08-31-06 12:13 PM EST

NEW YORK -(Dow Jones)- Over the next two years, gold prices are expected to rise by some $200 an ounce, said Ian Telfer, president and chief executive of Goldcorp Inc. (GG), speaking during a conference call Thursday about his company's newly announced merger with Glamis Gold Ltd. (GLG).

During the negotiations to combine the two companies, which would create one of the world's largest gold mining companies, Telfer said a longer-term gold price of $550 an ounce and $9 an ounce silver price was used, although he expects much higher prices in the coming years.

Looking ahead to the next two years, Telfer said gold prices, which are currently trading around $630 an ounce on the Comex division of the New York mercantile Exchange, could surpass the old high of more than $800 an ounce seen in 1980.

Glamis President and Chief Executive Kevin McArthur said he would not be surprised to see four-digit gold prices in the longer-term.

"We are building a company based on low cost mines and we are building mines to sustain over the long term so we believe there is tremendous upside" to the gold price, said McArthur during the call.

He added that the newly formed company, which will continue under the name Goldcorp Inc., will not hedge as they predict that gold prices will continue to move higher.

"We will be the only senior gold company with zero hedging," said McArthur.

While the company does produce some base metals, McArthur said the newly formed company will continue to mainly focus on gold.

The company is looking at a ratio of 80-to-20 in its precious metals holdings versus its base metals assets but said gold will remain the top metal.

"(Gold) is what the company is built on," said McArthur.

The $8.6 billion deal in stock, based on the closing price of Goldcorp's stock Wednesday, will allow for common shareholders to exchange each Glamis share for 1.69 common shares of Goldcorp.

The deal is expected to close in November.

-By Alison Guerriere Ciaccio; Dow Jones Newswires; 201-938-5959; alison.guerriere@dowjones.com

(END) Dow Jones Newswires
08-31-06 1213ET
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