(GG) Goldcorp’s Earnings Miss – Profit Slides

Goldcorp Inc.’s (GG) first-quarter 2013 adjusted earnings (excluding one-time items) of 31 cents a share missed the Zacks Consensus Estimate of 40 cents and were well below 50 cents a share earned in the year-ago quarter.

Profit, as reported, amounted to $309 million or  33 cents per share in the reported quarter, down roughly 35% from $479 million or  51 cents in the prior-year quarter, hurt by a double-digit decline in sales.

Goldcorp, which is among the prominent gold miners along with Barrick Gold Corporation (ABX), Newmont Mining Corporation (NEM) and Kinross Gold Corporation (KGC), posted revenues of $1.02 billion in the quarter, down roughly 16% year over year. It missed the Zacks Consensus Estimate of $1.39 billion.

Gold sales jumped 9% year over year to 595,100 ounces in the reported quarter and production increased 17.1% to 614,600 ounces. Silver production, on the other hand, declined 14.9% year over year to 5.6 million ounces from 6.6 million ounces in the prior-year quarter. All-in sustaining costs totaled $1,135 per ounce, $565 per ounce on a by-product basis and $710 per ounce on a co-product basis.

Mining Highlights

At the Red Lake Mine in Canada, gold production went up almost 27.4% year over year to 145,500 ounces in the quarter. Total cash cost was $476 per ounce, a year-over-year decline of almost 9%.

At Porcupine in Ontario, gold production increased 10.7% to 67,200 ounces with total cash cost coming in at $797 per ounce.

Gold production at Musselwhite climbed 11.1% to 59,100 ounces at a total cash cost of $841 per ounce.

At the Penasquito mine, gold production declined 12.4% to 60,100 ounces. Total cash cost was $611 per ounce of gold on a by-product basis compared with negative $751 in year-ago quarter. Silver production at the mine was about 3.9 million ounces compared with 5 million ounces in the year-ago quarter.

At the Los Filos mine, gold production came down 1.5% to 81,500 ounces at total cash cost of $589 per ounce.

At Marlin, gold production declined 6% year over year to 50,000 ounces at a cash cost of $102 per ounce on a by-product basis. Silver production declined 4.8% to 1.6 million ounces.

At Alumbrera, gold and copper production totaled 24,700 ounces and 18.8 million pounds, respectively, a year-over-year decline of 10.5% and 22%, respectively. Total cash cost was $14 per ounce on a by-product basis.

At Pueblo Viejo, where Goldcorp holds a 40% interest with the rest owned by Barrick Gold, gold production was 64,100 ounce in the quarter. Pueblo Viejo achieved commercial production in Jan 2013 and ramp up to full capacity is expected in the second half of 2013.

Financial Position

As of Mar 31, 2013, cash and cash equivalents were $1,463 million versus $1,394 million as of Mar 31 2012. Long-term debt stood at $2,275 as of Mar 31, 2013, compared with $748 million as of Mar 31, 2012. The company’s adjusted operating cash flow was $400 million in the reported quarter.

Project Update

Goldcorp is conducting several studies related to a number of its growth projects. The company’s next generation projects under construction, including Cerro Negro in Argentina, Eleonore in Quebec and Cochenour in Ontario, are forecast to deliver high-margin, low-cost growth over the next five years with over half of the capital spending related to these projects awaiting completion by the end of 2013.

Construction of the Cerro Negro project continued to progress steadily in the first quarter. The permit for the construction of the power line to connect to the grid was delayed than expected and received during the quarter. Initial gold production may be deferred until the first quarter of 2014.
Eleonore remains on track to produce first gold in late 2014.


Goldcorp reiterated its guidance for 2013 and expects gold production to between 2.55 million and 2.80 million ounces. Total cash costs are projected between $525 and $575 per ounce of gold on a by-product basis and in the range of $700 to $750 per ounce of gold on a co-product basis. All-in sustaining costs are expected between $1,000 and $1,100 per ounce.

Capital expenditures for 2013 are anticipated at roughly $2.8 billion.
With over $4 billion of liquidity and strong credit ratings Goldcorp remains confident that it can fund its capital programs both at its operating mines and new projects in any foreseeable gold price scenario.

Currently, Goldcorp retains a Zacks Rank #3 (Hold).

BARRICK GOLD CP (ABX): Free Stock Analysis Report

GOLDCORP INC (GG): Free Stock Analysis Report

KINROSS GOLD (KGC): Free Stock Analysis Report

NEWMONT MINING (NEM): Free Stock Analysis Report

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