What Affected Goldcorp Stock in 1Q17?
On March 28, 2017, Goldcorp (GG) made three significant announcements in two separate releases:
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- It will acquire from Kinross Gold (KGC) a 25.0% interest in the Cerro Casale project in Chile and a 100% interest in the Quebrada Seca exploration project adjacent to Cerro Casale.
- It will acquire an additional 25.0% interest in Cerro Casale from Barrick Gold (ABX), which holds a 75.0% interest in the project.
- It will acquire Exeter Resources (XRA) and its 100% owned Caspiche project. This junior miner’s only project is located in the Maricunga Gold Belt in Chile, which is ~10.0 kilometers north of Cerro Casale.
As a result of these transactions, Goldcorp will form a 50–50 joint venture with Barrick for the Cerro Casale project, which will help jointly advance the project.
For detailed analysis of the project, please read Impact of Chilean Joint Venture on Barrick Gold and Goldcorp.
Goldcorp’s 4Q16 results beat market expectations mainly due to lower costs and higher gold prices. The market was happy with Goldcorp’s results. The stock rose 6.1% after the results were reported. Investors also were happy about its guidance. Goldcorp is planning to increase its production and reserves by 20% in the next five years while at the same time reducing its costs by 20%.
Among GG’s peers (JNUG) (GDX), Barrick Gold (ABX) has the lowest AISC. It aspires to achieve AISC of below $700 per ounce by 2019, which would be below the 25th percentile of the industry’s cost curve.
Newmont Mining (NEM) has a 2016 cost outlook of $870–$930 per ounce. Despite having achieved cost improvements, Kinross Gold (KGC) remains a rather high-cost precious metals producer. Yamana Gold (AUY) has an AISC guidance of $880–$920 per ounce for 2016.