Back to top

Analyst Blog

Zacks Equity Research

Goldcorp's JV Commences Production

ABX GG NEM

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

The year 2012 has not been encouraging for Goldcorp Inc. (GG - Analyst Report) so far and the company has yet to spread cheers among its investors. The company had curtailed its full-year guidance last month and followed it with a disappointing second quarter report.

In what can be construed as bucking the trend, Goldcorp recently announced that it has registered its first gold production at the Pueblo Viejo mine in the Dominican Republic.

Goldcorp holds a 40% interest in the Pueblo Viejo mine while Barrick Gold Corporation (ABX - Analyst Report) holds the remaining stake and also serves as the mine operator. In its recently-reported quarter, Goldcorp stated that it expects production at the mine to commence this month, and the ore is now being processed by the first two out of the four autoclaves.

Pueblo Viejo is expected to contribute around 68,000 to 85,000 ounces of gold to Goldcorp’s production this year. Total cash costs are expected in the range of $400-$500 per ounce. Despite the expected costs at the mine being higher than Goldcorp’s full-year target of $310 to $340 per ounce, they are expected to decline over time as production ramps up.

Goldcorp expects total cash costs of less than $350 per ounce (excluding future inflation) for the first five years of full production. Also, the mine is expected to contribute between 415,000 to 450,000 ounces to the company’s production over the same time period.

Goldcorp is an unhedged producer of gold and as such, it is well-positioned to gain from increase in gold prices. However, declining production and escalating costs have weighed on the company’s performance. Weak production from the Red Lake mine in the first half of the year and lower expectations from the Peñasquito mine for the second half had forced the company to slash its targets.

In such circumstances, the commencement of production at Pueblo Viejo comes as a positive for Goldcorp.

We currently have a long-term Neutral recommendation on Goldcorp. The company, which competes with Barrick Gold Corporation and Newmont Mining Corp. (NEM - Analyst Report), holds a Zacks #4 Rank, indicating a short-term Sell rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%