##### 



Exhibit
3
 Managements Responsibility for Financial Reporting
    /s/ Kevin McArthur
    
    /s/ Lindsay HallKevin McArthur
    
    Lindsay HallPresident and Chief Executive Officer
    
    Executive Vice President and
Chief Financial OfficerVancouver, CanadaMarch 26, 2007
 Report of Independent Registered Chartered Accountants
        Internal Control  Integrated
Framework




---



##### 



Report Of Independent Registered Public Accounting Firm
     
  (except as to Note 20 which is as of March 9, 2007)




---



##### 



Managements Report on Internal Control Over Financial Reporting
  (i)
    
    pertain to the maintenance of records that accurately and fairly reflect, in
reasonable detail, the transactions related to and dispositions of Goldcorps
assets;(ii)
    
    provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and Goldcorp receipts and expenditures are made only in
accordance with authorizations of management and Goldcorps directors;(iii)
    
    provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of Goldcorp assets that could have a
material effect on Goldcorps financial statements.
   Internal Control  Integrated Framework
  /s/ Kevin McArthur
    
    /s/ Lindsay HallKevin McArthur
    
    Lindsay HallPresident & Chief Executive Officer
    
    Executive Vice President & Chief Financial OfficerVancouver, CanadaMarch 26, 2007




---



##### 



Report of Independent Registered Chartered Accountants
  Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework Internal ControlIntegrated Framework




---



##### 



Consolidated Statements of Earnings  Years Ended December 31
 Note
    
    
    2006
    
    
    2005
    
    
    2004Revenues
    
    
    
    
    
    $
    1,710.0
    
    
    $
    896.4
    
    
    $
    191.0Operating expenses
    
    
    
    
    
    
    643.8
    
    
    
    304.0
    
    
    
    66.6Depreciation and depletion
    
    
    
    
    
    
    324.2
    
    
    
    135.3
    
    
    
    21.4Earnings from mine operations
    
    
    
    
    
    
    742.0
    
    
    
    457.1
    
    
    
    103.0Corporate administration1
    
    
    
    
    
    
    83.0
    
    
    
    43.9
    
    
    
    15.5Exploration
    
    
    
    
    
    
    29.0
    
    
    
    8.0
    
    
    
    6.7Write-down of mineral interests
    
    
    6 (e)
    
    
    174.7
    
    
    
    
    
    
    
    Earnings from operations
    
    
    
    
    
    
    455.3
    
    
    
    405.2
    
    
    
    80.8Other income (expense)Interest and other income
    
    
    
    
    
    
    18.3
    
    
    
    9.2
    
    
    
    9.3Interest expense and finance fees
    
    
    
    
    
    
    (44.8
    )
    
    
    0.1
    
    
    
    0.1Gain on foreign exchange
    
    
    
    
    
    
    5.3
    
    
    
    0.5
    
    
    
    0.2Non-hedge derivative loss
    
    
    11
    
    
    (4.1
    )
    
    
    
    
    
    
    (Loss) gain on marketable securities, net
    
    
    
    
    
    
    (5.0
    )
    
    
    10.2
    
    
    
    (9.0
    )Gain on sale of shares in subsidiary
    
    
    13 (a)
    
    
    109.8
    
    
    
    
    
    
    
    Dilution gains
    
    
    13(a) &
    (b)
    
    
    63.8
    
    
    
    18.7
    
    
    
    Other expenses
    
    
    
    
    
    
    
    
    
    
    (3.6
    )
    
    
    143.3
    
    
    
    35.1
    
    
    
    0.6Earnings before taxes and non-controlling interests
    
    
    
    
    
    
    598.6
    
    
    
    440.3
    
    
    
    81.4Income and mining taxes
    
    
    9
    
    
    154.5
    
    
    
    142.4
    
    
    
    30.1Non-controlling interests
    
    
    13
    
    
    
    35.8
    
    
    
    12.2
    
    
    
    Net earnings
    
    
    
    
    
    $
    408.3
    
    
    $
    285.7
    
    
    $
    51.31Stock option expense (a non-cash item) included in Corporate administration
    
    
    14(b) &
    (c)
    
    $
    22.7
    
    
    $
    13.9
    
    
    $
    5.1Earnings per shareBasic
    
    
    
    
    
    $
    0.94
    
    
    $
    0.91
    
    
    $
    0.27Diluted
    
    
    14 (d)
    
    
    0.93
    
    
    
    0.83
    
    
    
    0.27Weighted-average number of shares outstanding(in thousands)Basic
    
    
    
    
    
    
    435,189
    
    
    
    314,292
    
    
    
    189,723Diluted
    
    
    14 (d)
    
    
    441,264
    
    
    
    345,394
    
    
    
    193,685




---



##### 



Consolidated Balance Sheets  At December 31
 Note
    
    
    2006
    
    
    2005AssetsCurrentCash and cash equivalents
    
    
    
    
    
    $
    555.2
    
    
    $
    562.2Restricted cash
    
    
    4
    
    
    
    65.0
    
    
    
    Marketable securities (market value: $27.0 million; 2005  $16.1 million)
    
    
    
    
    
    
    14.9
    
    
    
    11.3Accounts receivable
    
    
    
    
    
    
    67.0
    
    
    
    75.1Income and mining taxes receivable
    
    
    
    
    
    
    
    
    
    
    2.8Future income and mining taxes
    
    
    9
    
    
    
    20.7
    
    
    
    26.6Inventories and stockpiled ore
    
    
    5
    
    
    
    146.5
    
    
    
    71.0Other
    
    
    
    
    
    
    14.1
    
    
    
    17.2883.4
    
    
    
    766.2Mining interests
    
    
    6
    
    
    
    15,128.8
    
    
    
    2,980.8Goodwill
    
    
    6
    
    
    
    1,340.2
    
    
    
    142.7Silver purchase arrangements
    
    
    7
    
    
    
    346.5
    
    
    
    74.6Stockpiled ore
    
    
    5
    
    
    
    75.7
    
    
    
    57.3Long-term investments (market value: $190.9 million; 2005  $41.1 million)
    
    
    
    
    
    
    134.0
    
    
    
    33.5Other
    
    
    8
    
    
    
    57.3
    
    
    
    10.9$
    17,965.9
    
    
    $
    4,066.0LiabilitiesCurrentAccounts payable, accrued liabilities and other
    
    
    
    
    
    $
    228.9
    
    
    $
    97.5Income and mining taxes payable
    
    
    
    
    
    
    101.7
    
    
    
    93.3Current portion of long-term debt
    
    
    10
    
    
    
    135.0
    
    
    
    465.6
    
    
    
    190.8Derivative instrument liability
    
    
    11
    
    
    
    6.1
    
    
    
    Future income and mining taxes
    
    
    9
    
    
    
    3,615.8
    
    
    
    728.1Long-term debt
    
    
    10
    
    
    
    790.0
    
    
    
    Reclamation and closure cost obligations
    
    
    12
    
    
    
    226.2
    
    
    
    57.7Income and mining taxes payable
    
    
    
    
    
    
    19.5
    
    
    
    Other
    
    
    
    
    
    
    13.2
    
    
    
    7.05,136.4
    
    
    
    983.6Non-controlling interests
    
    
    13
    
    
    
    354.5
    
    
    
    108.6Shareholders EquityCommon shares, share purchase warrants, and stock options
    
    
    14
    
    
    
    11,825.8
    
    
    
    2,653.8Cumulative translation adjustment
    
    
    
    
    
    
    101.9
    
    
    
    101.9Retained earnings
    
    
    
    
    
    
    547.3
    
    
    
    218.112,475.0
    
    
    
    2,973.8$
    17,965.9
    
    
    $
    4,066.0
 (note 18)  (note 201)
 Approved by the board:Kevin McArthur
    
    Ian TelferDirector
    
    Director




---



##### 



Consolidated Statements of Cash Flows  Years Ended December 31
 Note
    
    
    2006
    
    
    2005
    
    
    2004Operating ActivitiesNet earnings
    
    
    
    
    
    $
    408.3
    
    
    $
    285.7
    
    
    $
    51.3Reclamation expenditures
    
    
    12
    
    
    (7.3
    )
    
    
    (3.6
    )
    
    
    (0.7
    )Items not affecting cash
    
    
    
    
    
    
    324.2
    
    
    
    135.3
    
    
    
    21.4Depreciation and depletionNon-hedge derivative loss
    
    
    11
    
    
    4.1
    
    
    
    
    
    
    
    Loss (gain) on marketable securities, net
    
    
    
    
    
    
    5.0
    
    
    
    (10.2
    )
    
    
    9.0Gain on sale of shares in subsidiary
    
    
    13 (a)
    
    
    (109.8
    )
    
    
    
    
    
    
    Future income and mining taxes
    
    
    9
    
    
    (67.9
    )
    
    
    7.1
    
    
    
    18.6Stock option expense
    
    
    14(b) & (c)
    
    
    22.7
    
    
    
    13.9
    
    
    
    5.1Non-controlling interests
    
    
    13
    
    
    35.8
    
    
    
    12.2
    
    
    
    Dilution gains
    
    
    13(a) & (b)
    
    
    (63.8
    )
    
    
    (18.7
    )
    
    
    Write-down of mining interests
    
    
    6 (e)
    
    
    174.7
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    (0.3
    )
    
    
    (2.9
    )
    
    
    (2.9
    )Change in non-cash working capital
    
    
    15
    
    
    65.6
    
    
    
    47.0
    
    
    
    (48.7
    )Cash provided by operating activities
    
    
    
    
    
    
    791.3
    
    
    
    465.8
    
    
    
    53.1Investing ActivitiesMining interests
    
    
    
    
    
    
    (474.5
    )
    
    
    (277.5
    )
    
    
    (56.1
    )Acquisitions, net of cash acquired
    
    
    15
    
    
    (1,549.2
    )
    
    
    62.4
    
    
    
    Silver purchase arrangements
    
    
    7 (a)
    
    
    (285.3
    )
    
    
    
    
    
    
    Purchase of marketable securities
    
    
    
    
    
    
    
    
    
    
    (8.2
    )
    
    
    (22.6
    )Proceeds on sale of marketable securities
    
    
    
    
    
    
    7.8
    
    
    
    36.0
    
    
    
    4.6Proceeds on sale of shares in subsidiary
    
    
    
    
    
    
    189.0
    
    
    
    
    
    
    
    Purchase of long-term investments
    
    
    
    
    
    
    (98.9
    )
    
    
    (33.6
    )
    
    
    Increase in restricted cash
    
    
    4
    
    
    (65.0
    )
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    (0.8
    )
    
    
    
    
    
    
    1.0Cash used in investing activities
    
    
    
    
    
    
    (2,276.9
    )
    
    
    (220.9
    )
    
    
    (73.1
    )Financing ActivitiesLong-term debt borrowings
    
    
    
    
    
    
    1,465.0
    
    
    
    
    
    
    
    Long-term debt repayments
    
    
    
    
    
    
    (620.0
    )
    
    
    
    
    
    
    Common shares issued, net
    
    
    
    
    
    
    527.5
    
    
    
    44.0
    
    
    
    3.5Dividends paid to common shareholders
    
    
    
    
    
    
    (79.1
    )
    
    
    (151.0
    )
    
    
    (53.1
    )Shares issued by subsidiaries to non-controlling interests
    
    
    
    
    
    
    185.0
    
    
    
    86.7
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    Cash provided by (used in) financing activities
    
    
    
    
    
    
    1,478.4
    
    
    
    (21.5
    )
    
    
    (49.6
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    0.2
    
    
    
    5.4
    
    
    
    24.0(Decrease) increase in cash and cash equivalents
    
    
    
    
    
    
    (7.0
    )
    
    
    228.8
    
    
    
    (45.6
    )Cash and cash equivalents, beginning of year
    
    
    
    
    
    
    562.2
    
    
    
    333.4
    
    
    
    379.0Cash and cash equivalents, end of year
    
    
    
    
    
    $
    555.2
    
    
    $
    562.2
    
    
    $
    333.4Cash and cash equivalents is comprised of:Cash
    
    
    
    
    
    $
    178.3
    
    
    $
    17.7
    
    
    $
    7.5Short-term money market investments
    
    
    
    
    
    
    376.9
    
    
    
    544.5
    
    
    
    325.9$
    555.2
    
    
    $
    562.2
    
    
    $
    333.4
 (note 15)




---



##### 



Consolidated Statements of Shareholders Equity
  Share
    
    
    
    
    
    
    CumulativeCommon Shares
    
    
    Purchase
    
    
    Stock
    
    
    Translation
    
    
    RetainedShares
    
    
    Amount
    
    
    Warrants
    
    
    Options
    
    
    Adjustment
    
    
    Earnings
    
    
    TotalAt January 1, 2004
    
    
    189,274
    
    
    $
    359.7
    
    
    $
    16.1
    
    
    $
    2.3
    
    
    $
    66.3
    
    
    $
    63.4
    
    
    $
    507.8Stock options exercised
    
    
    706
    
    
    
    3.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.6Fair value of stock options
issued and vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    
    
    
    
    
    
    
    
    5.0Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31.3
    )
    
    
    (31.3
    )Unrealized gain on translation
of non-US dollar denominated
accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41.4
    
    
    
    
    
    
    
    41.4Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51.3
    
    
    
    51.3At December 31, 2004
    
    
    189,980
    
    
    
    363.3
    
    
    
    16.1
    
    
    
    7.3
    
    
    
    107.7
    
    
    
    83.4
    
    
    
    577.8Issued pursuant to Wheaton
acquisition (note 3(d))
    
    
    143,771
    
    
    
    1,887.4
    
    
    
    290.8
    
    
    
    30.8
    
    
    
    
    
    
    
    
    
    
    
    2,209.0Stock options exercised and
restricted share units
issued/cancelled
    
    
    2,556
    
    
    
    32.2
    
    
    
    
    
    
    
    (7.6
    )
    
    
    
    
    
    
    
    
    
    
    24.6Share purchase warrants exercised
    
    
    3,335
    
    
    
    39.8
    
    
    
    (20.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.7Fair value of stock options
issued and vested, and
restricted share units vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14.0
    
    
    
    
    
    
    
    
    
    
    
    14.0Share issue costs
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (151.0
    )
    
    
    (151.0
    )Unrealized loss on translation
of non-US dollar denominated
accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.8
    )
    
    
    
    
    
    
    (5.8
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285.7
    
    
    
    285.7At December 31, 2005
    
    
    339,642
    
    
    
    2,322.5
    
    
    
    286.8
    
    
    
    44.5
    
    
    
    101.9
    
    
    
    218.1
    
    
    
    2,973.8Issued pursuant to acquisition
of Glamis Gold Ltd (note 3(a))
    
    
    283,578
    
    
    
    8,140.4
    
    
    
    
    
    
    
    82.1
    
    
    
    
    
    
    
    
    
    
    
    8,222.5Issued pursuant to acquisition
of Virginia Gold Mines Inc (note
3(c))
    
    
    19,310
    
    
    
    398.3
    
    
    
    3.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    401.9Stock options exercised/
cancelled and restricted share
units issued
    
    
    6,523
    
    
    
    96.4
    
    
    
    
    
    
    
    (24.9
    )
    
    
    
    
    
    
    
    
    
    
    71.5Share purchase warrants exercised
    
    
    54,472
    
    
    
    748.5
    
    
    
    (287.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461.3Fair value of new warrants issued
    
    
    
    
    
    
    (38.9
    )
    
    
    38.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value of stock options
issued and vested, and
restricted share units issued
and vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18.5
    
    
    
    
    
    
    
    
    
    
    
    18.5Share issue costs
    
    
    
    
    
    
    (3.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.7
    )Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79.1
    )
    
    
    (79.1
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    408.3
    
    
    
    408.3At December 31, 2006
    
    
    703,525
    
    
    $
    11,663.5
    
    
    $
    42.1
    
    
    $
    120.2
    
    
    $
    101.9
    
    
    $
    547.3
    
    
    $
    12,475.0
 (note 14)




---



##### 



Notes to the Consolidated Financial Statements  Years Ended December 31, 2006, 2005 and 2004
  1.
    
    DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONSGoldcorp Inc (Goldcorp or the Company) is a leading gold producer engaged in gold mining
and related activities including exploration, extraction, processing and reclamation.The Companys assets are comprised of the Red Lake, Porcupine (51% interest) and Musselwhite
(68% interest) gold mines in Canada, the Alumbrera gold/copper mine (37.5% interest) in
Argentina, the El Sauzal gold mine and Luismin gold/silver mines in Mexico, the Marlin
gold/silver mine in Guatemala, the Amapari gold mine in Brazil, the La Coipa gold/silver mine
(50% interest) in Chile, the San Martin gold mine in Honduras, the Peak gold mine in Australia
and the Wharf and Marigold (67% interest) gold mines in the United States. Significant
development projects include the expansion of the existing Red Lake mine, the Los Filos gold
project and Peñasquito gold/silver projects in Mexico, the Éléonore gold project in Canada, the
Pueblo Viejo gold project (40% interest) in the Dominican Republic, and the Cerro Blanco gold
project in Guatemala. Goldcorp also owns a 49% interest in Silver Wheaton Corp, a publicly
traded silver mining company and a 77% interest in Terrane Metals Corp (Terrane), a publicly
traded exploration company.




---



##### 



2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThese consolidated financial statements have been prepared by the Company in accordance with
Canadian generally accepted accounting principles (Canadian GAAP) using the following
significant accounting policies.
 (a) Basis of presentation and principles of consolidation
  Ownership
    
    
    
    Operations andMining properties
    
    Location
    
    interest
    
    Status
    
    development projects ownedRed Lake mine (Red Lake)(1)
    
    Canada
    
    
    100
    %
    
    Consolidated
    
    Red Lake and Campbell complexesPorcupine Joint Venture (Porcupine)(1)
    
    Canada
    
    
    51
    %
    
    Proportionately
consolidated
    
    Porcupine mine,
unincorporated joint ventureMusselwhite mine (Musselwhite)(1)
    
    Canada
    
    
    68
    %
    
    Proportionately
consolidated
    
    Musselwhite mine,
unincorporated joint ventureLes Mines Opinaca Ltée (Éléonore)(2)
    
    Canada
    
    
    100
    %
    
    Consolidated
    
    Éléonore gold projectSilver Wheaton Corp (Silver Wheaton)(3)(4)
    
    Canada
    
    
    49
    %
    
    Consolidated
    
    Silver contracts in Mexico,
Sweden and PeruTerrane Metals Corp (Terrane)(5)
    
    Canada
    
    
    77
    %
    
    Consolidated
    
    Mt Milligan and certain other
Canadian exploration interestsWharf gold mine (Wharf)
    
    United States
    
    
    100
    %
    
    Consolidated
    
    Wharf mineMarigold Mining Company (Marigold)(6)
    
    United States
    
    
    66.7
    %
    
    Proportionately
consolidated
    
    Marigold mine, unincorporated
joint ventureDominicana Corporation (Pueblo Viejo)(1)
    
    Dominican
Republic
    
    
    40
    %
    
    Equity investment
    
    Pueblo Viejo gold projectLuismin SA de CV (Luismin)(3)
    
    Mexico
    
    
    100
    %
    
    Consolidated, except
for El Limón which
is an equity
investment
    
    San Dimas, San Martin and
Nukay mines, Los Filos and El
Limón gold projectsMinas de la Alta Primeria SA de CV (El Sauzal)(6)
    
    Mexico
    
    
    100
    %
    
    Consolidated
    
    El Sauzal mineMinera Peñasquito SA de CV (Peñasquito)(6)
    
    Mexico
    
    
    100
    %
    
    Consolidated
    
    Peñasquito projectMinera Alumbrera Ltd (Alumbrera)(3)
    
    Argentina
    
    
    37.5
    %
    
    Proportionately
consolidated
    
    Alumbrera mine,
incorporated joint ventureMontana Explorations de Guatemala SA
(Marlin)(6)
    
    Guatemala
    
    
    100
    %
    
    Consolidated
    
    Marlin mineEntra Mares de Guatemala SA (Cerro Blanco)(6)
    
    Guatemala
    
    
    100
    %
    
    Consolidated
    
    Cerro Blanco projectMinerales Entra Mares de Honduras SA
(San Martin)(6)
    
    Honduras
    
    
    100
    %
    
    Consolidated
    
    San Martin mineMineraçao Pedra Branca do Amapari Ltda (Amapari)(3)
    
    Brazil
    
    
    100
    %
    
    Consolidated
    
    Amapari mineCompania Minera Mantos de Oro (La Coipa)(1)
    
    Chile
    
    
    50
    %
    
    Proportionately
consolidated
    
    La Coipa mine,
incorporated joint venturePeak Gold Mines Pty Ltd (Peak)(3)
    
    Australia
    
    
    100
    %
    
    Consolidated
    
    Peak mine
 
 (1)
    
    The results of Goldcorp include the Placer Dome assets acquired
from Barrick from May 12, 2006 onward (note 3(b)).(2)
    
    The results of Goldcorp include Éléonore from March 31, 2006, the
date of acquisition, onward (note 3(c)).(3)
    
    The results of Goldcorp include an 82% interest in the
subsidiaries and investments of Wheaton from February 15 to April 15, 2005
and 100% thereafter (note 3(d)).(4)
    
    Goldcorps interest in Silver Wheaton has been diluted to 49% upon
the issuance of equity by Silver Wheaton to non-controlling interests and the
sale of Silver Wheaton common shares on December 8, 2006 (note 13(a)).(5)
    
    The results of Terrane have been consolidated from July 24, 2006,
the date of acquisition (note 13(b)).(6)
    
    The results of Goldcorp include Glamis from November 4, 2006, the
date of acquisition, onward (note 3(a)).




---



##### 



subordinated financial support. VIEs are subject to consolidation by the primary beneficiary
who will absorb the majority of the entities expected losses and/or expected residual
returns. The Company has determined that none of its equity investments qualify as VIEs.(b)
    
    Use of estimatesThe preparation of consolidated financial statements in conformity with Canadian GAAP
requires the Companys management to make estimates and assumptions about future events that
affect the amounts reported in the consolidated financial statements and related notes to the
financial statements. Actual results may differ from those estimates.Significant estimates used in the preparation of these consolidated financial statements
include, but are not limited to, the recoverability of accounts receivable and investments,
the quantities of material on leach pads and in circuit, the proven and probable ore reserves
and resources and the related depletion and amortization, the estimated tonnes of waste
material to be mined and the estimated recoverable tonnes of ore from each mine area, the
estimated net realizable value of inventories, the accounting for stock-based compensation,
the provision for income and mining taxes and composition of future income and mining tax
assets and liabilities, the expected economic lives of and the estimated future operating
results and net cash flows from mining interests, the anticipated costs of reclamation and
closure cost obligations, and the fair value of assets and liabilities acquired in business
combinations.(c)
    
    Revenue recognitionRevenue from the sale of metals is recognized in the accounts when persuasive evidence of an
arrangement exists, title and risk passes to the buyer, collection is reasonably assured and
the price is reasonably determinable. Revenue from the sale of metals in concentrate may be
subject to adjustment upon final settlement of estimated metal prices, weights and assays.
Adjustments to revenue for metal prices are recorded monthly and other adjustments are
recorded on final settlement. Refining and treatment charges are netted against revenue for
sales of metal concentrate.(d)
    
    Investment in joint venturesThe Company conducts a portion of its business through joint ventures under which the joint
venture participants are bound by contractual agreements establishing joint control over the
venturers. The Company records its proportionate share of assets, liabilities, revenue and
operating costs of the joint ventures.(e)
    
    Cash and cash equivalentsCash and cash equivalents include cash, and those short-term money market instruments that
are readily convertible to cash with an original term of less than 90 days.(f)
    
    Marketable securitiesMarketable securities are carried at the lower of cost or market value.(g)
    
    Inventories and stockpiled oreFinished goods, work-in-process, heap leach ore and stockpiled ore are valued at the lower of
average production cost or net realizable value. Production costs include the cost of raw
materials, direct labor, mine-site overhead expenses and depreciation and depletion of mining
interests. Supplies are valued at the lower of average cost or replacement cost.The recovery of gold from certain oxide ores is achieved through the heap leaching process
used at certain of the Companys mines. Under this method, ore is placed on leach pads where
it is treated with a chemical solution which dissolves the gold contained in the ore. The
resulting pregnant solution is further processed in a plant where the gold is recovered.
For accounting purposes, costs are added to ore on leach pads based on current mining and
leaching costs, including applicable




---



##### 



depreciation, depletion and amortization relating to mining interests. Costs are removed from
ore on leach pads as ounces of gold are recovered based on the average cost per recoverable
ounce of gold on the leach pad.Estimates of recoverable gold on the leach pads are calculated from the quantities of ore
placed on the leach pads (measured tonnes added to the leach pads), the grade of ore placed
on the leach pads (based on assay data), and a recovery percentage (based on ore type).(h)
    
    Mining interestsMining interests represent capitalized expenditures related to the development of mining
properties, related plant and equipment and expenditures related to exploration arising from
property acquisitions. Capitalized costs are depreciated and depleted using either a
unit-of-production method over the estimated economic life of the mine to which they relate,
or for plant and equipment, using the straight-line method over their estimated useful lives.The costs associated with mining properties are separately allocated to reserves, resources
and exploration potential, and include acquired interests in production, development and
exploration stage properties representing the fair value at the time they were acquired. The
value associated with resources and exploration potential is the value beyond proven and
probable reserves assigned through acquisition. The value allocated to reserves is
depreciated on a unit-of-production method over the estimated recoverable proven and probable
reserves at the mine. The reserve value is noted as depletable mining properties in Note 6.
The resource value represents the property interests that are believed to potentially contain
economic mineralized material such as inferred material within pits; measured, indicated, and
inferred resources with insufficient drill spacing to qualify as proven and probable
reserves; and inferred resources in close proximity to proven and probable reserves.
Exploration potential represents the estimated mineralized material contained within (i)
areas adjacent to existing reserves and mineralization located within the immediate mine
area; (ii) areas outside of immediate mine areas that are not part of measured, indicated, or
inferred resources; and (iii) greenfields exploration potential that is not associated with
any other production, development, or exploration stage property, as described above.
Resource value and exploration potential value is noted as non-depletable mining properties
in Note 6. At least annually or when otherwise appropriate, and subsequent to its review and
evaluation for impairment, value from the non-depletable category is transferred to the
depletable category as a result of an analysis of the conversion of resources or exploration
potential into reserves.Costs related to property acquisitions are capitalized until the viability of the mineral
property is determined. When it is determined that a property is not economically viable the
capitalized costs are written-off.Exploration costs incurred to the date of establishing that a property is economically
recoverable are charged to operations. Further development expenditures are capitalized to
the property.Mining expenditures incurred either to develop new ore bodies or to develop mine areas in
advance of current production are capitalized. Commercial production is deemed to have
commenced when management determines that the completion of operational commissioning of
major mine and plant components is completed, operating results are being achieved
consistently for a period of time and that there are indicators that these operating results
will be continued. The Company determines commencement of commercial production based on the
following factors which indicate that planned principal operations have commenced. These
would include one or more of the following:
 (i)
    
    A significant portion of plant/mill capacity is achieved;(ii)
    
    A significant portion of available funding is directed towards
operating activities;(iii)
    
    A pre-determined, reasonable period of time has passed; or(iv)
    
    A development project significant to the primary business
objective of the enterprise has been completed as to significant milestones
being achieved.




