Good morning, [audio gap] Goldcorp Inc. 2012 Third Quarter Conference Call for Thursday, October 25, 2012. Please be advised that this call is being recorded. I would like to turn the meeting over to Mr. Jeff Wilhoit, Vice President Investor Relations of Goldcorp. Please go ahead, Mr. Wilhoit.

Thank you, and welcome, everyone, to the Goldcorp Third Quarter Earnings Conference Call. Some of the senior management in the room with me today are Chuck Jeannes, President and Chief Executive Officer; Lindsay Hall, Chief Financial Officer; and George Burns, Chief Operating Officer. For those of you participating on the webcast, we've included a number of slides to support this morning's discussion. These slides are available on our website at www.goldcorp.com. As a reminder, we will be discussing forward-looking information that involves unique risks concerning the business operations and financial performance and condition of Goldcorp. Forward-looking statements include, but are not limited to, statements with respect to future metal prices, the estimation of mineral reserves and resources, the timing and amount of estimated future production, cost of production, capital expenditures, and cost and timing of the development of new assets and deposits. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on forward-looking statements. With that, I will now turn the call over to Chuck Jeannes, President and CEO.

Thanks, Jeff, and thanks, everyone, for joining us today. I'm pleased to report that improved operating performance in the third quarter, combined with strong realized gold prices, resulted in Goldcorp's highest quarterly revenues ever, totaling $1.5 billion. This led to strong adjusted net earnings of $441 million and operating cash flows before working capital changes of $687 million. Following the operational challenges we experienced in the first half of 2012, these improved results demonstrate the resilience and stability of our overall mine portfolio. There's always significant work to be done but we're confident that we can meet the challenges and continue to deliver on the unique value proposition that Goldcorp has represented over the long term. Turning to the operations. At Red Lake, mining has advanced in the High Grade Zone following the completion of de-stress slots at the 41 and 45 levels. These cuts successfully reduced the seismicity that had previously delayed access to certain production headings, and you can see this beginning to be reflected in our increased grade in production for the quarter. While it took longer to complete this work than we originally planned, we expect to benefit from the experience we've gained, as well as improved procedures now in place when we encounter seismicity deeper in the mine. We remain confident that these conditions will be manageable over the long term. Ongoing exploration success, both at depth in the High Grade Zone and in a newly discovered zone, underscores the fact that Red Lake remains a fantastic deposit and one that will continue to be a cornerstone producer for us for many years to come. At Peñasquito, we were pleased to report strong production in the third quarter driven by higher throughput, grades and recoveries. This resulted in earnings from operations of $245 million in…

Thanks, Chuck. I'm pleased to be joining you today on the call. We have an outstanding collection of mines and projects, high quality, long life with strong, dedicated teams. My primary focus is on supporting our emphasis on execution and extending Goldcorp's record of safe, responsible operations. Turning to the quarter, gold production was 592,500 ounces at cash cost of $220 per ounce on a by-product basis and $660 per ounce on a co-product basis. Our quarterly performance across the portfolio was solid with production driven by Red Lake and Peñasquito, in addition to a solid quarter throughout the rest of the producing mines. Musselwhite made a strong contribution in the quarter driven by a significant increase in throughput and grade. This mine operates in a remote, challenging environment. As you'll recall, we had a number of unusual challenges recently. So it's particularly gratifying to see the team surface the potential that exists there through hard work and continued exploration success. This performance helped offset a lower quarter at Porcupine in Ontario where we saw lower grades, as expected, in light of mine sequencing in the Hoyle Pond underground. Los Filos in Mexico continued its long-time record of production consistency, despite the annual rainy season. Our newest producing asset, Pueblo Viejo, contributed 1,000 ounces of gold to our third quarter production. Turning to Red Lake. Third quarter gold production totaled 120,200 ounces at a total cash cost of $535 per ounce. A number of you on the line were present on the Red Lake mine tour last month, just as we were completing the de-stress slot on level 45 of the High Grade Zone. Since then, we have been able to access significantly more mine headings, which resulted in our increased grade of production in the quarter. I wanted to…

