Goldcorp Reports First Quarter 2017 Results
VANCOUVER, April 26, 2017 – GOLDCORP INC. (TSX: G, NYSE: GG) today reported its first quarter 2017 results.
First Quarter Highlights
- Net earnings for the first quarter were $170 million, or $0.20 per share, compared to net earnings of $80 million, or $0.10 per share, for the first quarter of 2016.
- First quarter operating cash flows were $227 million and adjusted operating cash flows(1,2) were $269 million, of which $74 million was used to fund the growth pipeline, $65 million was used to repurchase a gold stream on the Company’s NuevaUnión project and $15 million was used to pay dividends. Available liquidity at March 31, 2017 stood at $3.1 billion.
- Gold production of 655,000 ounces at low all-in sustaining costs (1) (“AISC”) of $800 per ounce, compared to 784,000 ounces at AISC of $836 per ounce for the first quarter of 2016. 2017 guidance reconfirmed for gold production of approximately 2.5 million ounces (+/- 5%) at AISC of approximately $850 per ounce (+/- 5%).
- Portfolio optimization continues to drive increasing net asset value (“NAV”) per share. The Company continued to upgrade its portfolio with the announcement of a 50/50 joint venture with Barrick in the Maricunga district in Chile, and the completion of approximately $500 million in divestitures of non-core assets. Targeted annual sustainable efficiencies of $250 million and advancing our robust project pipeline are on track to deliver a 20% increase in gold production, a 20% increase in gold reserves and a 20% reduction in AISC over the next five years.
“Strong first quarter results were driven by solid production and low all-in sustaining costs, with our $250 million annual sustainable efficiency program well advanced and already benefitting the bottom line,” said David Garofalo, President and Chief Executive Officer. “To deliver on the 20/20/20 growth plan we are maintaining a laser focus on execution, while simultaneously optimizing our asset portfolio and driving down costs. In addition, we continue to enhance the strongest growth pipeline in the gold industry with the planned 60 million ounce joint venture in the Maricunga District in Chile, financed by the sale of non-core assets. This transaction underlies our strategy of growing net asset value per share by delivering three to four million ounces of sustainable, annual gold production from six to eight core camps.”
FINANCIAL AND OPERATING RESULTS
($ millions, except where indicated) |
Three months ended |
Three months ended |
Gold production1 (ounces) |
655,000 |
784,000 |
Gold sales1 (ounces) |
646,000 |
799,000 |
Operating cash flows |
$227 |
$59 |
Adjusted operating cash flows1,2 |
$269 |
$89 |
Net earnings |
$170 |
$80 |
Net earnings (per share) |
$0.20 |
$0.10 |
By-product cash costs1,3 (per ounce) |
$540 |
$557 |
AISC1,3 (per ounce) |
$800 |
$836 |
Net earnings and net earnings per share for the first quarter of 2017 were affected by, among other things, the following non-cash or other items that management believes are not reflective of the performance of the underlying operations (items are denoted as (increases)/decreases to net income and net income per share):
($ millions, except where indicated) |
Pre-tax |
After-tax |
$/share |
Positive deferred tax effects of foreign |
$ – |
$(61) |
$(0.07) |
Reduction in the Company’s obligation to |
$(26) |
$(26) |
$(0.03) |
Total cash costs on a by-product basis for the first quarter of 2017 were $540 per ounce, compared to $557 per ounce for the first quarter of 2016. AISC for the first quarter of 2017 were $800 per ounce, compared to $836 per ounce in the first quarter of 2016. The decrease in AISC was primarily due to the Company’s focus on cost containment with lower corporate administration and sustaining capital costs, higher realized by-product prices at Peñasquito, partially offset by lower sales volumes.
As of March 31, 2017, the Company had total liquidity of approximately $3.1 billion, including $0.2 billion in cash, cash equivalents and short term investments and $2.9 billion available on its credit facility.
Please refer to the Company’s financial statements, related notes and accompanying Management Discussion and Analysis (“MD&A”) for a full review of its operations and projects. This can be accessed by clicking on this link: MDA_Financials.
