TSX: G
NYSE: GG
(All Amounts in $US unless stated otherwise)
VANCOUVER, Jan. 12, 2015 /PRNewswire/ - GOLDCORP
INC. (TSX: G, NYSE: GG) today announced gold production
and preliminary cash costs for 2014 and provided production and
cash cost guidance for 2015 and production forecasts for the
five-year period through 2019.
Highlights
- Record gold production of 886,000 ounces in the fourth quarter,
resulting in 2014 gold production of a record
2.871 million ounces.
- All-in sustaining costs2 total
approximately $1,045 per ounce in the
fourth quarter of 2014; all-in sustaining costs decreased 6% to
approximately $950 per gold ounce for
2014.
- Forecast 2015 gold production to grow approximately 20% to
between 3.3 and 3.6 million ounces, in line with previous Company
guidance after divestitures of Marigold and Wharf mines.
- Forecast 2015 all-in sustaining costs expected between
$875 and $950 per gold ounce.
- Forecast 2015 capital spending expected to decrease to between
$1.2 billion and $1.4 billion.
- Commercial production achieved at Cerro Negro on January 1, 2015; Éléonore commercial production
expected in the first quarter of 2015.
Goldcorp's year-end financial statements are scheduled to be
released on February 19, 2015. The
final calculation of capital and operating costs has not yet been
completed, but all-in sustaining costs for the fourth quarter and
2014 are expected to be approximately $1,045 and $950 per
ounce of gold, respectively. On a
by-product2 basis, for the fourth quarter
and 2014 costs are expected to be approximately $600 and $545 per
ounce of gold, respectively.
"Goldcorp delivered another year of double-digit gold production
growth at significantly lower costs in 2014," said Chuck Jeannes, Goldcorp President and Chief
Executive Officer. "An excellent year from the flagship
Peñasquito mine in Mexico and the
achievement of production guidance at most mines in the portfolio
nearly offset previously-reported production challenges at Los
Filos and El Sauzal mines in
Mexico. Despite record fourth quarter gold production,
continued weakness at Los Filos and start-up issues at Éléonore
left us short of full year production guidance. Most importantly,
we achieved Goldcorp's first operational objective as we produced
gold with zero fatalities. At the same time, we significantly
reduced the number of injuries across our organization.
"Another key accomplishment during 2014 was the achievement of
initial gold production at the three new growth projects that
comprise the backbone of Goldcorp's growth profile. We were
pleased to achieve commercial production at Cerro Negro as at
January 1, 2015. At Éléonore we
expect to address remaining start-up issues early in the year in
order to position the mine for strong, sustained gold production.
The seamless integration of the Cochenour project into the operations of
Red Lake in this year of
transition is also a key priority during 2015. All three
projects are well-positioned for long term success, and with their
capital investment nearly complete, we enter 2015 with an
outstanding portfolio anchored by young, low-cost mines that are
positioned to contribute free cash flow this year and beyond.
"At all of our mines and projects, the focus remains on
profitable gold production that demonstrates clear returns for
shareholders and we have eliminated marginal ounces that do not
meet this objective from our mine plans. We accomplished this
in 2014 with the completion of a new mine plan at Peñasquito that
delivered stronger returns, and the latest example of this is at
Red Lake, where remnant production
from the declining Campbell operation no longer meets our return
requirements and will be phased out in 2015. A disciplined
focus on margins results in a better asset portfolio and a
financially stronger company.
"World economic factors continue to support our expectation for
stable gold prices in 2015. Strong demand for gold from
Asia and developing economies
around the world will support demand while we believe that global
gold production will remain flat at best. Even in the current
gold price environment, Goldcorp's strong, investment-grade balance
sheet, cost profile and production growth leave us well-positioned
for long-term success."
With respect to the Cerro Negro mine in Argentina the Argentine government continues
to support various actions and programs aimed at conserving its
foreign exchange reserves, including restrictions on importation of
goods and services and limitations on the exchange of Argentine
pesos into US dollars. The financial consequences of these programs
as well as the continuing inflationary environment in the country
are negatively impacting operations at the Cerro Negro mine.