Thanks, George. Our third quarter financial results reflect improved performance at Red Lake and Peñasquito, as well as higher sales at Alumbrera due to the resumption of shipments, although we had temporary suspension in the second quarter of 2012. We had record quarterly revenues of $1.5 billion, primarily from gold sales and an average realized gold price of $1,685 per ounce, with by-product cash costs of $220 per gold ounce. Operating cash flows before working capital amounted to $687 million, of which $669 million, almost all of it, was reinvested in our operations and capital projects. Compared to the second quarter of 2012, by-product cash costs of $370 per ounce decreased by $150 per ounce, mainly due to higher by-product sales credits, positive provisional pricing impacts at Peñasquito and Alumbrera and higher sales at Alumbrera. On a co-product basis, cash costs increased to $660 per ounce compared to $619 per ounce in the second quarter as we continued to experience increased cost pressures at our Canadian and Mexican mines. Net earnings for the third quarter amounted to $498 million compared to $268 million in the prior quarter. Adjusted earnings for the quarter amounted to $441 million or $0.54 per share, compared to $332 million or $0.41 per share in the prior quarter. To calculate adjusted earnings, we added back to our reported net earnings of $498 million the noncash derivative losses of $100 million, most of it related to the mark-to-market of our convertible debt, and deducted the company's book gain of $110 million related to our investment in Primero. We also need to remove the effect of the noncash foreign exchange losses on the translation of deferred income tax assets and liabilities of $52 million from the book tax provision. The detailed calculation of our adjusted net earnings is…

[Operator Instructions] The first question is from Brian Yu from Citi.

The first question is just with Peñasquito. You mentioned you're still being impacted by the wide variability but actually you had pretty good results. I was wondering if you could help us kind of quantify, maybe on a percentage basis or cubic meters per day, I mean how far short of where you would like it to be? And then secondly, as you think about expanding that supply for next year, what type of percentage increase are you looking for in terms of the capacity?

Brian, it's Chuck. I mean the simple answer to the question is, as our original plan provided, we had hoped to be at 130,000 tonnes per day in our throughput at Peñasquito by this point. And we're not. I think we were between 105,000, 110,000 for the quarter. And so that limitation is the difference that you're looking for between where we had originally planned to be and where we are today. And then in terms of 2013, you heard George talk about the efforts that we have underway to source additional water. And until we have a little more clarity as to those efforts and their success, we're not able to give you any guidance on 2013. We'll be doing that early in January.

I was kind of looking more for color in terms of how much more in water resources that -- whether in a capacity churn, that you're looking to bring online and be made available?

Yes, Brian. As I stated, we're currently pumping about 70,000 cubic meters a day to achieve that 105,000 tonne a day sort of throughput. And to get to the 130,000, we need to be in the 85,000, 90,000 cubic meter a day range. And so that's what the study is all about, is how do we find additional water to be able to continue that ramp-up to our design capacity or find ways to reduce the amount of water required and still get that tonnage. And we are working on both.

Okay. And then on Pueblo Viejo, the ounces there were just reduced a little bit. Is that fairly timing-related?

Yes, typical startup issues at a new mine, nothing of significance. Just as things are going on a daily basis, we're keeping a very close eye.

The next question is from David Haughton from BMO Capital Markets.

You had mentioned the Camino Rojo, I'm wondering if you could put some broad parameters around what we should be thinking. Should it be something like what we saw from the heap leach at Peñasquito? Or is there some other twist to the story here?

Maybe I could start, David, and then George can give you his thoughts. Basically, you'll recall when we bought the asset, we said that we thought that the near-surface oxide would be more readily developable, but that we hoped that there would be a larger sulfide deposit that would really add the value to that transaction. And indeed, that's what's happened. We've got the near-surface oxide lined out. We've got an internal feasibility study that analyzes that and is actually quite a positive. But at the same time, we've had very good success defining a deeper sulfide resource. And where we are now is making sure that we don't take any action to advance the oxide that will later impede our ability to develop the sulfide. And all of this revolves around land access, around water, around the various infrastructure things. For example, you do a different power supply solution for a small oxide effort than you would for a much larger flotation plant. So those are the kinds of things that we're working on right now.

All right. And is there any thought of integrating some of these plans with perhaps your neighbor?

Well, we do have a neighbor there and, as you know, whenever you have an ore body that gets close to a boundary, you need to have some agreements with the neighbor as to how to lay back so that we can access all of our ore and they need to determine what they have on their side and how best to resolve that. So those are discussions that have taken place and that will continue to take place.

