Goldcorp profit beats on strong precious metal sales

Thu Oct 25, 2012 11:47am EDT
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By Julie Gordon

TORONTO (Reuters) - Goldcorp Inc (G.TO: Quote), the No. 2 Canadian gold miner, reported a 48 percent increase in quarterly profit on Thursday, as improved performance at its Red Lake and Penasquito mines led to strong gold and silver sales.

On an adjusted basis, profit slipped but still handily beat analysts' expectations, sending its shares up more than 5 percent on the Toronto Stock Exchange.

"This is the sort of thing the market is looking for - under-promise, over-deliver and contain your costs - and this is what Goldcorp has done," said George Topping, a mining analyst at Stifel Nicolaus in Toronto.

"You put it back to back with Agnico-Eagle, which also had a good quarter, and you get the sense the winds of change have swept through the gold equities."

Agnico-Eagle Mines Ltd (AEM.TO: Quote) reported record quarterly production and boosted its outlook for the year after the market closed on Wednesday, sending its shares climbing 6.9 percent to C$54.93 on Thursday morning.

Goldcorp maintained its production outlook for the year and said it will update capital spending expectations early next year in light of industrywide capital cost escalation.

Escalating costs have pushed mining companies around the world to shelve major development projects as investors demand more measured growth and a better return on investment.

Gold production more than doubled at the Penasquito mine in Mexico in the quarter, driven by stronger grades. A water shortage in the arid region is still holding back throughput rates at the mill, but the company said it was well on track to meet its forecast.   Continued...