Goldcorp Reverses To Profit In First Quarter; Costs Down While Production Up

By Paul Ploumis (ScrapMonster Author)

April 29, 2016 02:57:33 AM

(Kitco News) - Goldcorp Inc. reported Wednesday that it was profitable in the first quarter as costs declined and production rose.

Net earnings were $80 million, or 10 cents per share, compared to a net loss of $87 million, or 11 cents per share, in the first quarter of 2015.

Goldcorp reported production of 783,700 ounces during the January-March period at all-in sustaining costs of $836 per ounce. Output was up from 724,800 in the same period a year ago, when AISC were $885 an ounce.

The lower AISC was primarily a result of lower production costs from favorable foreign-exchange impacts at Canadian, Mexican and Argentine operations, the company said.

“We delivered a solid first quarter of production at low all-in sustaining costs” said David Garofalo, president and chief executive officer. “Éléonore and Cerro Negro continued their ramp-up with underground mine development advancing well at both assets.”

He added that the company aims for “further productivity improvements at current operations and to leverage our existing mining camps by advancing low capital intensity, high rate of return internal growth opportunities.”

The company listed negative free cash flow of $101 million, although this was less than the negative $321 million in the same period a year ago. Officials said they anticipate being back to “substantially” positive cash flow by year-end.

“Similar to 2015, first-quarter free cash flow was impacted by a working capital increase, which is expected to reverse over the balance of the year,” the company said in its earnings release. “The improvement in the first quarter of 2016 as compared to 2015 was due to lower capital expenditures with the completion of the construction of Éléonore and Cerro Negro mines.”

Goldcorp reconfirmed its 2016 guidance, projecting gold production to be between 2.8 million and 3.1 million ounces with total cash costs between $500 and $575 per ounce on a by-product basis, and all-in sustaining costs between $850 and $925 per ounce.

Second-quarter production will be approximately 15% lower than the first, Goldcorp said. During the second quarter, output will be dented by planned lower-grade mining sequences in most mines and a 10-day mill shutdown for preventative maintenance at Peñasquito.

Goldcorp said over the next two years, the company is targeting $250 million per year in mine site and corporate efficiencies through an initiative to decentralize the organization, drive ownership and accountability down to the individual mine sites and maximize the net asset value of the existing business.

Courtesy: Kitco News