Goldcorp CEO says mining is about margins, not volume – by Ian McGugan (Globe and Mail – June 28, 2016)

Gold has been on a tear in the wake of last week’s shocking Brexit vote, but investors who want the best returns may want to look to producers rather than the metal itself.

By and large, miners flopped at creating value for shareholders during the last run-up in gold prices that began a more than decade ago. Investors who simply bought gold during those years did much better than those who bet on miners’ shares: From 2004 through 2012, gold rose more than 300 per cent, compared to just 73 per cent for the S&P/TSX global gold index (in U.S. dollars).

But this time around the comparison is shaping up differently. As precious metal prices have surged this year, many gold miners’ stocks have produced gains that are much larger than the rise in the underlying metal.

But David Garofalo, who took over as chief executive officer of Vancouver-based Goldcorp Inc. at the end of February, says the industry has learned its lesson when it comes to handling a rising gold price.

Goldcorp is not among the sector’s biggest gainers, but even so its shares have soared more than 50 per cent in value since January, while the price of gold has advanced only about 25 per cent.

One reason for the outperformance is that the industry is no longer engaged in a mad scramble to expand output, said Mr. Garofalo, 50, who previously served as chief executive of HudBay Minerals Inc., a base-metals producer. The downturn in gold prices after 2012 put a damper on many expansion projects. So did a persistent lack of exploration success across the industry.

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