---



##### 



Mine development costs incurred to maintain current production are included in operations.
The nature of the Companys mine development costs includes costs related to accessing ore
bodies that will be mined within the current production cycle. The costs include the
development and access costs (tunneling) of production drifts to develop the ore body in the
current production cycle. The distinction when compared with those mining expenditures
incurred either to develop new ore bodies or to develop mine areas in advance of current
production is mainly the production timeframe of the mining area. For those areas being
developed which will be mined in the future periods, the costs are capitalized and amortized
at such time as the related mining area is mined as compared to current production areas
where development costs are expensed as incurred given that the short term nature of these
expenditures matches the benefit of the ore being mined.Upon sale or abandonment the cost of the property and equipment, and related accumulated
depreciation or depletion, are removed from the accounts and any gains or losses thereon are
included in operations.The Company reviews and evaluates its mining properties for impairment annually or when
events or changes in circumstances indicate that the related carrying amounts may not be
recoverable. Impairment is considered to exist if the total estimated future undiscounted
cash flows are less than the carrying amount of the assets. An impairment loss is measured
and recorded based on discounted estimated future cash flows. Future cash flows are estimated
based on expected future production, commodity prices, operating costs and capital costs.(i)
    
    GoodwillAcquisitions are accounted for using the purchase method whereby assets and liabilities
acquired are recorded at their fair values as of the date of acquisition and any excess of
the purchase price over such fair value is recorded as goodwill. Goodwill is identified and
allocated to reporting units by preparing estimates of the fair value of each reporting unit
and comparing this amount to the fair value of assets and liabilities in the reporting unit.
Goodwill is not amortized.The Company evaluates, on an annual basis, the carrying amount of goodwill to determine
whether current events and circumstances indicate that such carrying amount may no longer be
recoverable. To accomplish this, the Company compares the fair value of its reporting units
to their carrying amounts. If the carrying value of a reporting unit exceeds its fair value,
the Company compares the implied fair value of the reporting units goodwill to its carrying
amount, and any excess of the carrying value over the fair value is charged to operations.
Assumptions underlying fair value estimates are subject to significant risks and
uncertainties.(j)
    
    Silver purchase arrangementsPurchase arrangements for which settlement is called for in silver are recorded at cost. The
cost of this asset is separately allocated to reserves, resources and exploration potential.
The value allocated to reserves is depreciated on a unit-of-sale basis over the estimated
recoverable reserves at the mine corresponding to the specific contract.Evaluations of the carrying values of each purchase arrangement are undertaken annually to
determine if estimated undiscounted future net cash flows are less than the carrying value.
Estimated undiscounted future net cash flows are calculated using estimated production, sales
prices and purchase costs. If it is determined that the undiscounted future net cash flows
from an operation are less than the carrying value then a write-down to fair value is
recorded with a charge to operations.(k)
    
    Long-term investmentsLong-term investments are carried at cost. When a decline in market value that is other than
temporary has occurred, these investments are written down to provide for the loss.




---



##### 



(l)
    
    Income and mining taxesThe Company uses the liability method of accounting for income and mining taxes. Under the
liability method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and for tax losses and other
deductions carried forward. Upon business acquisitions, the liability method results in a
gross up of mining interests to reflect the recognition of the future tax liabilities for the
tax effect of such differences.Future tax assets and liabilities are measured using enacted or substantively enacted tax
rates expected to apply when the asset is realized or the liability settled. A reduction in
respect of the benefit of a future tax asset (a valuation allowance) is recorded against any
future tax asset if it is not more likely than not to be realized. The effect on future tax
assets and liabilities of a change in tax rates is recognized in income in the period in
which the change is substantively enacted.(m)
    
    Reclamation and closure cost obligationsThe Companys mining and exploration activities are subject to various governmental laws and
regulations relating to the protection of the environment. These environmental regulations
are continually changing and are generally becoming more restrictive. The Company has made,
and intends to make in the future, expenditures to comply with such laws and regulations. The
Company has recorded a liability and corresponding asset for the estimated future cost of
reclamation and closure, including site rehabilitation and long-term treatment and monitoring
costs, discounted to net present value. Such estimates are, however, subject to change based
on negotiations with regulatory authorities, or changes in laws and regulations.(n)
    
    Non-controlling interestsNon-controlling interests exist in less than wholly-owned subsidiaries of the Company and
represent the outside interests share of the carrying values of the subsidiaries. When the
subsidiary company issues its own shares to outside interests, a dilution gain or loss arises
as a result of the difference between the Companys share of the proceeds and the carrying
value of the underlying equity.(o)
    
    Foreign currency translationPrior to April 1, 2005, the Canadian dollar was determined to be the measurement currency of
the Companys Canadian operations and these operations have been translated into United
States dollars up until this date using the current rate method as follows: all assets and
liabilities are translated into United States dollars at the exchange rate prevailing at the
balance sheet date; all revenue and expense items are translated at the average rate of
exchange for the period; and the resulting translation adjustment is recorded as a cumulative
translation adjustment (CTA), a separate component of shareholders equity. Subsequent to
the change in measurement currency described below, the CTA balance will remain the same
until the reporting units which gave rise to the CTA balance are disposed of or retired.Due to the Wheaton acquisition and related changes, including holding a greater proportion of
the Companys cash in United States dollars, it was determined that as of April 1, 2005, the
United States dollar is the reporting and measurement currency of the Companys Canadian
operations and therefore these operations have been translated using the temporal method from
that date onward. All operations outside of Canada apply the United States dollar as their
reporting and measurement currency and therefore translate their operating results using the
temporal method. Under this method, foreign currency monetary assets and liabilities are
translated into United States dollars at the exchange rates prevailing at the balance sheet
date; non-monetary assets denominated in foreign currencies are translated using the rate of
exchange at the transaction date; and foreign exchange gains and losses are included in the
determination of earnings. In addition, unrealized gains and losses due to movements in
exchange rates on cash balances held in foreign currencies are shown separately on the
Consolidated Statements of Cash Flows.




---



##### 



(p)
    
    Earnings per shareEarnings per share calculations are based on the weighted average number of common shares and
common share equivalents issued and outstanding during the year. Diluted earnings per share
are calculated using the treasury method which requires the calculation of diluted earnings
per share by assuming that outstanding stock options, warrants, and restricted share units
with an average market price that exceeds the average exercise prices of the options and
warrants for the year, are exercised and the assumed proceeds are used to repurchase shares
of the Company at the average market price of the common shares for the year.(q)
    
    Stock-based compensationThe Company applies the fair value method of accounting for all stock option awards. Under
this method the Company recognizes a compensation expense for all stock options awarded to
employees since January 1, 2003, based on the fair value of the options on the date of grant
which is determined by using an option pricing model. The fair value of the options is
expensed over the vesting period of the options. Stock options issued to employees before
January 1, 2003 were accounted for using the settlement method and accordingly, no
compensation expense has been recorded for those options.(r)
    
    Financial instrumentsThe Companys financial instruments comprise, primarily, cash and cash equivalents,
restricted cash, accounts receivable, marketable securities, accounts payable, and income and
mining taxes payable. The fair value of these financial instruments approximates their
carrying values due primarily to their immediate or short-term maturity. Fair value for other
financial instruments have been estimated by reference to quoted market prices for actual or
similar instruments where available.Goldcorp uses copper forward contracts to mitigate the risk of copper price changes on copper
sales at Alumbrera. These contracts do not meet the definition of an effective hedge and
consequently changes in the fair values of these contracts are recorded in earnings.The Company employs, from time to time, interest rate and Canadian dollar forward and option
contracts to manage exposure to fluctuations in interest rates and foreign currency exchange
rates. The Company has no contracts outstanding.




---



##### 



3. BUSINESS COMBINATIONS AND ACQUISITIONS
 (a) Glamis Gold Ltd
     Preliminary purchase price:283.2 million common shares of Goldcorp and cash
    
    $
    8,129.00.4 million common shares of Goldcorp on exercise of Glamis SARs
    
    
    11.4Stock options Goldcorp issued in exchange for those of Glamis
    
    
    82.1Acquisition costs
    
    
    20.0$
    8,242.5Net assets acquired:Cash and cash equivalents
    
    $
    73.4Current assets
    
    
    50.3Mining interests
    
    
    9,786.2Other assets
    
    
    52.8Current liabilities
    
    
    (63.1
    )Long-term debt
    
    
    (80.0
    )Future income tax liabilities
    
    
    (2,354.8
    )Reclamation and closure cost obligations
    
    
    (30.0
    )Goodwill
    
    
    807.7$
    8,242.5
  GOLDCORP     |     16




---



##### 



(b) Placer Dome Inc mining assets
 (note 10(a) and (b)) (note 13(b) )
  Purchase price:Cash
    
    $
    1,593.4Acquisition costs
    
    
    10.0$
    1,603.4Net assets acquired:Current assets
    
    $
    69.8Mining interests
    
    
    1,653.7Other assets
    
    
    16.1Current liabilities
    
    
    (51.7
    )Future income tax liabilities
    
    
    (353.3
    )Reclamation and closure cost obligations
    
    
    (129.2
    )Other liabilities
    
    
    (6.4
    )Goodwill
    
    
    404.4$
    1,603.4
   (c) Virginia Gold Mines Inc
  17     |     GOLDCORP




---



##### 



Purchase price:Common shares of Goldcorp issued to acquire 100% of Virginia (19.3 million shares)
    
    $
    398.3Share purchase warrants of Virginia exercisable into Goldcorp shares at conversion of 0.4 shares per warrant
    
    
    3.6Acquisition costs
    
    
    4.0$
    405.9Net assets acquired:Current assets
    
    $
    1.2Mining interest
    
    
    692.0Current liabilities
    
    
    (0.9
    )Future income tax liabilities
    
    
    (286.4
    )$
    405.9
 (d) Wheaton River Minerals Ltd
     GOLDCORP     |     18




---



##### 



Purchase price:Common shares of Goldcorp issued to acquire 100% of Wheaton (143.8 million shares)
    
    $
    1,887.4Share purchase warrants of Goldcorp issued in exchange for those of Wheaton (174.8 million warrants)
    
    
    290.8Stock options of Goldcorp issued in exchange for those of Wheaton (4.9 million options)
    
    
    30.8Acquisition costs
    
    
    26.0$
    2,235.0Net assets acquired:Cash and cash equivalents
    
    $
    168.7Marketable securities
    
    
    4.3Other non-cash operating working capital
    
    
    0.8Mining interests
    
    
    2,502.1Silver contract
    
    
    77.5Stockpiled ore, non-current
    
    
    55.3Other long-term assets
    
    
    3.8Future income taxes, net
    
    
    (631.8
    )Reclamation and closure cost obligations
    
    
    (24.5
    )Future employee benefits
    
    
    (5.3
    )Other liabilities
    
    
    (10.3
    )Non-controlling interest in Silver Wheaton (35%) (note 13(a))
    
    
    (54.9
    )Net identifiable assets
    
    
    2,085.7Residual purchase price allocated to goodwill (note 6)
    
    
    149.3$
    2,235.0
    19     |     GOLDCORP




---



##### 



(e) Bermejal Gold Deposit
  4. RESTRICTED CASH
  5. INVENTORIES AND STOCKPILED ORE
 2006
    
    
    2005Supplies
    
    $
    69.5
    
    
    $
    25.1Finished goods
    
    
    33.9
    
    
    
    16.7Work in process
    
    
    23.4
    
    
    
    10.1Heap leach ore
    
    
    22.4
    
    
    
    19.0Stockpiled ore
    
    
    73.0
    
    
    
    57.4222.2
    
    
    
    128.3Less: non-current heap leach inventory and stockpiled ore
    
    
    75.7
    
    
    
    57.3$
    146.5
    
    
    $
    71.0
 Work in process
  Heap leach inventory
  Stockpiled ore
  GOLDCORP     |     20




---



##### 



6. MINING INTERESTS
 2006
    
    
    2005Accumulateddepreciation
    
    
    
    
    
    
    
    
    
    
    Accumulatedand
    
    
    
    
    
    
    
    
    
    
    DepreciationCost
    
    
    depletion
    
    
    Net
    
    
    Cost
    
    
    and depletion
    
    
    NetMining properties
    
    $
    14,351.7
    
    
    $
    388.7
    
    
    $
    13,963.0
    
    
    $
    2,533.0
    
    
    $
    205.2
    
    
    $
    2,327.8Plant and equipment
    
    
    1,433.8
    
    
    
    268.0
    
    
    
    1,165.8
    
    
    
    794.9
    
    
    
    141.9
    
    
    
    653.0$
    15,785.5
    
    
    $
    656.7
    
    
    $
    15,128.8
    
    
    $
    3,327.9
    
    
    $
    347.1
    
    
    $
    2,980.8
  Mining propertiesNon-
    
    
    
    
    
    
    Plant andDepletable
    
    
    depletable
    
    
    Total
    
    
    equipment
    
    
    2006
    
    
    2005Red Lake(a)
    
    $
    471.8
    
    
    $
    529.3
    
    
    $
    1,001.1
    
    
    $
    147.6
    
    
    $
    1,148.7
    
    
    $
    289.5Porcupine(a)
    
    
    63.2
    
    
    
    93.8
    
    
    
    157.0
    
    
    
    95.4
    
    
    
    252.4
    
    
    
    Musselwhite(a)
    
    
    33.0
    
    
    
    119.4
    
    
    
    152.4
    
    
    
    76.8
    
    
    
    229.2
    
    
    
    Éléonore gold project
    
    
    
    
    
    
    704.2
    
    
    
    704.2
    
    
    
    
    
    
    
    704.2
    
    
    
    Canadian exploration properties
(note 13(b))
    
    
    
    
    
    
    157.2
    
    
    
    157.2
    
    
    
    0.2
    
    
    
    157.4
    
    
    
    Wharf
    
    
    4.4
    
    
    
    
    
    
    
    4.4
    
    
    
    0.2
    
    
    
    4.6
    
    
    
    6.2Marigold (b)
    
    
    87.7
    
    
    
    397.0
    
    
    
    484.7
    
    
    
    33.9
    
    
    
    518.6
    
    
    
    Pueblo Viejo(a) (d)
    
    
    
    
    
    
    98.9
    
    
    
    98.9
    
    
    
    
    
    
    
    98.9
    
    
    
    Luismin(c)
    
    
    191.1
    
    
    
    607.2
    
    
    
    798.3
    
    
    
    68.6
    
    
    
    866.9
    
    
    
    842.7Los Filos project
    
    
    
    
    
    
    431.6
    
    
    
    431.6
    
    
    
    164.1
    
    
    
    595.7
    
    
    
    421.8El Limón project(d)
    
    
    
    
    
    
    85.0
    
    
    
