Goldcorp (GG, Financial) is expanding its production. It is carrying out various feasibility studies to improve low-cost production assets. Let's take a closer look at Goldcorp's various moves.
Strategic moves
The pre-feasibility studies linked to the pyrite leach projects and concentrate enrichment process are advancing continuously and are estimated to get completed by the year end. These projects are believed to have significant capability to deliver considerable value at Peñasquito in a long run. The company expects to produce in 40,000 to 60,000 ounces range for this year and is forecasted to announce commercial production in the beginning of 2015.
By the quarter end, the exploration ramp achieved depth of 788 meters and the production shaft got nearly 65% completed targeting a depth of 975 meters.
The project is well on track to announce commercial production during the beginning of 2015 first quarter, and to expand the design throughput to 7,000 tons per day during the beginning of 2018.
In the third quarter, Goldcorp produced 234,000 ounces of silver and 19,000 ounces of gold with the initial capital cost estimate reduced in $1.65 billion to $1.7 billion range.
The high voltage power line development is now complete, with commissioning by the Argentinean Power Authority in progress. Permanent power from the grid and energization of the substation is currently estimated by fourth quarter ending.
During the quarter, Underground construction at Eureka in Mariana Central comprised 2,300 meters and Goldcorp expects to resume expansion of Mariana Norte by 2015 beginning.
Considering the exploration vertical, there’s continued drilling on the Bruce Channel deposit with eight drills presently drilling from underground. Drilling for the quarter totalled 28,300 meters, and in line with the company’s expectations.
Conclusion
The company has not provided any data for trailing P/E ratio, indicating the company was in loss earlier. However, the forward P/E looks comparatively healthy at 23.24 and nearer to the industry’s average of 14.97, going forward. The PEG ratio of 2.05, above 1, represents slower growth compared to solid industry’s average of 0.29. The profit margin of -23.51% is disappointing and signifies no profit but loss. The revenue per share and diluted EPS of 4.47 and -1.05 respectively depicts poor investor earnings.
The quarterly revenue growth of -4.00% is poor compared to significant industry’s average of 55.00% and suggests continued decline in investor earnings. But, the current ratio of 1.24 suggests the robustness of the company’s balance sheet. Finally, the investors are advised to invest into Goldcorp Inc. looking at the solid long-term growth prospects indicated by the CAGR for the next 5 years per annum of 13.10% comparable to the industry’s average of 21.31% and expect promising returns in a long run.
