Goldcorp profit beats on strong precious metal sales

Thu Oct 25, 2012 6:03pm EDT
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By Julie Gordon

TORONTO (Reuters) - Goldcorp Inc (G.TO: Quote), the No. 2 Canadian gold miner, reported better-than-expected quarterly results on Thursday, as improved performance at its Red Lake and Penasquito mines led to strong gold and silver sales.

The strong quarter, which came just months after the company was forced to slash its full-year outlook on hiccups at its two flagship mines, sent shares climbing, with the stock closing up nearly 7 percent.

"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. Its shares closed up 8.9 percent at C$55.97 on Thursday on the Toronto Stock Exchange.

Goldcorp maintained its revised production outlook for the year and said cash costs fell 15 percent in the quarter as by-product metal credits outweighed higher production costs. Excluding credits, cash costs rose 20 percent.

As industrywide cost escalation prompts miners around the world to shelve major growth projects, Goldcorp has undertaken a review of its capital projects, with a cost update expected early next year.

"We're not immune to capital escalation - it's been a problem throughout the industry and we've seen it as well," Chief Executive Chuck Jeannes told Reuters.   Continued...