UPDATE 2-Goldcorp reports loss on impairment, tax-related charges

Thu Feb 13, 2014 5:45pm EST

By Euan Rocha

TORONTO Feb 13 (Reuters) - Goldcorp Inc reported a quarterly loss of $1.1 billion on a slew of one-time charges, but better-than-expected production costs and a rising gold price pushed the miner's stock higher on Thursday.

Vancouver, British Columbia-based Goldcorp said a number of tax and impairment charges hurt results, along with reclamation and closure costs at its inactive mine sites.

The company is the latest of a string of gold miners to be stung by asset impairment charges due to the sharp year-on-year slide in price of gold. Goldcorp's rival's Barrick Gold and Agnico-Eagle Mines both saw their quarterly results hurt by similar charges this week.

Goldcorp also followed in the steps of its peers and trimmed the size of its gold reserve base by 15 percent to account for the 28 percent slide in the price of gold in 2013. It said it had 54.4 million ounces of proven and probable gold reserves at the end of 2013, based on a $1,300 per ounce gold price.

Gold miners typically recalculate reserves, the amount of gold that it is economically feasible to mine, at the beginning of each year. Many have lowered their estimates with fourth-quarter results, following years of increases. When prices fall, reserves typically fall as well, because it is no longer profitable to mine lower-quality ore.

Barrick, which opted to use a more conservative long-term gold price assumption, lowered its estimated gold reserves to 104.1 million ounces from 140.2 million ounces a year ago.

Goldcorp's Chief Executive Chuck Jeannes, in an interview, said the company was comfortable with using a higher gold price assumption, as it remains bullish on gold over the long run.

"It's primarily a reflection of our long-term view on gold prices and it is quite consistent with the analysts' longer-term averages. Now we run our mine plans at lower prices in the near term, so nothing we are doing in terms of taking action today at the sites is impacted by the longer-term view, it is more based on spot."

The optimistic view may pan out. The price of spot gold rose above $1,300 an ounce on Thursday for the first time in more than three months, lifting shares of Goldcorp and its peers. Goldcorp's stock closed 3.6 percent higher at C$26.98 on the New York Stock Exchange on Thursday.

QUARTERLY LOSS

The Vancouver-based miner said its net loss in the fourth quarter was $1.1 billion, or $1.34 a share. That compared with a year-earlier profit of $504 million, or 47 cents a share.

Excluding the one-time tax and impairment charges, along with reclamation and closure costs for Goldcorp's inactive mine sites, the company reported a profit of $74 million, or 9 cents a share, down from $465 million, or 57 cents a share, a year earlier, when precious metal prices were significantly higher.

The miner, which early in January made a C$2.6 billion ($2.4 billion) hostile bid for rival Osisko Mining Corp, said its quarterly revenue fell to $1.2 billion from $1.43 billion despite record gold production levels, as its average realized gold price in the quarter fell to $1,254 an ounce from $1,692 an ounce a year earlier.

OSISKO BID

Goldcorp said it believes a lawsuit filed against it by its target Osisko is without merit, and it urged the gold miner to allow it to do its due diligence and proceed with a transaction.

Jeannes on a conference call said Osisko has now had enough time to explore all its alternatives and that it is now time for Osisko's board to engage with Goldcorp.

"It is time to allow us due diligence access," said Jeannes. "It is frankly bizarre that the only company that has not been granted due diligence access, is the only one that wants to transact with Osisko."

Osisko stuck to its stance in a letter mailed out to its shareholders on Thursday, urging them not to tender shares in favor of the Goldcorp bid. The letter called the offer inadequate and said it fails to recognize the value of its flagship asset, the Canadian Malartic gold mine in Quebec.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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