promoted through mining group Inmet and gold miner Agnico-Eagle, where he became finance director, before joining copper group HudBay Minerals as CEO.
Despite his fast chatter, Garofalo is, in many ways, a quintessential accountant, describing countries through the narrow prism of hurdle rates, the return that Goldcorp would need, to justify an investment. How, for example, would Goldcorp weigh Chile against Mexico? “It's an asset-driven evaluation, where are we going to get the best return on invested capital? We'd probably use the same discount rates in either of those jurisdictions. Argentina's probably a bit higher, but it's coming down.”
Garofalo also returns repeatedly to phrases like “framework”, “bandwidth”, “industrial complex” and “borne out over time.” Has Penasquito been mismanaged? Garofalo returns to the top-down metric. “It was managed towards growth in ounces, versus value maximisation. Penasquito is still the cornerstone of the company. It's still the best and most profitable asset that we have. We can make this asset a lot better, a lot more profitable. We'll be back at the higher grade and it'll be the cash machine that it always has been.”
Goldcorp's one surviving mine manager is Guy Belleau, head of Eleonore. “They ran into some geological difficulties and that's not uncommon when you're exposing an underground mine for the first time,” Garofalo says. “There's only so much you can discern from surface drilling.” Goldcorp has prepped investors for a 30 per cent drop in grades, but
Belleau is doing a “very, very good job.”
Garofalo is also outright bullish on Goldcorp's troublesome Cerro Negro mine in Argentina. In 2010, Chuck Jeannes paid a whopping C$3.6bn ($3.4bn) for ASX-listed Andean Resources and its greenfield gold acreage in Patagonia, a vast empty steppe, populated by llama and sheep. Goldcorp sunk another $2bn building the mine, even as Argentina descended into political chaos under former president, Cristina Fernández de Kirchner. Cerro Negro ran over-budget, production fell short and Goldcorp unveiled an embarrassing $3bn impairment.
“Chuck had it tough,” Garofalo says. “He was building Cerro Negro in the worst time during the Kirchner regime. We had this huge overrun on capital and I think that was inevitable, given the macroeconomic model. Now I've waltzed in with the thing built, commissioned, and a complete change in the political dynamic.”
Argentina elected pro-business president Mauricio Macri late last year. In ten months, Macri has returned Argentina to the international bond markets, easing trade and packing his cabinet with former bankers from JPMorgan. When Garofalo met Macri earlier this year, they swapped anecdotes on industrial productivity. “He has a very keen sense of what drives businesses,” Garofalo says. “What he's done in less than a year is breathtaking. Just incredible. He actually has an inflation measure now that he can trust and his objective is to bring it back down to single-digits within 18 months.”
Cerro Negro's plant is far from fully utilised, running 30 per cent below capacity, but the mine is producing eye-popping grades of 16 grams
per tonne. “Our geologists say it's shooting fish in a barrel right now. It's nine distinct deposits and we'll add more beads onto the string.”
It was “an astute investment”, Garofalo maintains. “I don't think anybody could have built that mine in Argentina more efficiently than we did. We'll be feeding that complex for decades.”
Agnico built five mines in five years when Garofalo was at the company. At HudBay, he built another three. Does Goldcorp's rambling portfolio require a different strategy? “We're going to be in a perpetual state of mine building for as long as I'm with the company.”
He has already pushed the button on invest-ments at Penasquito and at the Musselwhite mine in Ontario, building a new $90m hoist, to lower costs. Goldcorp will also begin building its Borden mine in Ontario “very shortly”, feeding additional tonnage into its Porcupine complex.
To tighten up the company's exploration...