Goldcorp


All that glittersClaude Lemasson tells Gary Toushek how people-centric policies have helped Goldcorp go from junior miner to the worldÔÇÖs second-largest gold company. These days Claude Lemasson spends a lot of time traveling between his Toronto office and the James Bay area of northern Qu├®bec, looking after his current priority, the ├ël├®onore project, a major new gold discovery situated within a relatively unexplored area of James Bay, in Cree Nation of Wemindji territory. HeÔÇÖs in charge of Vancouver-based Goldcorp Inc.ÔÇÖs projects in the Canada/US region, and the ├ël├®onore project is at the center of what is touted to be a promising new gold district in North America. Goldcorp has several smaller projects nearby in partnership with junior exploration companies and has created Opinaca Mines (Les Mines Opinaca Lt├®e) as an operating subsidiary in Qu├®bec. In addition, Goldcorp has five operating mines in the US and Canada, as well as several operations in Mexico and in Central and South America. Founded in 1984 as a junior exploration and development mining company, after a series of recent acquisitions Goldcorp is now the second-largest gold mining company in the world in terms of market cap valueÔÇö$30 billionÔÇöbehind Barrick Gold and ÔÇ£even though weÔÇÖre technically smaller than Newmont in terms of number of mines and amount of annual gold production,ÔÇØ says Lemasson. Lemasson has 20 years of experience in the industry, the last ten at Goldcorp, beginning as a senior consultant. He was the project manager heading up a team to rebuild the Red Lake Mine in 1999, and then was hired as general manager of that mine. In early 2006 Goldcorp acquired the ├ël├®onore property, and he was promoted to a newly created position as general manager of GoldcorpÔÇÖs projects in Canada and the US, with the development of ├ël├®onore at the top of his list.ÔÇ£When I joined Goldcorp, it was basically two small mines plus Red Lake,ÔÇØ he says, ÔÇ£which was a non-operational project at the time. But because of a new discovery Red Lake Mine was on again, and it has become the flagship of the company.ÔÇØ Gold was first discovered at Red Lake in 1926 and mined for several decades until it was thought to be nearly depleted. But in 1995 Goldcorp discovered below the original mine a new ore body that contained the worldÔÇÖs richest grade gold oreÔÇötwo troy ounces of gold per tonÔÇöand Red Lake now has the title of the ÔÇ£worldÔÇÖs richest gold mine.ÔÇØ In 2001 production there was so good that it established Goldcorp as CanadaÔÇÖs largest gold producer and one of the worldÔÇÖs lowest-cost producers. The production and potential of Red Lake enabled Goldcorp to accumulate a significant amount of capital until late 2004, when it began a two-year period of acquisitionsÔÇöWheaton River Minerals; a portion of Placer Dome, Inc.; Glamis Gold Ltd.ÔÇöas well as ├ël├®onore.The ├ël├®onore project is in a remote, inland part of Quebec, with access only by helicopter year-round, by barge in the summer, and with a temporary ice airstrip on the lake in the winter to facilitate the shipping of equipment, supplies and workforce to the site. Nonetheless, in 2007 the exploration camp was upgraded and five drill rigs worked the site for most of the year, while the development of a comprehensive collaboration agreement with the Crees, begun in March, 2007, was undertaken by a special team jointly assembled by Lemasson and Chief Rodney Mark of Wemindji; the agreement is expected to be completed later in 2008. Drilling results continue to be positive, and engineering work in 2007-08 includes advanced environmental studies, geotechnical work, metallurgical sampling and studies, and permanent infrastructure preliminary determination and design. ÔÇ£As well as advanced exploration, a pre-feasibility study begun in August 2007 continues this year, since we have some good high-grade hits or intercepts at depth in the ore body, which effectively changes the shape of the ore body and the concentration of gold,ÔÇØ says Lemasson. ÔÇ£In other words, the center of gravity of the ore body is moving as we discover new things at depth. So weÔÇÖll continue our analysis and modeling, to better determine the size of the ore body and dimensions of the mine. Next weÔÇÖll do a feasibility study to be completed in 2009, then construction and development of the mine in 2010ÔÇô11, and we expect to be in full operation by 2012.