McEwen Capital

McEwen Capital

October 12, 2006 12:53 ET

Goldcorp: Light on Details, Heavy on Base Metals

McEwen Provides Facts for Shareholders

TORONTO, ONTARIO--(CCNMatthews - Oct. 12, 2006) - ROB McEWEN, GOLDCORP'S LARGEST INDIVIDUAL SHAREHOLDER, wants fellow shareholders to know about additional key information that they are missing. Shareholders have been left in the dark by Goldcorp's management on the proposed Plan of Arrangement with Glamis Gold.


- Rob McEwen files for Court order to force a shareholder vote

- Board advisor analyzes $8.2 billion deal in just one day

- Hotel due diligence, no site visits, conflicts of interest?

- Penasquito equals lots of Zinc, lots of Lead, Silver may be sold, low grade Gold

"Why do Goldcorp shareholders have to read a Glamis Circular to learn vital details of an arrangement by Goldcorp's management that has already destroyed significant share value for the owners of the company?

Goldcorp continues to willfully avoid transparency and good corporate governance by denying shareholders the right to vote on a proposed arrangement that will have a negative impact on earnings, cash flow, and forever change the company," said McEwen.


Rob McEwen has filed for a compliance order from the Ontario Superior Court against Goldcorp under the Ontario Business Corporations Act (OBCA). The OBCA states that a Corporation in Ontario must receive shareholder approval before it can complete a fundamental change, such as a Plan of Arrangement. McEwen contends that Goldcorp is failing to comply with the OBCA by denying shareholders the right to vote on the proposed Plan of Arrangement with Glamis Gold.

"I have received letters of support from more than 780 Goldcorp shareholders who, including myself, own 24.4 million shares, representing 5.8% of the company. These shareholders are outraged, and I understand why; we are being irreparably harmed by this ill-conceived deal," underscores McEwen.

Goldcorp shareholders are urged to act now! Visit, print off and complete the Support Form and e-mail, fax or mail it back to McEwen Capital. Let's show the Board and management that we, the owners of 99.9% of the company, want a vote on this transaction.


Goldcorp acknowledges that its purchase of Glamis will be dilutive to future earnings and cash flow. But, Goldcorp also suggests that at some point in the future the gold and base metal reserves acquired from Glamis will benefit shareholders.

In the past, Goldcorp's present CEO appears to have understood the importance of earnings:

"American shareholders care about earnings...every time those companies made acquisitions they said, 'Yeah, but it doesn't affect cash flow.' Well, if your earnings go down, your stock tends to go down."

Ian Telfer, Sprott Asset Management Conference, Jan. 11, 2005

Goldcorp has failed to tell shareholders how it intends to deal with the $6.7 billion in "unallocated purchase price", as described in Appendix B (page 7) of the Glamis Circular, and how this will potentially impact on Goldcorp's earnings. This nebulous accounting makes up 80% of the total price Goldcorp is paying for Glamis!


According to the Glamis Circular (page 41-42) on August 29th Goldcorp retained CIBC as a financial adviser to the Board. On August 30th they presented their views to the Board, and the directors subsequently approved the deal. Early on August 31st the deal was announced. This is a big and complex transaction, it is amazing that a thorough analysis could be delivered within one day.


According to the Glamis Circular (page 42) the Glamis Board unanimously approved the deal. But, the same was not stated for the Goldcorp Board. Goldcorp's Board members did not unanimously agree that the Glamis deal was in the best interests of shareholders without a vote. Why were Goldcorp shareholders not informed?


According to the Glamis Circular (page 41) Goldcorp spent only two days in Seattle conducting due diligence on its $8.2 billion purchase. The last time we checked, Glamis did not have any mines or exploration projects in Seattle! No site visits and questionable due diligence practices demonstrates negligence on the part of Goldcorp.

The Goldcorp employees who conducted the technical due diligence have little or no ownership in Goldcorp, but have substantial economic interests in Silver Wheaton. Was the due diligence for the benefit of Silver Wheaton?


It is shocking to hear that only three weeks after decimating our share price, Goldcorp has offered to sell all of Penasquito's silver production in a non-arms length deal to Silver Wheaton, after we were told it was Goldcorp's future. Why are Goldcorp shareholders assuming all the risk, and getting limited upside?


A strong indication that the market thinks this deal is bad is illustrated in the following table:

Share Price Performance After Announcements

Acquirer Target Shares(i) Gold(i)

U.S. Gold Corporation 4 Nevada Companies +10.4% -1.9%
Yamana Gold Inc. RNC Gold Inc. + 4.5% +0.1%
Goldcorp Inc. Wheaton River +0.1% -0.9%
Yamana Gold Inc. Desert Sun Mining - 1.3% +0.4%
IamGold Gallory Gold - 1.7% +0.2%
Glamis Gold Western Silver - 3.2% +1.8%
Yamana Gold Inc. Viceroy Exploration - 4.6% -2.3%
Barrick Gold Placer Dome - 6.9% -1.7%
Goldcorp Inc Glamis Gold - 9.5% +1.4%

(i) Acquirer share price (+/-) and gold price (+/-) following


The Penasquito project is not a gold deposit! It is an un-permitted, undeveloped, base metal project, with low-grade gold. Based on the information contained in the Glamis Circular, 70% of revenue will come from base metal production. According to the Glamis Feasibility Study, Penasquito will require $1.2 billion in capital expenditures.


It is appalling that basic shareholder rights, which are being provided to Glamis shareholders, are being completely ignored by Goldcorp. Goldcorp shareholders get no information circular, no fairness opinion, no right to dissent, no right to accept a superior offer, and no VOTE!

Please note: To view the document titled "Support Form to Request a Shareholder Vote", please click on the following link:

Contact Information

  • McEwen Capital Corporation
    Robert R. McEwen, Ian J. Ball or Stefan M. Spears
    (647) 258-0395 or Toll Free: 1-866-441-0690
    (647) 258-0408 (FAX)