BRIEF-Western Energy says increased support for combination with Savanna Energy
* Western Energy Services Corp. Announces increased support for combination with Savanna Energy Services Corp.
* Adjusted EPS 54 cents vs avg estimate 46 cents
* Posts record revenue of $1.5 bln on strong gold sales
* Maintains production outlook for 2012
* Shares close up 6.9 percent at C$43.60 on TSX
By Julie Gordon
TORONTO, Oct 25 Goldcorp Inc, the No. 2 Canadian gold miner, reported better-than-expected quarterly results on Thursday, as improved performance at its Red Lake and Penasquito mines led to strong gold and silver sales.
The strong quarter, which came just months after the company was forced to slash its full-year outlook on hiccups at its two flagship mines, sent shares climbing, with the stock closing up nearly 7 percent.
"This is the sort of thing the market is looking for - under-promise, over-deliver and contain your costs - and this is what Goldcorp has done," said George Topping, a mining analyst at Stifel Nicolaus in Toronto.
"You put it back-to-back with Agnico-Eagle, which also had a good quarter, and you get the sense the winds of change have swept through the gold equities."
Agnico-Eagle Mines Ltd reported record quarterly production and boosted its outlook for the year after the market closed on Wednesday. Its shares closed up 8.9 percent at C$55.97 on Thursday on the Toronto Stock Exchange.
Goldcorp maintained its revised production outlook for the year and said cash costs fell 15 percent in the quarter as by-product metal credits outweighed higher production costs. Excluding credits, cash costs rose 20 percent.
As industrywide cost escalation prompts miners around the world to shelve major growth projects, Goldcorp has undertaken a review of its capital projects, with a cost update expected early next year.
"We're not immune to capital escalation - it's been a problem throughout the industry and we've seen it as well," Chief Executive Chuck Jeannes told Reuters.
He added that the company, which earlier this year shelved its $3.9 billion El Morro project in Chile over a permitting issue, is not looking at delaying any other projects.
"We've got very high quality mines we're building," Jeannes said. "I can't imagine deferring any of those."
Shares of the Vancouver-based miner closed up 6.9 percent at C$43.60 on the Toronto Stock Exchange.
Gold production more than doubled at the Penasquito mine in Mexico in the quarter, driven by stronger grades. A water shortage in the arid region is still holding back throughput rates at the mill, but the company said it was well on track to meet its forecast.
Goldcorp also saw improved output at its Red Lake mine in Ontario as it was able to access higher grade zones.
Net earnings in the quarter rose to $498 million, or 61 cents a share, from $336 million, or 42 cents, in the year-earlier period.
Excluding foreign exchange gains and other one-time items, profit fell to 54 cents from 56 cents per share in the third quarter of 2011. Analysts, on average, expected 46 cents a share, according to Thomson Reuters I/B/E/S.
Revenue jumped 18 percent to a record $1.5 billion, topping expectations of $1.4 billion, as the miner sold 617,800 ounces of gold and 9.1 million ounces of silver.
Goldcorp expects to meet its annual production target of some 2.35 million to 2.45 million gold ounces at total cash costs of $310 to $340 per ounce.
Its newest mine, the Pueblo Viejo joint venture with Barrick Gold Corp, started production in the quarter. The mine is expected to achieve commercial output in December.
The Vancouver, British Columbia-based company has three new mines set to start production through 2014: the Cerro Negro project in Argentina and two new mines in Canada.
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