Additionally, the market valuations of future exploration potential
have declined. Concurrent with the declaration of commercial
production, the Company is conducting an impairment test of its
Cerro Negro assets to assess the full effect of these actions in
light of ongoing challenging fiscal conditions in Argentina.
Preliminary analysis indicates an after-tax asset impairment charge
in the range of approximately $2.3 to $2.7
billion4 in the fourth quarter. The
Company expects to complete its final impairment analysis for
inclusion in its fourth quarter earnings release.
2015 Guidance
Goldcorp expects to produce between 3.3 and 3.6 million ounces
of gold in 2015, in line with previous 2015 guidance (including the
divestment of the Marigold and Wharf mines). Higher
gold production will be driven by growing contributions from Cerro
Negro and Éléonore and a strong year at Peñasquito. The
ramp-ups at Cerro Negro and Éléonore are strongly weighted to the
second half of the year while metals grades at Peñasquito are
expected to be lowest in the first quarter consistent with the
commencement of a new pit phase. As a result, the Company expects
relatively low first quarter production followed by steady
production growth over the course of 2015 as mining continues
deeper into higher-grade portions of the Peñasco pit at
Peñasquito.
All-in sustaining costs for 2015 are expected to be between
$875 and $950 per ounce, driven by
new contributions from two new low-cost mines and continued efforts
to enhance productivity and cost efficiencies through the Company's
Operating for Excellence program. With 2014 cash flow improvements
totaling approximately $278 million,
approximately $175 million in
additional efficiencies are expected to be realized under the
program in 2015.
Forecast silver production for 2015 of between 39 and 41 million
ounces (including approximately 24 to 26 million ounces at
Peñasquito) would maintain Goldcorp's position as one of the
largest silver producers in the world. Zinc production is
expected to be between 400 and 415 million pounds and lead
production is forecast at between 175 and 185 million pounds.
Copper production is forecast between 50 and 55 million
pounds. On a gold equivalent basis3,
Company-wide 2015 production is expected to total between 4.4
million ounces and 4.8 million ounces, an increase of over 10%
compared to 2014.
Price and cost assumptions used to forecast total cash costs and
gold equivalent calculation for 2015 include: $1,200 per ounce for gold; by-product metals
prices of $18.00 per ounce silver;
$3.00 per pound copper; $1.00 per pound zinc and $0.95 per pound lead. Canadian dollar and
Mexican peso budget assumptions are at $1.14 and $14.00
respectively to the US dollar. Mine-by-mine actual 2014 gold
production and forecast 2015 gold production ranges are as
follows:
Mine
|
2014 Production
|
2015 Forecast
|
Peñasquito
|
567,800
|
700,000 –
750,000
|
Cerro
Negro
|
152,100
|
425,000 –
475,000
|
Pueblo Viejo
(40.0%)
|
439,100
|
420,000 –
460,000
|
Red Lake (includes
Cochenour)
|
414,400
|
400,000 –
425,000
|
Éléonore
|
18,300
|
290,000 –
330,000
|
Porcupine
|
300,000
|
300,000 –
320,000
|
Los Filos
|
258,700
|
265,000 –
290,000
|
Musselwhite
|
278,300
|
250,000 –
270,000
|
Marlin
|
186,500
|
160,000 –
175,000
|
Wharf*
|
72,100
|
15,000 –
20,000
|
Alumbrera
(37.5%)
|
120,000
|
75,000 –
85,000
|
El Sauzal
|
37,700
|
0
|
Marigold**
(66.67%)
|
21,800
|
0
|
Total
|
2,866,800
|
3,300,000 – 3,600,000
|
*Wharf production guidance assumes closing of mine sale
on March 31, 2015. Goldcorp
estimates full-year 2015 gold production guidance at Wharf of
between 85,000 and 90,000 ounces at all-in sustaining costs of
between $800 and $875 per gold
ounce.
