Goldcorp, the world’s second largest gold producer, has revealed mixed fortunes in its second quarter results.
Revenues of $1.3 billion represent an increase of 62 percent over Q2, 2010, and adjusted net earnings climbed 111 percent to $420 million, but a series of misadventures in various operations have led the company to revise its production forecasts for the rest of the year.
Goldcorp reported that forest fires in northwest Ontario had affected operations at its Musselwhite mine. Evacuation and power disruptions due to damaged transmission lines will reduce 2011 production by approximately 20,000 ounces, the company said.
At Peñasquito in Mexico, higher grades and recoveries of gold, silver, lead and zinc were offset by lower processing rates resulting from a variety of issues, including a flood at its cyanide supplier in Tennessee which restricted supplies. Total 2011 gold production at Peñasquito is now expected to be 250,000 ounces compared to previous guidance of 350,000 ounces.
At the Pueblo Viejo project in the Dominican Republic, (a joint venture 60 percent owned by Barrick Gold) the starter dam at the tailings facility was damaged in a severe rainstorm, resulting in a delay in first gold production. Goldcorp was expecting to produce 50,000 ounces of gold at Pueblo Viejo in 2011, but will now not produce any until next year.
All things taken together, Goldcorp expects a reduction in 2011 gold production to between 2.50 million and 2.55 million ounces, compared to previous guidance of between 2.65 million and 2.75 million ounces.
Chuck Jeannes, president and chief executive officer, was confident about the longer term future, however. "Due to strength throughout our mine portfolio in the first half of 2011 as well as steady progress on the development of our next generation of gold projects, Goldcorp's long-term growth profile remains intact," he said.
"Goldcorp remains well-positioned to benefit from near-record high metals prices. Effective cost containment is blunting the effect of industry cost pressures, and continued strong by-product metals prices have led to improved cash costs for 2011. Our portfolio of young, prospective mines continues to deliver the best gold margins in the industry and our advancing project pipeline will drive our 60 percent growth in gold production over the next five years."
