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- Goldcorp’s output will have to pick up to reach its annual goals.
- The changes in its all-in sustaining costs could impact its profitability.
- Falling gold prices will reduce its profit margins in the fourth quarter.
Goldcorp: A Gold Producer For A Potential Gold Rebound
- Goldcorp is a mid-tier Canadian gold miner operating a total of 12 mines and four development projects throughout the American continent.
- The company is well-managed and will post an AISC under $1,000/oz in 2014.
- GG offers a 3.2% per annum dividend and presents a good growth prospect for 2015, with two new mines: Éléonore and Cerro Negro.
- Goldcorp's production issues will weigh on its financial performance.
- However, Goldcorp is bringing new mines online in order to mitigate some of the impact.
- Goldcorp's debt is a concern.
- Goldcorp generates strong free cash flow, which might improve further as gold pricing improves.
- Goldcorp is expected to deliver bottom-line growth in the next half decade as compared to a loss in the last five years.
Update: Goldcorp Announces December Dividends--A Holiday Surprise
- Goldcorp announced its December dividend of $0.05.
- I predicted the dividend would be maintained despite the high cash burn rate in Q3.
- I remain resolute in my call to own some gold exposure at these levels and think Goldcorp is still best-in-breed.
Update: Goldcorp Signs An Agreement With 4 First Nations Communities In Timmins, Ontario
- Goldcorp has signed an agreement with four first nations communities in Timmins, Ontario with respect to its Porcupine Project.
- I had not anticipated this in my previous articles.
- This is an bullish development for an important yet less well-known of Goldcorp's Projects, although I continue to avoid the stock at current valuations.
Update: Goldcorp Signs Agreement With The First Nations - Reducing Political Risk Goes A Long Way
- Goldcorp announced that its Porcupine Gold Mines had signed a Resource Development Agreement with four First Nation communities in Canada.
- I previously wrote about the political risk of being a miner but did not see this agreement coming despite years of negotiations.
- Reducing political risk is bullish and in this case means that the Porcupine Mines can continue its long running production history without worry from the First Nations.
- Goldcorp's Chuck Jeannes speaks with Henry Bonner at Sprott Global and hints that the company is looking for acquisitions.
- Investors interested in the gold mining space will find that Goldcorp is overvalued, but that there are opportunities among potential acquisition targets.
- I name 4 that Goldcorp may be interested in and that investors may want to consider as well.
- Goldcorp recently withdrew its environmental impact study for El Morro copper-gold project in Chile.
- Goldcorp has good growth coming from Cerro Negro and Éléonore, and near-term gold production from Cochenour.
- Camino Rojo is advancing to the pre-feasibility stage, and that should be complete early 2016.
Update: Goldcorp Announces Dividend - The Significance To Shareholders
- Goldcorp has just announced its latest dividend of $0.05, in-line with its prior payout.
- As I predicted the dividend was maintained despite the serious cash burn in Q3.
- The commitment to the dividend is significant for shareholders who have suffered over the last few years and I maintain that we should do some buying as others panic.
Update: Goldcorp Withdraws Its Environmental Impact Study For El Morro
- Goldcorp just announced that it has withdrawn its EIS for El Morro as the company was not able to get government approval with the current plan.
- This should come as no surprise and I expressed concerns over this project in my recent article.
- Goldcorp has no near-term growth projects after Eleonore and Cerro Negro reach full production and shares remain overvalued.
Goldcorp Sinks To 6-Year Lows; Buying Opportunity On Tax Loss Selling
- Impairment charges at its Peñasquito and El Sauzal Mexican gold mines negatively affected earnings growth.
- Cerro Negro and Éléonore will play a big role in helping Goldcorp achieve its fourth quarter, and full-year production forecast.
- Tax loss related selling in December could provide an ample buying opportunity for those who want to own a gold, dividend paying stock.
What It Really Costs To Mine Gold: The Goldcorp Third Quarter Edition
- Goldcorp’s costs on both a core and a core non-tax basis rose significantly on a year-over year basis.
- This rise was due to increasing costs and lower gold-equivalent production due to operating issues at some of the company's mines.
