Goldcorp Receives Certificate

Canada’s leading gold producer, Goldcorp Inc. (GG), recently announced that its Marlin mine in Guatemala has received certification under the International Cyanide Management Code for the use of cyanide for the production of gold.

Marlin is Goldcorp's third gold mine to receive full certification. The Marigold mine in Nevada was the first gold mine in the world to be fully certified under the Cyanide Code, followed by El Sauzal mine, which was the first gold mine in Mexico to be fully certified. The Cyanide Code is a voluntary industry program for companies involved in the production of gold using cyanide, developed with the support of the United Nations Environment Program.

This apart, Goldcorp is consistently acquiring shares in Osisko Mining Corporation, a junior gold mining company in Canada. According to the regulatory filing, Goldcorp has purchased 4.8% of Osisko Mining by buying about 8.5 million shares and 4.3 million share purchase warrants of Osisko Mining. Each warrant is exercisable for one common share of Osisko for $5.45 per share until Nov 17, 2009.

However, Goldcorp has notified that it does not have any immediate plans to increase its current 12.9% stake in Osisko. Osisko Mining owns Canada’s largest untapped gold deposit. The company is pursuing the Canadian Malartic project and has 6.28 million oz of proven and probable gold reserves at Canadian Malartic.

Goldcorp is one of the world's lowest cost and fastest growing gold producers. The company is benefiting from facility expansion, increasing gold prices and its acquisition strategy. With the Glamis Gold acquisition, Goldcorp has the best production profile among major gold companies such as Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC) and Newmont Mining Corporation (NEM).

Gold price trends remain positive, but higher interest rates and speculative concerns could push down prices. We remain concerned about Goldcorp’s near-term prospects because of its aggressive acquisition policy.

Apart from environmental and financial risks, the company also faces execution risk at its Amapari and Los Filos projects in Guerrero state. We maintain our Neutral recommendation on the stock.

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