VANCOUVER—On January 09, 2011, Goldcorp Inc. (TSX: G, NYSE: GG) announced 2011 gold production and provided production and cash cost guidance for 2012 and the five-year period ending 2016.
Goldcorp’s year-end financial statements are scheduled to be released on February 15, 2012. The final calculation of operating costs has not yet been completed, but total cash costs for all of 2011 are expected to be approximately $220 per ounce of gold on a by-product basis and approximately $530 per ounce of gold on a co-product basis, meeting guidance on both measures.
The Company ends the year with approximately $1.7 billion in cash.
“Very strong gold production in the fourth quarter of 2011 underscores the overall high quality of our mine portfolio,” said Chuck Jeannes, President and Chief Executive Officer. “Peñasquito met its production target and continued to emerge as the linchpin of our asset base in 2011, with strong operating cash flow in just its first full year of production. Also in Mexico, the Los Filos mine achieved record production of 336,500 ounces while continuing with its excellent safety performance. Red Lake in 2011 remained the anchor of our overall gold production at very low cash costs while Porcupine and Musselwhite mines in Ontario provided stable production and exciting exploration results. In Guatemala, the last year of open pit mining in the highest grade portion of the pit at Marlin resulted in record gold production of 382,400 ounces.”
Goldcorp also provided cash cost guidance for the 2012 year. The Company expects to produce approximately 2.6 million ounces of gold at a total cash cost of $250 to $275 per ounce on a by-product basis and $550 to $600 per ounce on a co-product basis. Forecast 2012 silver production of approximately 34 million ounces would place Goldcorp among the largest silver producers in the world. Copper production is forecast at approximately 110 million pounds; zinc production is expected to be approximately 400 million pounds and lead production is forecast at approximately 180 million pounds.
“Goldcorp’s increasing production profile and balance sheet strength affords us the flexibility to fund our operations and projects internally while also returning value to shareholders in the form of increasing dividends,” confirmed Jeannes. “This combination of strong, achievable growth and a meaningful dividend creates a highly differentiated investment proposition in the gold industry and a key competitive advantage for Goldcorp as we begin 2012.”
At Red Lake, production is expected to benefit from an increase in tonnes mined from lower-grade zones consistent with the Company’s long-term initiative to utilize excess milling capacity. The focus in the year ahead will remain on enhancing the overall flexibility of the High Grade Zone (HGZ) through continued investments in development.
Construction of the 5-kilometre haulage drift to connect the Cochenour shaft with the Red Lake mine on the 5400 foot level has advanced to a completion level of more than 36% at the end of 2011 and targeted for 66% completion by year-end 2012. Upon completion, the drift will enable ore from the Cochenour/Bruce Channel deposit to be hauled directly to the Red Lake mine for processing at the existing mill facilities. Forecast life-of-mine gold production from Cochenour is approximately 250,000 to 275,000 ounces per year at low cash costs commencing near the end of 2014. During 2012, exploration drilling from the haulage drift will continue to test the unexplored ground at depth in the heart of the prolific Red Lake gold district.
At Porcupine in Ontario, the Hoyle Pond Deep project continued advancing toward shaft sinking in the first quarter of 2012 in an effort to target newly discovered zones of gold mineralization. Exploration at Hoyle Pond remains focused on lateral and depth extension of current mineralized zones, as well as expansion of the TVZ zone. The Company has also announced approval for the Hollinger open pit project near the Porcupine complex in Timmins. The $75 million construction phase for the project has begun and the mine is expected to begin production in the third quarter of 2012.
At Musselwhite in Ontario, increased production in 2012 will be driven by increasing grades in the PQ Deeps. Exploration drilling continued to focus on the underground extension of both the Lynx zone discovery and PQ Deeps resources. The Lynx resource has been extended 200 metres north and 100 metres to the south of the resource boundary, with mineralization open along strike and up- and down-dip. Underground drilling in the PQ Deeps has extended the resource 200 metres north of the resource boundary and remains open along strike. Surface drilling on the north shore of Opapamiskin Lake continues to investigate the projection of the Lynx zone.
Upon reaching initial gold production in late 2014, Éléonore in Quebec will be a sustained source of large, low-cost gold production in one of the most stable mining jurisdictions in the world. A February 2011 pre-feasibility study update significantly expanded the gold production profile through a development plan that will access the Roberto deposit through two shafts and feed mill throughput of 7,000 tonnes per day. In November, the Environmental and Social Impact Assessment permit was received, and full construction is now well underway. Over 46,000 metres of surface diamond drilling was completed in 2011 and the exploration ramp has now advanced 831 metres in length. The exploration shaft has reached a depth of 640 metres with completion to a full 718 metre depth targeted for the second quarter of 2012.
An estimated $1.7 billion in cash at year-end, an undrawn $2 billion credit facility and continuing strong cash flows in 2012 are expected to provide the necessary flexibility to fund the Company’s peer-leading growth profile.
Goldcorp will invest aggressively in 2012 to fund its suite of growth projects, with capital expenditures for 2012 forecast at approximately $2.6 billion of which approximately 60% is allocated to projects and 40% for operations.
Spurred by significant exploration successes in and around many of its key properties, company-wide exploration expenditures in 2012 are expected to total approximately $200 million, of which approximately one third will be expensed. Goldcorp’s primary focus will remain on the replacement of reserves mined throughout the year and on extending existing gold zones at all of its prospective mines and projects.
Five Year Forecast:
Goldcorp’s production profile continues to evolve toward a model comprised of sustained, low-cost gold production from large cornerstone projects. Gold production is forecast to grow approximately 70% over the next five years to 4.2 million ounces in 2016. New projects will make significant contributions to this growth, with first gold production forecast from new projects as follows: Pueblo Viejo, mid-2012; Cerro Negro, second-half 2013; Cochenour, late 2014; Camino Rojo, 2014; Éléonore, late 2014; and El Morro, 2017.
At metals prices of $26 per ounce silver, $3.30 per pound copper, $0.90 per pound zinc and $0.90 per pound lead, average by-product cash costs over the five-year period are expected to remain below $400 per ounce over the 5-year plan, positioning the Company for outstanding, sustained margins and cash flows over the long term.