    85.0
    
    
    
    2.0
    
    
    
    87.0
    
    
    
    87.0El Sauzal (b)
    
    
    270.9
    
    
    
    678.9
    
    
    
    949.8
    
    
    
    60.0
    
    
    
    1,009.8
    
    
    
    Peñasquito (b)
    
    
    
    
    
    
    7,015.2
    
    
    
    7,015.2
    
    
    
    41.3
    
    
    
    7,056.5
    
    
    
    Mexican exploration projects
    
    
    
    
    
    
    168.4
    
    
    
    168.4
    
    
    
    
    
    
    
    168.4
    
    
    
    169.2Alumbrera
    
    
    412.1
    
    
    
    
    
    
    
    412.1
    
    
    
    248.0
    
    
    
    660.1
    
    
    
    724.7Marlin (b)
    
    
    296.7
    
    
    
    787.5
    
    
    
    1,084.2
    
    
    
    79.4
    
    
    
    1,163.6
    
    
    
    Cerro Blanco (b)
    
    
    
    
    
    
    16.1
    
    
    
    16.1
    
    
    
    2.5
    
    
    
    18.6
    
    
    
    San Martin (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.9
    
    
    
    3.9
    
    
    
    Amapari (e)
    
    
    9.3
    
    
    
    37.0
    
    
    
    46.3
    
    
    
    53.7
    
    
    
    100.0
    
    
    
    268.7La Coipa(a)
    
    
    22.6
    
    
    
    26.2
    
    
    
    48.8
    
    
    
    57.7
    
    
    
    106.5
    
    
    
    Peak
    
    
    43.5
    
    
    
    103.8
    
    
    
    147.3
    
    
    
    26.0
    
    
    
    173.3
    
    
    
    169.0Corporate and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.5
    
    
    
    4.5
    
    
    
    2.0$
    1,906.3
    
    
    $
    12,056.7
    
    
    $
    13,963.0
    
    
    $
    1,165.8
    
    
    $
    15,128.8
    
    
    $
    2,980.8
  Reduction of2005
    
    
    Additions
    
    
    ownership
    
    
    2006Red Lake(a)
    
    $
    
    
    
    $
    404.4
    
    
    $
    
    
    
    $
    404.4Peñasquito(b)
    
    
    
    
    
    
    807.7
    
    
    
    
    
    
    
    807.7Los Filos
    
    
    74.3
    
    
    
    
    
    
    
    
    
    
    
    74.3Silver Wheaton
    
    
    68.4
    
    
    
    
    
    
    
    (14.6
    )
    
    
    53.8$
    142.7
    
    
    $
    1,212.1
    
    
    $
    (14.6
    )
    
    $
    1,340.2
 (a)
    
    The net book values have been allocated according to the fair value of the Placer Dome
mining assets acquired.(b)
    
    The net book values have been allocated according to the preliminary fair value of the
Glamis mining assets acquired.
 21     |     GOLDCORP




---



##### 



(c)
    
    Included in the carrying value of Luismin mines is the value of mining properties
attributable to the Silver Wheaton silver contract of the following amounts:
 Mining propertiesPlant and
    
    
    Total
    
    
    TotalDepletable
    
    
    Non-depletable
    
    
    Total
    
    
    equipment
    
    
    2006
    
    
    2005Silver interests
    
    $
    52.9
    
    
    $
    158.8
    
    
    $
    211.7
    
    
    $
    
    
    
    $
    211.7
    
    
    $
    200.0
 (d)
    
    The equity investments in these exploration/development stage properties have no
current operations. The recorded value represents the fair value of the property at the
time they were acquired, plus subsequent expenditures which have been invested in property
development.(e)
    
    The Company recorded a $174.7 million impairment charge against its investment in
Amapari as a result of a revision downward of its proven and probable reserves to 485,000
ounces of gold as at December 31, 2006, reflecting the exclusion of sulfide mineralization
previously and the pending sale of the mine (note 20).
 7. SILVER PURCHASE ARRANGEMENTS
 December 31, 2006
    
    
    December 31, 2005Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    amortization
    
    
    Net
    
    
    Cost
    
    
    Amortization
    
    
    NetYauliyacu(a)
    
    $
    285.3
    
    
    $
    10.6
    
    
    $
    274.7
    
    
    $
    
    
    
    $
    
    
    
    $
    Zinkgruvan(b)
    
    
    77.9
    
    
    
    6.1
    
    
    
    71.8
    
    
    $
    77.9
    
    
    $
    3.3
    
    
    $
    74.6$
    363.2
    
    
    $
    16.7
    
    
    $
    346.5
    
    
    $
    77.9
    
    
    $
    3.3
    
    
    $
    74.6
 (a)
    
    On March 23, 2006, Silver Wheaton entered into an agreement to purchase 4.75 million
ounces of silver per year for a period of 20 years, based on the production from Glencore
International AGs (Glencore) Yauliyacu mining operations in Peru, for an upfront payment
of $285.3 million, comprised of $245.3 million in cash and a $40.0 million promissory note
(note 10(e)). In addition, a cash payment of $3.90 per ounce of silver delivered under the
purchase arrangement is due (subject to an inflationary adjustment commencing in 2009). The
carrying value of the silver purchase arrangement is being amortized to operations on a
unit-of-sale basis. As at December 31, 2005, Yauliyacu had proven and probable silver
reserves of 12.9 million ounces, measured and indicated resources of 52.2 million ounces
and inferred silver resources of 64.7 million ounces.(b)
    
    In December 2004, Silver Wheaton entered into an agreement to purchase all of the
silver produced by Lundin Mining Corporations Zinkgruvan mine in Sweden for an upfront
cash payment of $50 million, 6 million Silver Wheaton common shares valued at $21.1 million
and 30 million Silver Wheaton common share purchase warrants valued at $6.8 million for a
total purchase price of $77.9 million. In addition, a per ounce cash payment of the lesser
of $3.90 and the prevailing market price, (subject to an inflationary adjustment, beginning
in 2007, equal to half of the US Consumer Price Index, with a minimum of 0.4% and a maximum
of 1.65% per annum), is due. The carrying value of the silver purchase arrangement is being
amortized to operations on a unit-of-sale basis. Under the agreement, Zinkgruvan is
required to deliver the equivalent of a minimum of 40 million ounces of silver over the 25
year period following the agreement date. As at December 31, 2005, Zinkgruvan had proven
and probable silver reserves of 25.8 million ounces, measured and indicated resources of
6.8 million ounces and inferred silver resources of 29.4 million ounces. The Zinkgruvan
mine is expected to produce approximately 2 million ounces of silver annually for a minimum
of 20 years.
 GOLDCORP     |     22




---



##### 



8. OTHER LONG-TERM ASSETS
 2006
    
    
    2005Reclamation deposits
    
    $
    17.2
    
    
    $
    5.3Sales/indirect taxes recoverable
    
    
    28.6
    
    
    
    Other
    
    
    11.5
    
    
    
    5.6$
    57.3
    
    
    $
    10.9
 9. INCOME AND MINING TAXES
 2006
    
    
    2005
    
    
    2004Current income and mining tax expense
    
    $
    222.4
    
    
    $
    135.3
    
    
    $
    11.5Future income and mining tax expense
    
    
    (67.9
    )
    
    
    7.1
    
    
    
    18.6$
    154.5
    
    
    $
    142.4
    
    
    $
    30.1
  2006
    
    
    2005
    
    
    2004Earnings before income taxes
    
    $
    598.6
    
    
    $
    440.3
    
    
    $
    81.4Canadian federal and provincial income tax rates
    
    
    36.12
    %
    
    
    38.47
    %
    
    
    40.05
    %Income tax expense based on above rates
    
    
    216.2
    
    
    
    169.4
    
    
    
    32.6Increase (decrease) due to:Impact of reduction in tax rates on future income taxes
    
    
    (45.8
    )
    
    
    
    
    
    
    Provincial mining taxes
    
    
    16.8
    
    
    
    20.7
    
    
    
    7.5Non-deductible expenditures
    
    
    3.7
    
    
    
    6.2
    
    
    
    2.0Resource allowance
    
    
    (8.4
    )
    
    
    (17.5
    )
    
    
    (9.0
    )Lower statutory tax rates on earnings of foreign subsidiaries
    
    
    (54.5
    )
    
    
    (15.6
    )
    
    
    (0.2
    )Dilution gains not subject to tax
    
    
    (23.0
    )
    
    
    (7.2
    )
    
    
    Foreign exchange and other permanent differences
    
    
    (16.0
    )
    
    
    (6.5
    )
    
    
    Mining duties deduction
    
    
    (3.6
    )
    
    
    (2.3
    )
    
    
    (1.5
    )Non-taxable portion of realized capital (gains) losses
    
    
    (15.6
    )
    
    
    (2.6
    )
    
    
    1.8Change in valuation allowance
    
    
    (5.7
    )
    
    
    (3.1
    )
    
    
    (0.9
    )Non-deductible asset write-down
    
    
    63.1
    
    
    
    
    
    
    
    Capital gains tax on sale of subsidiary shares
    
    
    23.8Other
    
    
    3.5
    
    
    
    0.9
    
    
    
    (2.2
    )$
    154.5
    
    
    $
    142.4
    
    
    $
    30.1
 23     |     GOLDCORP




---



##### 



2006
    
    
    2005Future income and mining tax assetsNon-capital losses
    
    $
    121.7
    
    
    $
    13.2Deductible temporary differences and other
    
    
    112.1
    
    
    
    51.4Value of future income tax and mining assets
    
    
    233.8
    
    
    
    64.6Valuation allowance
    
    
    (115.3
    )
    
    
    (14.6
    )118.5
    
    
    
    50.0Future income and mining tax liabilitiesTaxable temporary differences
    
    
    (3,713.6
    )
    
    
    (751.5
    )Future income and mining tax liabilities, net
    
    $
    (3,595.1
    )
    
    $
    (701.5
    )Presented on the Consolidated Balance Sheets as:Future income and mining tax assets
    
    $
    20.7
    
    
    $
    26.6Future income and mining tax liabilities
    
    
    (3,615.8
    )
    
    
    (728.1
    )Future income and mining tax liabilities, net
    
    $
    (3,595.1
    )
    
    $
    (701.5
    )
  Tax Loss Carry Forwards
    10. BANK CREDIT FACILITIES
 2006
    
    
    2005$500 million revolving credit facility(a)
    
    $
    500.0
    
    
    $
    $550 million bridge facility(b)
    
    
    100.0
    
    
    
    $350 million revolving credit facility(b)
    
    
    290.0
    
    
    
    $50 million revolving credit facility(f)
    
    
    35.0
    
    
    
    925.0
    
    
    
    Less: current portion of long-term debt
    
    
    135.0
    
    
    
    $
    790.0
    
    
    $
    
 (a)
    
    In 2005, Goldcorp entered into a $500 million revolving credit facility with a
syndicate of five lenders. The facility is unsecured and available to finance acquisitions
and for general corporate purposes. Amounts drawn incur interest at LIBOR plus 0.625% to
1.125% per annum dependent upon the Companys leverage ratio, increasing by an additional
0.125% per annum if the total amount drawn under this facility exceeds $250 million.
Undrawn amounts are subject to a 0.15% to 0.25% per annum
 GOLDCORP     |     24




---



##### 



commitment fee dependent on the Companys leverage ratio. All amounts drawn are required to
be refinanced or repaid by July 29, 2010. As at December 31, 2006, this facility was fully
drawn.(b)
    
    On April 21, 2006, the Company entered into two credit facilities comprised of a $550
million bridge facility and a $350 million revolving credit facility. Both facilities are
unsecured, and amounts drawn down will incur interest at LIBOR plus 0.625% to 1.125% per
annum dependent upon the Companys leverage ratio, increasing by an additional 0.125% per
annum if the total amount drawn under either facility exceeds 50% of the facility amount.
Undrawn amounts will be subject to a 0.15% to 0.25% per annum commitment fee dependent on
the Companys leverage ratio. Proceeds raised from the early exercise of the warrants (note
14(a))were required to repay the $550 million bridge facility and the repayment may not be
re-borrowed. Amounts drawn on the $350 million facility will be required to be refinanced
or repaid by May 12, 2008. As at December 31, 2006, $290 million of debt is outstanding on
the $350 million credit facility. Debt of $100 million is outstanding on the bridge
facility which is required to be repaid by May 12, 2007.(c)
    
    The Company has an Aus$5 million ($3.9 million), unsecured, revolving working capital
facility for its Peak mine operations of which $nil was drawn down at December 31, 2006.
The loan bears interest related to the Australian Treasury Bill rate plus 1.5% per annum.(d)
    
    On February 24, 2006, Silver Wheaton entered into a credit agreement comprising a $100
million non-revolving term loan (the Term Loan) and a $25 million revolving loan (the
Revolving Loan). The Revolving Loan is for a period of five years and the Term Loan is to
be repaid in equal installments over a period of four years, however, prepayments are
allowed at any time. The interest rate on each of these loans is based on LIBOR plus a
spread determined by Silver Wheatons leverage ratio. Both the Term Loan and the Revolving
Loan are secured against Silver Wheatons assets including the Luismin, Zinkgruvan and
Yauliyacu silver purchase arrangements. During April 2006, both the term loan and the
revolving loan were repaid in full. The term loan was cancelled upon repayment while the
revolving loan facility remains available.(e)
    
    On March 23, 2006, as partial consideration for entering into the Yauliyacu silver
purchase contract (note 7), Silver Wheaton issued a $40 million promissory note to
Glencore, bearing interest at 3% per annum and due on July 21, 2006. The promissory note
was repaid from the proceeds of the public offering completed by Silver Wheaton on April
20, 2006 (note 13(a)).(f)
    
    The Company assumed a $50.0 million revolving credit facility as a result of the
acquisition of Glamis (note 3(a)). The facility is available for drawdown in United States
dollars or ounces of silver with repayment at any time during the three-year period ending
March 4, 2008 at a bank-base rate or LIBOR (plus 0.25%-1.50% depending on financial
ratios), payable according to the quoted rate term. The facility is secured by a pledge of
the Companys shares in certain U.S. and Mexican mining subsidiaries. As at December 31,
2006, $35 million had been drawn against this facility. The facility was repaid, and
cancelled on January 19, 2007.(g)
    
