Toronto Stock Exchange: G
New York Stock Exchange: GG
Goldcorp Meets Production Targets, Cash Flow Increases 22% In The
Second Quarter
July 29, 2009
VANCOUVER, British Columbia � Goldcorp Inc. (TSX: G, NYSE: GG)
today reported gold production of 582,400 ounces for the second quarter,
remaining on track for full-year guidance of 2.3 million ounces of gold
produced. Adjusted net earnings1 in the second quarter were $99.2
million, or $0.14 per share. A non-cash foreign exchange loss on the
revaluation of future income tax liabilities led to a reported net loss of
$231.6 million, or $0.32 per share.
Second Quarter Highlights
- Gold production increased 5% over the 2008 second
quarter, to 582,400 ounces.
- Total cash costs2 for the quarter were $310
per ounce on a by-product basis, and $299 per ounce for the first half of
2009.
- Total cash costs2 on a co-product basis were
$402 per ounce compared to $432 per ounce in the second quarter of 2008.
- Operating cash flows before changes in working capital3
totaled $276.6 million or $0.38 per share, a 22% increase over the second
quarter of 2008.
- Mechanical completion was achieved at the Pe�asquito
project in Mexico.
- Completed a 2% convertible note offering with net proceeds
of $839.7 million.
- Dividends paid amounted to $32.9 million.
�Goldcorp�s low-cost operating structure again resulted in outstanding cash
margins in the second quarter amid a continued robust gold price environment,�
said Chuck Jeannes, Goldcorp President and Chief Executive Officer. �Gold
production was solid throughout our mine portfolio, and we remain on track to
meet our 2009 production and cash cost guidance. As well, two primary
contributors to our five-year, 50% growth profile passed key milestones in the
second quarter. At Pe�asquito, the on-time mechanical completion of the
first sulphide processing line positions us for the sale of first concentrates
from this world-class mine in the latter part of this year. At Red Lake, the completion
of the 4199 exploration drift three months ahead of schedule will enable an
early start to a drilling program aimed at converting existing gold resources
to reserves and identifying new gold resources in the deep high grade
zone. As our next generation of growth projects progresses into
development, we were pleased to leverage our strong balance sheet through the
sale of 2% convertible notes in the second quarter that brought proceeds of
$840 million. This source of low-cost debt greatly enhances our funding
flexibility as we invest in our future. This flexibility has paid
immediate dividends in the form of an additional $88 million capital investment
to address opportunities throughout our asset base, including
earlier-than-expected drilling in the Red Lake high grade zone and the
resumption of advanced exploration and development activities at �l�onore.�
Financial Review
Gold sales in the second quarter, compared to the second quarter of 2008,
increased to ���������564,800 ounces at a total cash cost of $310 per ounce on
a by-product basis, and $402 per ounce on a co-product basis. On both a
by-product and co-product basis, Goldcorp remains the lowest cost, highest
margin senior gold producer in the industry.
Adjusted net earnings totaled $99.2 million, or $0.14 per share, compared to
$83.2 million or $0.12 per share, in the second quarter of 2008. Adjusted
net earnings primarily exclude the effect of a non-cash foreign exchange loss
on revaluation of future income tax liabilities, but include the impact of
non-cash stock option expenses, which amounted to approximately $0.02 per share
for the quarter. Operating cash flow before non-cash working capital
adjustments3 increased 22% to $276.6 million compared to $226.3
million in last year�s second quarter. Reported net loss in the quarter was
$231.6 million compared to net loss of $9.2 million in the second quarter of
2008.
For the first six months ended June 30, 2009, revenues of $1.25 billion were
consistent with the revenues in the first six months of 2008 as the 12%
increase in gold production was offset by lower realized copper prices.
On a by-product basis, total cash costs were $299 per ounce compared to a total
cash cost of $274 per ounce in 2008. Total cash costs on a co-product basis
were $377 per ounce in the first half versus $415 per ounce in the 2008
period.
