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Goldcorp (GG) Beats Earnings and Sales Estimates in Q1

Goldcorp Inc. GG reported a profit of $80 million or 10 cents per share for first-quarter 2016 versus a net loss of $87 million or 11 cents per share logged a year ago, aided by reduced costs.  Adjusted earnings (excluding one-time items) for the quarter came in at 9 cents per share, beating the Zacks Consensus Estimate of 4 cents.

Adjusted loss excludes one-time items, including positive deferred tax effects of foreign exchange on tax assets and liabilities and restructuring costs.

Goldcorp, which is among the top gold producers, along with Barrick Gold ABX, Newmont NEM and Kinross Gold KGC, posted revenues of $944 million in the reported quarter, down around 7.2% year over year. Revenues beat the Zacks Consensus Estimate of $930 million.

Average realized gold price for the quarter declined 5.5% to $836 per ounce from $885 per ounce in the prior-year quarter.

Gold sales decreased around 3.4% year over year to 799,100 ounces in the reported quarter, while production increased 8.1% to 783,700 ounces. All-in sustaining costs were $836 per gold ounce (down 5.5% year over year), while cash cost totaled $557 per ounce on a by-product basis (down 4.8% year over year) and $604 per ounce (down 9.9%) on a co-product basis.

Silver production fell roughly 9.4% year over year to 7.7 million ounces from 8.5 million ounces in the prior-year quarter.

Shares of the company rose around 6% to close at $18.94 on Apr 28.

Mining Highlights    

At the Penasquito mine, gold production was 124,700 ounces, a year-over-year decrease of around 19.9%. Production declined due to mining in a lower grade portion of the pit. All-in sustaining cost of $1,004 per ounce surged 43% year over year.

Cerro Negro in Argentina produced 115,400 ounces of gold in the first quarter, at an all-in sustaining cost of $503 per ounce, supported by higher grades, recoveries and a reduction of in-circuit inventory.

At Pueblo Viejo, where Goldcorp holds 40% interest and Barrick Gold holds 60% interest, gold production rose nearly 26.7% year over year to 114,300 ounces (40% basis), at an all-in sustaining cost of $443 per ounce. The increase in gold production was backed by higher plant throughput and grade.

Financial Position

As of Mar 31, 2016, cash and cash equivalents were $401 million, up from $365 million as of Mar 31, 2015. Long-term debt was $2,727 million as of Mar 31, 2016, compared with $3,670 million as of Mar 31, 2015. The company’s adjusted operating cash flow fell to $330 million as of Mar 31, 2016, from $366 million as of Mar 31, 2015, mainly due to lower cash flow from Alumbrera and Pueblo Viejo.

Outlook

For 2016, Goldcorp reiterated its gold production guidance range of between 2.8 and 3.1 million ounces. However, the company anticipates that gold production during the second quarter will be unfavorably impacted by planned lower grade mining sequences in most mines and a 10-day mill shutdown for preventative maintenance at Penasquito.

The company expects AISC to be between $850 and $925 per ounce. Higher costs are expected in the second quarter compared to the first mainly due to higher sustaining capital and lower gold production. The third and fourth quarters are expected to see AISC normalize vis-à-vis the second quarter as a result of higher gold production.

Growth capital for 2016 is expected to be roughly $100 million to advance the organic growth projects through their respective study phases.

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