    In addition, the Company assumed a term loan in the amount of $45.0 million as a result
of the Glamis transaction (note 3(a)). The facility provided for up to $45.0 million in
funding for development of the Companys Marlin Project in Guatemala bearing interest at a
six-month LIBOR plus 2.625% payable semi-annually. The facility was secured by a pledge of
the Companys shares in the related Guatemalan subsidiaries. This facility was repaid on
December 29, 2006.(h)
    
    Reclamation letters of credit outstanding at the year ended December 31, 2006 totaled
$135.5 million (2005  $31.3 million), with $11.4 million collateralized by certificates of
deposits.
  2007
    
    $
    135.02008
    
    
    290.02009
    
    
    2010
    
    
    500.0$
    925.0
 25     |     GOLDCORP




---



##### 



11. DERIVATIVE INSTRUMENTS
  12. RECLAMATION AND CLOSURE COST OBLIGATIONS
   2006
    
    
    2005Reclamation and closure cost obligations  January 1
    
    $
    57.7
    
    
    $
    26.4Arising on acquisition of Placer Dome assets (note 3(b))
    
    
    129.2
    
    
    
    Arising on acquisition of Glamis (note 3(a))
    
    
    30.0
    
    
    
    Arising on acquisition of Wheaton (note 3(d))
    
    
    
    
    
    
    24.5Reclamation expenditures
    
    
    (7.3
    )
    
    
    (3.6
    )Accretion expense, included in depreciation and depletion
    
    
    7.0
    
    
    
    8.1Revisions in estimates and liabilities incurred
    
    
    17.5
    
    
    
    2.3234.1
    
    
    
    57.7Less: current portion of reclamation and closure cost
obligations, included in Accounts payable, accrued
liabilities, and other
    
    
    (7.9
    )
    
    
    $
    226.2
    
    
    $
    57.7
 GOLDCORP     |     26




---



##### 



13. NON-CONTROLLING INTERESTS
 Silver Wheaton
    
    
    Terrane
    
    
    TotalAt January 1, 2005
    
    $
    
    
    
    $
    
    
    
    $
    Arising upon acquisition of Wheaton (note 3(d))
    
    
    54.9
    
    
    
    
    
    
    
    54.9Increase in non-controlling interest (a)(i)
    
    
    45.1
    
    
    
    
    
    
    
    45.1Share of net earnings
    
    
    8.6
    
    
    
    
    
    
    
    8.6At December 31, 2005
    
    
    108.6
    
    
    
    
    
    
    
    108.6Increase in net assets of Silver Wheaton arising upon
contract amendment (a)(ii)
    
    
    32.3
    
    
    
    
    
    
    
    32.3Increase in non-controlling interest (a)(iii)
    
    
    98.1
    
    
    
    
    
    
    
    98.1Increase in non-controlling interest (a)(iv)
    
    
    51.9
    
    
    
    
    
    
    
    51.9Arising from transaction with Terrane (b)(i)
    
    
    
    
    
    
    22.0
    
    
    
    22.0Increase in non-controlling interest (b)(ii)
    
    
    
    
    
    
    5.8
    
    
    
    5.8Share of net earnings (loss)
    
    
    36.5
    
    
    
    (0.7
    )
    
    
    35.8At December 31, 2006
    
    $
    327.4
    
    
    $
    27.1
    
    
    $
    354.5
 (a) Silver
Wheaton
 (i)
    As a result of the Wheaton acquisition on February 14, 2005, Goldcorp acquired
Wheatons 65% ownership of its subsidiary, Silver Wheaton. This interest decreased to
59% in December 2005 following the issuance of additional shares by Silver Wheaton to
non-controlling interests giving rise to a dilution gain of $18.7 million which was
recognized in earnings in 2005 and an increase in non-controlling interests of $45.1
million.(ii)
    On March 30, 2006, Goldcorp and Silver Wheaton amended the silver purchase
contract, increasing the minimum number of ounces of silver to be delivered over the 25
year period by 100 million ounces, to 220 million ounces, and waiving any capital
expenditure contributions previously required to be paid by Silver Wheaton. In
consideration for these amendments, Silver Wheaton issued to Goldcorp 18 million common shares, valued at $115.6 million, and a $20.0 million non-interest bearing promissory
note due on March 30, 2007. As a result, at March 30, 2006, Goldcorp owned 62% of Silver
Wheatons common shares. This transaction resulted in an increase to mining interests of
$46.6 million, an increase to future income tax liabilities of $14.3 million, and an
increase in non-controlling interests of $32.3 million.(iii)
    On April 20, 2006, Silver Wheaton closed a C$200 million public offering of 16.7
million common shares at a price of C$12.00 per share. This transaction gave rise to a
dilution gain of $61.4 million and an increase in non-controlling interests of $98.1
million.(iv)
    On December 7, 2006, Goldcorp completed the sale of 18 million common shares of
Silver Wheaton at a price of C$12.70 per share for gross proceeds of $199.1 million.
This transaction gave rise to a gain on sale of $109.8 million which has been recognized
in operations for the current year and an increase in non-controlling interests of $51.9
million.(v)
    Related transactionsGoldcorps interest in Silver Wheaton declined from 59% to 49% during the year as a
result of the above transactions and from additional issuances of common shares by Silver
Wheaton from the exercise of stock options and warrants. The dilution of the Companys
interest in Silver Wheaton due to the public offering and exercises of stock options and
warrants resulted in a dilution gain of $61.4 million which has been recognized in
operations for the current year. Goldcorp maintains control of Silver Wheaton due to the
majority influence it exerts on the board of directors of Silver Wheaton, therefore the
Company continues to consolidate 100% of Silver Wheaton.During the year ended December 31, 2006, the Company sold to Silver Wheaton 9.0 million
ounces (2005  7.9 million ounces) of silver from a subsidiary at a price of $3.90 per
ounce, for total consideration of approximately $35.0 million (2005  $30.8 million).
Silver Wheaton also has an agreement with Goldcorp whereby the Company provides certain
 27     |     GOLDCORP




---



##### 



management and administrative services at cost. During the year, total management fees
paid to the Company were $0.2 million (2005  $0.4 million). This agreement allows for
cancellation with 30 days notice at any time.In addition, during September 2006, in connection with the Companys recent acquisition
of Glamis, Silver Wheaton has agreed to waive its right to acquire an interest in any of
Glamis Mexican projects. In exchange for this waiver, Silver Wheaton has received a
right of first refusal on future silver production from the Penasquito Project in Mexico.(b)
    Terrane Metals Corp(i)
    On July 24, 2006, the Company completed the sale of Mt Milligan and certain other
Canadian exploration interests to Terrane. Goldcorp acquired these exploration interests
from Barrick in May 2006 (note 3(b)).In consideration for the exploration properties, the Company received 240 million
convertible Series A preferred shares at a price of C$0.50 per share. The preferred
shares are convertible into common shares of Terrane at the option of Goldcorp at any
time without any further consideration. Upon acquisition, on an as-converted basis,
Goldcorp would own an 81% equity interest in Terranes issued and outstanding shares. The
preferred shares are not entitled to dividends, are non-transferable without the prior
written consent of Terrane, are non-redeemable, non-retractable, non-voting and if not
previously converted will be automatically converted into common shares on the 20th
anniversary of their issuance.(ii)
    On November 3, 2006, Terrane issued 13.4 million units in a brokered private
placement at a price of C$0.75 per unit for gross proceeds of C$10 million. Each unit
consists of one common share and one half of a common share purchase warrant. As a
result of this transaction, Goldcorps interest in Terrane, on an as-converted basis,
decreased to 77%, resulting in a dilution gain of $2.4 million which has been recognized
in operations for the current year and an increase in non-controlling interests of $5.8
million.(c)
    Wheaton River Minerals Ltd(i)
    On February 14, 2005, Goldcorp acquired an 82% interest in Wheaton (note 3(d))
which resulted in the recording of an 18% non-controlling interest of $141.9 million.
During the period February 15 to April 15, 2005, the non-controlling interests share of
Wheatons net earnings was $3.5 million. During the same period, Wheaton issued common
shares to non-controlling interests from the exercise of stock options and warrants in
the amount of $3.3 million. Goldcorp acquired the remaining 18% non-controlling
interests share of Wheaton on April 15, 2005.(ii)
    Non-controlling interest in 2005 on the statement of earnings included $3.6
million related to Wheaton for the period February 15 to April 15, 2005.
 14. SHAREHOLDERS EQUITY
  (a) Share Purchase Warrants
 (note 3(b) )
 GOLDCORP     |     28




---



##### 



(note 3(c) )
 (b) Stock Options
      WeightedAverageOptions
    
    
    ExerciseOutstanding
    
    
    Price(000s)
    
    
    (C$/option)At January 1, 2004
    
    
    6,012
    
    
    $
    12.68Granted
    
    
    1,335
    
    
    
    16.89Exercised
    
    
    (706
    )
    
    
    6.64Cancelled/expired
    
    
    (497
    )
    
    
    16.47At December 31, 2004
    
    
    6,144
    
    
    $
    13.98Issued in connection with the acquisition of Wheaton
    
    
    4,917
    
    
    
    9.52Granted
    
    
    5,095
    
    
    
    19.31Exercised
    
    
    (2,545
    )
    
    
    10.11Cancelled/expired
    
    
    (34
    )
    
    
    17.66At December 31, 2005
    
    
    13,577
    
    
    
    15.08Issued in connection with the acquisition of Glamis
    
    
    4,668
    
    
    
    12.90Granted
    
    
    3,560
    
    
    
    31.12Exercised
    
    
    (6,502
    )
    
    
    12.60Cancelled
    
    
    (104
    )
    
    
    24.85At December 31, 2006
    
    
    15,199
    
    
    $
    19.16
 29     |     GOLDCORP




---



##### 



Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedWeighted
    
    
    Average
    
    
    Options
    
    
    Weighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    Outstanding
    
    
    Average
    
    
    RemainingOptions
    
    
    Exercise
    
    
    Contractual
    
    
    and
    
    
    Exercise
    
    
    ContractualOutstanding
    
    
    Price
    
    
    Life
    
    
    Exercisable
    
    
    Price
    
    
    LifeExercise Prices (C$)
    
    (000s)
    
    
    (C$/option)
    
    
    (years)
    
    
    (000s)
    
    
    (C$/option)
    
    
    (years)$2.05  $4.98
    
    
    453
    
    
    $
    3.83
    
    
    
    1.9
    
    
    
    453
    
    
    $
    3.83
    
    
    
    1.9$6.28  $8.06
    
    
    939
    
    
    
    7.45
    
    
    
    1.1
    
    
    
    939
    
    
    
    7.45
    
    
    
    1.1$10.18  $13.38
    
    
    4,021
    
    
    
    12.64
    
    
    
    2.7
    
    
    
    4,021
    
    
    
    12.64
    
    
    
    2.7$14.80  $17.50
    
    
    1,034
    
    
    
    16.97
    
    
    
    6.9
    
    
    
    1,034
    
    
    
    16.97
    
    
    
    6.9$18.50  $21.01
    
    
    4,604
    
    
    
    19.23
    
    
    
    8.5
    
    
    
    2,178
    
    
    
    19.23
    
    
    
    8.1$23.30  $26.76
    
    
    643
    
    
    
    25.59
    
    
    
    5.0
    
    
    
    593
    
    
    
    25.77
    
    
    
    4.7$28.84  $31.93
    
    
    3,090
    
    
    
    30.75
    
    
    
    9.6
    
    
    
    
    
    
    
    
    
    
    
    $32.57  $34.39
    
    
    415
    
    
    
    33.85
    
    
    
    9.8
    
    
    
    
    
    
    
    
    
    
    
    15,199
    
    
    $
    19.16
    
    
    
    6.3
    
    
    
    9,218
    
    
    $
    14.56
    
    
    
    4.4
 (c) Restricted Share Units
    (d) Diluted Earnings per Share
  2006
    
    
    2005
    
    
    2004Earnings available to common shareholders
    
    $
    408.3
    
    
    $
    285.7
    
    
    $
    51.3Basic weighted-average number of shares outstanding(in thousands)
    
    
    435,189
    
    
    
    314,292
    
    
    
    189,723Effect of dilutive securities:Stock options
    
    
    6,016
    
    
    
    3,249
    
    
    
    1,153Warrants
    
    
    
    
    
    
    27,832
    
    
    
    2,809Restricted share units
    
    
    59
    
    
    
    21
    
    
    
    Diluted weighted-average number of shares outstanding
    
    
    441,264
    
    
    
    345,394
    
    
    
    193,685Earnings per shareBasic
    
    $
    0.94
    
    
    $
    0.91
    
    
    $
    0.27Diluted
    
    
    0.93
    
    
    
    0.83
    
    
    
    0.27
  2006
    
    
    2005
    
    
    2004Stock options
    
    
    515
    
    
    
    108
    
    
    
    1,804Share purchase warrants
    
    
    8,439
    
    
    
    
    
    
    
    
 GOLDCORP     |     30




---



##### 



15. SUPPLEMENTAL CASH FLOW INFORMATION
 Note
    
    
    2006
    
    
    2005
    
    
    2004Change in non-cash operating working capitalAccounts receivable
    
    
    
    
    
    $
    20.7
    
    
    $
    (23.7
    )
    
    $
    2.4Income and mining taxes receivable
    
    
    
    
    
    
    2.8
    
    
    
    12.3
    
    
    
    Inventories and stockpiled ore
    
    
    
    
    
    
    7.4
    
    
    
    (10.0
    )
    
    
    9.7Accounts payable and accrued liabilities
    
    
    
    
    
    
    32.3
    
    
    
    6.2
    
    
    
    (5.0
    )Income and mining taxes payable
    
    
    
    
    
    
    (4.3
    )
    
    
    37.6
    
    
    
    (27.8
    )Gold bullion
    
    
    
    
    
    
    
    
    
    
    33.9
    
    
    
    (28.0
    )Other
    
    
    
    
    
