Costs are becoming a growing concern for gold miners across the world. In this regard, Goldcorp Inc. (GG) has decided to set aside its acquisition strategies for the time being and concentrate only on developing its large pipeline of projects in America.
In the previous year itself, Goldcorp had pursued about half-dozen deals.
In September 2010, Goldcorp agreed to buy gold miner Andean Resources Ltd for C$3.6 billion ($3.2 billion), trumping a rival bid from Eldorado Gold Corporation.
Before this, in January, 2010, Goldcorp signed agreement to acquire Xstrata’s 70% interest in the El Morro copper/gold project in Chile through an agreement with midtier miner New Gold, the company that owns the remaining 30%.
Though the acquisitions are no longer a priority for Goldcorp in 2011, it will not shy away if it comes across a good deal.
In fourth quarter 2010, gold production at Red Lake was 187,000 ounces at total cash costs of $313 per ounce. At Porcupine in Ontario, gold production totaled 67,900 ounces at a total cash cost of $656 per ounce.
The Hoyle Pond Deep project continued to progress, which will access recently-discovered zones of gold mineralization and enhance operational flexibility and efficiencies throughout the Hoyle Pond underground complex. Drilling focused on lateral and depth extension of current mineralized zones, as well as testing for additional mineralized areas.
The TVZ deposit, encountered during depth extension of the current mineralization, has been successfully extended up-dip and remains open both up and down dip and to the east. There are currently three surface diamond drills testing the projection of this deposit to surface.
Goldcorp expects to produce between 2.65 million and 2.75 million ounces this year. It expects production to reach 4 million ounces by 2015.
Goldcorp is one of the world’s fastest growing senior gold producers. Its low-cost gold production is 100% unhedged. The company faces stiff competition from AngloGold Ashanti Ltd. (AU), Barrick Gold Corporation (ABX) and Newmont Mining Corp. (NEM).
Goldcorp’s arch rival Agnico also announced a 256% increase in its quarterly dividend in December, when it announced that it would raise the quarterly payment to $0.16 a share, starting on March 15, 2011.
We maintain our Neutral recommendation on Goldcorp. Currently, it holds a Zacks #3 Rank (Hold) on the stock.
BARRICK GOLD CP (ABX): Free Stock Analysis Report
ANGLOGOLD LTD (AU): Free Stock Analysis Report
GOLDCORP INC (GG): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
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