(All Amounts in $US)
VANCOUVER, April 26, 2017 /CNW/ - 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
March 31, 2017
|
Three months
ended
March 31, 2016
|
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
exchange on tax assets and liabilities and
losses
|
$ -
|
$(61)
|
$(0.07)
|
Reduction in the
Company's obligation to
fund its share of Alumbrera's reclamation
costs
|
$(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 $2.9 billion available on its
credit facility.
Please refer to the Company's financial statements, related
notes and accompanying Management Discussion and Analysis
("MD&A") for a full review of its operations and projects. This
can be accessed by clicking on this link: MDA_Financials.
About Goldcorp
Goldcorp is a senior gold producer focused on responsible mining
practices with safe, low-cost production from a high-quality
portfolio of mines.
Conference Call and Webcast
Date:
|
Thursday, April 27,
2017
|
Time:
|
10:00 a.m.
(PST)
|
Dial-in:
|
1-800-355-4959
(toll-free) or 1-416-340-2216 (outside Canada and the
US)
|
Replay:
|
1-800-408-3053
(toll-free) or 1-905-694-9451 (outside Canada and the
US)
|
Replay end
date:
|
May 28,
2017
|
Replay
Passcode:
|
Conference ID#:
2296992
|
A live and archived webcast will also be available.
Footnotes
|
1.
|
The Company has
included non-GAAP performance measures on an attributable basis
(Goldcorp share) throughout this document. Attributable performance
measures include the Company's mining operations and projects and
the Company's share from Pueblo Viejo, Alumbrera and
NuevaUnión.
|
|
|
2.
|
Adjusted operating
cash flows comprises Goldcorp's share of operating cash flows,
calculated on an attributable basis to include the Company's share
of Alumbrera, Pueblo Viejo and NuevaUnión's operating cash flows.
The Company believes that, in addition to conventional measures
prepared in accordance with GAAP, the Company and certain investors
use this information to evaluate the Company's performance and
ability to operate without reliance on additional external funding
or use of available cash.
|
|
|
|
The following table
provide a reconciliation of net cash provided by operating
activities in the consolidated financial statements to Goldcorp's
share of adjusted operating cash flows:
|
|
Three months
ended March
31
|
($
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
Credits
|
Treatment and
Refining Charges
on Concentrate
Sales
|
Total Cash
Costs: by-
product
|
Ounces
(thousands)
|
Total Cash Costs:
by-product per
ounce (b), (c)
|
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
Credits
|
Treatment and
Refining Charges
on Concentrate
Sales
|
Total Cash
Costs: by-
product
|
Ounces
(thousands)
|
Total Cash Costs:
by-product per
ounce (b), (c)
|
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
cash
costs: by-
product
|
Corporate
Administration
|
Exploration &
evaluation
costs
|
Reclamation
cost accretion
and amortization
|
Sustaining
capital
expenditures
|
Total
AISC
|
Ounces
(thousands)
|
Total
AISC per
ounce(a)
|
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
associates
|
$
|
302
|
$
|
36
|
$
|
7
|
$
|
8
|
$
|
104
|
$
|
457
|
539
|
$
|
849
|
Pueblo
Viejo
|
42
|
-
|
-
|
-
|
9
|
51
|
95
|
541
|
Other
associate
|
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
cash
costs: by-
product
|
Corporate
Administration
|
Exploration
& evaluation
costs
|
Reclamation
cost accretion
and
amortization
|
Sustaining
capital
expenditures
|
Total
AISC
|
Ounces
(thousands)
|
Total
AISC per
ounce(a)
|
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
associates
|
$
|
375
|
$
|
57
|
$
|
10
|
$
|
12
|
$
|
131
|
$
|
585
|
658
|
$
|
891
|
Pueblo
Viejo
|
40
|
-
|
-
|
1
|
9
|
50
|
112
|
443
|
Other
associate
|
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.
|
Cautionary Statement Regarding Forward Looking
Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the United States Securities Act of
1933, as amended, Section 21E of the United States Exchange Act of
1934, as amended, the United States Private Securities
Litigation Reform Act of 1995, or in releases made by the United
States Securities and Exchange Commission, all as may be amended
from time to time, and "forward-looking information" under the
provisions of applicable Canadian securities legislation,
concerning the business, operations and financial performance and
condition of Goldcorp. Forward-looking statements include, but are
not limited to, statements with respect to the benefits of the
purchase of a 50% interest in the Cerro Casale project (the "Cerro
Casale Transaction") and the acquisition of Exeter Resource
Corporation (the 'Caspiche Transaction"), the development of the
Caspiche project, the development of the Cerro Casale project, the
future price of gold, silver, copper, lead and zinc, the estimation
of Mineral Reserves (as defined below) and Mineral Resources (as
defined below), the realization of Mineral Reserve estimates, the
timing and amount of estimated future production, costs of
production, targeted cost reductions, capital expenditures, free
cash flow, 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 or comparable
language of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "should",
"might" or "will be taken", "occur" or "be achieved" or the
negative connotation thereof.
Forward-looking statements are necessarily based upon a number
of factors and assumptions 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. In respect of the
forward-looking statements concerning the anticipated completion of
the proposed Caspiche Transaction and the Cerro Casale Transaction,
Goldcorp has provided them in reliance on certain assumptions that
it believes are reasonable at this time, including assumptions as
to the acceptance by the shareholders of Exeter Resource
Corporation ("Exeter") of the tender offer from Goldcorp; the
ability of the parties to receive, in a timely manner, the
necessary regulatory and other third party approvals; and the
ability of the parties to satisfy, in a timely manner, the other
conditions to the closing of the Caspiche Transaction and the Cerro
Casale Transaction. 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 Mineral Resources
and metallurgical recoveries, mining operational and development
risks, litigation risks, regulatory restrictions (including
environmental regulatory restrictions and liability), changes in
national and local government legislation, taxation, controls or
regulations and/or change in the administration of laws, policies
and practices, expropriation or nationalization of property and
political or economic developments in Canada, the United
States and other jurisdictions in which the Company does or
may carry on business in the future, delays, suspension and
technical challenges associated with capital projects, higher
prices for fuel, steel, power, labour and other consumables,
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 believes its expectations are based upon reasonable
assumptions and 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:
the risk that the Caspiche Transaction or the Cerro Casale
Transaction may not close when planned or at all or on the terms
and conditions set forth in the Caspiche Transaction Agreement and
Cerro Casale Transaction Agreements, respectively; the failure to
meet the minimum tender conditions under the offer made to
shareholders of Exeter; the
failure to obtain the necessary regulatory and other third party
approvals required in order to proceed with the Caspiche
Transaction or the Cerro Casale Transaction; the benefits expected
from the Caspiche Transaction or the Cerro Casale Transaction not
being realized; 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;
actual results of current reclamation activities; environmental
risks; 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; mine development and operating risks;
accidents, labour disputes and other risks of the mining industry;
risks associated with restructuring and cost-efficiency
initiatives; delays in obtaining governmental approvals or
financing or in the completion of development or construction
activities; risks related to the integration of acquisitions; 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 most
recent annual information form available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. 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 disposition,
monetization, merger, acquisition, other business combination or
other transaction 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 intend or undertake to publicly update any forward-looking
statements that are included in this document, whether as a result
of new information, future events or otherwise, except in
accordance with applicable securities laws.
SOURCE Goldcorp Inc.