About Goldcorp
Goldcorp is a senior gold producer focused on responsible mining practices with safe, low-cost production from a high-quality portfolio of mines.
Conference Call and Webcast
Date: |
Thursday, April 27, 2017 |
Time: |
10:00 a.m. (PST) |
Dial-in: |
1-800-355-4959 (toll-free) or 1-416-340-2216 (outside Canada and the US) |
Replay: |
1-800-408-3053 (toll-free) or 1-905-694-9451 (outside Canada and the US) |
Replay end date: |
May 28, 2017 |
Replay Passcode: |
Conference ID#: 2296992 |
A live and archived webcast will also be available.
Footnotes |
|
1. |
The Company has included non-GAAP performance measures on an attributable basis (Goldcorp share) throughout this document. Attributable performance measures include the Company’s mining operations and projects and the Company’s share from Pueblo Viejo, Alumbrera and NuevaUnión. |
2. |
Adjusted operating cash flows comprises Goldcorp’s share of operating cash flows, calculated on an attributable basis to include the Company’s share of Alumbrera, Pueblo Viejo and NuevaUnión’s operating cash flows. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Company’s performance and ability to operate without reliance on additional external funding or use of available cash. |
The following table provide a reconciliation of net cash provided by operating activities in the consolidated financial statements to Goldcorp’s share of adjusted operating cash flows: |
Three months ended |
||
($ millions) |
2017 |
2016 |
Net cash provided by operating activities of continuing operations |
$227 |
$59 |
Adjusted operating cash flows provided by Pueblo Viejo, Alumbrera and NuevaUnión |
$42 |
$30 |
Goldcorp’s share of adjusted operating cash flows |
$269 |
$89 |
3. |
“Cash costs: by product” per ounce and “AISC” per ounce are non-GAAP financial performance measures. |
Cash costs: by-product: |
|
Total cash costs: by-product incorporate Goldcorp’s share of all production costs, including adjustments to inventory carrying values, adjusted for changes in estimates in reclamation and closure costs at the Company’s closed mines which are non-cash in nature, and include Goldcorp’s share of by-product silver, lead, zinc and copper credits, and treatment and refining charges included within revenue. Additionally, cash costs are adjusted for realized gains and losses arising on the Company’s commodity and foreign currency contracts which the Company enters into to mitigate its exposure to fluctuations in by-product metal prices, heating oil prices and foreign exchange rates, which may impact the Company’s operating costs. |
|
In addition to conventional measures, the Company assesses this per ounce measure in a manner that isolates the impacts of gold production volumes, the by-product credits, and operating costs fluctuations such that the non-controllable and controllable variability is independently addressed. The Company uses total cash costs: by product per gold ounce to monitor its operating performance internally, including operating cash costs, as well as in its assessment of potential development projects and acquisition targets. The Company believes this measure provides investors and analysts with useful information about the Company’s underlying cash costs of operations and the impact of by-product credits on the Company’s cost structure and is a relevant metric used to understand the Company’s operating profitability and ability to generate cash flow. When deriving the production costs associated with an ounce of gold, the Company includes by-product credits as the Company considers that the cost to produce the gold is reduced as a result of the by-product sales incidental to the gold production process, thereby allowing the Company’s management and other stakeholders to assess the net costs of gold production. |
