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Investors Are Curious about Newmont-Goldcorp’s Updated Guidance

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Updated

Production

Goldcorp’s (GG) production for the fourth quarter came in at 630,000 ounces of gold, a YoY decline of 2.5%. A large part of the decline in production volumes is due to the multiyear waste stripping campaign at Penasquito.

Goldcorp is guiding for gold production of 2.2 million to 2.4 million ounces in 2019. This guidance is in line with its 2018 production of 2.3 million ounces. GG expects the grades during the first quarter to be lower at Cerro Negro, Eleonore, and Red Lake due to mine sequencing. The production, however, is then expected to increase progressively each quarter, as grades and recoveries should climb at Penasquito due to the completion of its multiyear waste stripping campaign and its Pyrite Leach project is now fully commissioned and has completed a full year of operations.

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AISC

Goldcorp’s (GG) all-in sustaining costs (or AISC) for the fourth quarter came in at $765 per ounce, a decline of 12% as compared to costs in Q4 2017. The ramp-ups at Cerro Negro and Eleonore, new Argentine export duties, and changes in estimates for GG’s reclamation and closure costs impacted the company’s production costs favorably. This, along with lower sustaining capital expenditure helped the company achieve lower AISC. The company is guiding for AISC of between $750 and $850 per ounce in 2019.

On March 7, Yamana Gold (AUY), Glencore (GLNCY), and Goldcorp (GG) entered an agreement to develop and operate Yamana’s Agua Rica gold and copper mine in Argentina using the existing infrastructure and facilities of these three companies’ Alumbrera mine.

Updated guidance

Newmont Mining (NEM) and Goldcorp (GG) are expected to give updated guidance for the combined company after the merger, which is expected to be complete in the second quarter of 2019.

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