- We expect production to rise again in upcoming quarters and capital spending to decrease into 2015.
- For gold investors, the fact that costs are well above the current gold price suggest that the current gold price is too low to be sustainable in the long-term.
- Goldcorp’s output slightly increased despite the lower-than-expected production at El Sauzal.
- Higher all-in sustaining cost slashed its profitability.
- The company will have to show a sharp rise in production to reach its annual production guidance.
- Goldcorp missed production and earnings estimates in Q3.
- Goldcorp has over 54 million ounces of gold reserves and over 800 million ounces of silver reserves.
- The stock appears expensive when compared to other big cap gold stocks based on its gold and silver reserves.
Alan Greenspan Is Bullish On Gold - Could Goldcorp Be The Opportunity?
- Greenspan argues gold is a good investment with QE coming to an end.
- Goldcorp shares tank after Q3 earnings disappointment.
- My assumptions in the Levered Returns valuation models yield a fair value per share of $22, 20% above GG’s October 31st closing price of $18.61.
- Goldcorp reports weak results and is free cash flow negative.
- This is a negative surprise as I was aiming for the company to be FCF positive this year.
- 2014 will be a ‘lost year’ for Goldcorp, but fortunately the capex will start to decrease from next year on.
Update: Goldcorp Drops 10% On Weak Q3 Earnings, But Shares Are Way Oversold
- Goldcorp has reported poor Q3 earnings with higher than expected cash costs.
- The company lost $.05 per share or $44 million, with all-in costs coming in at $1,066 an ounce.
- Still, the company reported adjusted net earnings of $70 million and operating cash flows of $192 million.
- With a 10% drop in share price, I think the market has overreacted as results weren't nearly that bad.
- Goldcorp (GG) just reported its third quarter results which missed estimates on earnings but saw revenues climb year-over-year.
- I discuss the production results and costs.
- What is going on with cash?
- Is the dividend secure?
Thu, Oct. 9, 3:58 PM
- The price of gold may be rising, but gold mining stocks are getting hammered today; after all, "they are still stocks," Barron's Johanna Bennett writes.
- Gold prices rallied today to $1,234/oz., their highest level since Sept. 23, a day after the dovish minutes from the Fed’s September policy meeting excited gold bugs, but shares of the mining companies are falling along with the broader market selloff.
- Among the top mining names: IAG -6.9%, KGC -6.2%, SLW -5.9%, NGD -5.5%, AU -4.9%, GG -4.7%, ABX -3.9%, AUY -3.9%, GFI -2.8%, BTG -2.7%, RGLD -2.6%, AGI -2.1%, GOLD -1.8%.
- ETFs: GLD, SLV, GDX, GDXJ, NUGT, AGQ, IAU, DUST, SIL, USLV, SIVR, JNUG, SGOL, ZSL, UGL, GLDX, DGP, GLL, UGLD, DZZ, JDST, SLVO, GLDI, DSLV, SLVP, DGL, DBS, SILJ, DGZ, RING, OUNZ, GGGG, DGLD, AGOL, SGDM, PSAU
Thu, Oct. 9, 10:35 AM
- Goldcorp (GG -2.4%) is looking to cut costs on its planned and already-delayed $3.9B El Morro copper and gold project in Chile, and that may mean new permits are needed and further hold-ups, CEO Chuck Jeannes says.
- The project has been caught up in a legal fight, and this week Chile's Supreme Court ruled El Morro's environmental permit should be suspended until the company holds new talks with local indigenous groups.
- While progress on the project has been bogged down, the CEO says GG has been reviewing engineering plans to find a better way to build the mine and is continuing those studies.
Wed, Oct. 8, 6:20 PM
- No investment sector benefited more today from the dovish take on the FOMC meeting minutes than precious metals miners, as the Fed's worries over weakening world economies and a strong U.S. dollar offer hope for gold bulls that the Fed will not rush to raise interest rates.
- Gold mining ETFs surged past those linked to the commodity price, with GDX +7.4% and GDXJ +9.6% while GLD +1%; among leveraged ETFs, NUGT +21.5%.
