Goldcorp Inc. (GG, Financial) updated its shareholders Oct. 18 on the status of the sale of its minority interest stake of 21% in the San Nicolas asset.
The news release is published on Goldcorp’s website.
The San Nicolas asset is a copper-zinc project that Goldcorp was advancing in the Mexican province of Zacatecas and the miner has sold to Teck Resources Ltd. (TECK, Financial).
The transaction, the Canadian miner said, has been concluded by the two counterparties for $50 million to be paid in cash.
This transaction is in line with Goldcorp’s 20/20/20 strategy that the Canadian miner targets to accomplish within four years’ time.
First, with the sale of its minority interest in the San Nicolas project, Goldcorp unloads its operations with a noncore asset. This means that Goldcorp can save part of its operating cash flow that otherwise would have been used to fund the development of the San Nicolas project and in general expenses.
Also through the cost-cutting policy and inefficiencies, the Canadian miner aims to achieve a 20% reduction in all-in sustaining costs by 2022.
In addition, the cash Goldcorp will receive from the sale of this Mexican copper and zinc project will be used to advance other metallic projects the Canadian mining company is advancing alone – brown field and green field projects – or in joint venture with other miners.
Concerning the latter point, Goldcorp is engaged by agreement in a joint venture with the biggest producer of gold in the world, Barrick Gold Corp. (ABX, Financial), for the advancement of projects and explorations of mineral areas in Chile.
The Borden project in Ontario is an example of brownfield project in which Goldcorp is engaged while the Coffee Project – a greenfield project in the territories of Yukon – gives Goldcorp additional exploration opportunities.
Goldcorp is deemed to upgrade its portfolio of assets in terms of both the total amount of gold that can be produced and the average grade of its mineral reserves.
A 20% increase in the total amount of gold reserves and in the annual production are the other two objectives of Goldcorp’s strategy.
Goldcorp is trading at $13.15 per share with a market capitalization of $11.36 billion, an enterprise value of $14.27 billion, a price-book (P/B) ratio of 0.76 and a price-sales (P/S) ratio of 2.90.
The gold stock has been downtrending again on the New York Stock Exchange in the last five trading days and has lost 3.31% year to date. The Canadian miner underperformed the VanEck Vectors Gold Miners ETF (GDX) that in the same span has gained 11.51%.
Disclosure: I have no positions in any securities mentioned in this article.
