Toronto Stock Exchange: G New York Stock Exchange: GG
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(All Amounts in $US unless stated otherwise)
VANCOUVER, Jan. 10 /PRNewswire/ - GOLDCORP INC. (TSX: G,
NYSE: GG) today announced 2010 gold production and provided
production and cash cost guidance for the 2011 year and the
five-year period ending 2015.
Highlights
- Total 2010 gold production increased to a record 2.52 million ounces.
- Fourth quarter 2010 gold production totaled 686,300 ounces.
- Total 2011 gold production forecast to grow to 2.7 million ounces.
- Five-year gold production expected to increase 60% (70% on a gold
equivalent basis).
- Cash costs to continue downward trend below $300 per ounce over the
next five years.
- Six new mines over the next five years to fuel growth beyond 2015.
Goldcorp's year-end financial statements are expected to be
released on February, 24, 2010. The final calculation of operating
costs for 2010 has not yet been completed, but total cash costs(1)
are expected to be approximately $285
per ounce of gold on a by-product basis and less than $450 per ounce of gold on a co-product basis,
beating guidance on both measures. After payment of $765 million in cash consideration as part of the
Andean transaction which closed on December
30, 2010, the Company ended the year with over $530 million in cash.
"2010 was a year of mine development success as we completed
construction of the Penasquito mine in Mexico, as well as one of portfolio
enhancement as we took several steps to improve our mix of assets
for the long-term," said Chuck
Jeannes, President and Chief Executive Officer. "Goldcorp
remains the fastest-growing and lowest cost senior gold producer,
and our progress during the year has further enhanced these
competitive advantages as we enter 2011.
"The key operational milestone for the year was the on-time
start of commercial production and smooth ramp-up at Penasquito,
which is now positioned to generate strong cash flow in 2011 and
well into the next decade. Red
Lake continued its outstanding performance, ending the year
at over 700,000 ounces of gold production at very low cash costs.
Young, foundational mines like Marlin and Los Filos hit their
strides during the year, while major exploration success at all
three Canadian mines has created the opportunity for enhanced
production and cash flow from these long-lived assets.
"Amid growing scarcity of top-quality gold assets, we were
fortunate to secure three new projects, funded in large part from
the divestiture of non-core assets, thus greatly upgrading our
overall portfolio without significant dilution to our shareholders.
The year-end completion of the transaction to acquire the Cerro
Negro project in Argentina has
brought us another future cornerstone mine: a low-capital cost
project that is expected to contribute significant gold production
starting mid-2013 at extremely low cash costs. The El Morro
copper-gold project in Chile
marked our return to one of the strongest mining jurisdictions in
the world while the Camino Rojo acquisition secured a key strategic
asset in the highly prospective Penasquito district.
"Looking ahead to 2011, Goldcorp will continue to be
distinguished by growing, low-cost gold production in stable
jurisdictions throughout the Americas. With gold production set to
double at Penasquito this year, our focus shifts to building our
next suite of growth projects. The Pueblo
Viejo project in the Dominican
Republic continues to advance toward expected initial
production by the end of the year; construction of Éléonore in
Quebec will accelerate; the drift
connecting the Cochenour deposit
to Red Lake will exceed the
halfway point by the end of 2011; and the receipt of permits and
the first quarter completion of a feasibility study update at Cerro
Negro will spur the development of a much larger mine than planned
by the previous owner.
"Goldcorp's accelerating cash flows will allow us to internally
fund our leading growth profile while also allowing for the
continuing return of value to shareholders, which we accomplished
in 2010 through a doubling of our dividend. In a continued strong
market for gold in 2011, growing our cash margins, increasing gold
reserves and creating value are what our investors expect and what
we intend to deliver again this year. We will accomplish these
goals without compromising our commitment to operating responsibly
and with respect for all stakeholders."
2011 Forecast
Goldcorp also provided production and cash cost guidance for the
2011 year. The Company expects to produce between 2.65 and 2.75
million ounces of gold, which includes a significant contribution
from Penasquito as it ramps up to full production. Total cash costs
are expected to be in a range of $280 to
$320 per ounce of gold on a by-product basis. On a
co-product basis, the Company is forecasting a range of
$475 to $500 per ounce of gold, based
on an allocation of Penasquito operating expenses against the four
primary metals produced in proportion to assumed revenues.
Normalizing for metals prices, the Company expects an approximate
6% cost increase based on prices for consumables, labor, fuel and
power.
