Goldcorp gets permit for Mexican mine (January 23, 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 pounds of zinc and 156 million pounds of lead over the mine’s 17-year lifespan.

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

Goldcorp said it is ready start the mill construction after receiving the primary project MIA (Manifestacion de Impacto Ambiental) and the high voltage transmission line MIA much sooner than it had expected.

“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 chief executive officer Kevin McArthur. Goldcorp had anticipated that the permitting process would not be completed until the middle of this 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 an oz. of silver and US44 cents a pound of zinc, with lead revenue taken as a credit to production costs.

Last month, Goldcorp said it expects to produce approximately 2.8 million oz. gold this year at an anticipated cash cost of US$150 an oz. By-product assumptions used to forecast cash costs are silver at US$10 an oz. and copper at US$3 a pound.

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 (Penasquito is forecast to contribute 400,000 ounces of gold),” he said in a report.

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