October 27, 2011 / 1:09 AM / 6 years ago

UPDATE 3-Goldcorp operating profit lifted by gold price

* Q3 adjusted EPS $0.57 vs $0.33 a year earlier

* Q3 EPS from continuing ops $0.41 vs $0.32 a yr earlier

* Q3 revenue up almost 50 pct to $1.31 bln

* Reaffirms 2011 production forecast of 2.50-2.55 mln oz

* Updates El Morro feasibility; Capex seen at $3.9 bln (Adds CEO comments on dividend, development projects and new Argentine law; All figures in U.S. dollars, unless noted)

By Euan Rocha

Oct 26 (Reuters) - Goldcorp Inc G.TO said on Wednesday its third-quarter operating earnings rose 10.2 percent, driven largely by a sharp increase in the price of gold.

Goldcorp, one of the world’s top gold miners, said output in the quarter rose slightly as production gains at its Penasquito mine in Mexico and its Marlin mine in Guatemala more than offset the impact of production declines at some of its other operations.

The company said its quarterly earnings from continuing operations rose to $336 million, or 41 cents a share, from $305 million, or 32 cents a share, a year earlier.

Excluding losses from the foreign exchange translation of deferred income tax liabilities and other one-time items, the company said its adjusted earnings in the quarter ended Sept. 30 rose 88 percent to $459 million, or 57 cents a share.

The Vancouver-based company said its average realized gold price in the quarter rose 39 percent to $1,719 an ounce from $1,239 a year earlier.

Quarterly revenue rose nearly 50 percent to $1.31 billion.

On a net basis, the company said earnings fell more than 50 percent, as its year-before results were boosted by large one-time gain from discontinued operations.

REAFFIRMS OUTLOOK

Goldcorp reaffirmed its revised 2011 production guidance of between 2.5 million and 2.55 million ounces of gold.

Total cash costs for the year are expected to range between $180 and $220 per ounce on a by-product basis; and between $500 and $550 per ounce on a co-product basis, the company said.

Goldcorp said its strong balance sheet and its increasing cash flows leave it well-positioned to fund projects in its pipeline.

The company also indicated it may boost its dividend after it completes its mine planning and budgeting process, which is currently underway. Goldcorp is developing projects in the Dominican Republic, Argentina, Canada and Chile.

“We increased our dividend at the end of last year and I would expect that we’d be able to do so again this year,” Chief Executive Chuck Jeannes told Reuters in an interview.

Goldcorp’s ramp-up to full capacity is moving on-schedule at its Penasquito mine in Mexico. Jeannes said operating costs at the site will decline further, once the company achieves full production capacity in early 2012.

The company said more than 75 percent of the construction work at the the Pueblo Viejo project in the Dominican Republic is complete and first production is now expected in mid-2012. The project is being developed in partnership with Barrick Gold ABX.TO.

Goldcorp also said it has completed an updated feasibility study on its El Morro project in Chile and projected capital costs on the gold project have risen more than 50 percent to $3.9 billion.

“The last estimate was by our predecessor there Xstrata, they did a feasibility study in 2008 that had a $2.52 billion capital estimate,” said Jeannes. “This is almost four years later and certainly reflects increases in capital costs that we’ve seen industrywide.”

Jeannes said the project is now under management review and will likely be put before its board for approval, before the end of this year.

The company is not likely to be hurt much by Argentina’s move to force mining companies to cash in all their export revenue on the local foreign-exchange market, said Jeannes.

In a surprise move earlier on Wednesday, Argentina ordered all oil, gas and mining companies to repatriate their export revenues into the country, in a bid to protect its dwindling central bank reserves and stem losses in the Argentine peso. [ID:nN1E79P0HX] [ID:nN1E79N08K]

“I don’t think it will have much impact on us, because in the near-term we operate at Alumbrera with our partner Xstrata and the net income from that operation can be used directly in country to fund our development of the Cerro Negro project,” said Jeannes, adding that the company is still looking into the finer details of the new law.

“When we do start production from Cerro Negro and do start generating income, as best we can tell, what this would do is add some fairly minor transaction costs,” he added. (Reporting by Euan Rocha; editing by Peter Galloway, Bernard Orr)

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