Production costs at Red Lake hamper Goldcorp’s earnings

Revenue and earnings of Goldcorp (TSE) were down for the first nine months of 1995, as the company devoted much of its resources to development.

Goldcorp earned $4 million or 13 cents per share on revenue of $94.2 million, compared with $28.6 million or $1.04 per share on $106.6 million for the same period in 1994.

A decline of 12% in gold production, combined with a lower realized price for the yellow metal, depressed Goldcorp’s earnings, as did higher operating costs at the Wharf mine in South Dakota.

Goldcorp is almost halfway through a development and exploration program at its Red Lake operation, and recent drilling on the newly discovered mineralization, between the 30 and 34 levels, shows a total strike length of 240 metres, compared with the 150-metre strike reported earlier. Also, the main sulphide zones between the 30 and 38 levels have been found to extend about 360 metres vertically over a strike length of 460 metres.

Thus far, the exploration program has encountered a preliminary resource of 1.5 million oz., in addition to published resources, in all categories, of 1.1 million oz. The expenditure of time and manpower on development has caused the mine rate to fall, and the mine has recorded only a small operating profit for the first nine months of 1995.

At the Wharf mine, where heavy precipitation during the first half of the year hampered operations, operating profits were lower. The 60%-owned Golden Reward mine, adjacent to Wharf, had produced less gold but at a lower cost, with improved results.

Goldcorp’s industrial minerals operations had improved results in the third quarter of 1995.