Net earnings in the first six months of 2009 were $59.3 million or $0.08 per
share, compared to net earnings of $220.3 million, or $0.31 per share, in
2008. Adjusted net earnings totaled $264.9 million, or $0.36 per share,
compared to $247.9 million, or $0.35 per share, in 2008. Adjusted net
earnings primarily exclude the effect of a non-cash foreign exchange loss on
revaluation of future income tax liabilities. Cash flow from operations before
working capital changes3 increased 19% to $551.5 million, or $0.76
per share, from $465.4 million, or $0.66 per share, in the first six months of
2008.
Operations Review
The focus at Red Lake mine in Ontario remained on development and exploration
advances to provide greater mining flexibility in future years.
Gold production at Red Lake in the second quarter totaled 125,700 ounces at a
total cash cost of $326 per ounce compared to gold production of 149,600 ounces
at a total cash cost of $339 in the second quarter of 2008. The 4199
exploration drift was completed during the quarter and two drills are now
drilling from this new platform in an effort to convert existing resources to
reserves and add new resources at depth in the high grade zone for the first
time in four years. Also in the Red Lake district, dewatering of the
Cochenour shaft continued in the second quarter with completion targeted for
year-end.
A 44% increase in gold production at Musselwhite in Ontario over the 2008 second
quarter underscored the growing importance of this mine to Goldcorp�s
production profile. Gold production totalled 71,900 ounces while cash
costs fell to $508 per ounce as mining focused in higher grade sections of the
orebody. Mining activity in the second half of 2009 is expected to
track in line with previously forecast 2009 production of 235,000 ounces of
gold. The Porcupine mine in Ontario delivered a 5th
consecutive quarter of improved cash costs as the Pamour open pit operations
wind down, reporting strong operating cash flows from the production of 77,700
ounces of gold.
At Los Filos, in Guerrero state, gold production was 58,500 ounces at a
total cash cost of $510 per ounce. El Sauzal�s production of 53,100
ounces was in line with the forecasted production decrease consistent with its
declining mine life. At San Dimas, strong gold and silver grades and
major operating cost savings drove production of 27,100 gold ounces in the
second quarter at a total cash cost of $309 per ounce. Production of
63,000 ounces of gold and 884,900 ounces of silver at Marlin in Guatemala was
consistent with plan.
At the closed San Martin mine in Honduras, reclamation efforts continued
with minimal disruptions. The political situation continues to be
monitored closely in order to ensure the safety of personnel at the San Martin
mine and foundation as they pursue closure activities and community development
initiatives.
Project Update
On July 13, 2009 Goldcorp announced the mechanical completion of the first
sulphide process line (Line 1) at the Pe�asquito project in Zacatecas,
Mexico. The sale of first concentrates from Pe�asquito is expected
late in the second half of 2009 on the way to anticipated commercial production
on January 1, 2010. Construction of the second sulphide process line
(Line 2) is well underway and progressing toward planned completion in the
third quarter of 2010. Many of the components are already on site,
including the motors and shells for the second SAG mill and for the two additional
ball mills. Completion of construction of Line 2 and the high pressure
grinding rolls circuit is expected in the fourth quarter of 2010, allowing for
a ramp-up to mill�s full 130,000 tonnes per day capacity. For video clips
showing start-up and operation of the Line 1 mills as well as the latest
photographs from the site, please visit www.goldcorp.com
and click on Operations/Pe�asquito.
Positive exploration drilling continued at �l�onore in Quebec. Strong
assay results in the deep mineralized zone to the north continued to support
ongoing work on an internal prefeasibility study planned for the end of
2009. Environmental and social impact assessment work is continuing.
In the Dominican Republic, the Company expects to invest approximately $430
million in the Pueblo Viejo project in 2009. Development of the project
continued to track on budget and on schedule for initial gold production in the
fourth quarter of 2011 at a total initial capital cost of $2.7 billion or $1.1
billion for Goldcorp�s account. Goldcorp�s 40% share of gold production
in the first five full years of the mine�s life is expected to average
approximately 400,000 ounces at total cash costs of between $275 and $300 per
ounce. Goldcorp�s share of proven and probable gold reserves at Pueblo
Viejo amounts to 8.96 million ounces.
