Goldcorp, Harmony continue gloomy gold reports

By Cameron French

TORONTO (Reuters) - Stubbornly high production costs have pressured quarterly earnings at major gold miners, adding to what has been seen as an underwhelming reporting period for the industry.

Both Canada's Goldcorp (G.TO: Quote) and South Africa's Harmony Gold HARJ.J reported core profits on Friday that fell short of analyst estimates, following a similar result from top producer Barrick Gold (ABX.TO: Quote) on Thursday.

Smaller players Centerra Gold (CG.TO: Quote) and Eldorado Gold (ELD.TO: Quote) also released earnings on Friday. Centerra rebounded to a profit of $16.9 million from a year-before loss, while Eldorado's profit rose threefold on higher output and prices.

Goldcorp's net profit actually tripled on the back of a non-cash foreign exchange-related gain of $240 million, but adjusted earnings came in at $64.7 million, or 9 cents a share, down 21 percent from the year-before quarter.

While stiff cost inflation of energy, equipment, and labor have been the norm over the past few years, players such as Goldcorp and Centerra Gold (CG.TO: Quote) were also hit by lower than expected production at key mines.

In Goldcorp's case, production at its flagship Red Lake mine in Ontario lagged due to difficulties accessing high-grade ore. At Centerra, disappointing production from its Kumtor mine in Kyrgyzstan forced it to cut its 2008 production outlook. The company also raised its cost guidance.

"The third quarter has not been impressive by the gold mining industry," said Barry Allan, analyst at Research Capital. "There seem to be a lot of operational gremlins that are coming to the surface."

Leading miners Newmont Mining (NEM.N: Quote), Gold Fields (GFIJ.J: Quote), and AngloGold (ANGJ.J: Quote) have also reported underwhelming results this week.