Goldcorp Maintains Annual Production Guidance in 1Q15



Weak production due to slow ramp-ups

On its annual Investor Day held in Toronto on April 9, 2015, Goldcorp (GG) reported its 1Q15 production. Total gold production of 724,800 ounces was slightly below market expectations. The weaker production was mainly due to the slower-than-expected ramp-up at its Eleonore and Cerro Negro mines.

The all-in sustaining cost (or AISC) of $900 per ounce was lower than its full-year AISC of $949 per ounce in 2014. The company had previously reported that 2015 gold production is expected to be weighted to the second half of the year, primarily due to the new mine ramp-ups of Eleonore and Cerro Negro, as well as the planned mine sequence at Peñasquito.

Goldcorp management also commented that the sustaining capex part of the AISC is very lumpy, and that investors should not be overly concerned about single-quarter performance. Goldcorp’s management added that it is on track to maintain the full-year guidance.

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Annual guidance maintained

Goldcorp’s annual guidance for 2015 remains at 3.3 million–3.6 million ounces of production for an AISC of $875–$950 per ounce. The company also maintained its capital expenditure guidance of $1.2 billion–$1.4 billion, out of which 60% is development and 40% is operations. The major expenditures will include $235 million for Cerro Negro and $215 million for Eleonore.

Investors should be aware that Goldcorp’s results came in slightly below its guidance for 2014. For more details, please refer to Goldcorp’s 2014 earnings overview, Goldcorp forecast: Shiny with a chance of flat costs.

Among Goldcorp’s peers, Newmont Mining (NEM) will report its results on April 24, while Barrick Gold (ABX) will report on April 28.

These companies are part of the VanEck Vectors Gold Miners ETF (GDX). Goldcorp is its largest holding, making up 7.6% of GDX assets. Investors can get exposure to spot gold by investing in the SPDR Gold Trust ETF (GLD).


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