    
    6.7
    
    
    
    (9.3
    )
    
    
    $
    65.6
    
    
    $
    47.0
    
    
    $
    (48.7
    )Acquisitions, net of cash acquiredGlamis
    
    
    3
    (a)
    
    $
    53.3
    
    
    $
    
    
    
    $
    Placer Dome
    
    
    3
    (b)
    
    
    (1,603.4
    )
    
    
    
    
    
    
    Virginia
    
    
    3
    (c)
    
    
    (4.0
    )
    
    
    
    
    
    
    Terrane
    
    
    13
    (b)
    
    
    4.9
    
    
    
    
    
    
    
    Wheaton
    
    
    3
    (d)
    
    
    
    
    
    
    132.4
    
    
    
    Bermejal
    
    
    3
    (e)
    
    
    
    
    
    
    (70.0
    )
    
    
    $
    (1,549.2
    )
    
    $
    62.4
    
    
    $
    Non-cash financing and investing activitiesShares issued on acquisition of Glamis
    
    
    3
    (a)
    
    $
    8,129.0
    
    
    $
    
    
    
    $
    Shares issued in exchange for Glamis SARs
    
    
    3
    (a)
    
    
    11.4
    
    
    
    
    
    
    
    Stock options issued in exchange for those of Glamis
    
    
    3
    (a)
    
    
    82.1
    
    
    
    
    
    
    
    New Warrants issued on the early exercise of Existing Warrants
    
    
    14
    (a)
    
    
    38.9
    
    
    
    
    
    
    
    Shares and warrants issued on acquisition of Virginia
    
    
    3
    (c)
    
    
    401.9
    
    
    
    
    
    
    
    Silver Wheaton promissory note issued to Glencore
    
    
    7
    (a)
    
    
    40.0
    
    
    
    
    
    
    
    Shares and warrants issued on acquisition of Wheaton
    
    
    3
    (d)
    
    
    
    
    
    
    1,887.4
    
    
    
    Warrants issued in exchange for those of Wheaton
    
    
    3
    (d)
    
    
    
    
    
    
    290.8
    
    
    
    Stock options issued in exchange for those of Wheaton
    
    
    3
    (d)
    
    
    
    
    
    
    30.8
    
    
    
    Operating activities included the following cash paymentsIncome taxes paid
    
    
    
    
    
    $
    225.5
    
    
    $
    89.9
    
    
    $
    39.6Interest paid
    
    
    
    
    
    
    35.1
    
    
    
    
    
    
    
    
 31     |     GOLDCORP




---



##### 



16. JOINT VENTURE INTERESTS
 (note 2(a) )
  2006
    
    
    2005Proportionate Statements of Joint Venture OperationsRevenues
    
    $
    803.9
    
    
    $
    299.2Operating expenses
    
    
    (304.1
    )
    
    
    (100.3
    )Depreciation and depletion
    
    
    (128.7
    )
    
    
    (59.0
    )Exploration expense
    
    
    (5.2
    )
    
    
    Other income (expense)
    
    
    0.3
    
    
    
    (3.7
    )Income taxes
    
    
    (108.9
    )
    
    
    (43.5
    )Net income
    
    $
    257.3
    
    
    $
    92.7Proportionate Joint Venture Balance SheetsCurrent assets
    
    $
    379.3
    
    
    $
    155.2Mining Interests
    
    
    1,785.4
    
    
    
    724.7Other assets
    
    
    64.6
    
    
    
    51.4$
    2,229.3
    
    
    $
    931.3Current liabilities
    
    $
    461.4
    
    
    $
    59.5Future income and mining taxes
    
    
    442.1
    
    
    
    201.3Reclamation & closure cost obligation
    
    
    84.4
    
    
    
    5.5Goldcorps investment carrying value
    
    
    1,241.4
    
    
    
    665.0$
    2,229.3
    
    
    $
    931.3Proportionate Statements of Joint Venture Cash FlowsOperating activities
    
    $
    361.4
    
    
    $
    133.4Investing activities
    
    
    (44.8
    )
    
    
    (7.4
    )Financing activities
    
    
    (112.5
    )
    
    
    (99.4
    )Increase in cash and cash equivalents during the year
    
    $
    204.1
    
    
    $
    26.6
 GOLDCORP     |     32




---



##### 



17. SEGMENTED INFORMATION
  Earnings
    
    
    ExpendituresDepreciation
    
    
    (loss) from
    
    
    for miningRevenues
    
    
    and depletion
    
    
    operations
    
    
    interests
    
    
    Total assets2006Red Lake(1)
    
    $
    360.8
    
    
    $
    47.3
    
    
    $
    186.1
    
    
    $
    100.3
    
    
    $
    1,591.3Porcupine(1)
    
    
    72.9
    
    
    
    12.6
    
    
    
    16.9
    
    
    
    14.5
    
    
    
    272.3Musselwhite(1)
    
    
    62.6
    
    
    
    11.6
    
    
    
    3.7
    
    
    
    6.8
    
    
    
    229.0Éléonore(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.4
    
    
    
    711.9Marigold(2)
    
    
    19.2
    
    
    
    3.3
    
    
    
    6.3
    
    
    
    3.9
    
    
    
    551.0Luismin
    
    
    159.6
    
    
    
    50.6
    
    
    
    37.8
    
    
    
    227.3
    
    
    
    1,635.5El Sauzal(2)
    
    
    45.1
    
    
    
    25.7
    
    
    
    14.3
    
    
    
    0.6
    
    
    
    1,100.4Peñasquito(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.6
    
    
    
    7,870.9Alumbrera
    
    
    593.1
    
    
    
    82.7
    
    
    
    334.2
    
    
    
    17.4
    
    
    
    1,016.8Amapari
    
    
    51.7
    
    
    
    15.4
    
    
    
    (189.6
    )
    
    
    13.1
    
    
    
    128.5La Coipa(1)
    
    
    60.6
    
    
    
    19.9
    
    
    
    8.5
    
    
    
    2.3
    
    
    
    148.8Wharf
    
    
    40.6
    
    
    
    3.8
    
    
    
    12.3
    
    
    
    2.0
    
    
    
    41.3Marlin(2)
    
    
    32.3
    
    
    
    6.6
    
    
    
    16.0
    
    
    
    4.4
    
    
    
    1,283.6San Martin(2)
    
    
    8.3
    
    
    
    0.7
    
    
    
    2.1
    
    
    
    0.1
    
    
    
    14.9Peak
    
    
    79.7
    
    
    
    18.7
    
    
    
    21.4
    
    
    
    25.4
    
    
    
    201.6Pueblo Viejo
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.6
    
    
    
    98.9Silver Wheaton
    
    
    158.5
    
    
    
    24.1
    
    
    
    75.7
    
    
    
    
    
    
    
    740.5Terrane
    
    
    
    
    
    
    
    
    
    
    (3.1
    )
    
    
    9.2
    
    
    
    167.9Other(4)
    
    
    (35.0
    )
    
    
    1.2
    
    
    
    (87.3
    )
    
    
    2.6
    
    
    
    160.8Total
    
    $
    1,710.0
    
    
    $
    324.2
    
    
    $
    455.3
    
    
    $
    474.5
    
    
    $
    17,965.9
 2005Red Lake
    
    $
    362.0
    
    
    $
    36.7
    
    
    $
    242.9
    
    
    $
    57.9
    
    
    $
    297.8Wharf
    
    
    37.1
    
    
    
    7.6
    
    
    
    3.9
    
    
    
    3.3
    
    
    
    41.9Luismin(3)
    
    
    90.7
    
    
    
    16.2
    
    
    
    19.7
    
    
    
    124.8
    
    
    
    1,447.0Alumbrera(3)
    
    
    299.2
    
    
    
    59.0
    
    
    
    134.4
    
    
    
    6.6
    
    
    
    931.3Amapari(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64.1
    
    
    
    288.3Silver Wheaton(3)
    
    
    65.7
    
    
    
    9.5
    
    
    
    19.5
    
    
    
    0.2
    
    
    
    478.9Peak(3)
    
    
    58.8
    
    
    
    8.6
    
    
    
    17.0
    
    
    
    20.2
    
    
    
    146.3Other(4)
    
    
    (17.1
    )
    
    
    (2.3
    )
    
    
    (32.2
    )
    
    
    0.4
    
    
    
    434.5Total
    
    $
    896.4
    
    
    $
    135.3
    
    
    $
    405.2
    
    
    $
    277.5
    
    
    $
    4,066.0
 2004Red Lake
    
    $
    152.2
    
    
    $
    14.8
    
    
    $
    102.6
    
    
    $
    49.5
    
    
    $
    282.8Wharf
    
    
    26.1
    
    
    
    6.0
    
    
    
    3.6
    
    
    
    6.1
    
    
    
    35.0Other
    
    
    12.7
    
    
    
    0.6
    
    
    
    (25.4
    )
    
    
    0.5
    
    
    
    383.7Total
    
    $
    191.0
    
    
    $
    21.4
    
    
    $
    80.8
    
    
    $
    56.1
    
    
    $
    701.5
 (1)
    
    Includes results of operations for the period subsequent to May 11,
2006, the date of acquisition of certain Placer Dome assets (note 3(b)).(2)
    
    Includes results of operations for the period from November 4, 2006, the
date of acquisition, onward of Glamis (note 3(a)).(3)
    
    Includes results of operations for the period subsequent to February 14,
2005, the date of acquisition of Wheaton (note 3(d)).(4)
    
    Includes cost of sales from silver sales in Luismin and Corporate
activities.




---



##### 



18. COMMITMENTS AND CONTINGENCIES
 (a)
    
    Commitments exist for capital expenditures of approximately $508.3 million, of which
$375.2 million relates to Peñasquito . The Company rents premises and leases
equipment under operating leases that expire over the next five years. Operating lease
expense in 2006 was $ 6.2 million (2005  $7.6 million; 2004  $5.3 million). Following is
a schedule of future minimum rental and lease payments required:
 2007
    
    $
    7.62008
    
    
    6.92009
    
    
    3.32010
    
    
    1.22011
    
    
    1.120.1Thereafter
    
    
    Total future minimum payments required
    
    $
    20.1
 (b)
    
    Due to the size, complexity and nature of the Companys operations, various legal and
tax matters are outstanding from time to time. In the opinion of management, these matters
will not have a material effect on the Companys consolidated financial position or results
of operations.
 19. RELATED PARTY TRANSACTIONS




---



##### 



20. RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
  
 2006OtherCanadian
    
    
    Equity
    
    
    US GAAP
    
    
    USGAAP
    
    
    adjustments (a)
    
    
    Adjustments
    
    
    GAAPRevenues
    
    $
    1,710.0
    
    
    $
    (653.7
    )
    
    $
    
    
    
    $
    1,056.3Operating expenses, exclusive of depreciation and depletion
    
    
    643.8
    
    
    
    (208.4
    )
    
    
    
    
    
    
    435.4Depreciation and depletion
    
    
    324.2
    
    
    
    (102.3
    )
    
    
    
    
    
    
    221.9Corporate administration
    
    
    83.0
    
    
    
    
    
    
    
    8.0
    (j)
    
    
    91.0Exploration
    
    
    29.0
    
    
    
    (1.4
    )
    
    
    24.9
    (b)
    
    
    52.5Write-down of mineral interests
    
    
    174.7
    
    
    
    
    
    
    
    
    
    
    
    174.7Earnings from operations
    
    
    455.3
    
    
    
    (341.6
    )
    
    
    (32.9
    )
    
    
    80.8Other income (expense)Interest and other income
    
    
    18.3
    
    
    
    (1.4
    )
    
    
    
    
    
    
    16.9Interest expense and finance fees
    
    
    (44.8
    )
    
    
    0.6
    
    
    
    
    
    
    
    (44.2
    )Gain on foreign exchange
    
    
    5.3
    
    
    
    0.4
    
    
    
    
    
    
    
    5.7Non-hedge derivative loss
    
    
    (4.1
    )
    
    
    
    
    
    
    
    
    
    
    (4.1
    )(Loss) gain on securities, net
    
    
    (5.0
    )
    
    
    
    
    
    
    9.8
    (d)
    
    
    4.8Gain on sale of shares in subsidiary
    
    
    109.8
    
    
    
    
    
    
    
    
    
    
    
    109.8Dilution gains
    
    
    63.8
    
    
    
    
    
    
    
    
    
    
    
    63.8Mark-to-market losses on Cdn $ share purchase warrants
    
    
    
    
    
    
    
    
    
    
    (610.4)
    (l)
    
    
    (610.4
    )Equity in earnings of Alumbrera and La Coipa
    
    
    
    
    
    
    240.0
    
    
    
    (4.3)
    (k)
    
    
    235.7Earnings (loss) before taxes and non-controlling interests
    
    
    598.6
    
    
    
    (102.0
    )
    
    
    (637.8
    )
    
    
    (141.2
    )Income and mining taxes
    
    
    154.5
    
    
    
    (102.0
    )
    
    
    (14.1
    )(i) (b) (d)
    
    
    38.4Non-controlling interests
    
    
    35.8
    
    
    
    
    
    
    
    (68.8)
    (l)
    
    
    (33.0
    )Net earnings (loss) before cumulative effect of change in accounting policy
    
    
    408.3
    
    
    
    
    
    
    
    (554.9
    )
    
    
    (146.6
    )Cumulative effect of change in accounting policy
    
    
    
    
    
    
    
    
    
    
    (14.9)
    (j)
    
    
    (14.9
    )Net earnings (loss)
    
    $
    408.3
    
    
    $
    
    
    
    $
    (569.8
    )
    
    $
    (161.5
    )Other comprehensive income (loss) (h)
    
    
    -Unrealized gain on securities, net of reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    41.1
    (d)
    
    
    41.1Comprehensive income (loss)
    
    $
    408.3
    
    
    $
    
    
    
    $
    (528.7)
    (h)
    
    $
    (120.4
    )(Loss) earnings per shareBefore the cumulative effect of changes in accounting policy
    
    $
    0.94
    
    
    
    
    
    
    
    
    
    
    $
    (0.34
    )Basic
    
    
    0.94
    
    
    
