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Why Goldcorp Dulled despite Beating Estimates in 1Q17

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Part 4
Why Goldcorp Dulled despite Beating Estimates in 1Q17 PART 4 OF 7

How Goldcorp Plans to Boost Its Production Growth

Sustained production growth

After years of cutting back on their sustained capital expenditure, gold miners started to refocus on production growth in 2016 as gold prices (GLD) remained buoyant.

How Goldcorp Plans to Boost Its Production Growth

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Increased exploration and capital expenditure budgets were the key themes of miners’ earnings in 2016. Goldcorp (GG) provided its exploration update on April 26, 2017. Let’s look at some key points from this update.

Positive exploration results

Goldcorp’s exploration highlights were as follows:

  • drilling at Cerro Negro yielded positive results
  • drilling at the Coffee project has started
  • initial study work revealed 13 new targets for follow-up testing
  • there was continued exploration progress at the Timmins Camp

In Goldcorp’s exploration update, senior vice president of exploration Paul Harbidge stated that “during the quarter we continued to focus our efforts on reserve replacement and populating the resource triangle with new targets.” He added that “I am encouraged with the positive results that we are seeing from our portfolio of projects as well as the generative studies which are laying the foundation for future exploration success. We are well positioned to meet our targeted 20% increase in reserves over the next five years.”

Gold reserves growth

Goldcorp’s objective is to increase its gold reserves by 20% over the next five years. Goldcorp plans to increase its reserves from its existing portfolio. Its reserves at the end of 2016 totaled 42.3 million ounces. The company is aiming for a 20% rise to 50 million ounces of net depletion by 2021.

Barrick Gold (ABX) reported a 6.5% fall in its 2016 reserves, which totaled 85 million ounces. Newmont Mining (NEM) reported a fall in its reserve estimates in 2015 to 73.7 million ounces, a 10% reduction from 2014.

Yamana Gold (AUY) reported a massive 19% fall in its reserves between 2014 and 2015 to 15.9 million ounces. Kinross Gold’s (KGC) reserves were 34 million ounces at the end of 2015, almost flat with the 34.4 million ounces it reported at the end of 2014.

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