Goldcorp Inc. (GG) recently reported a forest fire near its Musselwhite mine, in northwest Ontario. Soon after, the company ceased operations there and evacuated as many as 380 employees.
The mine at Musselwhite is underground and contains a plant that produces approximately a quarter-million ounces of gold annually. It began commercial production on April 1, 1997.
The fire was located approximately 30 kilometers from Musselwhite, moving towards the mine site helped by winds in the area. The majority of the employees were evacuated safely. However, a small crew would remain to handle the necessary operations at the mine and coordinate with firefighting crews from the Ontario Ministry of Natural Resources (OMNR). The electricity at the mine is being supplied by generators as the section supplying electricity has been destroyed by the fire.
In May 2011, Goldcorp released its earnings for the first quarter of 2011. The company’s net earnings were $651 million compared with $232 million in the first quarter of 2010. Adjusted net earnings were $397 million, or 50 cents per share compared with $159 million or 22 cents per share in the first quarter of 2010. Results exceeded the Zacks Consensus Estimate of 48 cents.
In the first quarter of 2011, revenues increased 69% year over year to $1,216 million, on gold sales of 627,300 ounces. Revenues missed the Zacks Consensus Estimate of $1,295 million. Record gold prices and Goldcorp’s strong production boosted revenues. The average realized gold price for the quarter rose 26% to $1,694 an ounce. Cash costs, including by-product credit, were $188 an ounce.
For 2011, Goldcorp stood by its production outlook for the year, with output expected to be in the range of 2.65 million to 2.75 million ounces. However, the company announced that if the improving trend continues, it may revisit its cash cost guidance of $280 – $320 per ounce. Moreover, the production in the current year may drop due to this mishap. We maintain our Neutral recommendation on Goldcorp, which currently holds a Zacks #3 Rank (Hold).
Based in Vancouver, Goldcorp Inc. has development projects across the Americas and plans to expand production by 60% to 4 million ounces in 2015. The company competes with Barrick Gold Corporation (ABX) and Newmont Mining Corp. (NEM).
BARRICK GOLD CP (ABX): Free Stock Analysis Report
GOLDCORP INC (GG): Free Stock Analysis Report
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