Goldcorp Inc. (GG) recently announced a new credit facility of $2.0 billion, replacing the company’s existing credit facility of $1.5 billion. The agreement was signed with a consortium of 15 lenders. This floating rate facility is unsecured and amounts drawn are required to be financed or repaid by November 23, 2016.
The company intends to utilize the proceeds from the new credit facility to pursue further growth opportunities and for other general corporate purposes.
As of September 30, 2011, long-term debt of the company was $72.6 million, up from $69.5 million as of December 31, 2010.
We believe the new credit facility will increase the company’s available fund and extend the maturity period of debt. Additionally, this issuance of note is consistent with management’s target of attaining optimal capital structure.
The company also plans to use this new debt to fund its expansion program.
On October 27, 2011, Goldcorp reported adjusted net earnings of $459 million or 57 cents per share compared with $244 million or 33 cents per share in the year-ago quarter. Quarterly earnings also exceeded the Zacks Consensus Estimate of 56 cents per share.
Reported net earnings were $336 million in the third quarter of 2011 compared with $721 million in the third quarter of 2010.
In the third quarter of 2011, revenues increased 48% year over year to $1.3 billion, on gold sales of 571,500 ounces.
The company competes with Barrick Gold Corporation (ABX) and Newmont Mining Corp. (NEM).
We maintain our Neutral recommendation on Goldcorp. Currently, the company retains a Zacks #3 Rank (Hold rating).