Based upon improved metals markets and added liquidity from the recent
convertible note financing, the Company has completed a mid-year capital review
and decided to accelerate development of certain projects. An additional $88
million of capital expenditures have been approved, bringing the total
forecasted capital spend for the year to approximately $1.5 billion. These
projects include acceleration of exploration of the deep high grade zone at Red
Lake following early completion of the 4199 drift, the reactivation of advanced
exploration activities at �l�onore including road access and a power line to
the site, and an additional $14 million of exploration expenditures at various
mines and projects.
This release should be read in conjunction with Goldcorp�s second quarter
2009 unaudited MD&A report on the Company's website, www.goldcorp.com , in the �Investors� section under
�Financials�.
A conference call will be held on July 30, 2009 at 10:00 a.m. (PDT) to
discuss the second quarter results. Participants may join the call by dialing
toll free 866-226-1792 or 416-340-8530 for calls from outside Canada and the
US. A recorded playback of the call can be accessed after the event until
August 30, 2009 by dialing 800-408-3053 or 416-695-5800 for calls outside
Canada and the US. Passcode: 7423354. A live and archived audio webcast
will also be available at www.goldcorp.com .
Goldcorp is the lowest-cost and fastest growing multi-million ounce gold
producer with operations throughout the Americas. Its gold production remains
100% unhedged.
(1)
Adjusted net earnings is a non-GAAP measure. The Company believes that, in
addition to conventional measures prepared in accordance with GAAP, the Company
and certain investors use this information to evaluate the Company�s performance.
Accordingly, it is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP. Refer to page 35 of the 2009 second quarter MD&A
for a reconciliation of adjusted earnings to reported net earnings.
(2)
The Company has included a non-GAAP performance measure, total cash cost per
gold ounce, throughout this document. The Company reports total cash costs on a
sales basis. In the gold mining industry, this is a common performance measure
but does not have any standardized meaning, and is a non-GAAP measure. The
Company follows the recommendations of the Gold Institute standard. The Company
believes that, in addition to conventional measures, prepared in accordance
with GAAP, certain investors use this information to evaluate the Company�s
performance and ability to generate cash flow. Accordingly, it is intended to
provide additional information and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with
GAAP. Refer to page 36 of the 2009 second quarter MD&A for a
reconciliation of total cash costs to reported operating expenses.
(3)
Operating cash flows before working capital changes and operating cash flows
before working capital changes per share are non-GAAP measures which the
Company believes provides a better indicator of the Company's ability to
generate cash flow from its mining operations. Cash provided by
operating activities reported in accordance with GAAP was $263.7 million in the
second quarter ended June 30, 2009.
Please click here to view the financial statements
Please click here to view the report
Cautionary Note Regarding Forward-Looking Statements
Safe Harbor Statement under the United States Private Securities Litigation
Reform Act of 1995: Except for the statements of historical fact contained
herein, the information presented constitutes �forward-looking statements�
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements, including but not limited to those with
respect to the price of gold, silver, copper, zinc and lead, the timing and
amount of estimated future production, costs of production, reserve
determination and reserve conversion rates involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievement of Goldcorp to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, risks related to the
integration of Gold Eagle�s business, properties and assets with Goldcorp,
risks related to international operations, risks related to joint venture
operations, the actual results of current exploration activities, actual
results of current reclamation activities, conclusions of economic evaluations,
changes in project parameters as plans continue to be refined, future prices of
gold, silver and copper, zinc and lead as well as those factors discussed in
the section entitled �General Development of the Business � Risks of the
Business� in Goldcorp�s Form 40-F on file with the Securities and Exchange
Commission in Washington, D.C. and Goldcorp�s Annual Information Form on file
with the securities regulatory authorities in Canada. Although Goldcorp has
attempted to identify important factors that could cause actual results to
differ materially, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements.
Readers should not place undue reliance on forward-looking statements.
For a more detailed discussion of such risks and other factors, please refer to
Goldcorp�s website, www.goldcorp.com .
CONTACT INFORMATION:
Jeff Wilhoit
Vice President, Investor Relations
(604) 696-3074
Fax: (604) 696-3001
Email: info@goldcorp.com
Website: www.goldcorp.com
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