And the next update will be coming out in the first quarter of this year. Will you be able to then wrap some financial numbers around it so that we can have a go ourselves at modeling this a little bit better than what we could at the moment?

Yes, we hope so.

All right. Just going now back to Cerro Negro. I heard the comments that you had made, Chuck and also George. So when we're thinking about this -- previously you'd said that the contingencies that you had baked into the CapEx and the timeline numbers, you were feeling relatively comfortable about. Have you reconsidered that now?

Well, not to split hairs, but I think we last said that we were using up and had to use our contingencies. And that is the case. And so we're just in the midst of doing our updated capital estimates and budgeting and we'll have that information for you available in early January.

The next question is from Anita Soni from Crédit Suisse. Anita Soni - Crédit Suisse AG, Research Division: I just wanted to know, in terms of the grades at Peñasquito that you're accessing now in the Peñasco pit, is that something that you expect to continue, say, at least for the next year, I guess, and -- from the prior model, and into 18 months or so?

This is George. Yes, we had a really good third quarter and the pit, we're in Phase III. In the deep part of Phase III we're getting into the better grades consistent with the deeper part of the ore body. We're also stripping on Phase 4 and getting into ore. So you can see -- you can expect to see the fourth quarter grades to drop off a bit in line with the guidance that we've already put out, just as a result of Phase III's coming to a close and Phase IV now starting to come back down through the ore body. Anita Soni - Crédit Suisse AG, Research Division: I think in the original, I mean, way back when, when we saw last off-season [ph], we were going to see these 0.6 grades next year and then slightly higher into 2014. Is that still the plan or did you access this a little bit earlier than forecasted?

Well, Anita, remember we've actually accessed things slower than anticipated because of the slower or lower throughput that we're seeing. And so the original feasibility numbers anticipated the full 130,000 tonnes a day. And so there's going to be changes in those. And that's what we're working through right now in developing the mine plan and budget for next year. And we'll have that for you in January.

The next question is from Greg Barnes from TD Securities.

Chuck, I guessed from your comments the heap leach or the oxide at Camino Rojo, really the story here is the deeper sulfide ore body. Can you characterize that for us, what kind of grades we're looking at, broadbrush scale? Just a little better sense of what's going on.

Sure, I'll let George do that, but just to say if it weren't for the success we've had in outlining the sulfide mineralization, we would definitely be going forward with this oxide opportunity. It's a very high return, pretty straightforward, simple opportunity that we basically just duplicate the oxide plant at Peñasquito down at Camino Rojo. As I said, the challenge is making sure that we don't advance this in a way that later hurts us as we're trying to develop the sulfide. So with that kind of introduction, I'll pass it to George to talk a little bit more.

Okay. So just to give you a general idea. As I see, we've got 3 different areas of sulfide mineralization and, there, each area's distinctively different. So the oxide deposit and transition ore that's included in our recent study continues at depth and there's sulfide there available. And we understand that fairly well. What's changed is up to the west and to the south, this mineralization continues and we've got 2 distinct zones. Generally, we're seeing gold grades a bit better than Peñasquito, and we're seeing lead, zinc and silver generally a bit worse. But again, there's 3 distinct zones. The latest discovered area is showing very high silver content. So to describe it as very challenging, all I can tell you is there's 3 distinct zones. We're excited about all 3 and we're developing drilling plans into next year to better understand it and for us to better determine what the potential really is there. All I can tell you, from a mining engineer perspective, when I look at the grades and thicknesses, I'm really excited about it.

So conceptually, how do you see this project progressing over the next 3, 5 years?

Well from my perspective, next year the big focus is going to be on drilling and we're looking to kind of put our foot to the pedal in terms of our drilling programs to understand that sulfide potential. And then we're going to be focused hard on metallurgical test work, geotechnical. And that metallurgical work is going to help us determine exactly what the processing method is and then we can start working on engineering plans. So my own idea, in the next 5 years, we're going to fully understand this potential and, assuming it's as good as I think it is, we're going to be executing on that potential.

Do you see feasibility 2015, 2016, George?

I think that's definitely possible.

The next question is from Joung Park from MorningStar.

Just have 3 questions. So first, at Red Lake, how are you guys thinking about the long-term production rates at that mine once we move past 2012? Are you guys still expecting it to be in the 500,000-ounce range, like this year?

