Major gold miners hope Goldcorp’s numbers show the way

Lower cost and more gold production proved to be the simple and the winning formula for Goldcorp (G-T) as it announced strong first quarter financials.

Hopefully for other big gold miners, Goldcorp’s numbers are indicators of a trend where lower input costs are working their way into the system in an environment where gold prices remain high — a combination that bolsters margins and wins the Street’s favour.

In Toronto on May 7, the company’s shares finished 87¢ higher at $36.42 on 5.4 million shares traded.

For the first quarter, Vancouver-based Goldcorp posted earnings of 23¢ a share – which was the same as a year earlier, but was above the average analyst forecast of 13¢ per share.

And while beating expectations is always a good thing, the first quarter story wasn’t all rosy. The company said lower silver and copper production cut revenues from the by-products, resulting in slightly lower revenues of US$624.8 million compared with US$626.7 million for the same period last year.

The difference, however, was kept narrow because of higher revenues from its gold production.

Gold revenues swelled as the company managed to increase gold production by 18% to roughly 617,000 oz. for the quarter.

That higher gold production, when coupled with lower taxes, bolstered net profit by 25% to US$290 million.

The company re-affirmed its guidance of 2.3 million oz. of production for the year at cash costs of US$365 per oz.