Goldcorp (GG, Financial) dropped 1.4% in after-hours trading on Wednesday following disappointing results on first-quarter 2018 production, sales volume and net earnings.
The production of gold dropped 10% to 590,000 ounces in the first quarter compared to a year ago when the Canadian miner reported a gold output of 655,000 ounces.
The all-in sustain cost (AISC) of one ounce of gold sold was $810 in the first quarter of 2018. While in the comparable of 2017, the AISC was $800 per ounce of metal sold.
The company sold less gold. A total of 585,000 ounces were placed on the market in the first quarter of 2018 versus a volume of 646,000 ounces of gold sold in the comparable of fiscal 2017.
The chart below illustrates the trend in Goldcorp’s production, sales volumes and AISC per ounce over the last five fiscal years:
The company reaffirms full fiscal 2018 guidance for gold production of 2.5 million ounces. The AISC is guided at $800 per ounce of metal.
The net income was $67 million. Compared to 2017, the bottom line decreased by $103 million or 61%.
The net profit per ordinary share of Goldcorp was 8 cents, down 60% year-over-year and the miner missed consensus by 2 cents.
The 11% increase in the adjusted operating cash flow to $350 million was possible thanks to a higher price of gold per ounce on the London Bullion Market: $1,329.28 per ounce in the first quarter of 2018 versus $1,219.36 an ounce in the first quarter of 2017.
CEO David Garofalo commented: "Our operations again delivered on target quarterly results while we continue to execute very well on our robust pipeline of growth projects, which together with excellent exploration results from across our portfolio, continues to enhance confidence in our 20/20/20 plan of growing production and reserves by 20% and reducing AISC by 20% by 2021."
The company says that the Peñasquito Pyrite Leach project in Mexico and Musselwhite Materials Handling project in Ontario are both ahead of schedule and have advanced to an 86% completion and 65%. The Borden project in Ontario is also on track and the production of metal is expected to be reached before the second part of 2019.
The company is also on track regarding the accomplishment of a program of sustainable annual efficiencies for $250 million to be achieved across its entire portfolio of activities before the second part of 2018, since 84% of it has already been completed in the first quarter of 2018.
Garofalo also added that the completion of a robust pre-feasibility study at NuevaUnión in Chile and the acceleration of study work, exploration and engineering at Century in Ontario and Norte Abierto in Chile underpin the company’s Beyond 20/20 pipeline of low-cost and large-scale mines, which also will be characterized by a new long-life.
Goldcorp Inc (GG, Financial) has climbed 9% so far this year and has outperformed the Van Eck Vectors Gold Miners ETF (GDX, Financial) by 15%.
For the 52-weeks through April 25, Goldcorp gained 1% and is trading above the 200, 100 and 50 SMA lines.
The 52-week range is $11.64 to $15.55 per share. The recommendation rating is 2.2 of 5, and the average target price is $17.92 per share.
(Disclosure: I have no positions in any security mentioned in this article.)
