Brenda Bouw

Globe and Mail Update

18:36 EDT Wednesday, June 16, 2010

Vancouver — Kevin McArthur was 53 when he retired as chief executive officer of Goldcorp Inc. , two years after it merged with Glamis Gold. But after a year on the golf course, the third-generation miner could not rid the business from his blood. Mr. McArthur, now 55, made his official comeback this month with the public debut of his new silver company, Tahoe Resources Inc.

Why did you retire from Goldcorp at the end of 2008?

At the end of the day I didn’t feel that I was adding value any more. I am a mining engineer and worked very hard building shareholder value, finding tip-of-the-iceberg assets, permitting, getting feasibility studies done and building mines and creating value the old-fashioned way. Not that I couldn’t do that at Goldcorp, but as the company gets larger and larger it’s that much more difficult to move the needle and it becomes a difficult job. I knew I wasn’t wired to do the job of running a $30-billion company and I had some personal issues that built up over a period of time. I just knew it was time to move on.

Did you really think you were going retire?

I seriously did. Let’s put it this way, I’ve made enough money where I don’t need to work any more. We were going to move up to our place at Lake Tahoe. I joined a few boards and have done some charity work. I was very active and busy, but the old mining business just kept calling. It became apparent I was too young to be on the golf course every day. [Around the end of 2009] I formed a private company and started looking for assets. We have a little cabin on Lake Tahoe, so I thought that would be nice. Tahoe Resources sounded good.

Why did you choose to buy the Escobal deposit in Guatemala from Goldcorp as Tahoe’s first asset?

I actually knocked on Goldcorp’s door and talked to [current Goldcorp CEO] Chuck Jeannes about this opportunity, because I remember this discovery made by Goldcorp in 2007 that was a silver asset. Back when I was CEO, I knew a process had started, but I never really knew where it went. We went down and visited and gathered up the cost information. The more we saw, the more we liked. We knew it had growth potential. That is the key for me. Tip of the iceberg. Goldcorp knew it had growth potential too, that is why they insisted on holding a big portion of the shares of the new company. They own 40 per cent of the company now.

How big do you want Tahoe to grow?

I used to say at Glamis that if we ever get to the point where we’re producing a million ounces per year I’m out because, once again, you can’t move the needle any more. It becomes that big company again. I guess I am almost calling my exit point. I don’t mean to, but I believe, as the saying goes, it’s not about the destination, it’s about the journey. We are going to focus first of all on building Escobal. The first step is drill, drill, drill … Then some day we are going to look for mine No. 2.

What was it like negotiating with Mr. Jeannes, considering you were once his boss? Did he use what you taught him against you in the deal process?

I learned a lot from him, maybe I used that against him. I think it was a two-way street. It was interesting, but Chuck actually stayed away from most of the negotiations because we do have a history … There was no sweetheart deal. I can tell that you we came to body blows a couple times (not literally) during the negotiation. It was a rough negotiation. I made a joke when we first looked at the property, I told Chuck’s team that I was willing to pay $30-million for their project.

They laughed and said “No. We want $500-million.” We all chuckled because those were ridiculous numbers, and in the end we paid $505-million. It could be perceived that I’ve overpaid, but a couple [of] things happened along the way. The drilling was continuing and they hit some very good stones of depth with some very good grades. They revised their scoping study and their resources numbers, it got much larger very quickly. That was the catalyst to drive me to pay actually more than they had asked in that original meeting.