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Goldcorp Inc.’s (GG - Analyst Report) first-quarter 2014 adjusted earnings (barring one-time items) of 26 cents a share topped the Zacks Consensus Estimate of 14 cents but was down from 31 cents a share earned in the year-ago quarter.

Adjusted earnings exclude foreign exchange loss on translation of deferred income tax assets and liabilities, losses from the foreign exchange on capital projects, and gain from the disposition of mining interests. However, earnings include stock-based compensation impact.

Net earnings, as reported in the quarter, were $98 million or 12 cents per share, down 68% from net earnings of $309 million or 38 cents per share, hit by lower gold prices.

Goldcorp posted revenues (as adjusted) of $1,228 million in the quarter, up 0.7% year over year. It exceeded the Zacks Consensus Estimate of $1,017 million. Average realized gold price for the reported quarter declined 20% to $1,297 per ounce from $1,622 per ounce in the prior-year quarter.

Gold sales increased 14.9% year over year to 684,000 ounces in the reported quarter and production increased 10.6% to 679,900 ounces.

Silver production rose 70.1% year over year to 9.6 million ounces from 5.6 million ounces in the prior-year quarter. All-in sustaining costs were $840 per ounce (down 26% year over year), while cash cost totaled $507 per ounce on a by-product basis and $673 per ounce on a co-product basis.

Mining Highlights

At the Penasquito mine, gold production totaled 129,800 ounces, an increase of 116% year over year. All-in sustaining cost was a record low at $371 per ounce due to continued success of the Operating for Excellence program and higher by-product credits.  

Gold production at Los Filos edged down 1.8% year over year to 80,000 ounces at an all-in sustaining cost of $805 per ounce. Operations at the Los Filos mine were suspended on Apr 1, 2014, due to failure to reach agreement with the Carrizalillo Ejido for renewing the occupancy agreement that expired on Mar 31, 2014. It is expected that the suspension of the Los Filos mine operation will affect 2014 production between 330,000 and 345,000 gold ounces.

Gold production at Red Lake decreased 34.7% year over year to 95,000 ounces at an all-in sustaining cost of $954 per ounce. Gold production was impacted by scheduled lower heading availability due to de-stress activities, which are expected to complete in the third quarter of 2014.

At Porcupine in Ontario, gold production in the quarter was 66,500 ounces, down 1% year over year at an all-in sustaining cost of $945 per ounce.

At Pueblo Viejo, where Goldcorp holds a 40% interest and Barrick Gold Corp. (ABX - Analyst Report) holds 60%, gold production increased 66% year over year to 106,200 ounces (40% basis) at an all-in sustaining cost of $628 per ounce.  The increase in production was led by major modifications to the autoclave facility in the second half of 2013, as the mine worked to achieve design capacity and all four autoclaves came online.

Financial Position

As of Mar 31, 2014, cash and cash equivalents were $1,001 million, down 31.6% from $1,463 million as of Mar 31, 2013. Long-term debt stood at $1,482 million as of Mar 31, 2014, compared with $2,275 million as of Mar 31, 2013. The company’s adjusted operating cash flow was $281 million in the quarter compared with $400 million in the year-ago quarter.

Acquisitions/Divestments

In Mar 2014, the company sold its interest in Primero mine for $201 million. In Apr 2014, Goldcorp also sold its interest in Marigold mine in Nevada.

Project Update

The first gold production at the Cerro Negro project is expected by mid-2014 with commercial production expected in the fourth quarter of 2014.  

Mine development is in progress on the underground deposits of Eureka and Mariana Central.  Production commenced at Eureka, while production at Mariana Central is forecast to commence in the second half of 2014.
At the Cochenour project, the haulage drift connecting the Bruce Channel deposit to the Red Lake complex was 90% complete.  The Eleonore project in Quebec remains on track for first gold in late 2014 and for commercial production during the first quarter of 2015.

At the Camino Rojo project near Penasquito in Mexico, favorable exploration and concept study results demonstrate that it will become Goldcorp's next major growth project.

Outlook

For 2014, Goldcorp reiterated its production guidance in the range of 2.95 million and 3.10 million ounces (following the sale of Marigold mine) at all-in sustaining costs between $950 and $1,000 per gold ounce. The company also reaffirmed its capital spending guidance in the range of $2.3 billion to $2.5 billion for 2014.

Goldcorp currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the gold mining industry include AngloGold Ashanti Ltd. (AU - Snapshot Report) and Gold Fields Ltd. (GFI - Snapshot Report) both carrying a Zacks Rank #1 (Strong Buy).

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