Goldcorp Gets Go-Ahead For Eleonore

Goldcorp Gets Go-Ahead For Eleonore

By Zacks Investment Research on November 15, 2011 |

Goldcorp Inc. (NYSE:GG) announced that the Quebec Minister of Sustainable Development, Environment and Parks has given the authorization to its Eleonore project, allowing Canada’s second largest gold producer to start full construction at the mine in Northern Quebec.

The project is located in the James Bay region and on track for a 2014 start-up.

The development plan outlines capital costs of $1.4 billion to bring Eleonore to full production at a rate of 600,000 ounces of gold per year with cash costs under $400 per ounce. An underground mine with a life of 15 years and 7,000-tonnes per day mill will be built, including infrastructure, including a processing facility, an access road and a power plant.

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.

Recently, Goldcorp released its third quarter 2011 earnings. The company’s adjusted net earnings were $459 million, or 57 cents per share compared with $244 million or 33 cents in the year-ago quarter. Results exceeded the Zacks Consensus Estimate of 56 cents. Reported net earnings were $336 million in the third quarter of 2011 compared with $721 million in the third quarter of 2010.

In the third quarter of 2011, revenues increased 48% year over year to $1.3 billion, on gold sales of 571,500 ounces.

The average realized gold price for the quarter rose 39% to $1,719 an ounce. Cash costs totaled $258 per ounce on a by-product basis and $551 per ounce on a co-product basis. Output in the quarter rose slightly as production gains at its Penasquito mine in Mexico and its Marlin mine in Guatemala more than offset the impact of production declines at some of its other operations.

For 2011, Goldcorp reaffirmed its revised production guidance between 2.5 million and 2.55 million ounces of gold.

Total cash costs for the year are expected to range between $180 and $220 per ounce on a by-product basis, and between $500 and $550 per ounce on a co-product basis.

Goldcorp stated that its strong balance sheet and its increasing cash flows leave it well-positioned to fund projects in its pipeline.

The company also indicated it may boost its dividend after it completes its mine planning and budgeting process, which is currently underway.

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

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



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