Tuesday, 6th December 2005 (2994 views)

Goldcorp is splashing out around $420 million worth of shares to acquire one of the world's most exciting new gold projects in James Bay, Canada from Virginia Gold Mines.

The deal is estimated to be worth a hefty 43 per cent premium on Virginia's market value, indicating the lucrative potential of the site and reflecting the soaring price of gold.

"It's the only significant gold discovery literally anywhere in the world in this gold cycle," Goldcorp chief executive Ian Telfer told the Toronto Star.

"It was certainly a premium. But we think there are at least ten years left in this gold cycle, and I think you'll see gold over $700 in the next couple years."

Analysts say the Eleonore property could yield over four million ounces of gold, with production due to start as soon as 2008.

But although some are calling Eleonore a new gold belt, the move is still seen in some quarters as a gamble.

Gold was only discovered in the area this past year and although initial drilling results have been good, this has yet to be translated into resources or reserves.

But with the price of gold recently shattering through the $500 an ounce barrier and set to continue surging, there has never been a better time to snap up promising new gold projects.

Goldcorp is currently Canada's fourth biggest gold miner.

 

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