| Goldcorp’s FCF Growth Could Strengthen Its Balance Sheet | |
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2Q15 Highlights: Goldcorp Braces for Volatile Gold Market Outlook (Continued from Prior Part) Balance sheet healthy
Goldcorp (GG) has the strongest balance sheet in its peer group, which includes companies like Barrick Gold (ABX), Newmont Mining (NEM), and Kinross Gold (KGC). Goldcorp’s liquidity is also comfortable at $3.2 billion, including $940 million in cash and cash equivalents, as well as $2.16 billion of an undrawn revolving facility. As we discussed previously, Goldcorp extended its credit facility from $2 billion to $3 billion during 2Q15.
Net debt reduced
Goldcorp’s net debt reduced quarter-over-quarter (or QoQ) to $2.55 billion as on June 30, 2015, from $3.47 billion at the end of 1Q15. The company raised net cash of $768 million from the sale of its equity stake in Tahoe Resources (TAHO). It repaid the debt of $305 million during the second quarter. It also paid dividends amounting to $124 million.
The company’s management noted during the call that through the application of proceeds from stake sale in TAHO in the third quarter, the drawn amount on its revolver should be down to zero. This should leave the company with only long-term debt of $2.5 billion. The first scheduled repayment for the debt is in 2018.
FCF positive
After reporting a negative free cash flow (or FCF) of $374 million in the first quarter of 2015, Goldcorp has delivered a positive FCF of $174 million in 2Q15. The reduction of dividends by 60% should save the company another $300 million annually. The positive trend on FCF could continue going forward, given scheduled ramp-ups of its mines in the second half.
Goldcorp’s capital expenditure budget remains unchanged at $1.2 billion–$1.4 billion.
Investors can gain access to the gold sector through the Market Vectors Gold Miners ETF (GDX), which invests in intermediate and senior gold producers. Goldcorp makes up 7.6% of its holdings. The SPDR Gold Trust ETF (GLD) tracks spot gold prices.
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PRODUCER |
CODE : K.TO |
ISIN : CA4969024047 |
CUSIP : 496902404 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Kinross Gold is a gold producing company based in Canada. Kinross Gold produces gold, silver in Brazil, in Canada, in Chile, in Ghana, in Mauritania, in Russia and in USA, develops copper, gold and silver in Chile, and holds various exploration projects in Canada, in Chile and in Russia. Its main assets in production are ROUND MOUNTAIN in USA, CRIXÁS, MORRO DO OURO and PARACATU in Brazil, REFUGIO MINE (VERDE AND PANCHO), FORT KNOX, MARICUNGA and LA COIPA in Chile, PORCUPINE and MUSSELWHITE in Canada, CHIRANO in Ghana, TASIAST in Mauritania and KUPOL in Russia, its main assets in development are KETTLE RIVER, GOLD HILL and CERRO CASALE in Chile and its main exploration properties are AHAFO NORTH, BIBIANI NORTH, BOLE, BOLE - BOLGATANGA, AKYEM, RUSSIAN MOUNTAIN, HORN MOUNTAIN, GIL, ENCHI and GOLDBANKS - KINROSS in Ghana, FRUTA DEL NORTE in Ecuador, HAMMOND REEF in Canada, KUBAKA MINE - BIRKACHAN in Russia and LOBO-MARTE in Chile. Kinross Gold is listed in Canada, in Germany and in United States of America. Its market capitalisation is 600.6 millions as of today (US$ 443.0 millions, € 398.4 millions). Its stock quote reached its lowest recent point on October 27, 2000 at 1.43, and its highest recent level on September 19, 2024 at 12.66. Kinross Gold has 47 442 200 shares outstanding. |