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How Does Goldcorp’s Production Growth Look in the Long Term?

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Goldcorp’s production growth

Goldcorp (GG) has committed $1 billion to growth. It expects to see production growth of 20% to 3 million ounces in the next five years. The main drivers of this increase include:

  • Goldcorp plans to ramp up Eleonore and Cerro Negro to their nameplate capacity levels by mid-2018.
  • Goldcorp plans to improve grades at Penasquito as the company goes through an intensive stripping campaign.
  • Goldcorp has allocated capital to the Pyrite Leach project. This could help improve recoveries and increase the production by 120,000 ounces per year at this project.
  • Materials Handling at Musselwhite is also expected to increase its production 20%.
  • Goldcorp’s Coffee and Borden projects should drive production growth toward the back end of its production profile. The company expects these projects to be “big drivers” for its production profile going forward five years with an expected ~20% increase.
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More upside?

Goldcorp’s (GG) CEO, David Garofalo, mentioned during its investor day that the HG Young and Cochenour projects are outside of this forecast increase in production. However, he maintained that they could still contribute to the production growth in five years, as an initial reserve for Cochenour is expected later in 2017. The initial reserve for HG Young is expected in 2018.

Goldcorp has been conservative while providing its production growth forecast. GG has only included projects to which capital has been allocated, feasibility studies done, and an investment case made.

Peers’ production

Goldcorp’s peers (GDX) (GDXJ) are also making every effort to increase their production. Barrick Gold (ABX) slightly increased its 2016 production guidance from ~5.3 million to ~5.6 million ounces. Its expected production for 2018 is slightly lower at 4.6 million–5.1 million ounces. 

Newmont Mining (NEM) expects its 2016 gold production to be 4.8 million–5.0 million ounces. Production in 2017 is expected to be higher at 5.2 million–5.7 million ounces due to the start of new projects. Kinross Gold’s (KGC) management is focusing on doubling the mineral reserve estimates from this mine by the end of 1Q17.

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