ABX Barrick Gold Corp. (BC) (delisted)

Goldcorp Inc. (GG) has agreed to support the proposed transaction by which the Canadian gold and copper producer Northgate Minerals Corporation will acquire all of the issued and outstanding shares of Primero Mining Corp.

Goldcorp holds 35% of Primero’s shares, and has entered into an agreement to vote in favor of the deal. On completion of the deal, Goldcorp will receive 46.7 million Northgate shares representing approximately 11% of the company's outstanding shares. The transaction will be effective through a plan of arrangement under the British Columbia Business Corporations Act.

Northgate Minerals agreed to acquire precious metals producer Primero in an all-stock deal worth C$370.4 ($383.7 million) million, creating a mid-tier gold company with a market cap of C$1.2 billion.

In May 2011, Goldcorp released its earnings for the first quarter of 2011. The company’s reported net earnings in the first quarter of 2011 were $651 million compared with $232 million in the first quarter of 2010. Adjusted net earnings were $397 million, or 50 cents per share compared with $159 million or 22 cents per share in the first quarter of 2010. Results exceeded the Zacks Consensus Estimate of 48 cents.

In the first quarter of 2011, revenues increased 69% year over year to $1,216 million, on gold sales of 627,300 ounces. Revenues missed the Zacks Consensus Estimate of $1,295 million.

Record gold prices and Goldcorp’s strong production boosted revenues. The average realized gold price for the quarter rose 26% to $1,694 an ounce. Cash costs, including by-product credit, were $188 an ounce.

For 2011, Goldcorp stood by its production outlook for the year, with output expected to be in the range of 2.65 million to 2.75 million ounces. However, the company announced that if the improving trend continues, it may revisit its cash cost guidance of $280 – $320 per ounce.

Based in Vancouver, Goldcorp Inc. has development projects across the Americas and plans to expand production by 60% to 4 million ounces in 2015.

The company competes with Barrick Gold Corporation (ABX) and Newmont Mining Corp. (NEM).

We maintain our Neutral recommendation on Goldcorp. Currently, it holds a Zacks #3 Rank (Hold) on the stock.

 
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