| 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–$1.4 billion.
Investors can gain access to the gold sector through the Market Vectors Gold Miners ETF (GDX), which invests in intermediate and senior gold producers. Goldcorp makes up 7.6% of its holdings. The SPDR Gold Trust ETF (GLD) tracks spot gold prices.
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Tahoe Resources Inc.
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EXPLORATION STAGE |
CODE : THO.TO |
ISIN : CA8738681037 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Tahoe Resources is a silver producing company based in Canada. Its main exploration property is ESCOBAL in Guatemala. Tahoe Resources is listed in Canada and in United States of America. Its market capitalisation is CA$ 1.5 billions as of today (US$ 1.1 billions, € 1.0 billions). Its stock quote reached its highest recent level on September 24, 2010 at CA$ 9.96, and its lowest recent point on June 28, 2019 at CA$ 4.95. Tahoe Resources has 312 300 000 shares outstanding. |