**Marigold mine divested on April 4, 2014.
Canada
At Red Lake in Ontario, 2015 gold production is expected to
remain near 2014 levels as reduced Campbell production more than
offsets new production from Cochenour in a transitional year.
Consistent with the Company's continued focus on maximizing cash
flow and elimination of marginal ounce production, remnant mining
in the Campbell zone is being phased out during 2015, contributing
to forecast gold production expected at between 400,000 and 425,000
ounces. Exploration in 2015 will continue to focus on the
high-grade HG Young discovery. Rehabilitation of the 14-Level
access in the Campbell Complex is expected to enable diamond
drilling to take place from underground in the current quarter.
Exploration will also continue in the High Grade Zone at depth and
on further testing of High Grade Zone deep
offsets. Drilling will accelerate in the deeper
portions of the Cochenour deposit
and from the haulage drift to test new exploration
targets.
At Éléonore in Quebec,
production for 2015 is expected to be between 290,000 and 330,000
gold ounces. The Company expects to reach commercial production by
the end of the first quarter following the resolution of minor
design and operating issues with the tailings filter press system,
which have significantly impacted filter cloth life. The ramp-up
from 3,500 tonnes per day to the design throughput of 7,000 tonnes
per day remains on track for the first half of 2018. The
production shaft reached a depth of 1,106 metres at the end of
2014, with the access ramp at over 5,556 metres in length,
corresponding to a depth of approximately 865 metres below
surface. Exploration drilling during 2015 will focus on
expanding reserves in the lower portion of the mine.
At Porcupine in Ontario, 2015
gold production is expected to be between 300,000 and 320,000 gold
ounces, driven by increasing production from the Hollinger open
pit. Costs at Porcupine in 2015 are expected to be relatively
higher as a result of a stripping campaign at Hollinger. The Hoyle
Pond Deep project continued to advance, with shaft-sinking expected
to be completed during the first quarter of 2015 and hoisting
expected to commence by year-end. Exploration during 2015
will focus on Hoyle Pond high-grade targets and expansion of the
TVZ zone. At Musselwhite in Ontario, another strong year of gold
production is expected in 2015 at between 250,000 and 270,000
ounces. Exploration will continue to focus on defining the
potential of the West Limb discovery. An access drift to provide
closer drilling platforms for West Limb exploration is continuing
with completion expected by the third quarter of 2015.
Mexico
Peñasquito is positioned for a strong year as mining in the
higher grade portion of the Peñasco pit takes place following a
first quarter characterized by lower production and higher costs as
mining commences on a new phase higher in the pit. Production
guidance for 2015 is expected to be between 700,000 and 750,000
ounces. On a gold equivalent basis, production is expected to
total between approximately 1.5 million to 1.6 million
ounces. Production expectations over the balance of the
five-year period assume throughput of 115,000 tonnes per day.
The Northern Well Field project remains on track to be completed
mid-year which is expected to meet the long-term water requirements
for Peñasquito.
The Pre-Feasibility Studies for the Concentrate Enrichment
Process (CEP) and Pyrite Leach Process were essentially complete at
the end of 2014 and are undergoing internal review. The preliminary
economic results continue to demonstrate the robust economics of
these projects and their potential to significantly increase the
mine life at Peñasquito. The two projects are being
integrated as they enter the feasibility study phase, which is
expected to commence by the end of the first quarter and be
completed in early 2016.
In 2015, exploration at Peñasquito will continue to focus on
defining the high-grade core of the copper-gold, sulphide-rich
skarn mineralization located below and adjacent to current Mineral
Reserves. Metallurgical test work on the mineralization is
underway. Negotiations are continuing between Minera
Peñasquito and authorized representatives of the Cerro Gordo Ejido
and the Company remains confident that a mutually beneficial
settlement of the land claim will be reached.
At the Camino Rojo project, located approximately 50 kilometres
from Peñasquito, the focus of ongoing pre-feasibility study work
has shifted to the evaluation of the project as a supplemental ore
source to the existing Peñasquito facility, in addition to a small,
stand-alone oxide heap leach plant. This approach has the
potential to generate the highest rate of return given the
significantly lower capital costs versus building a separate
processing facility at Camino Rojo.
