By Kitco News

Wednesday July 27, 2016 20:33

(Kitco News) - Goldcorp Inc. (TSX: G, NYSE: GG) Wednesday reported a net loss in the second quarter on lower production that was expected and also announced a decision to proceed with expansions at the Peñasquito and Musselwhite mines.

Goldcorp listed a net loss of $78 million, or 9 cents per share, compared to net earnings of $392 million, or 47 cents, in the year-ago period. Net earnings in 2015 included non-recurring after-tax gains on the sale of non-core assets of $358 million, or 43 cents per share.

Gold production from April through June was 613,400 ounces at all-in sustaining costs of $1,067 per ounce, compared to 908,000 ounces at AISC of $853 per ounce a year ago, the company said.

Goldcorp officials said they expected lower gold production in the second quarter mainly due to planned lower ore grades, a 10-day mill shutdown for planned maintenance at Peñasquito and the exhaustion of surface stockpiles at Cerro Negro. Further, output was hurt by a slower-than-expected ramp-up after the mill shutdown at Peñasquito and the decision to accelerate a large workforce reduction at Cerro Negro.

Still, the company maintained 2016 guidance for gold production of between 2.8 million and 3.1 million ounces at AISC of between $850 and $925 per ounce.

Production is expected to increase in the third and fourth quarter since the plant at Peñasquito returned to normal operations in July and higher grades are expected from a number of mines, Goldcorp said. AISC are expected to decrease as a result of higher production.

Adjusted operating cash flow was $307 million, compared to $523 million in 2015.

"While lower production was expected in the second quarter, the decision to accelerate a significant organizational restructuring had a short-term, negative impact on gold production,” said David Garofalo, president and chief executive officer. “With the decentralization of our business well under way and new mine management installed at the majority of our operations to reflect the new business model, Goldcorp is poised to deliver better gold production and cost performance.”

The company announced board approval to proceed with the Pyrite leach project at Peñasquito, with an expected capital investment of approximately $420 million, and the materials handling project at Musselwhite, with an expected capital investment of approximately $90 million. Both are expected to increase production beginning in 2019, Goldcorp said.

Source:Kitco