UPDATE 4-Goldcorp delays Argentina project, warns on Mexico tax
By Nicole Mordant and Allison Martell
VANCOUVER/TORONTO Oct 24 (Reuters) - Goldcorp Inc raised its cost estimate for building a gold mine at its Cerro Negro site in Argentina by up to a third on Thursday, and said production at the project, which is one of the company's three big mining developments, would be delayed.
Goldcorp, the world's biggest gold miner by market value, also said a 7.5 percent royalty proposed by Mexico on mining companies will likely drive away its new investments if it cannot get the returns it wants.
The Vancouver-based miner said it had increased its capital cost estimate on Cerro Negro to between $1.6 billion and $1.8 billion from $1.35 billion before. In 2011, Goldcorp estimated the cost at $749 million.
Cerro Negro has faced several challenges, including a permitting delay that held up construction of a key power line, rapid inflation in Argentina, the country's high taxes, and some productivity problems.
Goldcorp also said it has suspended further exploration at Cerro Negro, and has deferred some development there. First production will be delayed by at least three months, to midyear 2014.
Even so Goldcorp's stock ended 4.5 percent higher on the Toronto Stock Exchange at C$27.76 after the gold miner reported better-than-expected third quarter earnings. Other gold mining stocks were also firmer, boosted by a stronger gold price.
"We continue to believe that despite the challenges being faced in Argentina, Goldcorp remains the best senior gold producer, in terms of quality of asset base, production growth, and a solid balance sheet," Scotia Capital Tanya Jakusconek said in a note to clients. Continued...