Goldcorp (GG, Financial) delivered a record fourth quarter 2014 gold production of 890,900 ounces at all-inclusive costs of $1,035 per ounce.
During 2014, Goldcorp activated two new mines which contributed significantly to the robust gold production of 2.87 million ounces, an expansion of 11% compared to last year.
Strong growth in production will drive results
The significant fourth quarter gold production depicts the effectiveness of the company’s growth plans, which were further improved by the addition of two key mines in the already robust mine portfolio of Goldcorp.
Goldcorp divested Wharf in January and Marigold last April with their closing expected to be executed soon.
Goldcorp is extremely positive about the imminent acquisition of the Borden Lake gold project located near Porcupine, and has set a goal of reserve replacement in 2015.
The planned divestment of Marigold and Wharf is expected to provide significant cash flows to Goldcorp enough to successfully finance its key acquisitions during the quarter.
Expanding its operations
Goldcorp expects to expand the mine operations at Éléonore and Cerro Negro towards the end of the year and the metal grades at Peñasquito mine are believed to be least during the first quarter and in line with the beginning of the fresh pit phase.
In addition to delivering robust free cash flow from its key portfolio of solid young mines, Goldcorp is also focused on recognizing organic growth opportunities within its key portfolio that further has significant potential to add to the prospective growth in cash flows. Considering Peñasquito, both the Pyrite Leach and CEP projects are continuously illustrating significant possibilities to grow the production profile and the general mine economics. Additionally at Peñasquito, Goldcorp is evaluating the growth prospects of Camino Rojo for future operations.
The highly focused growth efforts of Goldcorp to expand its key mine operations while exploring the organic growth possibilities in its robust mine portfolio is believed to uniquely position Goldcorp among its core competitors for long-term growth and profitability.
Going forward into 2015, Goldcorp targets on achieving zero fatalities, deliver impressive free cash flow after paying strong dividends, expand net gold production in 3.3 to 3.6 million ounces range, achieve robust production growths at Eleonore and Cerro Negro mines, enhance Concentrate Enrichment/Pyrite Leach feasibility study at Penasqito, expand/replace gold reserves throughout the company, achieve $175 million gain from realizing excellence in the operating programs, and finally, sustain an investment grade balance sheet.
Goldcorp recently signed two major innovative agreements in line with its keen focus on expanding community partnerships. It entered into a partnership deal with the Wabauskang First Nation at Red Lake and it also signed a major resource growth deal with four First Nation communities at Porcupine. Therefore, Goldcorp now has a robust portfolio of partnership agreements considering all its Canadian mines with First Nations, which emphasize indigenous and treaty rights, Éléonore, Porcupine, Musselwhite and Red Lake.
The strategic partnership agreements of Goldcorp with the major gold mining players is estimated to significantly expand its market share and thus expand the customer base by increasingly adding strategic new customers to its already solid consumer base.
At Cochenour, Goldcorp witnessed 200,000 ounces increase in inferred resources with the drilling in 2014 primarily focused on descriptive drilling for engineering design of the initial growth and strokes close to the haulage drift. During 2015, Goldcorp plans to continue drilling on both and below the haulage drift to enable mine expansion and into deeper sections throughout the process.
The notable increase in the overall gold production at each of the sites of Goldcorp while moving into 2015 highlight the significant improvement in the mining techniques leveraged by the mining major.
Conclusion
Overall, the investors are advised to hold their position in Goldcorp looking at the declining profit margin of -62.89% which signifies no profit but loss. The PEG ratio of 2.47 is weaker than the industry’s average of 0.79 and indicates slower company growth. Moreover, Goldcorp is hugely debt-laden with total debt of $3.59 billion against total cash of merely $549.00 million.
