Victor Webb, President of Marston Webb International, recently commented that "Rob McEwen, who lately retired as Chairman of Goldcorp, is now very much back in the saddle with his firm, McEwen Capital and U.S. Gold. He is both an investor and a miner.

Interestingly, he has appointed a woman, Ann Carpenter, President and CEO of his company. She is one of the few women to be appointed to the top of a highly visible gold exploration company like U.S. Gold. Rob also appointed two other women to his board, Michele Ashby and Leanne Baker."

Rob McEwen, to purchase up to 1,250,000 shares in Coral Gold Resources Ltd., becomes a Director and Executive Chairman of the Board.

Robert R. McEwen, upon closing, will hold just under 20 per cent of the outstanding shares. The net proceeds of the offering will be used for additional exploration and development work on the company's mining properties, and for general working capital requirements. The above transactions will be subject to regulatory approval

Interview with Rob McEwen when he was Chairman of Goldcorp

We met with Rob McEwen at the 2004 New York Institutional Gold Conference as it was being held at the Marriott Marquis, a luxurious hotel in the center of Times Square. Victor Webb, president of Marston Webb International, arranged the meeting. Rob was kind enough to sit with us and share some of the innovative ideas he used to steer Goldcorp from a struggling gold enterprise to a world-class endeavor boasting 99 million dollars in earnings for 2003.

Throughout the history of mining and manufacturing, fluctuating business conditions have hurt or destroyed many companies. In dark times, it is easy to blame failure on fate, and give up hope. But after a brief discussion with Rob McEwen, we saw that an innovative, tough and confident leader can solve even the most daunting business crisis. During our conversation, Rob explained how he used a 46 month long strike as an opportunity to reinvent Goldcorp’s mission, and how Linux led to an inspired discovery of six million ounces of gold.

From the age of twelve, under the guidance of his father, Rob began investing in the market. This early exposure to the gold business and his MBA training from Schlich School of Business, York University, Toronto, Canada and a BA from the University of Western Ontario, London, Ontario may account for his intuitive understanding of the industry, and it’s often perplexing, yet cyclic nature. As the President of Goldcorp, Rob has a reputation for being tough. Rob told us about a board meeting he held where the manager of one of his companies, a limestone mine, complained that he felt like “The Maytag Man.” Rob said, “You mean that guy with the cobwebs all over him? Why do you feel like that?”
“I have nothing to do.” Rob recalled the manager saying. “You mean to say that you are running a multi-million dollar operation and see no possible improvements in productivity, pricing, research or management?” Rob asked.
“Nope.” Replied the Manager.
“Then I suggest that you walk out that door and never come back, because your job is over.”
McEwen then spoke with the remaining management of the limestone operation, encouraging them to think critically about their operation and see how it could be improved, and saw it grow into a dynamic, innovative and involved culture. Many leaders are tough, but what struck us is how deeply Rob McEwen is committed to innovation and new ways of thinking in both technical pursuits and management.

As a manager, Rob constantly challenges his employees to be receptive to new ideas, and to embrace change. These complimentary attributes have made Goldcorp the flagship of gold companies, and have contributed to the revitalization of the entire industry. During the gold slump of the 90’s, McEwen was faced with a series of obstacles that many considered insurmountable.

In 1996, the US Steelworkers, one of the world’s most powerful unions, went on strike at Goldcorp’s Red Lake Mine. The price of gold was readily dropping and the operation was already struggling with unfeasible production costs of $360.00 an ounce. The 180 strikers, who were essential to the operation, were asking for higher wages. These problems critically hindered Goldcorp and hung over the future of the company like a dark cloud.

As the negotiations began, Rob addressed a large group of disgruntled employees and tried to bring the message home for them. “I told the group that our number one priority as a company was to make money, and then to share the money.” Rob recalled. “After my speech, an employee came up to me and said, ‘That was a pretty brave statement you just made that making money was the number one priority.’” This would set the tone for a grueling 46-month strike between union workers and management. Instead of giving employees higher wages, which would destroy Goldcorp as a business, McEwen offered to involve the employees in the company with stock options and training. The Union was not interested in these concessions.

