Goldcorp founder doesn’t see rival bids for Osisko

Share

Goldcorp Inc. founder Rob McEwen said he believes his former company will not face competition in its quest to own Osisko Mining Corp.

Goldcorp, which Mr. McEwen built into a serious gold player before leaving in 2005, is entangled in a hostile bid for Osisko and its large Canadian Malartic gold mine in Quebec.

"The big guys aren't looking, they are shrinking," Mr. McEwen said.

Goldcorp's cash and stock bid is valued at $3-billion and is the biggest deal in the Canadian mining space in more than a year.

Investors are expecting a higher bid to emerge. But there are not many other miners that can save Osisko from Goldcorp, as the major gold producers are hampered by costly acquisitions made during the commodity boom.

Mr. McEwen suggested that more work had to be done at Osisko's prized mine.

The former Goldcorp chairman said he remembers looking at Canadian Malartic's ore grade and thinking to himself: "Wow, look at Osisko, they have less than a gram and they are going to process all this [rock]."

"In the right environment ... at a higher [gold] price, if they can contain their costs, it will probably be a good mine," he said.

Mr. McEwen – who left Goldcorp almost 10 years ago and is running McEwen Mining Inc., a small U.S.-based precious metals company – wants to take advantage of the weak stock prices and make an acquisition.

He wants McEwen Mining to one day be listed on the S&P 500, where it will be part of an index that many mutual funds will have to buy.

But in order to get there, he will have to increase his company's production and market capitalization.

Like other investors and companies looking for bargains in the resources sector, he wants a mining asset that is already in production or will be producing in the near future.

Mr. McEwen did not have a specific time frame, and said it is dependent on the price.

He likens himself to a very small animal hunting for prey. "When you are hunting or waiting for game, you usually have to be very patient. The first ones to come into the clearing are usually the smallest and then it is usually followed by progressively larger animals," he said.

"And it's the wise, older animal that comes last. They don't get hit."

Mr. McEwen resigned as Goldcorp's chairman in 2005 after engineering a friendly deal with Wheaton River Minerals Ltd.

He then sold all his stock in Goldcorp after the miner's management negotiated a $8.6-billion all-stock deal with Glamis Gold Ltd. in 2006 and refused to give shareholders a vote on the merger.

Mr. McEwen opposed the transaction, and called Goldcorp irresponsible for diluting its stock so much.

A consummate self-promoter, he believes bullion will top $2,000 (U.S.) an ounce in the near term. Like other gold bugs, he believes the world is shifting in favour of gold and that, at some point, the United States will falter under the weight of its own debt.

The thinking is that will in turn drive the U.S. dollar down and send investors fleeing from the greenback into gold, pushing bullion prices back up.