Gold prices have risen drastically so far in 2016, but Rob McEwen, founder of Goldcorp and chairman and CEO of McEwen Mining, believes that there’s more in store.
Gold prices have risen drastically so far in 2016, but Rob McEwen, founder of Goldcorp (TSX:G,NYSE:GG) and chairman and CEO of McEwen Mining (TSX:MUX,NYSE:MUX), believes that there’s more in store.
McEwen believes that gold prices could challenge $2,000 by the end of the year, hitting $5,000 gold in four years. “We have a point right now where gold’s moving in all currencies just like what happened at the beginning of 2005,” he said. “I think we are in the beginning of a new gold run.”
Watch the interview below, or read the transcript, for more of what McEwen had to say:
INN: Hi I’m Teresa Matich with the Investing News Network. Here with me today is Rob McEwen. He is the founder of Goldcorp and currently [Chairman] and chief owner of McEwen mining. Rob, thank you for joining me.
RM: Pleasure to be here Teresa.
INN: Mining has had a tough few years, but McEwen is now about 300 percent in both New York and Toronto. Can you tell us about some strategies you use to survive the downturn and see that rise?
RM: Surviving the downturn took a little bit of ingenuity. The whole industry was trying to reduce their costs, improve their operating margins, and we did the same. We didn’t raise any capital during the period. We just deferred some projects that weren’t as economic in the lower metal prices and said, “Well we have the metal in the ground. It’s not going to go away. Let’s just wait for a better price.” So, a better price for the metal to improve the economics of the project, and a better price for our shares in the event we had to finance. We’ve gone from $14, $15 million at the end of 2014 to 60 million today without doing any financings. It’s just been improvement.
INN: Wow. And I know you expected gold to bottom quite a bit earlier than this. Were you surprised when it finally did turn?
RM: Probably the suddenness of the turn. Gold started moving in other currencies in late 2014, but most people in Canada and in the United States were looking at the US dollar gold price, it was down 45 percent. And the biggest gold miner in the world Barrick (NYSE:ABX) was down 80 percent, so they said, “We are not investing.” But if you stepped away even in Canadian dollars the gold price was starting to move up in 2015. It took a couple of quarters before people started thinking. “Hey they are getting positive cash flow now, and the margins have opened up.” We have a point right now where gold’s moving in all currencies just like what happened at the beginning of 2005. I think we are in the beginning of a new gold run.
INN: And where do you think all this headed over the next year?
RM: Well it will be moving into the high teens and might even challenge $2,000 this year.
INN: Is $5,000 gold still in the cards long-term?
RM: I think it’s four years out.
INN: Wow ok that’s something to look forward to. And then back to McEwen, I noticed you’ve been acquiring properties over the past several months. You acquired some in Nevada and some next to the El Gallo mine. What’s the reasoning behind that?
RM: We are buying properties that are adjacent or lying within our own property boundaries, where we believe the exploration potential is good, and we can extend the resource life of the mines we have or the projects we are going to build. We are able to do it very inexpensively. On one project we were buying ounces for $4 an ounce, drilled off and 43-101 [compliant]. We thought this is a very low cost way of extending the life of our projects.
INN: Of course. And in terms of investments I saw you recently disclosed your interest in Golden Predator (TSXV:GPY). Could you tell us what the draw was there?
RM: Golden Predator like a lot of juniors had been really pushed down. They had a mine that had being closed, the Brewery Creek, which I was intrigued by. They also had visible gold on their showings on Three Aces. Bill Sheriff, the president, had come along and we’d been talking all last year, and I was watching his progress and he came in one day with a vial of grains of gold. He said he wanted to do a financing, and would you like to do it. It was trading around 15 cents and I said, “Sure.” Subsequently it’s gone up over 90 cents. It’s had a great run but I think it’s just he had… no one was paying attention to a lot of the exploration stories. And I think it’s really worthwhile for investors to be looking at those ones.
INN: Absolutely, thank you so much for joining me Rob.
RM: Pleasure Teresa, thank you.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.