Interview with Randy P. Reifel

President and Director of Chesapeake Gold Corp

and serves as a Director of Goldcorp Inc.

By Carolina Ibarra Sinclair

C - How long have you been investing in Latin American Mining?

R - Since 1989. The first place was Venezuela.

C - When did you first invest in Mexico?

R - 1993

C - Why did you choose to invest in Mexico?

R - There were two Geologists that had a company, and they started looking at mining properties. They created a database in Mexico. I sold my interest in a company that was in Venezuela in 1992. I wanted to remain in Latin America, so I looked at opportunities in Peru, which I pursued but didn’t close on anything. I was then introduced to these two geologists who had data on properties in Mexico. I agreed to team up with them and they became directors of what was then Francisco Gold.

Basically I had people who had working knowledge of how to do business in Mexico, and a portfolio of properties to begin looking at

C - Where the geologists Canadian or Mexican?

R - They were both Canadian, both fluent in Spanish and fairly senior geologists in their 40s and very capable people.

C - What kind of changes have you seen since you started investing in Mexico?

R - When we first got there, you still had to have a Mexican partner and could not own 100%. That has now changed, where a foreign entity can now own 100% of mineral properties in Mexico.

To this day, Mexico to my knowledge, is the only Latin American country that has no federal or state royalties, which is becoming more and more important because a lot of Latin American countries such as Peru and Chile are enforcing royalties after mines have gone into production, and these royalties come right off the top, so they are a big hit.

Mexico has not really changed since 1994-95 which is a good thing. It has been 13 years since, and you see more and more companies move to Mexico as a result. It is probably considered today one of the best addresses in the world to explore, just because of good mining law, and -good registration in terms of title. It is pretty clear and clean. For the most part the states are pro-mining, more to the north than to the south.

Now you are seeing a huge stampede of activity in Mexico and I think it has been a growing factor from when I started there in the mid-nineties.

I haven’t seen anything radically change which is the nice thing… it has been quite stable. There haven’t been any big surprises, certainly no unpleasant ones, and since I have been there, of course, we were successful in discovering what became Mexico’s largest gold mine. Just watching that mine go through the permitting and into production, was seemingly very efficient, quick, and was a real showcase for other people to invest in Mexico.

C - Which mine was that?

R - El Sauzal in Chihuahua State. Until last year it was the largest producing mine in Mexico.

C - Which company owns the mine?

R - It was owned by Glamis Gold, which bought it from Francisco Gold. Glamis was then bought out by Goldcorp. So, Goldcorp now owns El Sauzal.

C - Which would you say is the hardest place to do business in Mexico?

R - In the southern states. Oaxaca, Chiapas, where you don’t have quite the tradition in mining, and you have people that don’t understand the economics of mining. It is a huge education process to deal with everything from permitting, land issues, surface rights. It is a tough place. It takes a lot of time and money because of the cost of educating those people.

C - What would you say is the easiest area?

R - Northern Mexico. Chihuahua, Sonora, and Durango. Goldcorp is now putting in the biggest mine in Mexico in Zacatecas State. It is spending a billion and a half dollars there.

You have to do your homework right. I think most people have to understand that you are not able to do these things quickly because you cut corners. The standards are as rigid if not better than anything in North America. It’s just that you don’t have the environmental delays. Regarding the permitting, if you do your reports, they go through government on a fairly fast track basis, but you have to do your work. There is no easy route, but if you stay to the rout and do things to the standard necessary, permits move and you can build mines. Time is money, especially when you are spending a billion and a half dollars, you don’t want to wait five or six years to get that money spent and get through the process. There is a lot of infrastructure and a lot of big things inside and outside the mine that are required.

I personally think it is one of the best places in the world to do business with mining today.

C - How many projects are you involved in (in Mexico)?

R - Directly through Chesapeake, we’ve got 5 projects in a variety of states: Sonora, Chihuahua, Durango, Veracruz, and Oaxaca. Through Goldcorp, sitting on the board as a director, they have active mines in Durango, Guerrero, Zacatecas, and Chihuahua. Those last ones are either mines in production or soon to be (.i.e. Zacatecas where Peñasquito is, which is a big big mine slated for full production in 2009).

C - How do you visualize the future for the mining industry in Mexico, from a foreign investor’s perspective?

R - I think it is getting more and more attention and becoming more and more popular because of recent events such as the shutting down of mining by the presidents of Venezuela and Ecuador. When you invest in mining, and especially, in production, you are talking 10-20 year mine lives. So if you are putting up that kind of capital in that time frame you have to feel pretty good going in to it. That is once you start producing, that doesn’t account for the time it takes to set up a mine, so, you have to feel very comfortable about operating in a jurisdiction where you have got a 10 to 20 year mine life without any government intervention.

[This is why] Mexico is becoming more and more preferred as a place to do business. Going forward I think it looks better today than it did yesterday, if only because other countries in Latin America are becoming less popular and people are pulling out. It is a pretty short list now, you know, you don’t want to be in Colombia, Bolivia, Honduras has shut down mining, you are not going to go to Costa Rica, so it is a pretty small list. The nice thing about Mexico is that it is a huge country.

The big nock on Mexico for years was that there were no big mines. That is why you didn’t see any big mining companies. That has all changed now. In the last ten years you have gotten 20 million ounce deposits discovered in Mexico. That is another reason companies, big and small are investing in Mexico, because you can get the world class elephant mines. Case in point is Goldcorp putting in Peñasquito, and Chesapeake has Metates. These are, by anybody’s standard worldwide; within the top ten in the world (deposit size). I think Mexico is going to look better, even if they don’t change anything, by virtue of competing with countries in Latin America where people are withdrawing. I mean, where are they going to go? They are not going to go to Africa, in China there have been some bad experiences, Russia is tough to do business in. So, you have a pretty short list of places where you want to invest given the time horizon we are talking about for long life mines.

C - Thank you for your time.

After the end of the interview, during a more informal conversation, Mr. Reifel commented on the extent of infrastructure that long life mines invest in communities. He noted that the mining companies survey the communities where the mines will be placed to see what the needs are, and also negotiate with community leaders in this regard. He mentioned that the mines may build roads, sanitary installations, hospitals (in some cases staff the hospitals and pay the staff’s salaries), etc. Their budgets also contemplate the cost of reclaiming the mined land. He noted their goal is to do things from start to finish in a way that will allow them to show case what they have done in one community, so that they will be welcomed by other communities.

Mr. Reifel also mentioned he expects Mexico will, in the future, introduce a percentage of royalties. Even in this case, he feels, Mexico would still be one of the best choices to invest in mining compared with the countries mentioned above.