Due to the positive pre-feasibility study results for the CEP
and Pyrite Leach projects, in combination with the revised approach
to the development of Camino Rojo, the focus in 2015 will be on the
completion of a revised mine plan for Peñasquito that incorporates
all three projects over the life of the mine. The Company
believes that this revised mine plan demonstrates strong potential
to significantly increase the value of Peñasquito and materially
extend its mine life.
At Los Filos in Guerrero,
Mexico, 2015 gold production is forecast at between 265,000
and 290,000 ounces. The focus in 2015 will be on the
continued management of community and security risks in the region
and the completion of a new life-of-mine plan to maximize return on
investment. Construction of the next stage of the heap leach
pad remains on track for completion in mid-2015. The
exploration program will continue to focus on in-fill drilling and
conversion of inferred mineral resources into reserves at El
Bermejal North and in the underground operation.
Central and South
America
At Cerro Negro in the Santa
Cruz province of Argentina,
gold production is expected to be between 425,000 and 475,000
ounces in 2015. The Cerro Negro mill has been operating at
its design throughput rate of 4,000 tonnes per day and commercial
production was declared on January 1,
2015. Commissioning of the high-voltage power line by Transpa
has resumed after the holiday break and is expected to be completed
by February, 2015, at which time Cerro Negro will be connected to
the national grid.
Mining is taking place at the Eureka vein in the upper mine
horizon. Production mining will commence from the first high grade
stopes at the Mariana Central vein during the first quarter of
2015. Development of the lower mining horizon at Eureka is
progressing and ramp development at Mariana Central is on track to
access the lower mining horizon in the second quarter of 2015.
At the Pueblo Viejo joint
venture in the Dominican Republic,
full design throughput capacity is anticipated, leading to expected
gold production of between 420,000 and 460,000 ounces in 2015 (on a
40% basis). Work will continue during the year on the enhancement
of copper and silver recoveries.
Following the Company's fourth-quarter 2014 decision to withdraw
the Environmental Impact Study for the El Morro copper-gold project
in Chile, project activities
during 2015 will focus on a new development plan for project that
meets Goldcorp's investment return criteria. The Company
remains committed to continued productive interaction and
engagement with the adjacent communities and regional
authorities.
Financial Guidance
Approximately $540 million in cash
at year-end, a remaining undrawn credit facility of $1.1 billion and forecast free cash flow in 2015
are expected to provide the liquidity to fund the Company's current
development plans. Capital expenditures for 2015 are forecast
to decrease approximately 40% from 2014, to between $1.2 billion and $1.4 billion. Significant
capital expenditures in 2015 include approximately $235 million at Cerro Negro, $215 million at Peñasquito, $115 million at Éléonore and $95 million at Cochenour.
Company-wide exploration expenditures in 2015 are expected to
total approximately $170 million, of
which approximately one third is expected to be expensed.
Goldcorp's primary focus will remain on the replacement of reserves
mined throughout the year and on extending existing targets at each
of its mines and projects. General and administrative expense
is forecast at $185 million which
excludes stock option expense estimated at $95 million for the year. The Company expects its
overall effective tax rate to be approximately 35% in
2015.
Five-Year Forecast
The start-up of the new mines will make significant
contributions to forecast five-year gold production growth.
Year-by-year gold production is forecast as follows:
Year
|
Forecast Gold Production
|
2015
|
3.3 to 3.6 million
ounces
|
2016
|
3.3 to 3.6 million
ounces
|
2017
|
3.4 to 3.7 million
ounces
|
2018
|
3.1 to 3.4 million
ounces
|
2019
|
3.1 to 3.4 million
ounces
|
Forecast average all-in sustaining cash costs are expected to
remain low over the five-year period, positioning the Company for
continuing improved margins and free cash flow in each year of the
five-year forecast.
Goldcorp is one of the world's fastest growing gold
producers. Its low-cost gold production is located in safe
jurisdictions in the Americas and remains 100% unhedged.