Meanwhile, Rob, put tens of millions of dollars into exploration around his property. In a manufacturing setting, this would be similar to a company focusing on research and development during a strike. This strategy paid off as Red Lake geologists discovered more gold and significantly increased the size of the deposit. Some of the gold was found in unexpected locations. Many of these new deposits were far less costly to mine and required fewer workers. Despite the continuing strike, these new proven and probable reserves garnered more capital from the investment community. As the strike wore on, Rob challenged his management team to “Create Our Future.” In blue-sky sessions, he urged his people to find new directions for the company. Although there were occasional doubts from his men, “The union will never agree to this,” they rewrote the company’s mission, and came up with many new ideas.

After 46 months, and a death threat, McEwen offered the union a bold final settlement. He outlined the ever-declining price of gold, the new, less labor-intensive gold deposits, and his management's new vision for the company. Red Lake now only needed a fraction of the workforce (45 workers from 180) to return, after training and testing. The terms of the agreement included stock options for the workers, higher training, and a serious stake in the future of the company. The union, if they were to agree to the terms of the agreement, would set a new standard by which all their other agreements could be judged. In a surprising twist, The US Steelworkers pulled out of Goldcorp, and soon found themselves in a fight with Goldcorp’s workers, for taking away the Strike Pay.

McEwen’s Red Lake Mine is one of the few non-union gold operations in all of Canada. McEwen turned obstacles into stepping-stones to greater success. His employees were more deeply committed to the welfare of the company, and the production costs had dropped to $80.00 per ounce, and the price of gold rose. Goldcorp’s market capitalization has grown from $50 million to $2.7 billion and Goldcorp’s share price has increased 32% compound annual growth rate since Rob started restructuring Goldcorp in 1993. Goldcorp’s success has been credited by many in the industry for contributing to the revitalization of the mining industry in Canada and abroad. Perhaps Rob McEwen could have felt like the Maytag man himself, at the top of the heap, with the richest gold mine in the world, but that is not in Rob’s character.

At a seminar at MIT, a discussion about Linux, the free, open source code-operating platform that is challenging Microsoft’s Windows, inspired Rob. After the seminar, Rob proposed an Internet challenge to the geologists of the world. He posted the previously confidential geological information on the Red Lake mine, including maps and 3D models. He then asked the question, “Where will we find our next 6 million ounces?” and offered prizes totaling half a million dollars for the winners. In less than a year, two competing Australian consulting firms were awarded first prize. Through this contest Goldcorp was rewarded with a richer future.

For his ability to innovate and lead, Metals News is proud to have Rob McEwen be the first CEO featured in our leadership spotlight.
Next month we turn our spotlight on Michael Schwartzkopf, the brilliant third generation leader of the world class Austrian Refractory Metals Giant, PLANSEE.

For those not fortunate enough to attend, we have included highlights from Rob McEwen’s Speech to the IIGC.

The Red Lake Mine is considered to be the richest gold mine in the world! In terms of production cost, it produces gold at a very low cost of $80 per ounce. It is world class. Goldcorp’s gross margin for three months ended March 31, 2004 was 68%, net profit margin 36%, ROE, ROIC 14%. In 2003 gold production at Red Lake was 532,028oz. @ $80/ oz. Compared to Canada’s 800 largest, Goldcorp ranks third profit margin, fourteenth ROIC, and twenty-seventh in ROE”

In the last 4 years, after the discovery and development of the high-grade zone, the mine has produced 1.85 million ounces. The mine is on track to produce five million more ounces by 2012.”

Goldcorp has the first on-site mining virtual reality lab in the world. The recent success of the mine is attributable to hard work, critical thinking, innovative mining methods and new technologies.

Since late 2001, Goldcorp has been withholding a portion of the gold production from sale. Currently Goldcorp is withholding one third of its’ gold based on the belief that gold is going higher over the next six years.

The company is in excellent financial condition. It has no debt, a large treasury and strong cash flow and earnings. Goldcorp is completely unhedged and pays a dividend twelve times a year. Goldcorp’s shares are listed on the New York and Toronto Stock Exchanges under the trading symbols of GG and G, respectively.

In the last three years Rob McEwen has donated 14 million dollars Canadian to three hospitals, a university, museums and a church. He wants to share his success with others in a way that will improve people’s lives. Rob has used his uncommon perception and judgment to endow a medical research project that has the potential to relieve the suffering of possibly billions of people in the future. We admire his philanthropy so much that we are going to include a separate article on this research project.