With results continuing to exceed predictions,
Production is now expected to top an impressive 475,000 oz. in 2001, up considerably from earlier revisions and nearly twice the feasibility projection. However, the actual figure may come in higher as the forecast is partly based on the now-questionable reserve estimate.
Essentially, miners are recovering more ore at higher grades than was suggested by reserve drilling. In particular, 35% more tons carrying 28% more gold were recovered in the first six months of commercial production, which began Jan. 1.
Gilles Filion, Goldcorp’s vice-president of exploration, describes the results as pleasantly surprising but says a review of the reserve base is under way. Cutting factors are receiving particular attention, given the unexpectedly high grades discovered in the stopes.
The process is expected to take several weeks to complete and should see a new reserve estimate released in September. The revision will also incorporate results from an ongoing deep drilling program. The program is focused on the HW5 zone, where multi-ounce grades over minable widths have been discovered well below the reserve envelope.
Red Lake cranked out 131,927 oz. during the second quarter, adding to the 131,927 oz. produced in the previous quarter. Cash costs averaged US$57 per oz. for the 6-month period (much better than the feasibility estimate, owing mostly to the higher ouput) and are now expected to ring in at US$70 per oz. for the year.
Unit costs are improving, averaging US$126 per ton in the second quarter, versus US$136 in the first. Savings are being won both on and below surface.
Miners are exploiting 20 horizons on four levels to haul the targeted 710 tons of ore daily to surface. The mill is somewhat behind but is keeping recovery rates in the 90% range.
At last report, the High Grade zone hosted a reserve of 1.8 million tons grading 1.68 oz. per ton. Another 435,000 tons grading 2.02 oz. are classified as an inferred resource.
Reserves in the overlying Sulphide zone, where historic production was focused, stand at 1.4 million tons grading 0.39 oz. Resources are pegged at 411,000 tons grading 0.33 oz. Estimates in both zones are based on a gold price of US$275 per oz.
The underground ramp has reached the mine’s bottom, at 37 Level, but may be driven deeper next year on account of the newly discovered deep mineralization. High Grade’s reserves lie between 4,500 and 5,800 ft. below surface.
Goldcorp has budgeted US$4 million for ongoing capital and US$6 million for exploration.
Meanwhile, production at the Wharf heap-leach mine in South Dakota is also up, having risen 32%, year-over-year, to 55,606 oz. in the first half of 2001. Total costs, on the other hand, fell 21% to US$210 per oz. Both improvements reflect inventory adjustments on the heap.
Wharf is expected to crank out 45,000-50,000 oz. in the second half of the year at around US$210 per oz. Reserves at Wharf stand at 23 million tons grading 0.031 oz. The estimate is based on a gold price of US$275 per oz.
In the three months ended June 30,
Earnings in the first six months of the year topped US$30 million (37 per share) on US$92.1 million, compared with losses of US$5.6 million (7 per share) on US$18.6 million a year ago. Again, Red Lake accounts for the improvement.
Cash flow from operations was US$26.6 million in the recent quarter and US$55 million in the 6-month period. Comparable figures for 2000 were negative US$7 million and nil, respectively.
The industrial minerals business in Saskatchewan continues to turn a small profit, having earned US$800,000 on revenue of US$3.8 million in the first six months of this year. However, the business is considered non-core and is expected to be sold eventually.
On June 30, Goldcorp had US$66.5 million in working capital, nearly all of which was in the form of cash or short-term investments. The company remains debt-free.
A semi-annual dividend of US5 per share will be paid in September. Shareholders received their first instalment in March.
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