Assumptions used to forecast total cash costs for 2011 include:
$1,250 per ounce for gold; by-product
metals prices of $20.00 per ounce
silver; $3.25 per pound copper;
$0.90 per pound zinc; $0.90 per pound lead, an oil price of
$85 per barrel and the Canadian
dollar and Mexican peso at $1.03 and
$12.50 respectively to the US dollar.
The Company continues to evaluate opportunities to contain input
costs and minimize foreign exchange risk through the hedging of
both oil and currencies. Using current metals prices and foreign
exchange rates, Goldcorp's by-product cash costs for 2011 would be
forecast at $170 per ounce.
Quarterly gold production levels are expected to ramp up
steadily throughout 2011. Mine-by-mine actual 2010 gold production
results and estimated 2011 gold production are as follows:
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Mine 2010 Production 2011 Forecast
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Red Lake 703,300 665,000
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Marlin 296,100 400,000
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Penasquito 168,200 350,000
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Los Filos 306,100 335,000
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Musselwhite 258,600 265,000
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Porcupine 265,900 260,000
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Alumbrera (37.5%) 148,900 130,000
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El Sauzal 152,000 95,000
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Marigold (66.7%) 91,200 90,000
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Wharf 73,300 60,000
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Pueblo Viejo 0 50,000
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San Dimas* 53,400 0
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Total 2,517,000 2,700,000
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* San Dimas divested
Aug. 2010
Canada
At Red Lake, the "fill the
mills" initiative to utilize excess milling capacity will result in
a greater proportion of mined material from lower grade zones in
addition to ore mined from the High Grade Zone (HGZ). Overall, the
mine plan is expected to result in a slight decline in overall gold
production to 665,000 ounces of gold at very low cash costs. The
completion of the connection drift at the 45 level between the
Campbell and Red Lake complexes
has provided additional flexibility for HGZ development.
The construction of the 5-kilometer high speed haulage drift to
connect the Cochenour shaft with
the Red Lake mine on the 5400 foot
level has advanced to a completion level of more than 20%. Upon
completion, the drift will enable ore from the Cochenour/Bruce Channel deposit to be hauled
directly to the Red Lake mine for
processing at the existing mill facilities, thus adding an
important source of high grade, low-cost production commencing near
the end of 2014. During 2011, exploration drilling from the high
speed tram drift will continue to test the unexplored ground at
depth in the heart of the prolific Red
Lake gold district. A scoping study for the Cochenour project has been completed and
further guidance on the cost and timing of production will be
provided in connection with the Company's year-end earnings release
in February.
Consistent with its ongoing commitment to safe, responsible
operations, the Company is pleased to announce that its
Red Lake mine has become fully
certified under the International Cyanide Management Code for the
Manufacture, Transport and Use of Cyanide in the Production of Gold
("the Cyanide Code"). Red Lake is
the last of Goldcorp's nominated mines to receive full
certification. The Cyanide Code is a voluntary industry program for
companies involved in the production of gold using cyanide,
developed under the auspices of the United Nations Environment
Program with the goal of safeguarding human health and the
environment by promoting responsible management of cyanide used in
gold mining.
At Musselwhite in Ontario,
successful exploration drilling during 2010 resulted in the
discovery of the Lynx zone adjacent to the PQ Deeps underground
operation. With higher grade ore than historically found in this
mining area a decision is pending for mid-year 2011 to pursue a new
shaft that will increase throughput and production and extend the
mine life. Shaft engineering and confirmation of project economics
are currently underway. The Lynx zone is expected to contribute to
increased production as early as late this year.
At Porcupine, the underground shaft (winze) project continues to
advance, which will allow access to newly discovered zones at the
Hoyle Pond underground operation and a potential increase in the
overall gold production profile following its completion in 2014.
In 2011, gold production is expected to decline slightly as a
result of continued processing of a greater proportion of low-grade
stockpiled ore.
Upon reaching initial gold production in late 2014, Éléonore in
Quebec will be a key source of
large, low-cost gold production in one of the most attractive
mining jurisdictions in the world. The Company continues to advance
a pre-feasibility study update that contemplates a significantly
larger production profile than the current 3,500 tonne per day plan
developed prior to the 2009 gold resource increase. The Company
expects to announce the details of the updated study in the first
quarter of 2011. The hoist facilities for the planned 650
meter-deep exploration shaft were completed during the fourth
quarter and full-face sinking has now commenced, with completion
expected by the end of 2011.
