Goldcorp profit hurt by Ontario mine setback

Wed Apr 25, 2012 7:38pm EDT
 
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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...

 
President and Chief Executive Officer of Goldcorp., Chuck Jeannes' shadow is seen on the wall while he delivers a speech at the annual general meeting held at the Pan Pacific Convention centre in Vancouver, British Columbia May 18, 2011. REUTERS/Ben Nelms