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Goldcorp (GG) Wraps Up Divestiture of Los Filos to Leagold

Goldcorp Inc. GG declared that it has completed the divestiture of Los Filos Mine, located in Mexico, to Canadian company, Leagold Mining Corporation.

Goldcorp received $250 million in cash and 34,635,091 common shares, representing 25.3% of issued and outstanding shares of Leagold. The company also received $29 million in form of short-term promissory note, which will be received after Leagold obtains approval from the Mexican competition commission (COFECE) following the tranche of its equity financing, or 120 days from deal closing, whichever is earlier.

Following the closure of second tranche of its equity financing, Goldcorp will own 22.9% of Leagold’s issued and outstanding shares on an as-issued basis. Goldcorp will also retain tax receivables worth roughly $100 million, allowing the company to recognize the reversal of 2015 impairment charges for mining interests at Los Filos, on a pre-tax basis. The deal is in sync with the company’s aim to concentrate on core assets and boost net asset value per share.

According to the President and CEO of Goldcorp, the sale of Los Filos will help the company to focus on core business. The company also clarified that the acquisition of common shares of Leagold, pursuant to the terms of the share purchase agreement, is for investment purpose which will be evaluated periodically. Based on the results of such evaluations, the current state of markets and other circumstances, it could decrease or increase shareholding through private agreements, market transactions or any other means.

Goldcorp’s shares gained 2% in the last three months, underperforming the Zacks categorized Mining-Gold industry's gain of 4.9%.

 


 

The company is actively focused on cost reduction strategies, which should drive its results moving ahead. Goldcorp reported net earnings of $101 million or 12 cents per share for fourth-quarter fiscal 2016, compared to a net loss of $4.3 billion or $5.14 per share a year ago. Earnings per share beat the Zacks Consensus Estimate of 9 cents.

The company expects to continue its cost-saving initiatives in 2017. It also expects to meet its target of $250 million in annual sustainable efficiencies under its productivity and cost optimization program by 2018.
 

Goldcorp Inc. Price and Consensus

 

Goldcorp Inc. Price and Consensus | Goldcorp Inc. Quote

Goldcorp currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the basic materials space at present are Ternium S.A. TX, Hi-Crush Partners LP HCLP and Lundin Mining Corp. LUNMF. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ternium has an expected long-term earnings growth of 18.4%.

Hi-Crush has an expected long-term earnings growth of 20%.

Lundin has an expected long-term earnings growth of 34.1%.

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Goldcorp Inc. (GG): Free Stock Analysis Report
 
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