Goldcorp profit hurt by Ontario mine setback
By Euan Rocha
TORONTO (Reuters) - Canadian miner Goldcorp Inc (G.TO: Quote) reported a slim increase in its operating profit on Wednesday, as its most prolific mine was hit by operational problems that reduced output and offset most of the gains from a surge in bullion prices.
Vancouver-based Goldcorp said adverse ground conditions at the Red Lake mine in northern Ontario delayed the development of certain areas in the mine's high-grade zone. That, together with lower grades in certain other areas of the mine, led to a slow start to 2012.
The issues led to an 18 percent drop in Goldcorp's quarterly gold output and threw the miner's full-year production forecast into question. Its shares were down more than 3.7 percent in after-hours trading on Wednesday.
"We were clearly a bit disappointed with the production performance, I feel like we left an opportunity on the table," said Chief Executive Chuck Jeannes. "Overall I was happy that we saw increased earnings, increased revenues and increased cash flows quarter-on-quarter, but it could have been better."
Jeannes said output has begun to pick-up at Red Lake, but the company is now conducting a review to see whether it can make up the first-quarter shortfall over the rest of the year.
"We can certainly work around the issues. We don't have a concern about the long term future of Red Lake, but whether we can make up those ounces this year will be determined."
Canada's No. 2 gold miner said that for now it is sticking by its 2012 gold production forecast of 2.6 million ounces at total cash costs of $250 to $275 per ounce of gold on a by-product basis.
The company said it is analyzing whether the first-quarter setback at Red Lake will impact its overall 2012 production and cash costs. Continued...