Goldcorp Q4 earnings plummet despite record production

VANCOUVER– Goldcorp (G-T, GG-N) achieved record gold production for 2009 but it was not enough to counter a major slide in earnings caused by foreign exchange losses.

The company reported net earnings of US$240.2 million for the year ended Dec. 31, compared with US$1.476 billion for the year prior. The company took a US$371.1- million hit on foreign exchange in 2009, compared with a gain of US$1.06 million for 2008. Earnings were also distorted by the US$292.5-million sale of Silver Wheaton shares in 2008.

Goldcorp reported adjusted net earnings of US$588.2 million, or 80¢ a share for 2009, compared with US$397 million or 56¢ per share for the year prior.

Production was reported at 2.42 million oz. gold for 2009 at a total cash cost of US$295 per oz. on a byproduct basis, compared with 2.32 million oz. gold at a byproduct cash cost of US$305 per oz. for 2008.

Total proven and probable gold reserves stand at 48.75 million oz. after 2009, compared with 46.3 million oz. at the end of 2008.

After the year ended, Goldcorp finalized two acquisitions: the Camino Rojo project near Peasquito and the El Morro project in Chile.

The El Morro project, however, is the subject of a legal dispute between Goldcorp and Barrick Gold (ABX-T, ABX-N). The suit revolves around whether New Gold (NGD-T, NGD-N) had the right to sell its 75% stake in the project to Goldcorp after blocking Barrick’s attempted buy-in.

The Camino Rojo property in Mexico adds a major chunk of landholdings, including the Repressa deposit, near the company’s Peasquito project. Goldcorp expects to begin production at Peasquito in late 2010, with the first concentrates having been shipped from the project in late 2009. The company is also working on increasing the resource at the nearby Noche Buena deposit.

Also in Mexico, the company has reported full-year production at its Los Filos mine of 239,000 oz. gold, making it the largest gold production from a single mine in Mexico. Goldcorp estimates that a crushing and agglomeration plant, which it expects to complete shortly, will allow an annual increase in production to 300,000 oz.

In Guatemala, the company’s Marlin gold mine had record production of 274,900 oz., with 290,000 oz. expected in 2010.

Goldcorp plans to spend US$485 million developing its share of the Pueblo Viejo project in the Dominican Republic during 2010. The company has set a total pre-production capital estimate of US$3 billion for the project after deciding to accelerate expansion of the processing plant from 18,000 tonnes per day to 24,000 tonnes daily.

Back home, Goldcorp expects gold production at its Red Lake gold mine in Ontario to increase to 675,000 oz. gold in 2010 compared with 622,000 oz. in 2009. The company is plans to spend an estimated US$71 million developing a haulage drift at the nearby historic Cochenour mine, eventually expanding the drift from 420 metres to 5,500 metres.

Also in Ontario, Goldcorp is projecting that its Musselwhite gold mine will produce 260,000 oz. gold 2010 and its Porcupine gold mine will produce 280,000 oz.

Next-door in Quebec, the company has finished a pre-feasibility study for the lonore project. The future mine is expected to produce 330,000 oz. gold per year starting in 2015 and last 16 years. Initial capital expenditure is estimated at US$800 million, with project expenditures of US$95 million expected for 2010.

Goldcorp’s share price was up 46¢ on the day the quarterlies were released to close at $40.87. The shares’ 52-week trading range is between $32.39 and $48.37

The company has 733.7 million shares outstanding.