CANADIAN PERSPECTIVE: Good news from gold miners

Look to the gold sector for good news from Canadian miners. While base metal, coal and potash producers continue to...

Look to the gold sector for good news from Canadian miners. While base metal, coal and potash producers continue to trim output, companies such as Vancouver's Goldcorp have recorded record quarterly production. Gold output at all of the company's operations was 692,000 oz during the last quarter, bringing the 2008 total to 2.3 million oz.


Nor is that the only good news from Goldcorp. Although the calculation of operating costs for 2008 has not yet been completed, the company expects total cash costs will be $300/oz of gold on a byproduct basis.


The company is also predicting it will produce another 2.3 million oz of gold in 2009 at a total cash cost of $365/oz on a byproduct basis. Increases will be achieved at most mines, but production at the Alumbrera mine in Argentina and El Sauzal mine in Mexico will be significantly lower than previous years. The 2009 forecast for Goldcorp's Canadian operations include 620,000 oz from Red Lake mines, 290,000 oz from the Porcupine division, and 235,000 oz from Musselwhite mine.


Nor is Goldcorp the only bright spot.


Northgate Minerals of Vancouver also recorded record gold production in the fourth quarter of 2008. Q4 output was 118,265 oz, bringing total 2008 production to 354,800 oz, a yearly record. Northgate said its average net cash cost per ounce was $421. The company expects output to grow by approximately 50,000 oz to 392,000 oz in 2009.


Toronto-based Kinross Gold reports production during 2008 was up to approximately 1.9 million oz AuEq, an increase of 16% from the previous year. Average cost of sales for 2008 will be $425 to $445 per oz AuEq. A production increase of 32% to also slated for 2009, reaching 2.5 million oz AuEq.


Agnico-Eagle Mines, also headquartered in Toronto, has set a target of 300,000 oz of gold in 2008 from its LaRonde and Goldex mines in Quebec and Kittila mine in Finland. Total cash costs during Q3 2008 (the latest quarter for which figures are available) were $307 per oz.


Things are not quite so shiny at Barrick Gold of Toronto. Production is expected to be within the 2008 guidance range at 7.6 million to 7.8 million oz , but that number is down from 8.1 million oz produced in 2007. Estimated costs have risen to $425 to $445 per oz in 2008 from $350 an oz in 2007. We will have to wait for audited year-end figures to know how much these changes and the volatile price of gold will affect yearly earnings.


All in all, Canada's gold producers have a profitable year behind them. It is 2009 that will be the challenge.


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