    
    
    
    
    
    
    
    
    (0.37
    )Diluted
    
    
    0.93
    
    
    
    
    
    
    
    
    
    
    
    (0.37
    )




---



##### 



2005OtherCanadian
    
    
    Equity
    
    
    US GAAP
    
    
    USGAAP
    
    
    adjustments (a)
    
    
    Adjustments
    
    
    GAAPRevenues
    
    $
    896.4
    
    
    $
    (299.2
    )
    
    $
    
    
    
    $
    597.2Operating expenses, exclusive of depreciation and depletion
    
    
    304.0
    
    
    
    (100.3
    )
    
    
    
    
    
    
    203.7Depreciation and depletion
    
    
    135.3
    
    
    
    (59.0
    )
    
    
    
    
    
    
    76.3Corporate administration
    
    
    43.9
    
    
    
    
    
    
    
    
    
    
    
    43.9Exploration
    
    
    8.0
    
    
    
    
    
    
    
    
    
    
    
    8.0Earnings from operations
    
    
    405.2
    
    
    
    (139.9
    )
    
    
    
    
    
    
    265.3Other income (expense)Interest and other income
    
    
    9.2
    
    
    
    3.7
    
    
    
    
    
    
    
    12.9Interest expense and finance fees
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1Gain on foreign exchange
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    0.5Gain on securities, net
    
    
    10.2
    
    
    
    
    
    
    
    
    
    
    
    10.2Dilution gain
    
    
    18.7
    
    
    
    
    
    
    
    
    
    
    
    18.7Other
    
    
    (3.6
    )
    
    
    
    
    
    
    
    
    
    
    (3.6
    )Mark-to-market losses on Cdn $ share purchase warrants
    
    
    
    
    
    
    
    
    
    
    (435.5)
    (l)
    
    
    (435.5
    )Equity in earnings of Minera Alumbrera Ltd
    
    
    
    
    
    
    92.7
    
    
    
    
    
    
    
    92.7Earnings before taxes and non-controlling interests
    
    
    440.3
    
    
    
    (43.5
    )
    
    
    (435.5
    )
    
    
    (38.7
    )Income and mining taxes
    
    
    142.4
    
    
    
    (43.5
    )
    
    
    2.3
    (i)
    
    
    101.2Non-controlling interests
    
    
    12.2
    
    
    
    
    
    
    
    (17.2)
    (l)
    
    
    (5.0
    )Net earnings (loss)
    
    $
    285.7
    
    
    $
    
    
    
    $
    (420.6
    )
    
    $
    (134.9
    )Other comprehensive income (loss) (h)Unrealized losses on securities, net of reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    (2.7)
    (d)
    
    
    (2.7
    )Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    (5.8)
    (g)
    
    
    (5.8
    )Comprehensive income (loss)
    
    $
    285.7
    
    
    $
    
    
    
    $
    (429.1)
    (h)
    
    $
    (143.4
    )(Loss) earnings per shareBasic
    
    $
    0.91
    
    
    
    
    
    
    
    
    
    
    $
    (0.43
    )Diluted
    
    
    0.83
    
    
    
    
    
    
    
    
    
    
    
    (0.43
    )




---



##### 



2004Canadian
    
    
    US GAAP
    
    
    USGAAP
    
    
    adjustments
    
    
    GAAPRevenues
    
    $
    191.0
    
    
    $
    
    
    
    $
    191.0Operating expenses, exclusive of depreciation and depletion
    
    
    66.6
    
    
    
    
    
    
    
    66.6Depreciation and depletion
    
    
    21.4
    
    
    
    
    
    
    
    21.4Corporate administration
    
    
    15.5
    
    
    
    
    
    
    
    15.5Exploration
    
    
    6.7
    
    
    
    
    
    
    
    6.7Earnings from operations
    
    
    80.8
    
    
    
    
    
    
    
    80.8Other income (expense)Interest and other income
    
    
    9.3
    
    
    
    
    
    
    
    9.3Interest expense and finance fees
    
    
    0.1
    
    
    
    
    
    
    
    0.1Gain on foreign exchange
    
    
    0.2
    
    
    
    
    
    
    
    0.2Loss on securities, net
    
    
    (9.0
    )
    
    
    
    
    
    
    (9.0
    )Mark-to-market gains on Cdn $ share purchase warrants
    
    
    
    
    
    
    7.4
    (l)
    
    
    7.4Earnings before taxes and non-controlling interests
    
    
    81.4
    
    
    
    7.4
    
    
    
    88.8Income and mining taxes
    
    
    30.1
    
    
    
    1.4
    (i)
    
    
    31.5Net earnings
    
    $
    51.3
    
    
    $
    6.0
    
    
    $
    57.3Other comprehensive income (h)Unrealized losses on securities, net of reclassification adjustment
    
    
    
    
    
    
    (1.3)
    (d)
    
    
    (1.3
    )Cumulative translation adjustment
    
    
    
    
    
    
    41.4
    (g)
    
    
    41.4Comprehensive income
    
    $
    51.3
    
    
    $
    46.1
    (h)
    
    $
    97.4Earnings per shareBasic
    
    $
    0.27
    
    
    
    
    
    
    $
    0.30Diluted
    
    
    0.27
    
    
    
    
    
    
    
    0.30




---



##### 



2006EquityCanadian
    
    
    adjustments
    
    
    Other
    
    
    USGAAP
    
    
    (a)
    
    
    adjustments
    
    
    GAAPCurrent assets
    
    $
    883.4
    
    
    $
    (340.3
    )
    
    $
    12.1
    (d)
    
    $
    555.2Mining interests
    
    
    15,128.8
    
    
    
    (764.4
    )
    
    
    (24.9
    )  (b)
    
    
    14,339.5Equity adjustments for incorporated joint venture interests
    
    
    
    
    
    
    805.0
    
    
    
    (15.4
    )  (k)
    
    
    789.6Other non-current assets
    
    
    1,953.7
    
    
    
    (52.2
    )
    
    
 92.0
    (l) (d)
    
    
    1,993.5$
    17,965.9
    
    
    $
    (351.9
    )
    
    $
 63.8
    
    
    $
    17,677.8Current liabilities
    
    $
    465.6
    
    
    $
    (112.7
    )
    
    $
 
    
    
    $
    352.9Derivative liability
    
    
    6.1
    
    
    
    
    
    
    
 495.8
    (j) (l)
    
    
    501.9Other non-current liabilities
    
    
    4,664.7
    
    
    
    (239.2
    )
    
    
 2.4
    (b) (d)
    
    
    4,427.95,136.4
    
    
    
    (351.9
    )
    
    
    498.2
    
    
    
    5,282.7Non-controlling interests
    
    
    354.5
    
    
    
    
    
    
    
    (96.8
    )  (d) (l)
    
    
    257.7Shareholders equity
    
    
    12,475.0
    
    
    
    
    
    
    
    (337.6
    )
    
    
    12,137.4$
    17,965.9
    
    
    $
    (351.9
    )
    
    $
    63.8
    
    
    $
    17,677.8
 2005EquityCanadian
    
    
    adjustments
    
    
    Other
    
    
    USGAAP
    
    
    (a)
    
    
    adjustments
    
    
    GAAPCurrent assets
    
    $
    766.2
    
    
    $
    (155.2
    )
    
    $
    3.9
    (d)
    
    $
    614.9Mining interests
    
    
    2,980.8
    
    
    
    (724.7
    )
    
    
    
    
    
    
    2,256.1Equity adjustment for incorporated joint venture interest
    
    
    
    
    
    
    665.0
    
    
    
    
    
    
    
    665.0Other non-current assets
    
    
    319.0
    
    
    
    (51.4
    )
    
    
    21.5
    (l)
    
    
    289.1$
    4,066.0
    
    
    $
    (266.3
    )
    
    $
    25.4
    
    
    $
    3,825.1Current liabilities
    
    $
    190.8
    
    
    $
    (59.3
    )
    
    $
    
    
    
    $
    131.5Derivative liability
    
    
    
    
    
    
    
    
    
    
    787.1
    (l)
    
    
    787.1Other non-current liabilities
    
    
    792.8
    
    
    
    (207.0
    )
    
    
    7.1
    (i)
    
    
    592.9983.6
    
    
    
    (266.3
    )
    
    
    794.2
    
    
    
    1,511.5Non-controlling interests
    
    
    108.6
    
    
    
    
    
    
    
    (46.4)
    (l)
    
    
    62.2Shareholders equity
    
    
    2,973.8
    
    
    
    
    
    
    
    (722.4)
    
    
    
    2,251.4$
    4,066.0
    
    
    $
    (266.3
    )
    
    $
    25.4
    
    
    $
    3,825.1




---



##### 



2006
    
    
    2005
    
    
    2004Shareholders equityIn accordance with Canadian GAAP
    
    $
    12,475.0
    
    
    $
    2,973.8
    
    
    $
    577.8US GAAP adjustments detailed below
    
    $
    (337.6
    )
    
    $
    (722.4
    )
    
    $
    (26.4
    )In accordance with US GAAP
    
    $
    12,137.4
    
    
    $
    2,251.4
    
    
    $
    551.4Common shares and share purchase warrantsIn accordance with Canadian GAAP
    
    $
    11,705.6
    
    
    $
    2,609.3
    
    
    $
    379.4Renunciation of tax deductions on flow-through shares(f)
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.3Reclassification of Cdn $ share purchase warrants(l)
    
    
    719.6
    
    
    
    (283.0
    )
    
    
    (10.2
    )Reclassification of stock options(j)
    
    
    18.6
    
    
    
    
    
    
    
    In accordance with US GAAP
    
    $
    12,445.1
    
    
    $
    2,327.6
    
    
    $
    370.5Accumulated other comprehensive income(h)Cumulative translation adjustment:In accordance with Canadian GAAP
    
    $
    101.9
    
    
    $
    101.9
    
    
    $
    107.7Realization of cumulative translation adjustment (g)
    
    
    3.4
    
    
    
    3.4
    
    
    
    3.4In accordance with US GAAP
    
    
    105.3
    
    
    
    105.3
    
    
    
    111.1Unrealized gains on available-for-sale securities:In accordance with Canadian GAAP
    
    
    
    
    
    
    
    
    
    
    Unrealized
holding gains arising, net of taxes of $8.5 million (2005  $3.0 million; 2004  $1.9
million)(d)
    
    
    40.9
    
    
    
    12.0
    
    
    
    7.6Cumulative reclassification adjustments for realized losses (gains) recorded in earnings, net of
taxes of $0.9 million (2005  $2.0 million; 2004  $0.3 million) (d)
    
    
    4.1
    
    
    
    (8.1
    )
    
    
    (1.1
    )In accordance with US GAAP
    
    
    45.0
    
    
    
    3.9
    
    
    
    6.5Total accumulated other comprehensive income
    
    $
    150.3
    
    
    $
    109.2
    
    
    $
    117.6Stock options and additional paid in capitalIn accordance with Canadian GAAP
    
    $
    120.2
    
    
    $
    44.5
    
    
    $
    7.3Elimination of deficit with offsetting reduction to contributed surplus (e)
    
    
    14.3
    
    
    
    14.3
    
    
    
    14.3Reclassification of stock options(j)
    
    
    (96.6
    )
    
    
    
    
    
    
    In accordance with US GAAP
    
    $
    37.9
    
    
    $
    58.8
    
    
    $
    21.6Retained earnings (Accumulated deficit)In accordance with Canadian GAAP
    
    $
    547.3
    
    
    $
    218.1
    
    
    $
    83.4Realization of cumulative translation adjustment(g)
    
    
    (3.4
    )
    
    
    (3.4
    )
    
    
    (3.4
    )Changes to contributed surplus (e)
    
    
    (14.3
    )
    
    
    (14.3
    )
    
    
    (14.3
    )Renunciation of tax deductions on flow-through shares(f)
    
    
    (1.3
    )
    
    
    (1.3
    )
    
    
    (1.3
    )Elimination of effect of use of substantively enacted rates on future income taxes (i)
    
    
    
    
    
    
    (7.1
    )
    
    
    (4.7
    )Mark-to-market loss on share purchase warrants (l)
    
    
    (977.8
    )
    
    
    (436.2
    )
    
    
    (18.0
    )Additional stock compensation expense(j)
    
    
    (8.0
    )
    
    
    
    
    
    
    Unrealized
holding gains on
securities(d)
    
    
    8.0
    
    
    
    
    
    
    
    Cumulative effect of change in accounting policy(j)
    
    
    (14.9
    )
    
    
    
    
    
    
    Elimination of development costs (b)
    
    
    (16.1
    )
    
    
    
    
    
    
    Elimination of capitalized deferred stripping (k)
    
    
    (15.4
    )
    
    
    
    
    
    
    In accordance with US GAAP
    
    $
    (495.9
    )
    
    $
    (244.2
    )
    
    $
    41.7




---



##### 



2006
    
    
    2005
    
    
    2004Operating activitiesOperating activities under Canadian GAAP
    
    $
    791.3
    
    
    $
    465.8
    
    
    $
    53.1Development costs capitalized under Canadian GAAP(b)
    
    
    (24.9
    )
    
    
    
    
    
    
    Incorporated joint venture equity adjustment(a)(k)
    
    
    (331.6
    )
    
    
    (18.3
    )
    
    
    Operating activities under US GAAP
    
    
    434.8
    
    
    
    447.5
    
    
    
    53.1Investing activitiesInvesting
activities under Canadian GAAP
    
    
    (2,276.9
    )
    
    
    (220.8
    )
    
    
    (73.1
    )Development costs capitalized under Canadian GAAP(b)
    
    
    24.9
    
    
    
    
    
    
    
    Incorporated joint venture equity adjustment (a) (k)
    
    
    9.3
    
    
    
    6.6
    
    
    
    Investing activities under US GAAP
    
    
    (2,242.7
    )
    
    
    (214.2
    )
    
    
    (73.1
    )Financing activitiesFinancing activities under Canadian GAAP
    
    
    1,478.4
    
    
    
    (21.5
    )
    
    
    (49.6
    )Incorporated joint venture equity adjustment (a)
    
    
    112.5
    
    
    
