Goldcorp Inc. (G), the world’s largest gold producer by market value, is hiring workers for its corporate headquarters even after its biggest rivals fired staff as the metal slipped into a bear market.
Now is a good time to be recruiting, Chief Executive Officer Chuck Jeannes said in an interview yesterday in Denver. Goldcorp requires extra headcount at its Vancouver base because it’s building three mines, he said.
Goldcorp’s largest rivals, Barrick Gold Corp. (ABX) and Newmont Mining Corp. (NEM:US), each fired about 30 percent of their corporate office staff in the second quarter amid industrywide efforts to become more efficient and improve profitability. Gold has dropped 20 percent this year and producers have announced at least $26 billion of writedowns since July.
“There are a lot of folks out there who are either looking for jobs or who are disenchanted with their current jobs,” Jeannes said.
Goldcorp, which operates mines in North and South America, wrote down the value of its assets by $1.96 billion in July and is slowing some project spending.
Its shares rose 2.9 percent to $26.34 at 12:19 p.m. in New York. They have dropped 28 percent this year.
The company is seeking to reduce production costs by $100 an ounce of gold by the beginning of 2015, Jeannes said yesterday. He’s told mine managers to plan for positive free cash flow in each of the next five years, or else produce a closure plan for their operations.
“If they want a new fleet of trucks or they want to expand their crusher or do something, they need to pay for it themselves out of their own cash generation,” Jeannes said. “It has shocked people into really focusing on producing ounces that make money.”
Goldcorp is building two mines in Canada and one in Argentina. While the company continues to evaluate potential acquisitions, there aren’t many assets available that meet its requirements, Jeannes said.
“The fact that we are already growing pretty significantly means that we can be pretty selective and take our time,” he said. “We haven’t done a deal for several years and we may not do another one for another couple of years.”
A decline in the value of gold-mining and exploration companies hasn’t made a big difference to the number of potential targets because Goldcorp is focused on large deposits that would have low costs and long lives, he said.
“The drop in the equity market hasn’t changed whether a project hits those criteria,” he said.
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