Goldcorp First-Quarter Earnings Double From Year Ago

Allen Sykora  Wednesday April 26, 2017 18:23

Goldcorp Inc. (TSX: G, NYSE: GG) first-quarter earnings doubled from a year ago as costs fell even though production did likewise, the company said late Tuesday.

Net earnings were listed at $170 million, or 20 cents per share, compared to $80 million, or 10 cents, for the first quarter of 2016.

The company listed gold production of 655,000 ounces at all-in sustaining costs of $800 per ounce, compared to 784,000 ounces at AISC of $836 per ounce in the year-ago period. The decrease in AISC was primarily due to a focus on cost containment, with lower corporate administration and sustaining capital costs and higher realized by-product prices at Peñasquito, partially offset by lower sales volumes, Goldcorp said.

First-quarter operating cash flow was $227 million and adjusted operating cash flow was $269 million, of which $74 million was used to fund the growth pipeline, $65 million to repurchase a gold stream on the company's NuevaUnión project and $15 million to pay dividends.

The company said its project pipeline is on track to deliver a 20% increase in gold production, a 20% increase in gold reserves and a 20% reduction in AISC over the next five years.

"Strong first-quarter results were driven by solid production and low all-in sustaining costs, with our $250 million annual sustainable efficiency program well advanced and already benefitting the bottom line," said David Garofalo, president and chief executive officer. "To deliver on the 20/20/20 growth plan, we are maintaining a laser focus on execution, while simultaneously optimizing our asset portfolio and driving down costs.”

During the quarter, the company announced a 50-50 joint venture with Barrick Gold Corp. (NYSE, TSX: ABX) on the Maricunga district in Chile, as well as the completion of approximately $500 million in divestitures of non-core assets. This “underlies our strategy of growing net asset value per share by delivering 3 (million) to 4 four million ounces of sustainable, annual gold production from six to eight core camps," Garofalo said.

Goldcorp confirmed previous 2017 guidance of approximately 2.5 million ounces at an estimated AISC of $850 per ounce.

The company also updated its 2017 exploration program, reporting that drilling at Cerro Negro returned “positive results.” Goldcorp cited “encouraging” results from Silica Cap and the Bajo Negro hanging wall, supporting continued drilling on these two targets. Results include: 20.80 grams per tonne of gold over 5.01 meters and 4.75g/t over 5.16 meters. Drilling at the Coffee project began, and studies at Peñasquito yielded 13 new targets for follow-up testing, Goldcorp said. Meanwhile, at the Timmins Camp, additional targets were identified and as part of the pre-feasibility study at the Century project, drilling is under way with the aim of converting mineral resources to mineral reserves.