|
The Company reports total cash costs: by-product on a gold ounces sold basis. In the gold mining industry, this is a common performance measure but does not have any standardized meaning. The Company follows the recommendations of the Gold Institute Production Cost Standard. The Gold Institute, which ceased operations in 2002, was a non-regulatory body and represented a global group of producers of gold and gold products. The production cost standard developed by the Gold Institute remains the generally accepted standard of reporting cash costs of production by gold mining companies. |
|
AISC: |
|
AISC include total production cash costs incurred at the Company’s mining operations, which forms the basis of the Company’s by-product cash costs. Additionally, the Company includes sustaining capital expenditures, corporate administrative expense, exploration and evaluation costs, and reclamation cost accretion and amortization. The measure seeks to reflect the full cost of gold production from current operations, therefore growth capital is excluded. Certain other cash expenditures, including tax payments, dividends and financing costs are also excluded. |
|
The Company believes that this measure represents the total costs of producing gold from current operations, and provides the Company and other stakeholders of the Company with additional information of the Company’s operational performance and ability to generate cash flows. AISC, as a key performance measure, allows the Company to assess its ability to support capital expenditures and to sustain future production from the generation of operating cash flows. This information provides management with the ability to more actively manage capital programs and to make more prudent capital investment decisions. |
|
The Company reports AISC on a gold ounces sold basis. This performance measure was adopted as a result of an initiative undertaken within the gold mining industry; however, this performance measure has no standardized meaning and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company follows the guidance note released by the World Gold Council, which became effective January 1, 2014. The World Gold Council is a non-regulatory market development organization for the gold industry whose members comprise global senior gold mining companies. |
|
The following tables provide a reconciliation of total cash costs: by product to reported production costs: |
|
Three months ended March 31, 2017 |
|||||||||||
($ millions unless stated otherwise) |
|||||||||||
Production Costs (a) |
By-Product |
Treatment and |
Total Cash |
Ounces |
Total Cash Costs: |
||||||
Peñasquito |
$ |
194 |
$ |
(227) |
$ |
45 |
$ |
12 |
138 |
$ |
85 |
Cerro Negro |
53 |
(12) |
— |
41 |
88 |
459 |
|||||
Red Lake |
46 |
— |
— |
46 |
54 |
861 |
|||||
Éléonore |
61 |
— |
— |
61 |
72 |
850 |
|||||
Porcupine |
52 |
— |
— |
52 |
62 |
843 |
|||||
Musselwhite |
40 |
— |
— |
40 |
56 |
713 |
|||||
Other mines |
74 |
(24) |
— |
50 |
69 |
740 |
|||||
Corporate |
— |
— |
— |
— |
— |
— |
|||||
Total before associates |
$ |
520 |
$ |
(263) |
$ |
45 |
$ |
302 |
539 |
$ |
561 |
Pueblo Viejo |
47 |
(5) |
— |
42 |
95 |
439 |
|||||
Other associate |
29 |
(27) |
3 |
5 |
12 |
415 |
|||||
TOTAL |
$ |
596 |
$ |
(295) |
$ |
48 |
$ |
349 |
646 |
$ |
540 |
Three months ended March 31, 2016 |
|||||||||||
($ millions unless stated otherwise) |
|||||||||||
Production Costs (a) |
By-Product |
Treatment and |
Total Cash |
Ounces |
Total Cash Costs: |
||||||
Peñasquito |
$ |
172 |
$ |
(142) |
$ |
31 |
$ |
61 |
122 |
$ |
513 |
Cerro Negro |
68 |
(19) |
— |
49 |
128 |
381 |
|||||
Red Lake |