Yes, no change to the guidance and the way we answered that question last quarter. Unless and until we know more, we're suggesting that you should think about the Red Lake in that range, as a 500,000 ounce or so producer.

Okay. And then the second question is, I noticed that at Cerro Negro, you guys were able to secure all the major mechanical equipments that needed to be imported. So is Argentina being more lenient with the import restrictions that are in place earlier this year, is that what's going on?

Actually, no. Those restrictions have been quite challenging, but I think our team deserves a shout-out down there. They've worked very hard and managed that process. And we ended up having to put a team together just to manage importations much broader and more expansive than we ever thought we would because we obviously didn't know about those restrictions when we started. And they've just done a good job of managing that situation and getting the material in country.

Okay. And then you mentioned the industry-wide capital cost pressures which could lead to potential upward revisions, who knows, when you update your figures in next year. So can you kind of categorize where you're seeing the best biggest pressures? Is it labor, is it plant and equipment?

Well, I'll give my first overall impression, and it's primarily labor, and that rolls into everything else. As we have been, over the last 10 years, building more and more things throughout our sector, the availability of people, not only at the mines and at the projects but at the EPCM contractors, at the suppliers who provide our material, has been a limiting factor and a factor that's caused increasing costs. So I attribute it personally, from my experience, primarily to labor.

And I would support that. We've seen increase in steel and diesel costs but I think labor is the primary driver and of course, that's driving a lot of those other input costs as well.

The next question is from Steve Butler from Canaccord Genuity.

You'd talked about the water and tailing study at Peñasquito, comprehensive water strategy and looking to find more or find ways of reducing. Chuck, does this imply that you -- you probably haven't exhausted the alluvial source, but you're looking to maybe secure -- perhaps it's a bedrock source of water that you're looking at, exploring the opportunities around that?

It's, George, Steve. Yes, we are. We're looking to expand the alluvial well field. If I can describe it a little bit, there's about 5,100 square kilometers in Cedros Basin that we have water rights to. In less than 1% of that, we currently have wells tapping that aquifer. So there's lots of additional areas to look and we've been exploring. And we've had some success and that is going to feed into our study. We're also pumping water to dewater the pit that's coming out of bedrock and there are opportunities in the basin as well in bedrock. And then we're looking outside of the basin for other opportunities. And as you mentioned, we're looking at reducing our water consumption. So an example of something that's already underway, we started up the operation using sprinklers to leach with. And we're converting to drip, which will reduce evaporation, reduce the amount of water we need to operate. And on top of that, we're looking at other tailings modifications that are possible that will reduce our requirements. And at the end of the day, the study is all about finding the most economic solution so that we can get to our design throughput and deliver the best value to our shareholders. And that study will finish up in the first half of next year and we look forward to sharing that with you.

Okay. Can't wait. On Cerro Negro, you guys had drilled a whopping over 145,000 meters already and it looks like it's probably done for this year, October 10, you say, 421 holes. A lot of those being infill or is there any extensional? We should be thinking about inferred conversion that you'd been focusing on, the Mariana Central, Norte or San Marcos areas? I'm not sure where Charlie is on the line or you guys have any general comments about forward-looking expectations for year end. Maybe you said and the answer to it is no.

I can tell you that we're excited about our exploration groups, working on the year end reserve process for them. We do have new zones. We expect to expand the resources. And although the drilling program's finished, we are working on a regional program for the remainder of the year, and that also offers some pretty good excitement into the future. So, Steve, from my perspective, I'm pretty excited about what we've seen this year in the drilling and look forward to the guys putting out our new resource reserve statement.

And Steve, I can just say, the goal for the year at Cerro Negro was to both do a significant amount of infill drilling so that we convert both resources to reserves and potential to resources, and then also do extensional drilling. And we're just compiling all the results of that now and that's the information we'll have for you early in the year.

The next question is from Paretosh Misra from Morgan Stanley.

First, on El Morro, would it be fair to assume that spending there would be about $10 million, $15 million per quarter until you -- or while you're trying to obtain the permit?

