Goldcorp CEO claims most institutional shareholders back bid for Glamis


By Rachelle Younglai
Monday, September 25, 2006

DENVER -- Goldcorp Inc.'s chief executive said on Monday that the majority of the company's institutional shareholders are in favor of its plan to take over Glamis Gold Ltd. in an all-stock deal.

"We have certainly talked to the majority of our institutional shareholders," Ian Telfer told Reuters on the sidelines of the Denver Gold Forum, an industry conference.

"None of them want to change anything, none of them want to redo it, none of them want to re-price it, none of them want to overturn it," Telfer said.

Goldcorp announced its plan to snap up Glamis August 31. It is offering 1.69 Goldcorp shares for every Glamis share. At the time of the announcement the deal was valued at $8.6 billion, but the value has waned by nearly 30 percent to $6.23 billion as Goldcorp's stock has dropped.

A pullback in the price of gold and the size of the proposed Glamis deal has weighed on Goldcorp's stock price.

The transaction will push Goldcorp's annual production from 1.5 million ounces to 3 million ounces. It doubles Goldcorp's reserves and would boost silver production dramatically when Glamis' Penasquito silver project comes on stream.

Some industry sources have called the offer expensive and there is no love lost between Telfer and Goldcorp's former CEO, Rob McEwen.

In front of hundreds of delegates at the Denver conference, McEwen, who is still a Goldcorp shareholder, took subtle jabs at Telfer.

He noted in a midday presentation that deals should create value for both sets of shareholders and that in general management did not have enough invested in the companies they operated.

McEwen, currently the CEO of tiny gold explorer U.S. Gold, has said in the past he was looking for ways to force Goldcorp to hold a shareholder vote on the Glamis deal. Those plans have yet to materialize.

"He has personalized it because it affects him personally," said Telfer. "Rob is out there talking about his own portfolio."

Since this time last year, Goldcorp has leapfrogged into the ranks of senior producers from mid-tier status, with the potential Glamis buy and the acquisition of certain Placer Dome assets earlier this year.

If successful, Goldcorp stands to become the third largest gold company by market capitalization behind producer Barrick Gold Corp. and Newmont Mining Corp.. It will rank as the fifth largest by production with output of 3 million ounces of gold in 2007.

"One thing of our whole experience, is that it happened so fast that we haven't gotten used to being a big company," Telfer said. "It has taken other people time to treat us like that, and it has taken more time for us to treat ourselves like that."

Telfer is set to present later this week and will be meeting with institutional shareholders to talk about the Glamis offer.

The Goldcorp-Glamis deal requires approval from Glamis shareholders, but not Goldcorp's. A shareholder meeting for Glamis shareholders is set for late October.

In the meantime, Telfer said the integration of Placer Dome assets is "great" and "pretty much" complete.

He said there are still things like computer systems that need to be switched over, but that the main task was putting Goldcorp's Red Lake mine in Ontario together with the Placer Dome's neighboring Campbell mine.

In September, Goldcorp started moving ore from the Red Lake mine to the Campbell shaft where the ore was treated in the Campbell plant.

So far, the company has managed to reach $10 million in cost savings. Overall, it expects to save between $30 million to $40 million a year.

"With the cost savings we have achieved already, we have passed through $10 million," said Telfer.

Telfer expects to reach savings between $10 million and $20 million this year, partly through attrition and combining departments.

Shares of Goldcorp fell 2.5 percent to C$24.61 on the Toronto Stock Exchange. In New York, Goldcorp was off 2.8 percent at $21.98 and Glamis was down 2.5 percent at $36.84.

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