(Adds details, comments; in U.S. dollars, unless noted. Changes dateline from Ottawa)
By Cameron French
TORONTO, Oct 31 (Reuters) - Goldcorp’s (G.TO)(GG.N) third-quarter profit nearly quadrupled on a non-cash foreign exchange gain, the Canadian gold miner said on Friday, but core earnings declined and missed analyst estimates due to production hiccups and higher costs.
The company, with operations in Canada and throughout Latin America, reported net income of $297 million, or 42 cents a share, up from a profit of $75.8 million, or 11 cents a share, in the year-before period.
Stripping out the $240 million gain — which was due to a revaluation of future income tax liabilities — Goldcorp’s profit fell to $64.7 million, or 9 cents a share, from $82.3 million, or 12 cents a share, and missed analyst estimates of 14 cents a share.
Quarterly production rose 2.3 percent to 557,400 ounces, lagging expectations as output at the company’s flagship Red Lake mine in Ontario was hit by lower grades and delays following the completion of a new shaft.
“I guess I was a little bit surprised,” Research Capital’s Barry Allan said of the lower core earnings.
“I was looking for things to turn around a bit faster at key operations like Red Lake.”
Revenue increased 5 percent to $552 million as realized gold prices jumped to $865 an ounce from $685 a year earlier.
Cash costs per ounce ballooned to $346 from $160, energy and labor expenses rose, while lower silver and copper prices hurt the value of Goldcorp’s byproduct output, which it uses to offset its gold-mining costs.
Goldcorp said it expects to produce at the low end of a range of 2.3 million to 2.4 million ounces this year, while cash costs per ounce should be just under $300.
The Vancouver, British Columbia-based miner echoed other large miners who have said they will focus on conserving capital as the economic slowdown and financial crisis have made borrowing difficult and hammered share prices.
On a conference call, Chief Executive Kevin McArthur suggested it may review secondary projects so it can focus on developing its key Penasquito property in Mexico and its share of the Pueblo Viejo joint venture in the Dominican Republic.
“As far as other projects, we’re taking a good hard look at our capital spend given today’s capital markets,” he said.
McArthur also predicted gold will rebound from recent selling that has taken it down about 28 percent from its peaks in March. Gold XAU was around $720 an ounce on Friday.
“I fully believe we will be seeing a four-digit gold price in the not-too-distant future,” he said.
Goldcorp’s shares, which have fallen more than 30 percent so far this year, were down about 5.4 percent, or C$1.32, at C$23.20 on the Toronto Stock Exchange late Friday afternoon. ($1=$1.20 Canadian) (Additional reporting by Susan Taylor in Ottawa; editing by Rob Wilson)