Goldcorp Expects Production Growth from Cerro Negro and Eleonore



Ramp-up of mines

Goldcorp (GG) reported higher sales volume owing to the Peñasquito mine and the ramp-up of its two key mines, Cerro Negro and Eleonore. Cerro Negro and Eleonore started commercial production on January 1, 2015, and April 1, 2015, respectively.

These two mines are also key to Goldcorp’s increased production in the second half of the year. In this article, we’ll discuss how the ramp-up of these two mines is progressing.

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Cerro Negro ramp-up going as scheduled

The production at Cerro Negro mine in Argentina was 131,300 ounces in 2Q15, which is 42% higher quarter-over-quarter (or QoQ). Higher production was due to the increased quantities processed from the high-grade Mariana Central mine compared with 1Q15. Also, fewer tons were processed from lower grade stockpiles.

Recoveries also increased during the quarter with an optimized milling process. Overall, the ramp-up for Cerro Negro continued as planned in 2Q15.

Eleonore ramp-up behind schedule

The production at Eleonore mine in Mexico increased 35% QoQ. This is due to increased throughput, recovery, and head grades during the quarter. However, this was below expectations due to a slower ramp-up of operations. There was a brief shutdown in May to remediate a bottleneck at the tailings conveyor. After that, the mill has averaged 5,100 tons per day. The company expects the production to increase over the rest of 2015 as mill throughout and recovery improves. The grades are also expected to improve in the second half of 2015.

Newmont Mining (NEM) also reported that its execution stage projects, including Turf Vent Shaft and Merian, are going as planned to start production later in 2015 and in 2016.

Agnico-Eagle Mines (AEM) reported that two of its extension projects have been approved, which are going to add significant mine-life to its existing projects.

If you don’t want to pick up individual miners, the VanEck Vectors Gold Miners ETF (GDX) provides an alternative means to invest in the sector. The fund invests in senior and intermediate miners. Kinross forms 2.8% of GDX’s holdings.

To get exposure to gold prices, investors can also invest in gold-backed ETFs such as the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU).

In this weak gold price environment, cost control could help save the day for gold miners. In our next part, we’ll discuss how Goldcorp is doing on this front.


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