* Earnings of $0.31 per share before items miss Wall Street
* Revenue down 16 percent at $1 billion
* Spending reviewed; company pushes ahead on capital
* Shares down 2.1 percent in Toronto
By Julie Gordon
TORONTO, May 2 Miner Goldcorp Inc said on
Thursday that its first-quarter profit dropped by a
steeper-than-expected 35 percent as lower metal prices and
higher costs outweighed a boost in gold sales.
Shares of the world's largest gold miner by market
capitalization fell 2.1 percent to C$28.46 on the Toronto Stock
Even though gold prices have plunged recently, the
Vancouver-based miner said it was still committed to spending
$2.8 billion this year as it brings three new mines into
production through 2015.
With those new mines in Canada and Argentina, Goldcorp plans
to boost its output by about 50 percent by 2017. That bucks a
trend among many of the top gold miners of scrapping new
projects to return cash to shareholders.
"Our shareholders can count on continued discipline as we
advance our growth strategy and focus on execution and prudent
cost management at our mines and projects," Chief Executive
Officer Chuck Jeannes said in a statement.
While long-term fundamentals should support a strong gold
price, Jeannes said the company had put a "contingency plan" in
place to defer spending should market conditions warrant.
The price of gold fell sharply last month to a two-year low
of about $1,320 an ounce, but has since recovered to about
$1,460. That is still well below Goldcorp's average realized
gold price of $1,622 in the first quarter.
With prices volatile, miners are under pressure to bring
down operating and capital costs, improve margins and defer
Barrick Gold Corp, Goldcorp's top Canadian rival,
announced a 10 percent cut to its capital spending last week and
said it might suspend development of the Pascua-Lama mine it is
building on the border of Chile and Argentina.
Top U.S. gold miner Newmont Mining Corp said it was
cutting its capital spending for 2013 by about 5 percent as it
reported a sharp drop in first-quarter earnings on Monday.
Goldcorp's production jumped 17 percent to 614,600 ounces in
the first quarter, while gold sales were up 9 percent at 595,100
ounces. But lower gold, silver and copper prices weighed on
Cash costs on a by-product basis rose sharply to $565 an
ounce from $251 on lower by-product metal sales.
All-in cash costs, a new measure adopted by producers to
reflect the true cost of producing an ounce of gold, were $1,135
an ounce, above Goldcorp's 2013 target of $1,000 to $1,100.
Goldcorp expects its operating costs to come down throughout
the year, as it moves into higher grades at two of its mines and
as production ramps up at Pueblo Viejo, its joint venture with
Barrick in the Dominican Republic.
The company said a power permit for its Cerro Negro
development project in Argentina had come later than expected.
That could delay first gold from the mine to the first quarter
of 2014 from an earlier target of the end of 2013.
Goldcorp is also building two new projects in Canada.
Éléonore is scheduled to start-up in 2014 and Cochenour, in
At its Penasquito mine in Mexico, the company said it had
identified a new source of water that may supply enough to ramp
the plant up to full capacity. A water strategy study, due in
the first half of 2013, is under way.
First-quarter net income fell to $309 million, or 33 cents a
share, from $479 million, or 51 cents a share, a year earlier.
Excluding one-time items, earnings were 31 cents a share.
Analysts on average had expected 39 cents, according to Thomson
Revenue fell 16 percent to $1 billion, below Wall Street
expectations of $1.34 billion.
Goldcorp maintained its production outlook for 2013.