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Goldcorp (T.G) follows through on multi-billion write down warning at Argentine mine

Stockhouse Editorial
1 Comment| February 19, 2015

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All figures in US dollars unless otherwise stated.

Goldcorp's (TSX: G, Stock Forum) fourth quarter looked pretty grim when the company released its financial results for the period showing, that despite record production levels, it had sustained a $2.4 billion net loss or ($2.94) per share for Q4 versus a net loss of $1.1 billion or ($1.34) per share filed in Q4 2013.

According to the news release, the loss was attributed to an impairment charge of $2.3 billion due to a write down of its Cerro Negro gold mine, located in Argentina, which the company had warned investors about back in the middle of January.

The company explained that it wrote down the mine because of a decline in market valuations of future exploration potential and ongoing fiscal challenges in Argentina.

Other more positive quarterly results included adjusted revenues of $1.1 billion with gold sales totaling 707,900 ounces on record gold production of 890,900 ounces for an adjusted net earnings of $55.0 million or $0.41 per share.

The quarter also saw Cerro Negro reach commercial production on January 1 and announced agreements on the divestiture of Wharf on January 12 and on the acquisition of Probe Mines on January 19.

End of year figures came in at $4.5 billion in adjusted revenues with gold sales of 2.67 million ounces on record gold production of 2.87 million ounces for adjusted net earnings of $498 million or $0.61 per share.

During the year, the company reached certain milestones including first gold production at Cerro Negro and Eleonore mines. It also divested the Marigold mine and announced an update of proven and probable mineral reserves of 49.6 million gold ounces at December 31, 2014.

Company President and CEO, Chuck Jeannes, commented optimistically despite the mixed results, “Driven by the ongoing success of our Operating for Excellence initiatives and growing contributions from our newest mines, Goldcorp achieved another year of double-digit gold production growth at lower all-in sustaining costs.”

He then explained, “Expected production growth of an additional 20% in 2015, coupled with rapidly declining capital expenditures provides a clear path to achieving significant free cash flow this year.”

Then he summed up, “Coupled with our investment grade balance sheet, Goldcorp possesses the flexibility to pursue growth opportunities that will further support our future success.”

Goldcorp was in the news recently when the Vancouver-based company declared a second monthly dividend payment for 2015 back at the beginning of February.

Shares slipped 1.11% on the news to $28.62 per share.

Currently there are 813.6m outstanding shares with a market cap of $23.3 billion.


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