Mexico
The successful start-up of the Penasquito mine was the key
operational highlight of 2010. The mine reached commercial
production on schedule on the way to achieving 2010 production of
170,000 ounces. With the commissioning of the high pressure
grinding roll (HPGR) circuit during the fourth quarter, full
capacity of 130,000 tonnes per day is expected at the end of the
first quarter of 2011. At a forecast 350,000 ounces of gold
production, Penasquito is poised to become Mexico's largest gold producer in 2011. With
the expectation for negative cash costs, the mine is positioned to
generate one of the largest sources of cash flow for the Company
this year. Subsequent mine planning and optimization efforts have
increased near-term gold production from previous estimates while
maintaining long term life of mine production profile.
Important progress is also expected in 2011 on two initiatives
that will further enhance the robust economics at this world-class
mine. The construction of an in-pit crushing and conveying (IPCC)
system will commence in 2011 with expected completion in 2013. The
IPCC system will result in operating cost savings compared to truck
haulage. The Company also expects to announce plans in early 2011
to secure a reliable, long-term source of lower-cost power.
Exploration and development work will also continue at Camino
Rojo and Noche Buena, two advanced
stage satellite exploration projects near Penasquito. At Camino
Rojo the Company has finalized an agreement with local communities
to conduct exploration, which will advance aggressively at this
prospective deposit. The scoping study completed on Noche Buena late in 2010 confirmed that with
additional resources, the potential exists for a satellite
operation which will make a meaningful contribution to Penasquito's
production. Drilling will continue during 2011 with the objective
of adding further oxide resources and further testing of sulphide
zones.
Los Filos mine in Guerrero
state will once again be a major contributor to Goldcorp's overall
production profile in 2011. Gold production is forecast to increase
10% to 335,000 ounces, reflecting the benefit of the first full
year of operation of the crushing and agglomeration plant. As is
the case at a number of the Company's other mines, exploration
success continues to support the potential for an eventual increase
in the overall gold production profile at Los Filos over the longer
term.
Central and South America
At Marlin in Guatemala, record
production of 400,000 ounces of gold at very low cash costs is
forecast for 2011, driven by the mining of higher grade ore from
the open pit. The development of recent high grade discoveries in
the West Vero zone is expected to continue, with first production
expected to begin in 2012. The 2010 discovery of bonanza grade
mineralization in the Delmy vein is also supporting increased
expectations for the long term future at Marlin. Further
exploration will continue on the Delmy vein with the goal of
extending the zone, which remains open along strike and at
depth.
At the Company's 37.5%-owned Alumbrera copper gold mine in
Argentina, geotechnical
instability along a known fault zone in the pit has necessitated a
re-design of access to deeper sections of the pit, which will delay
access to higher grade ore in 2011. This is expected to result in
an impact to the Company's gold and copper production of
approximately 20,000 ounces and approximately 20 million pounds
respectively, in 2011.
Gold production from Pueblo
Viejo, the 40% owned gold project in the Dominican Republic operated by Barrick, is
expected to contribute slightly to the Company's overall 2011
production profile, with a subsequent ramp-up to a forecast average
of 415,000-450,000 ounces of gold expected in the first five years
of full production at total cash costs of $275 to $300 per ounce.
Following Pueblo Viejo, the
high grade Cerro Negro deposit is positioned to be the next source
of new gold production for the Company. Located in the
mining-friendly Santa Cruz
province of Argentina, Cerro Negro
is comprised of a system of underexplored vein zones with strong
potential for continued growth of gold resources. An updated
resource calculation for Cerro Negro will be available in early
February with Goldcorp's annual reserve and resource update, and
new feasibility study results for an expanded mining and processing
scenario that contemplates approximately doubling average
throughput to 4,000 tonnes per day will be available by the end of
the first quarter of 2011. The team at Cerro Negro is already
making good progress in advancing the project toward initial
production in 2013.
Financial Guidance
An estimated $530 million in cash
at year-end, an undrawn $1.5 billion
credit facility and estimated cash flows in 2011 of nearly
$2.5 billion at current metals prices
provide the necessary flexibility to fund the Company's
peer-leading growth profile.
Goldcorp will invest aggressively in 2011 to fund its suite of
growth projects, including the Cerro Negro, El Morro and Camino
Rojo projects acquired in 2010. Capital expenditures for 2011 are
forecast at approximately $1.8
billion of which approximately 50% is allocated to
operations and 50% for projects. Of the project capital estimate,
approximately 30% relates to completion of Pueblo Viejo.