    (46.9
    )
    
    
    Financing activities under US GAAP
    
    
    1,590.9
    
    
    
    (68.4
    )
    
    
    (49.6
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    0.2
    
    
    
    5.3
    
    
    
    24.0(Decrease) increase in cash and cash equivalents under US GAAP
    
    
    (216.8
    )
    
    
    170.2
    
    
    
    (45.6
    )Cash and cash equivalents, beginning of year under US GAAP
    
    
    503.6
    
    
    
    333.4
    
    
    
    379.0Cash and cash equivalents, end of year under US GAAP
    
    $
    286.8
    
    
    $
    503.6
    
    
    $
    333.4
  (a) Joint venture interests
 Under Canadian GAAP, the Company proportionately consolidates its interests in the
incorporated joint ventures of Alumbrera and La Coipa. Under US GAAP, the Company is
required to equity account for these investments and records its proportionate share of their
net earnings in equity in earnings of Alumbrera and La Copia. In addition, under Canadian
GAAP, the Company proportionately consolidates its interests in the unincorporated joint
ventures of Porcupine, Musselwhite and Marigold. US GAAP allows interests in unincorporated
joint ventures in the natural resource industry to be accounted for by proportionate
consolidation.
 (b) Development expenditures applicable to mining properties
 Under Canadian GAAP, exploration costs incurred to the date of establishing that a property
is economically recoverable are charged to operations. Further development expenditures are
capitalized to the property. Under US GAAP, exploration costs incurred until the completion
of a final feasibility study on the property are charged to operations.
 Under US GAAP, $24.9 million of such expenditures would be recorded in operations during the
period they were incurred which results in a $16.1 million (net of tax of $8.8 million)
charge to income during the year ended December 31, 2006 arising from mining expenditures
incurred on the Éléonore, Pueblo Viejo and Mt Milligan development projects.
 (c) Commencement of commercial production
 Under Canadian GAAP, the Company uses specific criteria to assess the point at which an
operation commences commercial production (note 2 (h)). Under US GAAP, the Company determines
commencement of production whereby the production phase of a mine is determined to have begun
when saleable minerals are extracted (produced) from an ore body, regardless of the level of
production. However, the production phase does not commence with the removal of de minimus
saleable mineral material that occurs in conjunction with the removal of overburden or waste
material for the purpose of obtaining access to an ore body. There are no material US and
Canadian GAAP differences with respect to the Companys determination of commencement of
commercial production.




---



##### 



(d) Investments in securities
 Under US GAAP (SFAS 115), the Companys investments in securities would be classified as
available-for-sale securities and carried at fair value. The unrealized holding gains on
available-for-sale securities are not recognized under Canadian accounting principles, but
are recognized under United States accounting principles as a component of comprehensive
income and reported as a net amount in a separate component of shareholders equity until
realized. The unrealized gains on trading securities are also not recognized
under Canadian accounting principles but are recognized under United
States accounting principles in net earnings. The Companys marketable securities increased by $12.1 million (2005  $3.9
million) and long-term investments increased by $70.5 million (2005  nil) as a result of
valuing at fair value with an increase in future income tax liabilities of $11.2 million
(2005  1.0). The amounts recorded in comprehensive income are shown net of tax expense
(recovery) of $8.4 million (2005  ($0.6) million;
2004  ($0.3) million). The amounts recorded in net earnings are $8.0 million (net of tax of
$1.8 million). The 2006
unrealized holding gain includes $18.4 million related to Silver Wheatons non-controlling
interests.
 (e) Contributed surplus
 Prior to 2004, under Canadian GAAP the Company used $70.6 million of contributed surplus to
eliminate a deficit which is not allowed for under US GAAP. Also prior to 2004, for US GAAP
purposes the Company reduced contributed surplus by $56.3 million resulting from the
amalgamation with another company.
 (f) Flow through shares
 Under US GAAP, the renunciation of tax deductions to holders of flow-through shares is
allocated between the offering of shares and the sale of tax benefits when the shares are
offered. The allocation, is made based on the difference between the quoted price of the
existing shares and the amount the investor pays for the flow through shares rather than as a
cost of issuing equity as required by Canadian GAAP.
 (g) Cumulative translation adjustment
 The change in cumulative translation adjustment recorded in the balance sheet for Canadian
GAAP is recorded in the calculation of comprehensive income for US GAAP. The Company
changed its functional currency to the United States dollar on April 1, 2005. There is no
change in the cumulative translation adjustment in 2006 (2005  $5.8 million; 2004  $41.4
million).
 Under US GAAP, a proportionate amount of the cumulative translation adjustment account ($3.4
million) is not recognized in earnings when there is a reduction in the Companys net
investment in a subsidiary as a result of dividend distributions.
 (h) Comprehensive income
 Under US GAAP, SFAS 130, Reporting Comprehensive Income establishes rules for the reporting
and display of comprehensive income and its components. Comprehensive income is net income,
plus certain other items that are recorded directly to shareholders equity such as foreign
currency translation adjustments and unrealized gains (losses) on securities.
 (i) Mining taxes
 Certain changes to income tax legislation affecting mining companies became law in 2003.
However, the enabling regulations which quantify the deduction for mining taxes paid
permitted by this change in legislation (which was considered to be substantively enacted for
Canadian GAAP purposes) did not receive the required approval to be considered enacted for US
GAAP purposes until October 4, 2006. Consequently for US GAAP purposes the 2004 and 2005
results have been adjusted to remove the benefit accrued for the deduction for income tax
purposes of actual provincial and other Crown royalties and mining taxes. As these
legislative changes are now enacted for US GAAP purposes, the cumulative adjustment of $7.1
million with respect to these income tax benefits have been taken into net earnings in 2006.




---



##### 



(j) Stock options
 The Company has a stock-based employee compensation plan (note14(b)). On January 1, 2006,
the Company adopted SFAS 123R, Accounting for Stock Based Compensationon a modified
prospective basis. Share-based benefits have been valued at fair value using the
Black-Scholes option pricing model for option grants and the grant date fair market value for
stock awards. Compensation amounts have been expensed over the applicable vesting period,
with the following exception.
 Stock options issued to employees of foreign operations, with an exercise price denominated
in a currency other than the Companys functional currency or the local currency of the
foreign operation, are required to be classified and accounted for as financial liabilities
and fair valued. The cumulative effect of this change in accounting policy has been recorded
as at January 1, 2006. The cumulative effect of the change in accounting policy adjustment is
$14.9 million providing a total increase to derivative liabilities of $23.4 million and a
decrease to share capital of $8.5 million. For the year ended December 31, 2006, the net
effect to US GAAP net earnings of reflecting the mark-to-market impacts related to fair
valuation of these stock options, is to reduce net earnings in 2006 by an additional amount
of $8.0 million arising from the recognition of a mark-to-market loss on these stock options.
On November 4, 2006, the Company re-issued options to certain Glamis employees as part of the
acquisition which resulted in the liability relating to stock options increasing by $69.6
million. The total liability as at December 31, 2006 relating to
stock options issued to
employees of the foreign operations totaled $100.9 million. Stock options and additional paid in capital was decreased
by $96.6 million relating to the reclassification of $69.5 million to
liabilities for new options issued to foreign operations, the
reclassification of $18.6 million to common shares on the exercise of
options and the cumulative impact of the change in accounting policy
of $8.5 million.
 (k) Deferred stripping costs
 On January 1, 2006, the Company adopted EITF 04-06, Accounting for Stripping Costs Incurred
During Production in the Mining Industry, which contrasts the Canadian guidance EIC -160,
Stripping Costs Incurred in the Production Phase of a Mining Operation. Under US GAAP
capitalized deferred stripping is not permissible, therefore any additions to the deferred
strip balance capitalized under Canadian GAAP is charged to cost of sales for US GAAP as gold
is produced and sold. The Company has adjusted for this difference prospectively from January
1, 2006, with the cumulative effect of the change in accounting policy being recorded to the
opening balance of retained earnings as at January 1, 2006. This adjustment impacts Alumbrera
only and is net of tax. The opening retained earnings adjustment is $11.1 million (net of
future income tax liability of $4.8 million). For the year ended December 31, 2006, the net
effect of expensing the stripping costs for US GAAP is $4.3 million (net of future income tax
liability recovery of $1.8 million).
 (l) Share purchase warrants
 For Canadian GAAP purposes, all of the Companys outstanding share purchase warrants are
classified and accounted for as equity on the Companys financial statements. A recent
interpretation of US GAAP, in accordance with SFAS 133, Accounting for Derivative
Instruments and Hedging Activities,currently requires share purchase warrants with an
exercise price denominated in a currency other than the Companys functional currency be
classified and accounted for as a financial liability and fair valued. The net effect to US
GAAP net earnings of reflecting the mark-to-market impacts related to fair valuation of these
series of warrants is to reduce net earnings in 2006 by an amount of $610.4 million net of
non-controlling interests of $68.8 million arising from the recognition of a mark-to-market
loss on the share purchase warrants (2005  mark-to-market loss of $435.5 million net of
non-controlling interests of $17.2. million and 2004  mark-to-market gain of $7.4 million).
A derivative liability at December 31, 2006 of $394.9 million (2005  $787.1 million) has
been recorded for these warrants. The non-controlling interest share of the warrant
derivative liability is $115.2 million (2005  $46.4 million). The $719.6 million




---



##### 



reclassification of warrants from derivative liabilities to common shares and share purchase
warrants in 2006 relates to the early exercise of the five existing series of warrants at the
time of announcement in March 2006.
 In addition, the Company has restated its Goodwill arising from the purchase of Wheaton River
in 2005 in the amount of $21.5 million due to the impact of this interpretation on the net
asset value of Silver Wheaton, a subsidiary acquired as part of that purchase.
 (m) Pro forma information on business combinations
 Under US GAAP, SFAS 141 requires disclosure of certain pro forma information when a business
combination is effected. The following table presents the pro forma results of operations for
informational purposes, assuming that the Company had acquired Glamis, certain Placer Dome
assets, Virginia and Wheaton at the beginning of 2005.
 2006
    
    2005Revenues
    
    
    $1,437.9
    
    
    $
    1,066.9Net loss
    
    
    (210.7
    )
    
    
    (204.4
    )Pro forma basic and diluted loss per share
    
    
    (0.30
    )
    
    
    (0.29
    )
 The pro forma results of operations give effect to certain adjustments including the increase
in depletion, depreciation and amortization resulting from adjustments to asset carrying
values upon acquisition of mine assets. The pro forma basic and diluted loss per share have
been calculated assuming the common shares issued in connection with the acquisition of
Glamis, Virginia and Wheaton were issued at the beginning of 2005. This information may not
necessarily be indicative of the future combined results of operations of the Company.
 (n) Impact of recent United States accounting pronouncements
 Recently issued United States accounting pronouncements have been outlined below.
 In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial
Instruments  an amendment of FASB statement 133 and 140 (SFAS 155). This Statement
simplifies accounting for certain hybrid financial statements by permitting fair value
remeasurements for any hybrid financial instrument that contains an embedded derivative that
would otherwise require bifurcation, and eliminates the restriction on the passive derivative
instruments that a qualifying special  purpose entity (SPE) may hold, with any changes in
fair value recognized to earnings. SFAS 155 is effective for all financial instruments
acquired or issued in the first fiscal year beginning after Sept. 15, 2006. The Company
believes the adoption of SFAS 155 will not have a material impact on its results of
operations.
 In July 2006, the FASB issued FIN 48 Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109. This interpretation provides guidance on the
financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. FIN 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosures, and transition. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Company is currently
evaluating the impact of the adoption of this standard on its Consolidated Financial
Statements.
 In September 2006, the FASB issued SFAS No. 157 Fair Value Measurements (SFAS No. 157)
which defines fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value measurements. This
statement is effective for fiscal periods beginning after November 15, 2007. The Company is
currently evaluating the impact of the adoption of this standard on its Consolidated
Financial Statements.




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Also in September 2006, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements (SAB 108). SEC staff issued
SAB 108 to address what they identified as diversity in practice whereby entities were using
either an income statement approach or a balance sheet approach, but not both, when
evaluating whether an error is material to an entitys financial statements. SAB 108 requires
that in quantifying and analyzing misstatements, both the income statement approach and the
balance sheet approach should be used to evaluate the materiality of financial statement
misstatements. SAB 108 is effective for interim and annual periods ending after November 15,
2006. SAB 108 allows for a one-time transitional cumulative effect adjustment to retained
earnings on January 1, 2006 for errors previously deemed not material, but would be material
under the requirements of SAB 108. Goldcorp has historically used the income statement
approach to quantify potential financial statements misstatements. As required by SAB 108,
the Company has re-evaluated prior period errors previously deemed not material using the
balance sheet approach. Based on this evaluation, the Company did not identify any material
errors or misstatements that were previously deemed not material under the income statement
approach. Going forward, the Company will apply both methods in quantifying potential
financial statement errors and misstatements, as required by SAB 108.
 In February 2007, the FASB issued SFAS No. 159 The Fair Value Option for Financial Assets
and Financial Liabilities  including an amendment of FASB Statement No. 115 (SFAS No.
159) which permits entities to choose to measure many financial instruments and certain
other items at fair value. This statement is effective for fiscal periods beginning after
November 15, 2007. The Company is currently evaluating the impact of the adoption of this
standard on its Consolidated Financial Statements.
 21. SUBSEQUENT EVENT
 On February 19, 2007, Goldcorp signed a letter of intent to sell its Peak mine in Australia
and its Amapari mine in Brazil to GPJ Ventures Ltd (GPJ), which will change its name to Peak
Gold Ltd (Peak Gold) in connection with the transaction. Under the terms of the agreement,
Goldcorp will receive from Peak Gold $200 million in cash and $100 million payable through the
issuance of Peak Gold common shares. Upon completion of the sale, Goldcorp will own
approximately 22% of Peak Gold.
 Completion of the transaction is subject to a number of conditions, including the execution of
definitive agreements, requisite regulatory approvals, completion by GPJ of at least C$277.5
million equity financing and approval by disinterested shareholders of GPJ. The transaction is
expected to close during the second quarter of 2007.




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