Vancouver — After digesting the producing Canadian assets of Placer Dome, Goldcorp (G-T, GG-N) has turned in a stellar second quarter with net earnings of US$190.4 million (US50 per share), almost doubling last year’s US$98 million (US30 per share) for the same period.
Under an agreement struck with Barrick Gold (ABX-T, ABX-N), which acquired Placer Dome in a $10-billion takeover deal, the Vancouver-based producer closed its $1.6-billion acquisition of certain Placer assets (Campbell, Porcupine, Musselwhite, La Coipa and Pueblo Viejo) midway through the quarter. As a result, Goldcorp’s second-quarter gold production increased 35% to 378,500 oz. at total cash costs of minus US$123 per oz. net of byproduct copper and silver credits. A gold price of US$620 per oz. was realized over the quarter, well up from the US$432 per oz. in last year’s corresponding period.
Second-quarter profits were boosted by a US$61-million non-cash gain realized from a dilution clause triggered by Silver Wheaton’s (SLW-T, SLW-N) $200-million public offering, which closed in the second quarter.
The company is on track for 2006 gold production of 1.8 million oz. at total cash costs of under US$100 per oz. Bullish on bullion’s outlook, none of Goldcorp’s future gold production has been hedged, allowing for full realization of gains in the metal price.
Revenue of US$491.5 million was booked for the second quarter with the bulk of cash flow derived from Goldcorp’s 37.5%-owned Alumbrera copper-gold mine in Argentina, its now integrated Red Lake operations in northwestern Ontario, its 57% interest in Silver Wheaton and the Luismin gold-silver operations in Mexico.
The company has closed a series of major acquisitions over the past two years, swallowing Wheaton River, Virginia Gold and the Canadian spoils of Placer Dome assets; it now places third among North American gold producers.
Despite beating the Street earnings forecast, shares of Goldcorp closed down 42 to $34.38 on TSX trading following its profit announcement on Aug. 10. The stock has traded in a 52-week range of $19.97 to $45.99.
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