Goldcorp shares slide after drop in output

Cerro Negro mine southern Argentina. Image: Goldcorp

Shares in Goldcorp Inc (NYSE:GG)(TSX:G) dropped sharply Thursday after the company reported first quarter results that surprised to the upside in terms of profits, but fell well short of expectations for gold production.

Vancouver-based Goldcorp ended the day more than 5% lower in New York for a market capitalization of $11.8 billion after reporting a 122% jump in earnings to $170m or $0.20 per share against forecasts of $0.08.

Investors were unhappy about the fall in gold production however with output going from 799koz during Q1 2016 to 646koz in the same period this year leading to 6.6% fall in revenues for the quarter to $882 million.

The output drop came mainly on the back of lower production at Cerro Negro in Argentina and the Red Lake mine in Ontario, Canada. The world’s number four gold miner in terms of output kept its outlook for the year the same despite the decline. Full year 2017 gold production of roughly 2.5 million ounces is forecast.

Total cash costs on a by-product basis for the first quarter of 2017 were $540 per ounce, compared to $557 per ounce for the first quarter of 2016.  All-in sustaining capital costs for the first quarter of 2017 were $800 per ounce, compared to $836 per ounce in the first quarter of 2016.   AISC of approximately $850 per ounce is forecast for the whole of 2017.

David Garofalo, President and Chief Executive Officer, commented that the company boasts “the strongest growth pipeline in the gold industry with the planned 60 million ounce joint venture in the Maricunga District in Chile, financed by the sale of non-core assets.”

“This transaction underlies our strategy of growing net asset value per share by delivering three to four million ounces of sustainable, annual gold production from six to eight core camps,” he said.

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