46 |
— |
— |
46 |
84 |
546 |
|||||
Éléonore |
56 |
— |
— |
56 |
70 |
804 |
|||||
Porcupine |
47 |
— |
— |
47 |
75 |
624 |
|||||
Musselwhite |
30 |
— |
— |
30 |
67 |
447 |
|||||
Other mines |
108 |
(23) |
— |
85 |
112 |
752 |
|||||
Corporate |
1 |
— |
— |
1 |
— |
— |
|||||
Total before associates |
$ |
528 |
$ |
(184) |
$ |
31 |
$ |
375 |
658 |
$ |
596 |
Pueblo Viejo |
45 |
(5) |
— |
40 |
112 |
359 |
|||||
Other associate |
66 |
(41) |
6 |
31 |
29 |
1,036 |
|||||
TOTAL |
$ |
639 |
$ |
(230) |
$ |
37 |
$ |
446 |
799 |
$ |
557 |
(a) |
$23 million in royalties are included in production costs for the three months ended March 31, 2017 (three months ended March 31, 2016– $17 million). |
(b) |
Total cash costs: by-product per ounce may not calculate based on amounts presented in these tables due to rounding. |
(c) |
If silver, copper, lead and zinc were treated as co-products, total cash costs for the three months ended March 31, 2017 would have been $701 per ounce of gold (three months ended March 31, 2016 – $604). |
As described above, AISC include total production cash costs incurred at the Company’s mining operations, which forms the basis of the Company’s cash costs: by-product and which are reconciled to reported production costs in the tables above. The following tables provide a reconciliation of AISC per ounce to total cash costs: by product: |
Three months ended March 31, 2017 |
|||||||||||||||
($ millions unless stated otherwise) |
|||||||||||||||
Total |
Corporate |
Exploration & |
Reclamation |
Sustaining |
Total |
Ounces |
Total |
||||||||
Peñasquito |
$ |
12 |
$ |
– |
$ |
1 |
$ |
1 |
$ |
40 |
$ |
54 |
138 |
$ |
391 |
Cerro Negro |
41 |
– |
1 |
2 |
14 |
58 |
88 |
651 |
|||||||
Red Lake |
46 |
– |
1 |
– |
14 |
61 |
54 |
1,149 |
|||||||
Éléonore |
61 |
– |
1 |
– |
14 |
76 |
72 |
1,057 |
|||||||
Porcupine |
52 |
– |
– |
3 |
7 |
62 |
62 |
1,011 |
|||||||
Musselwhite |
40 |
– |
2 |
– |
7 |
49 |
56 |
871 |
|||||||
Other mines |
50 |
– |
1 |
2 |
2 |
55 |
69 |
800 |
|||||||
Corporate |
— |
36 |
– |
– |
6 |
42 |
– |
66 |
|||||||
Total before |
$ |
302 |
$ |
36 |
$ |
7 |
$ |
8 |
$ |
104 |
$ |
457 |
539 |
$ |
849 |
Pueblo Viejo |
42 |
– |
– |
– |
9 |
51 |
95 |
541 |
|||||||
Other |
5 |
– |
– |
3 |
– |
8 |
12 |
623 |
|||||||
TOTAL |
$ |
349 |
$ |
36 |
$ |
7 |
$ |
11 |
$ |
113 |
$ |
516 |
646 |
$ |
800 |
Three months ended March 31, 2016 |
|||||||||||||||
($ millions unless stated otherwise) |
|||||||||||||||
Total |
Corporate |
Exploration |
Reclamation |
Sustaining |
Total |
Ounces |
Total |
||||||||
Peñasquito |
$ |
61 |
$ |
– |
$ |
1 |
$ |
2 |
$ |
57 |
$ |
121 |
122 |
$ |
1,004 |
Cerro Negro |
49 |
– |
– |
2 |
14 |
65 |
128 |
503 |
|||||||
Red Lake |
46 |
– |
3 |
1 |
21 |
71 |
84 |
842 |
|||||||
Éléonore |
56 |
– |
– |
– |
11 |
67 |
70 |
965 |
|||||||
Porcupine |
47 |
– |
– |
3 |
12 |
62 |
75 |
837 |
|||||||
Musselwhite |
30 |
– |
2 |
– |
5 |
37 |
67 |
553 |
|||||||
Other mines |
85 |
– |
2 |
4 |
7 |
98 |
112 |
876 |
|||||||
Corporate |
1 |
57 |
2 |
– |
4 |
64 |
– |
80 |
|||||||
Total before |
$ |
375 |
$ |
57 |
$ |
10 |
$ |
12 |
$ |
131 |
$ |
585 |
658 |
$ |
891 |
Pueblo Viejo |
40 |
– |
– |
1 |
9 |
50 |
112 |
443 |
|||||||
Other |
31 |
– |
– |
2 |
– |
33 |
29 |
1,115 |
|||||||
TOTAL |
$ |
446 |
$ |
57 |
$ |
10 |
$ |
15 |
$ |
140 |
$ |
668 |
799 |
$ |
836 |
(a) |
AISC may not calculate based on amounts presented in these tables due to rounding. |
INVESTOR CONTACT: Lynette Gould, Director, Investor Relations, (800) 567-6223, E-mail: info@goldcorp.com, www.goldcorp.com; MEDIA CONTACT: Christine Marks, Director, Corporate Communications, Telephone: (604) 696-3050, E-mail: media@goldcorp.com, www.goldcorp.com
NT4
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