Goldcorp Ready To Rocket Higher From Acquisitions, Gold Prices
It appears that, despite some tumultuous months that have seen sharp fluctuations in share price, Goldcorp (GG) has positioned itself through its large-scale acquisitions to ride the current rise in gold price to post profitable results for the remainder of 2012.
In large part due to its need to stay competitive with Barrick Gold (ABX), the world’s No. 1 miner of gold, Goldcorp made several substantial acquisitions in recent years that are beginning to pay off.
In 2006, Goldcorp and Glamis Gold announced a merger that was valued at $21.3 billion. With this merger Goldcorp became the third-largest gold miner in the world.
Although many financial experts questioned this massive merger at the time as it did not contribute to Goldcorp’s immediate cash flow, Goldcorp’s financial circumstances at that time now seem irrelevant. The current gold price indexes, which show a $1,100 increase in value from 2006-2012, will prove that this merger will allow Goldcorp to continue to build on its long-term financial strength.
At the time of the Glamis merger, gold was selling at approximately $620 per ounce. At the same time, Goldcorp was selling at approximately $15 per share. Its share value was due in large part due to the declining value of gold that bottomed out at around $400 for the period of 2002-2005 and was only beginning to make gains that eventually saw gold nearly quadruple in value over the next seven years.
Seemingly influenced by the continued rise in gold, Goldcorp made another key acquisition in August 2008 when it purchased Eagle Mines for $1.47 billion. To continue reading, click here.