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The Break-Up

Written By Luke Burgess

Posted February 1, 2008


Following a full week of speculation, Goldcorp Inc. (NYSE: GG, TSX: G) announced that it will sell its 48% stake in silver reseller Silver Wheaton Corp. (NYSE: SLW, TSX: SLW) Goldcorp will drop its 108,000,000 common shares of Silver Wheaton at a price of C$14.50 per share for aggregate gross proceeds of C$1,566,000,000.

Shares of SLW closed down US$1.37 (8.2%) for the week.


In a press release put out late last night, Goldcorp commented on the sale of equity saying:

The share sale is consistent with Goldcorp’s commitment to simplifying its corporate structure and strengthening its balance sheet. The proceeds from the transaction provide Goldcorp with the financial flexibility to fund an expected 50% growth in gold production over the next five-year period and will provide financial flexibility for future growth opportunities. Capital spending over the next five years is expected to be over US$3.9 billion, including funding completion of the Peñasquito, Éléonore and Cerro Blanco projects as well as providing sustaining capex at operating mines. Not included in this figure is the possible construction of the Pueblo Viejo project in the Dominican Republic (Barrick 60%, Goldcorp 40%) which remains under feasibility review.

Goldcorp has mines in Canada, the US, Mexico, Guatamala, Honduras, the Dominican Republic, Argentina and Chile, but more than 50% of the company’s production in 2008 will come from Canada, where it is expanding output at its Red Lake mine.

– luke