Goldcorp Inc.’s (GG) gold reserves once again increased for the seventh consecutive year. Gold reserves surged 23% to 60.1 million ounces in fiscal 2010. Measured and indicated gold resources also climbed 13% to 25.7 million ounces in 2010, following recent discoveries at its gold projects in Argentina and Canada.
In order to further increase its reserves and resources, add new discoveries and expand existing discoveries, Goldcorp intends to invest an additional $170 million in fiscal 2011.
The company also reported one of the largest silver holdings in the sector with proven and probable silver reserves and measured and indicated silver resources of 1.3 billion ounces and 457.6 million ounces, respectively.
In February 2011, Goldcorp sold its 38.6 million in Osisko Mining Corporation (Osisko), displaying its continued success in redeploying internal capital from non-core assets to fund the company’s existing project pipeline.
Goldcorp has development projects throughout the Americas, including the Penasquito mine in Mexico and a stake in the giant Pueblo Viejo project in the Dominican Republic.
Earlier, Goldcorp acquired Argentina-focused Andean Resources for C$3.6 billion ($3.4 billion) in the latter half of 2010. The acquisition brings forth Goldcorp the Cerro Negro Gold project, an advanced-stage, high-grade vein system with substantial expansion potential, adding to Goldcorp’s peer-leading low cost growth pipeline.
Goldcorp follows an aggressive acquisition strategy for attaining growth similar to other industry players like Barrick Gold Corporation (ABX) and Kinross Gold (KGC). The acquisition of Glamis Gold Limited and Placer Dome’s Canadian assets were major milestones for the company.
Goldcorp’s merger with Glamis Gold Limited in 2008 positions it well as the world’s largest gold mining company. The company also acquired the Placer Dome Canadian mines and other agreed interests from peer Barrick Gold, which boosted its annual production up by 50% and increased the gold reserves by 72% in 2009.
We are optimistic about Goldcorp’s Penasquito mine in Mexico, which commenced commercial production in September 2010. In addition, Goldcorp divested many of its non-core assets, generating huge cash flows, which are likely to be used for future growth projects.
However, Goldcorp is exposed to various political and economic risks. Goldcorp also faces foreign exchange risk as it pays most expenses in local currencies and sells in dollars.
Based in Vancouver, Canada, Goldcorp Inc. is a leading gold producer engaged in gold mining and related activities including exploration, extraction, processing and reclamation. Goldcorp has operations in Canada, the US, Mexico and Central and South America. Apart from gold, the company also produces copper and silver. It competes with the likes of AngloGold Ashanti Ltd. (AU), Barrick Gold Corporationand Newmont Mining Corp. (NEM).
We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.
BARRICK GOLD CP (ABX): Free Stock Analysis Report
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