TSX:WRM, AMEX:WHT
stockhouse.ca
Ian Telfer
Chairman and
Chief Executive Officer
Wheaton River Minerals Ltd. is engaged in the acquisition, exploration and future development and operation of precious metal properties.
URL: wheatonriver.com Phone:604-696-3011.
Ian Telfer, Chairman and Chief Executive Officer, spoke with Wall Street Reporter Magazine.
WSR: For those in the audience not yet familiar with the company, let’s start with a brief description of WheatonRiver.
WHT: WheatonRiver is a mid-tier precious metal producer that has operating mines in Mexico that this year will produce about 100,000 ounces of gold and almost six million ounces of silver.If you translate the silver into equivalent gold ounces it is almost 200,000 ounces of gold equivalent.We’ve got five or six years of reserves and almost 15 years of resources in front of us and the cash costs of producing these ounces of gold is less than US$190 per ounce.
WSR: Tell us about some of the current operations in Mexico.
WHT: Our main operation is in the State of Durango near the town of Tayoltita. We refer to this area as San Dimas.It’s a very famous mining area.We produce there about 130,000 or two thirds of our production from this region.It’s narrow vein underground mining.The area has been known to contain gold for many, many years and has been mined continuously for almost a hundred years.It’s a fairly modern operation with a very, very skilled workforce.The families have been in the region for a long time.There is a very high level of professionalism, the safety record is excellent, the environmental record is excellent and as I mentioned, the cash costs for the whole company are below $190 but at the major operation, in the most recent quarter, there was US$182 per ounce.So it’s an excellent operation with a long, long mine life ahead of it.
WSR: How will the recent acquisition at Luismin help the company to position itself in the market?
WHT: By acquiring Luismin it catapulted the company from very small production in previous years from a mine in Canada that has now run out of ore, to almost 200,000 ounces, which is a significant gold producer in North America these days.So it’s put us in a category with some very excellent companies such as Glamis, Meridian and Agnico-Eagle.We all have production in and around the same 200,000 to 250,000 ounces.This is an area of the stock market that investors seem to want to invest in because unlike the very large companies, like Barrick and Placer, it’s very difficult for investors to see how those two companies could double in size, for example.But when you’re at 200,000 ounces as we are, people can see that with a discovery or a big increase in production, you could double the size of your company and so it gets investors’ interest.So we’re very pleased to be in this range.
WSR: What are some of the ways you are planning to improve your production and your production targets for the remaining year?
WHT: We are expanding the mine at San Dimas.So it will take us over the next three or four years.It’ll get us up over to 250,000 ounces of production and the cash price will decline because of that expansion down to we hope, below US$170 an ounce and production for the mines for this year will be about 195,000 ounces of gold equivalent production.Now, we have only owned it since June when we acquired it so WheatonRiver’s production this year will be about 100,000 ounces.Then next year we’ll have the full year so it’ll get up to 200,000.
WSR: You had a number of exploration projects in your portfolio, advanced as well as early stage projects.What’s the strategy moving forward there?
WHT: The Luismin mines came with a very large excellent exploration portfolio of over 40 properties and we’ve moved aggressively to get some funds spent on these properties. They’ve been fairly neglected the last few years and so what we’re doing is joint venturing with other mining companies and having them spend money on the properties to earn an interest in them.Of course, Wheaton keeps the remaining part of the property and in most cases retains the right to be the operator and the majority shareholder.The first transaction we announced was with a small Canadian company called Geologics.They’ll spend $2.2 million on one of our properties over the next 12 months and then the next one was with Placer Dome and they intend to spend $4 million over three years on another property.We have another announcement we haven’t yet made and it’s a company spending US$1.5 million on two properties.So a total of $3 million.So far that means we’ve got almost $10 million being spent on our properties over the next period of time and there are continuing discussions going on so we hope to raise that to closer to $15 million in the first quarter of next year.
WSR: What’s your hedging strategy moving forward?
WHT: At present, we’re completely unhedged.It is our intention to stay unhedged.We’re very bullish on the price of both gold and silver.Our shareholders are really here for the upside in those commodities and so we do not intend to hedge at the present time.We should also point out that our balance sheet is very, very strong.The company has over US$20 million in cash and has no debt at all at any level of the company.
WSR: We are seeing very strong gold prices in today’s environment.Do you feel that the investment community understands your company at this point?
WHT: No.It’s a fairly new story.You know the Barricks and the Placers and the Newmonts have been around for years and years and WheatonRiver in its current form with these Mexican assets has only been around for six months.So no, it’s a story that is not yet been followed very intensely by the market.Many people do not know about it although it’s starting to spread and so, it’s one of my jobs over the next period of time to get out there and let people know what we’re doing and how low our cost structure is, and how we see ourselves growing.
WSR: What about your acquisition strategy moving forward as well as the criteria for these acquisitions?
WHT: We’ll certainly stay in precious metals.We won’t be buying anything else and our preference would be to stay in the Americas.We will not be going to South Africa or China or the former Soviet Union or some of those more exotic places.We have a lot of expertise in this hemisphere and so we’d like to acquire something there.We’d be looking for something similar in size to the Luismin acquisition, so I’d say between 130,000 and 200,000 ounces and it’s our preference to buy something that is currently in production.So that would be our focus for acquisitions.
WSR: What are some of the near-term milestones or benchmarks that our investors should keep an eye out for over the coming months?
WHT: We’ve reported one quarter of financials, the first three months that we owned this mine to the end of September, we will be reporting on the full six months or at the end of our December year-end probably sometime in the first quarter.I think that will be significant so that when people see two quarters back to back of cash flow positive, profitable mining company, I think that will get a lot of attention and some of the large pension funds, that may interest them in investing the stock.Following that I think people should watch to see that our reserves will increase from 12 months ago to now and that’s significant for a mining company and lastly, certainly if we make another acquisition that would really signal we’re growing into the big leagues and people should watch out for that.
WSR: The company is now trading on the American Stock Exchange with ticker symbol WHT.Especially for our U.S. investors, why is Wheaton River Minerals a good investment opportunity at this point?
WHT: Well, it’s a well-managed company.It has profitable production, has a long mine life ahead of it, it has very low cash costs as I said currently at US$182 dollars per ounce and gold’s trading today at $330 so there’s a huge margin in there.So long life reserves, low cost production and it’s a new story, it’s under-followed -- people interested in getting into stories before the masses find them, we would certainly quality for that. |