- Among major miners: BTG +14.4%, AGI +13.6%, GG +8.6%, RGLD +8.6%, SLW +8%, NGD +7.6%, IAG +7.5%, GFI +7%, AUY +6.9%, ABX +5.2%, AU +4.8%, KGC +3.5%.
- Other ETFs: SLV, AGQ, IAU, DUST, SIL, USLV, SIVR, JNUG, SGOL, ZSL, UGL, GLDX, DGP, GLL, UGLD, DZZ, JDST, SLVO, GLDI, DSLV, SLVP, DGL, DBS, GLTR, SILJ, DGZ, RING, OUNZ, GGGG, DGLD, AGOL, DBP, SGDM, WITE, PSAU
Tue, Oct. 7, 2:33 PM
- Chile's Supreme Court has halted development of Goldcorp's (GG -1.2%) El Morro gold and copper mine, saying an environmental permit awarded last year should be stopped until a fresh consultation takes place with local indigenous groups who oppose the $3.9B project.
- The decision overturns a local appeals court finding from last April, which dismissed an appeal lodged by the local Diaguita community, who say the mine is planned on what they deem as sacred ancestral land, and that it could pollute a local river.
- El Morro is 70% owned by GG and 30% by New Gold (NGD -2.6%).
Mon, Oct. 6, 2:45 PM
- Gold prices bounce off 15-month lows to reclaim $1,200/oz. as the dollar rally pauses, helping strengthen shares of precious metals miners: AU +4.4%, GFI +3%, IAG +1.9%, BTG +3%, GG +2.2%, NGD +1.5%, KGC +1.6%, AGI +1.6%, RGLD +1%, SLW +2.1%.
- Sterne Agee analysts Michael Dudas and Satyadeep Jain foresee gold and silver prices trending higher, with gold averaging $1,400/oz. in 2015 and $1,450 in 2016 and silver averaging $19 next year and $21 in 2016, as “global demand remains firm, liquidity remains ample and the dollar appears overbought.”
- With investor sentiment still skeptical, Sterne thinks any supportive macro news flow could provide fuel for a rally; the firm rate Newmont Mining (NEM +1.5%), Agnico-Eagle Mines (AEM +2.4%), Coeur Mining (CDE +1.3%) and Gold Resource (GORO +0.2%) as Buys, with Barrick Gold (ABX +0.5%), Hecla Mining (HL +4.3%) and Pan American Silver (PAAS +1.5%) rated Neutral.
- ETFs: GLD, SLV, AGQ, IAU, USLV, SIVR, SGOL, ZSL, UGL, DGP, GLL, UGLD, DZZ, SLVO, GLDI, DSLV, DGL, DBS, DGZ, OUNZ, DGLD, AGOL, DBP, TBAR, USV, UBG, JJP, GLDE, BAR, GYEN, GEUR, RGRP, BARS, GGBP, BLNG
Mon, Oct. 6, 11:59 AM
Thu, Oct. 2, 9:58 AM
- Goldcorp (GG +0.7%) says it has achieved first gold production at the Éléonore mine in the James Bay region of northern Quebec, on schedule and in line with capital cost guidance.
- GG expects 2014 production at the mine of 40K-60K oz., and says progress remains on track for declaration of commercial production in Q1 2015; capital costs remain unchanged at $1.8B-$1.9B.
- GG plans for Éléonore to ramp-up to design throughput of 7K metric tons/day by 2018.
Wed, Oct. 1, 3:43 PM
- Goldcorp (GG +0.5%) tells the BNamericas mining summit in Mexico City that it expects to produce ~1M oz. of gold in the Mexican region this year, roughly one third of the company's total estimated output for 2014, despite the suspension of its Sauzal mine a month ago after instability in the pit wall.
- Local media says GG already has abandoned Sauzal, which is in its last year of active mine life.
- GG has said it expects to produce an overall 2.95M-3.1M oz. of gold this year, up from 2.67M oz. last year.
