May 5, 2008 / 1:14 PM / 10 years ago

UPDATE 3-Goldcorp profit jumps as prices trump flat output

(Adds details from conference call; in U.S. dollars unless noted)

By Cameron French

TORONTO, May 5 (Reuters) - Goldcorp Inc. (G.TO), Canada’s No. 2 gold miner, notched an 84 percent jump in first-quarter profit, benefiting from soaring gold prices and the sale of its stake in Silver Wheaton SLW.TO, the company said on Monday.

Goldcorp, which has operations in Canada and throughout Latin America, sold its 48 percent stake in Silver Wheaton for about $1.6 billion during the quarter, which added $136.5 million to the bottom line.

Net profit was $229.5 million, or 32 cents a share, up from a year-before profit of $124.9 million, or 18 cents a share.

Stripping out the Silver Wheaton gain, a non-cash foreign exchange loss, and an unrealized copper derivatives loss, the company earned 23 cents a share, just ahead of the 21 cents a share profit expected by analysts.

Better than expected results from the Marlin mine in Guatemala and the Los Filos mine in Mexico helped offset what the company termed a “slow start to the year” at its Canadian operations.

“In the shorter term, we know there will be setbacks when dealing with a variety of operations the Canadian mines did not deliver this quarter,” Goldcorp Chief Executive Kevin McArthur said on a conference call with analysts.

Despite the production issues, the company maintained its 2008 production outlook of about 2.6 million ounces at a cash cost of about $250 an ounce, saying it would make up the lost production during the year.

McArthur pointed out Goldcorp is debt-free, has a cash position of nearly $1.3 billion, and has cash flow of about $1 billion a year, which means it should not have to access equity or credit markets to fund its projects.

But he said share buybacks or acquisitions would take a back seat in the near future to spending the money on exploration and development near current operations, including a possible expansion of the flagship Red Lake mine in Ontario.

“I’m keeping our powder dry for now. We’re seeing significant opportunities that are too fuzzy right now to talk about in any detail,” he said.


All told, gold sales in the latest quarter were 517,800 ounces, down from 527,000 in the year-before period.

However, with realized gold prices climbing 43 percent to $932 an ounce, revenue climbed 32 percent to $626.7 million.

Goldcorp shares, which have risen around 30 percent over the past year amid soaring bullion prices, were up 37 Canadian cents at C$37.18 on the Toronto Stock Exchange.

“Overall, the results were in line with expectations, or slightly ahead,” said John Ing, president of Maison Placements in Toronto.

Cash costs per ounce were $240, up from $181, including the offsetting impact of copper and silver sales. The higher cost was due to the stronger Canadian dollar, and higher labor and consumables costs.

On a co-product basis, costs were $396 per ounce.

Goldcorp forecast capital spending, excluding its 40 percent owned Pueblo Viejo project in the Dominican Republic, at about $1.2 billion for the year.

The company has said it plans to spend up to $5 billion over the next five years. ($1=$1.01 Canadian) (Reporting by Cameron French and Robert Melnbardis; editing by Rob Wilson)

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