Goldcorp submits amended EIA for Cerro Negro, ups El Morro capex to US$3.9bn

Thursday, October 27, 2011

Vancouver-based Goldcorp (NYSE: GG, TSX: G) has submitted an amended environmental impact assessment (EIA) to increase throughput capacity at its Cerro Negro gold-silver project in Argentina, COO Steve Reid said during a conference call to discuss Q3 results.

"We submitted an amended EIA to increase throughput from 1,850t/d to 4,000t/d and to allow for mining to occur from three underground mines simultaneously as opposed to just the Eureka vein," Reid said.

The company expects to begin underground development at the Mariana Norte and Mariana Central veins by year-end, following approval of the document.

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Cerro Negro is still on track for first production in 2013 as advancement of the decline at Eureka has exceeded 1,400m in length of the targeted 4,000m, Reid said.


Goldcorp does not expect the Argentine government's recent announcement that future export revenues derived from mining operations must be repatriated to the country and converted to pesos prior to being distributed either locally or back overseas to have a major impact on the firm.

"When we start to generate net profits from Cerro Negro two years down the road, we will be looking at a transaction fee when bringing funds back to Argentina of 0.6% and another 0.6% fee when moving funds back offshore for dividends or debt repayment, whatever it may be," CEO Chuck Jeannes said.

"So we are looking at an added cost of 1.2%, which will not have a material impact on Goldcorp," he added.


The company also announced that capex for its 70%-controlled El Morro gold-copper project in northern Chile has increased to US$3.9bn following technical work on the feasibility study that was completed during Q3.

"The capex is now at US$3.9bn, which is an increase from the US$2.5bn figure included when the feasibility study was done 3.5 years ago [by previous project owner Xstrata [LSE: XTA]]," Jeannes said.

The increase is due to higher costs in the industry and as well as some changes to the project's layout.

"Some US$500mn is relative to modifications to the layout of various pieces of the project and another US$500mn is related to the general move in prices of steel, concrete, labor and mining equipment," Reid said, adding that there are no significant scope changes and the original 90,000t/d throughput figure has remained the same.