Wed, Sep. 24, 3:46 PM
- Goldcorp (GG -0.4%) is upgraded to Outperform from Neutral with a $33 price target at Credit Suisse, which considers GG its preferred senior gold stock and the best positioned to weather a lower gold price environment.
- The firm believes GG merits a premium valuation because of its strong balance sheet, lower cost new mines, longer mine life and superior dividend yield.
- Credit Suisse also is looking for the company to produce the highest free cash flows among the senior gold producers by 2016.
Mon, Sep. 8, 12:03 PM
Mon, Sep. 8, 11:49 AM
- Miners have reached "peak gold," in which gold production has hit its high as easy-to-mine gold deposits become harder to find, Goldcorp (GG -2.4%) CEO Chuck Jeannes tells WSJ.
- Jeannes says a falloff in supply will support the gold price but make mining it even harder and lead to further consolidation in the industry; yet investors are wrong to believe GG is poised to make acquisitions of its own, he says.
- Gold production has been on the upswing since the late 1970s, hitting 2,270 metric tons last year, but Jeannes believes that without a dramatic technological advance gold production is unlikely to increase during his career.
- ETFs: GDX, NUGT, DUST, GLDX, RING, GGGG, SGDM, PSAU
Thu, Sep. 4, 2:58 PM
- Goldcorp's (GG -2.8%) gold production this year could end up near the bottom end of its forecast range if it is unable to restart output at one of its Mexican mines, CEO Chuck Jeannes says.
- GG said yesterday it suspended mining at its El Sauzal mine in Mexico as a safety precaution after instability in the pit wall, and Jeannes says it could be weeks or months before mining could resume there; in a worst case scenario, the company would not restart the operation, which is in its last year of active mine life.
- GG had expected to produce 2.95M-3.1M oz. of gold this year, up from 2.67M oz. last year, but the CEO says the combination of the El Sauzal problem and the Los Filos shutdown earlier in the year would push output toward the bottom end of guidance for 2014.
Tue, Sep. 2, 6:47 PM
- Goldcorp (NYSE:GG) says it has suspended mining at its El Sauzal mine in Mexico as a safety precaution after instability in the pit wall.
- GG says the mine, which is in its final year of active mine life, is experiencing movement in the highwall slope of the Trini pit.
- A geotechnical team is assessing the impact of the movement on the mine, which had been expected to produce ~105K oz. of gold this year.
Wed, Aug. 13, 12:28 PM
- Austerity moves clearly have helped gold miners navigate through the lower price environment, but Citigroup analysts warn that further belt-tightening will be difficult, and may even hurt long-term prospects.
- Citi cautions that the slowdown in capex invariably will result in a fall in production, which in turn will lead to a faster rise in unit costs; also, the recent increase in head grades across the global mining space is an unsustainable mining practice that can have further detrimental effects on future mine plans and ore bodies.
- Among miners Citi sees as most vulnerable to a low gold price environment are Sibanye Gold (NYSE:SBGL), Harmony Gold (NYSE:HMY) and DRDGOLD (NYSE:DRD), which the least vulnerable are Goldcorp (NYSE:GG), Barrick Gold (NYSE:ABX), Yamana (NYSE:AUY), Medusa Mining (OTC:MDSMF) and OceanaGold (OTCPK:OCANF).
- ETFs: GDX, NUGT, DUST, GLDX, RING, GGGG, PSAU
Tue, Aug. 12, 11:16 AM
- Oppenheimer technical analyst Ari Wald sees big upside in gold miners going forward, and is more bullish on the miners than the metal itself.
- Wald thinks the Market Vectors Gold Miners ETF (GDX +1.6%) can soar more than 40% from current levels to his price objective of $38; GDX has finally broken out from a long-term downtrend, he says, suggesting a new trend of outperformance is underway.
- The analyst considers GDX a top trade idea, and believe the ETF has a stronger floor and offers more upside opportunity than the SPDR Gold Shares (GLD +0.4%).
- Among individual GDX components, Wald recommends Goldcorp (GG +2.5%), Randgold Resources (GOLD +0.4%) and Royal Gold (RGLD +2%).
Mon, Aug. 11, 2:35 PM
GG vs. ETF Alternatives
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