1.
|
Includes production
of 21,800 ounces from Marigold mine. The Company's
calculation of 2014 gold production increase excludes Marigold
production.
|
|
|
2.
|
The Company has
included non-GAAP performance measures - total cash cost,
by-product and co-product per gold ounce and all-in sustaining cash
cost per gold ounce, throughout this document. The Company reports
both of these measures on a sales basis.
|
|
|
|
Total cash cost per
gold ounce and all-in sustaining cash cost per gold in the gold
mining industry 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 Production Cost
Standard. The Gold Institute, which ceased operations in 2002, was
a non-regulatory body and represented a global group of suppliers
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. All-in
sustaining cash costs include by-product cash costs, sustaining
capital, corporate general & administrative expenses and
exploration expense.
|
|
|
|
The Company uses
total cash costs, by product and co-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 these
measures provide 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. Accordingly,
they are 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.
|
|
|
|
Total cash costs on a
by-product basis are calculated by deducting Goldcorp's share of
by-product silver, copper, lead and zinc sales revenues from
Goldcorp's share of production costs. On a by-product basis,
cash costs for 2015 are forecast to be between $500 per ounce and
$550 per ounce.
|
|
|
|
Cost decrease
calculation excludes Marigold production.
|
|
|
3.
|
Total cash costs on a
co-product basis are calculated by allocating Goldcorp's share of
production costs to each co-product based on the ratio of actual
sales volumes multiplied by budget metal prices. On a co-product
basis, cash costs for 2015 are forecast to be between $625 per
ounce and $675 per ounce. Gold equivalent ounces are calculated
using the following assumptions: $1,200 per ounce for gold;
by-product metal prices of $18 per ounce silver; $3.00 per pound
copper; $1.00 per pound zinc; and $0.95 per pound lead. By-product
metals are converted to gold equivalent ounces by multiplying
by-product metal production with the associated by-product metal
price and dividing it with the gold price.
|
|
|
4.
|
This is a preliminary
unaudited estimate range and the impairment testing work is
ongoing, with respect to various underlying assumptions related to
items such as the current market value of exploration, long term
inflationary effects, and foreign exchange
rates.
|
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 Section 21E of the United States Securities
Exchange Act of 1934, as amended, Section 27A of the United States
Securities Act of 1933, as amended and applicable Canadian
securities legislation, concerning the business, operations and
financial performance and condition of Goldcorp Inc. ("Goldcorp").
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 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.
Forward-looking statements are made based upon certain
assumptions and other important factors that, if untrue, could
cause the actual results, performances or achievements of Goldcorp
to be materially different from future results, performances or
achievements expressed or implied by such statements. Such
statements and information are based on numerous assumptions
regarding present and future business strategies and the
environment in which Goldcorp will operate in the future, including
the price of gold, anticipated costs and ability to achieve goals.
Certain important factors that could cause actual results,
performances or achievements to differ materially from those in the
forward-looking statements include, among others, gold price
volatility, discrepancies between actual and estimated production,
mineral reserves and resources and metallurgical recoveries, mining
operational and development risks, litigation risks, regulatory
restrictions (including environmental regulatory restrictions and
liability), activities by governmental authorities (including
changes in taxation), currency fluctuations, the speculative nature
of gold exploration, the global economic climate, dilution, share
price volatility, competition, loss of key employees, additional
funding requirements and defective title to mineral claims or
property. Although Goldcorp has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended.
Forward-looking statements are subject to known and unknown
risks, uncertainties and other important 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, including economic and political
instability in foreign jurisdictions in which Goldcorp operates;
risks related to current global financial conditions; risks related
to joint venture operations; actual results of current exploration
activities; environmental risks; future prices of gold, silver,
copper, lead and zinc; possible variations in ore reserves, grade
or recovery rates; mine development and operating risks; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; risks related to
indebtedness and the service of such indebtedness, 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, 2013
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.
Forward-looking statements are made as of the date hereof 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 our 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.