Goldcorp gets permit for Mexican mine (February 19, 2007)

Vancouver — Goldcorp (G-T, GG-N) has received construction permits ahead of schedule for what is expected to be Mexico’s largest gold mine, once it is running at full speed in 2012.

The $880-million Penasquito project in the state of Zacatecas is expected to produce an average of 388,000 oz. gold, 23 million oz. silver, 303 million lbs. zinc and 156 million lbs. lead annually over the mine’s 17-year lifespan.

Goldcorp said the project remains on schedule for full production from heap leaching of oxide ore by mid-2008, with full operation of the mill and flotation circuit set to begin by 2009.

Goldcorp said it is ready to start mill construction after receiving the primary project and high-voltage transmission-line permits much sooner than it had anticipated.

“The earlier-than-expected receipt of construction and operating permits is a great milestone in the development of this world-class project,” said Goldcorp president and CEO Kevin McArthur.

Goldcorp had anticipated that the permitting process would not be completed until mid-year.

Electric power and water supplies have been established, an airstrip has been built, and foundations have been poured for the construction camp facilities.

A feasibility study estimates that co-product cash costs will average US$125 per oz. gold, US$4.91 per oz. silver and US44 per lb. zinc, with lead revenue taken as a credit.

Recently, Goldcorp said it expects to produce about 2.8 million oz. gold this year at an anticipated cash cost of US$150 an oz. Byproduct assumptions used to forecast cash costs are silver at US$10 per oz. and copper at US$3 per lb.

But the company’s output is projected to rise substantially during the next few years, according to gold mining analyst Michael Jalonen of Merrill Lynch Research in Toronto.

“Thanks to a slew of development projects, we see Goldcorp’s gold output rising to 3.5 million ounces by 2010,” he said in a report.

Penasquito is forecast to contribute 400,000 oz. gold.

Jalonen said Goldcorp’s cash costs are forecast to remain below $200 per oz. over the next several years.