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Goldcorp Inc.’s (GG - Analyst Report) fourth-quarter 2012 adjusted earnings (excluding one-time items other than stock-based compensation expenses) of 42 cents a share missed the Zacks Consensus Estimate of 54 cents and were well below 66 cents a share earned in the year-ago quarter. Earnings, as reported, were 47 cents per share compared with 39 cents in the year-ago quarter.

For full-year 2012, earnings (excluding one-time items other than stock-based compensation expenses) were $1.82 per share, below the Zacks Consensus Estimate of $1.94. Reported earnings were $1.95 per share, down from $2.18 posted a year ago.

Revenues decreased 5.3% year over year to $1.43 billion in the quarter, missing the Zacks Consensus Estimate of $1.63 billion. For the full year, sales increased 1.4% to $5.43 billion, also missing the Zacks Consensus Estimate of $5.89 billion.

Gold sales fell 5.8% year over year to 645,100 ounces in the reported quarter and production inched up 1.8% to 700,400 ounces. Total cash costs were $360 per ounce of gold on a by-product basis and $621 per ounce on a co-product basis.

Goldcorp is adopting an all-in sustaining cash cost measure this year, which include by-product cash costs, sustaining capital, corporate general and administrative expenses, exploration expense and reclamation cost accretion.

Mining Highlights

At the Red Lake Mine in Canada, gold production went up almost 9.3% year over year to 168,300 ounces in the quarter. Total cash cost was $403 per ounce, a year-over-year jump of almost 7.8%.

At Porcupine in Ontario, gold production decreased 0.8% to 74,100 ounces with total cash cost coming in at $750 per ounce.

Gold production at Musselwhite climbed 12.7% to 64,000 ounces at a total cash cost of $693 per ounce.

At the Penasquito mine, gold production surged 37.2% to 112,900 ounces. Strong by-product silver, lead and zinc credits led to total cash cost of negative $457 per ounce of gold on a by-product basis. Silver production at the mine was about 5.2 million compared with 5.9 million in the year-ago quarter.

At the Los Filos mine, gold production increased 8.9% to 92,800 ounces at a total cash cost of $572 per ounce.

At Marlin, gold production declined 62.1% from the year-ago quarter to 49,500 ounces at a cash cost of negative $182 per ounce on a by-product basis. Silver production declined 36.9% to 1.8 million ounces.

At Alumbrera, gold and copper production totaled 31,800 ounces and 25.4 million pounds, respectively, a year-over-year increase of 38.3% and 37.3%, respectively. Total cash cost was negative $894 per ounce on a by-product basis.

At Pueblo Viejo, where Goldcorp holds a 40% interest with the rest owned by Barrick Gold Corporation (ABX - Analyst Report), gold production was 43,700 ounce in the quarter. Pueblo Viejo achieved commercial production in Jan 2013 and ramp up to full capacity is expected in the second half of 2013.

Financial Position

As of Dec 31, 2012, cash and cash equivalents were $918 million versus $1,502 million as of Dec 31 2011. The company’s operating cash flow before working capital changes amounted to $2.4 billion in 2012.

Project Update

Goldcorp is conducting several studies related to a number of its growth projects. A study of the Cochenour project was completed in the fourth quarter of 2012, which concluded that the Bruce Channel ore body is lower than previously expected, necessitating the deepening of the Cochenour shaft by 245 meters, resulting in deferral of first gold production to the first half of 2015.  Cerro Negro is advancing on schedule toward first gold production at the end of 2013.

Eleonore in Quebec continues to benefit from a development plan focused on capital efficiency and building a solid production platform beyond expected first production in late 2014.


For 2013, Goldcorp expects gold production to between 2.55 and 2.80 million ounces and total cash costs are projected between $525 and $575 per ounce of gold on a by-product basis and in the range of $700 to $750 per ounce of gold on a co-product basis. All-in cash costs are expected between $1,000 and $1,100 per ounce.

Capital expenditures for 2013 are anticipated at roughly $2.8 billion, of which, around 60% is allocated to projects and 40% for operations.
Currently, Goldcorp retains Zacks Rank #5 (Strong Sell).

Other companies in the gold mining industry having favorable Zacks Rank are AngloGold Ashanti Ltd. (AU - Snapshot Report), Banro Corporation (BAA - Snapshot Report). Both hold a Zacks Rank #2 (Buy).

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