Spurred by significant exploration successes in and around many
of its key properties, company-wide exploration expenditures in
2011 are expected to increase to approximately $170 million, of which approximately half will be
expensed. The primary focus will remain the replacement of reserves
mined throughout the year and on extending existing gold zones at
all of its prospective mines and projects. In addition, important
investments will be made in enhancing the Company's early-stage
exploration pipeline. General and administrative expense is
forecast at $125 million which
excludes non-cash stock option expense estimated to be $90 million for the year. Depreciation, depletion
and amortization expense is expected to be approximately
$280 per ounce of gold produced. The
Company expects an overall effective tax rate of 30% for 2011.
Five Year Forecast
With six new mines expected to be constructed over the next five
years, Goldcorp's production profile will continue to grow toward
sustained, low-cost gold production from large cornerstone
projects. Gold production is forecast to grow approximately 60%
over the next five years to 4 million ounces in 2015. New projects
will make significant contributions to this growth, with first gold
production forecast from new projects as follows: Pueblo Viejo, late 2011; Cerro Negro,
mid-2013; Cochenour, 2014; Camino
Rojo, 2014; Éléonore, late 2014; and El Morro, late 2015.
Year-by-year gold production is forecast as follows:
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Year Forecast Gold Production
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2011 2.7 Million
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2012 3.1 Million
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2013 3.3 Million
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2014 3.7 Million
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2015 4.0 Million
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The Company does not report production on a gold equivalent
basis, but for comparative purposes, converting production of
silver, copper, lead and zinc would result in gold equivalent
production of 3.8 million ounces in 2011, growing 70% to 5.6
million ounces over the next five years. By-product cash costs are
expected to remain below $300 per
ounce over the 5-year plan, positioning the Company for
outstanding, sustained margins and cash flows over the long
term.
Goldcorp is one of the world's fastest growing senior gold
producers. Its low-cost gold production is located in safe
jurisdictions in the Americas and remains 100% unhedged.
1. The Company has included a non-GAAP performance measure, total cash
cost per gold ounce, throughout this document. The Company reports
total cash costs on a sales basis. In the gold mining industry, this
is a common performance measure but does not have any standardized
meaning, and is a non-GAAP measure. The Company follows the
recommendations of the Gold Institute standard. The Company believes
that, in addition to conventional measures, prepared in accordance
with GAAP, certain investors use this information to evaluate the
Company's performance and ability to generate cash flow. Accordingly,
it is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements", within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and applicable Canadian securities legislation,
concerning the business, operations and financial performance and
condition of Goldcorp Inc. Forward-looking statements include, but
are not limited to, statements with respect to the future price of
gold, silver, copper, lead and zinc, the estimation of mineral
reserves and resources, the realization of mineral reserve
estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, costs and timing of the
development of new deposits, success of exploration activities,
permitting time lines, hedging practices, currency exchange rate
fluctuations, requirements for additional capital, government
regulation of mining operations, environmental risks, unanticipated
reclamation expenses, timing and possible outcome of pending
litigation, title disputes or claims and limitations on insurance
coverage. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", "believes" or
the negative connotation thereof or variations of such words and
phrases or statements that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "occur" or "be
achieved" or the negative connotation thereof. All forward-looking
statements are developed based on assumptions about such risks,
uncertainties and other factors set at herein. Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of Goldcorp to be materially
different from those expressed or implied by such forward-looking
statements, including but not limited to: risks related to the
integration of acquisitions; risks related to international
operations; risks related to joint venture operations; actual
results of current exploration activities; actual results of
current reclamation activities; conclusions of economic
evaluations; changes in project parameters as plans continue to be
refined; future prices of gold, silver, copper, lead and zinc;
possible variations in ore reserves, grade or recovery rates;
failure of plant, equipment or processes to operate as anticipated;
accidents, labour disputes; delays in obtaining governmental
approvals or financing or in the completion of development or
construction activities and other risks of the mining industry, as
well as those factors discussed in the section entitled
"Description of the Business - Risk Factors" in Goldcorp's annual
information form for the year ended December
31, 2009 available at www.sedar.com. Although Goldcorp has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. The
forward-looking statements contained in this press release are made
as of the date of this press release and, accordingly, are subject
to change after such date. Except as otherwise indicated by
Goldcorp, these statements do not reflect the potential impact of
any non-recurring or other special items or of any dispositions,
monetizations, mergers, acquisitions, other business combinations
or other transactions that may be announced or that may occur after
the date hereof. Forward-looking statements are provided for the
purpose of providing information about management's current
expectations and plans and allowing investors and others to get a
better understanding of Goldcorp's operating environment. Goldcorp
does not undertake to update any forward-looking statements that
are included in this document, except in accordance with applicable
securities laws.
SOURCE Goldcorp Inc.
Copyright . 10 PR Newswire