Well, yes. I wouldn't say that's a terrible number but, again, not to be like a broken record, but we are just in the midst of our budgeting process. An this has been a fairly recent change at El Morro. I mean, up until pretty recently, these guys were blasting straight ahead and expecting to spend several hundred million dollars next year. So the change in plans in terms of what we can accomplish in the feasibility analysis and optimization work while we're waiting for this permitting process to take place is really still being designed in the budgeting process. So yes, it's going to be a much smaller number until we're are able to do something on the site. And because of the uncertainty of that, it's going to be a bit hazy for next year.

Fair enough. And can you please remind me, is there any royalty at Santa Cruz in Argentina?

Yes. And it's a 3% royalty and then-- sorry, I'm looking. Yes, there's a 3% mine mouth royalty. There's also a separate payment that we make that was a negotiated payment for corporate social responsibility in the local community.

Finally, just going back to the CapEx question from earlier, is there any item within the CapEx where you're actually seeing things are getting somewhat better or maybe at least stabilizing, maybe some kind -- any consumable, or tires or reagents, anywhere, are you seeing things getting better?

Well let me answer first and then I'll pass it to George. Certainly, we have an expectation that given the numerous projects around the world in the mining industry generally, not just the gold sector, that have been slowed down or put on hold, that, that should relieve some of the pressure on capital pricing going forward. That's a theory. It makes sense. I expect to see it but it's not as though you automatically, immediately see that. We're not buying a mill every week or every month so that we can compare the price of those things on a regular basis. But that general concept, I think, is accurate and it will happen over time. But it's not going to be immediate. George, any comments on the specifics?

Yes, I'd just add that, from an equipment point of view, we were looking at really long delivery times. We're now seeing that soften up and actually some of the equipment we were looking to is going to be delivered a bit early, which is helpful to us. And we're also seeing a little bit of softening in the steel prices. So I think like Chuck said, all indications are things are going to level off, get a bit better, and it doesn't happen immediately but I think we're going to see more of that soon.

[Operator Instructions] The next question is from Alec Kodatsky from CIBC.

Just a couple quick questions. First, on the NXT Zone, I guess you've given it a name. Have you given any more thought to potentially building that into a mine plan or how you may go about actually extracting it?

George here. Our focus right now is chasing it up plunge and down dip, as well as that 47 level development that we just started. That's going to allow us to be able to drill it on closer centers, get a better understanding on how to mine it, dilution and those sort of factors. So what I'd tell you is we're looking to have resources by the end of the year, next year expand those resources, and with the hope to have reserves maybe late next year or into the following year. And then obviously, production and development will be chasing that. So the next couple of years, you're going to see that thing grow. And our production, I think, is 1 year or 2 out.

And then next, with respect to the water study, just curious if -- just trying to get a sense for the actual motivation behind the study. How much of it would be related to Peñasquito versus the other opportunities? And I guess the other way of asking the question, if it was just Peñasquito that was under consideration, would you be going through such a comprehensive piece of work or is it really trying to unlock the potential for the other assets you have in the region?

The study would be -- the comprehensiveness of the study is all about Peñasquito right now. But given the potential we see at Camino Rojo, we need more water. So the scope of the study is no different. It's just our total expectation is much bigger given the potential at the Camino Rojo. So I guess the way I would characterize it, we need additional water beyond Peñasquito's needs and this study is going to fit right into that.

And maybe I can just give my sense of it, Alec, is, from my perspective, everything we can do to enhance the throughput of Peñasquito is being looked at right now, and that's the immediate focus. And you saw, we generated $245 million in operating earnings in one quarter. This is value that we can bring to the bottom line right now. And so that's the primary focus. And then the benefit, the side benefit, if you will, is that we'll learn more about Camino Rojo. But we're much more focused on enhancing the bird we have in the hand right now rather than the future deposit.

There are no further questions at this time. I would like to turn the meeting back over to Mr. Jeannes.

Okay. Thanks very much and thanks, everyone, for joining us today. I think you can see from today's results, our team is doing a good job of managing the operational issues that hit us in the first half of the year. At the same time, it's important to point out that our growth proposition remains intact. In fact, the first phase of that growth is now here with the startup of Pueblo Viejo, with strong growth in production targeted over the next year and beyond. So we look forward to sharing those successes with all of you in the future. And we won't have another opportunity to talk this year, so I just want to wish everyone a happy and safe holiday season and we look forward to talking to you in the new year.

The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.