ÔÇØ This year, infrastructure to support the advanced exploration program will be built, including a camp upgrade, a temporary airstrip and road, and the sinking of an 18-foot-diameter exploration shaft to about 2,000 feet. ÔÇ£ItÔÇÖs more efficient in terms of cost and speed than drilling long, 5,000-foot holes from the surface, which are very expensive,ÔÇØ says Lemasson. ÔÇ£This way we can take our drills underground and set up platforms from which we can drill the deep targets with more holes at closer spacing.ÔÇØ┬á┬á He considers Goldcorp a unique, progressive company. ÔÇ£Although weÔÇÖre fairly large today, we still operate with a mid-size attitude. WeÔÇÖre decentralized, and a lot of responsibility is delegated down the chain of command, which is great because it allows each mine site or project or region to excel in its strengths. WeÔÇÖre a low-cost producer, fairly entrepreneurial, people-oriented.ÔÇØ Another thing Lemasson likes is the companyÔÇÖs investment in training programs on all levels, particularly leadership training. In fact, all his key staff at ├ël├®onore are engaged in some kind of training, with coaching and workshops. The strategy is simple: itÔÇÖs becoming more difficult to recruit and retain good managers, professionals and skilled trades people in mining. As older workers retire, thereÔÇÖs a generational gap thatÔÇÖs not being filled. Meanwhile thereÔÇÖs a global demand for these positions, ÔÇ£so itÔÇÖs not even a matter of cost; you just canÔÇÖt find the right people. So I think Goldcorp has an advantage being people-centric. And thatÔÇÖs part of our success.ÔÇØ Ironically, while the price of gold climbs to record highs, the mining industry is cyclical, and when the market commodity price falls, the cost of doing businessÔÇöthe equipment, material and labor costs of building and then operating a mineÔÇöwill not decline. ÔÇ£We have to live with these economics, which make or break projects.ÔÇØ Lemasson acknowledges that thereÔÇÖs much more recognition of the rights and culture of aboriginal communities today by the mining industry. Negotiations for drilling and mineral rights tend to begin with general apologies on behalf of those miners and governments that came earlier and left damages, even as recently as a decade or so ago, when sustainable development was a buzzword that was spoken and even written into agreements by mining interests but wasnÔÇÖt actually practiced. ÔÇ£ThatÔÇÖs the legacy weÔÇÖre facing today, and we need to have the sensitivity to respect these native communities, and the rights they have to the land that often provides for their livelihood,ÔÇØ says Lemasson. ÔÇ£We know itÔÇÖs important to practice sustainable development that actually works, and itÔÇÖs a central strategic pillar of Goldcorp. When we approached this project, we began by developing a productive, mutual relationship with the native people, and over time we will work hard to demonstrate that we as miners can be sensitive and beneficial to these communities, and itÔÇÖs not by giving financial handouts or only employment. ItÔÇÖs by sponsoring education for children and youth, by providing extensive training and language programs to help improve their standard of living and by providing them with the support and ability to develop business ventures. They are an untapped pool for the skilled labor that we need, and they recognize the opportunities we offer them in the mining industry. So itÔÇÖs very much mutual benefits to both sides, and all of us end up winning. ÔÇ£As for the environment itself,ÔÇØ he continues, ÔÇ£we respect it and we adhere to strict regulations. Often we exceed those regulations because we choose to, because itÔÇÖs critical to everyoneÔÇÖs future, specifically the neighboring communities. So I think weÔÇÖre a bit avant-garde in that sense, because weÔÇÖre a different kind of mining company that values the long-term positive impact that we have on the world.ÔÇØ┬á ┬á Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *   ┬áFirst published July 2008