GPJ, Goldcorp see higher 2007 production, costs

Vancouver — Canada’s second-largest gold producer, Goldcorp (G-T, GG-N), expects to produce 2.6 million oz. of the yellow metal in 2007, assuming that the planned sale of its Peak mine in Australia and Amapari mine in Brazil succeeds.

The production target would mark an increase from 1.69 million oz. in 2006, a year when the acquisition of assets from Placer Dome and Glamis Gold drove a dramatic increase in the company’s reserves and resources.

But it is down from a forecast released in December, when Goldcorp said its 2007 gold production would be 2.8 million oz. at a cost of US$150 per oz.

“Our priority going forward will be on organic growth initiatives designed to unlock further value from our very large mineral concession holdings,” said Goldcorp CEO Kevin McArthur. “We will be investing over 120 million dollars in exploration during 2007, with most of that directed towards drilling in the shadows of our headframes.”

The pledge comes just days after Goldcorp agreed to spin out the Peak and Amapari mines in a $300-million deal to a junior company led by Frank Giustra’s investment banking firm, Endeavour Financial.

The deal will instantly transform TSX Venture Exchange-listed GPJ Ventures (GPJ.H-V, GPJFF-O) into a 200,000 oz.-per-year gold producer that will be owned 24% by Goldcorp.

After changing its name to Peak Gold, the new company will feature a board of directors headed by Goldcorp chairman Ian Telfer, Endeavour chairman Giustra, and Gordon Keep, Endeavour’s managing director, corporate finance.

Upon closing of the mine acquisitions, Peak Gold will grant up to 30 million stock options to its directors, officers, employees and consultants exercisable at 75 a share for a period of five years.

The company said cash costs at 13 mines in 2006 came in at US$33 an oz. It expects those cash costs to be under US$150 an oz. this year.

In the fourth quarter ended Dec. 31, 2006, the company produced 587,800 oz. gold at a total cash cost of US$160 an oz.

Goldcorp has also revealed that its proven and probable gold reserves increased by 170% to 39.8 million oz. in 2006. Measured and indicated gold resources have posted a fivefold increase during the year to 16.4 million oz.

The company, which has grown into one of Canada’s biggest gold producers through the acquisitions of Wheaton River Minerals and Glamis Gold, is set to release its financial results for the fourth quarter and full year 2006 shortly.