Goldcorp slashes dividend 60% amid dire gold market

Goldcorp axes dividend 60% amid dire gold market

Miners inside the Eureka vein at Cerro Negro gold and silver mine in Argentina's Santa Cruz province. (Image courtesy of Goldcorp via Flickr)

Goldcorp (TSX:G) (NYSE:GG), the world’s largest publicly traded gold miner by market value, has slashed its dividend by 60% to keep balance sheets healthy as bullion prices have dropped to five year-lows this month.

The mining giant, however, managed to double its profit for the second quarter, thanks mostly to the sale of its Tahoe Resources (TSX:THO) (NYSE:TAHO) share last month. The Vancouver-based firm earned US$392 million, or 47 cents per share in the three months ended in June, compared to a profit of $181 million, or 22 cents per share, in the same period last year.

This is the first time since the third-quarter of 2012 that Goldcorp is able to become cash-flow positive.

Excluding the Tahoe windfall, Goldcorp earned $65 million, or 8 cents per share. That was one cent higher than market expectations, but lower than last year due to lower bullion prices and costs linked to construction of a new mine in Quebec and another one in Argentina.

Like most of its peers, Goldcorp continues to work on lowering costs and shoring up its balance sheet. Those measures and the dividend cut are to “ensure the company has the financial flexibility to succeed in a volatile gold market,” Goldcorp Chief Executive Officer Chuck Jeannes said in the statement.

The firm said it expects to spend between $850 and $900 to produce an ounce of gold this year, less than its previous forecast of between $875 and $950.

Gold production increased 40% year-over-year to 908,000 ounces, as the new Cerro Negro mine in Argentina ramped up production, the Eleonore mine in Northern Quebec achieved commercial production, and the Peñasquito mine in Mexico performed well.