World’s most valuable gold miner Goldcorp posts sharp profit drop

Goldcorp Inc. (TSX:G) posted Thursday a 35% drop in first-quarter profits compared with a year ago as the price of gold slipped and costs rose.

The new world’s largest gold miner by market value, which earned its crown after the share price of fellow Canadian Barrick Gold (TSX, NYSE:ABX) fell to a 20-year low late April, said net income fell to $309 million, or 33 cents a share, from $479 million, or 51 cents a share, in the same period last year.

The Vancouver-based gold giant also said it has developed a “contingency plan” to defer capital spending if conditions in the gold market require it. The move is a direct response to the dramatic drop in prices last month.

The company, which keeps its books in US dollars, produced 614,600 ounces of gold in the quarter, up from 524,700 a year ago, while gold sales increased to 595,100 ounces, up from 545,7000.

The average realized gold price fell to $1,622 per ounce, down from $1,707 in the first quarter last year, while total cash costs on a by product basis increased to $565 per ounce from $251 a year ago.

"We expect gold production to increase throughout the year with a corresponding decrease in operating costs as we work through planned lower grades at Penasquito and Alumbrera, and benefit from the ramp-up of production at Pueblo Viejo," Goldcorp chief executive Chuck Jeannes said in a statement.

"Based on this start, we remain quite comfortable with our annual guidance for both gold production and operating costs."

Barrick, Goldcorp’s local top rival, announced last week a 10% cut to its capital spending, warning it is considering to halt development of the Pascua-Lama project on the border of Chile and Argentina.

US No 1. gold miner Newmont Mining (NYSE:NEM) also said it was axing its capital spending for 2013 by about 5%, as it reported a sharp drop in first-quarter earnings on Monday.