Although CMJ does not routinely report quarterly earnings, the numbers posted last week by Vancouver's GOLDCORP cannot be ignored. Any company that is making US$545 profit per ounce of gold produced, is doing lots of things right.
For the Q3 2007 alone, gold production rose 28% to 556,000 oz of gold and sales were 537,200 oz. The average price received for an ounce of gold was US$685, but the total cash costs, net of byproduct credits, was only US$150/oz. Shareholders enjoyed dividends totalling $31.7 million over the three-month period.
During the third quarter, Goldcorp grew gold production at much lower cash costs than industry averages, said president and CEO Kevin McArthur. "We enjoy the best gross margin in the senior space, enabling shareholders to participate fully in the continued strong market for gold. Maintaining this margin advantage and growing production by over 50% in the next few years remains our primary focus."
The numbers are evidence that Goldcorp is growing up. No longer is it the one-mine operation that Rob McEwen saw such promise in, a little over a decade ago. It now truly belongs on the list of world's largest gold producers.
When thinking of large gold miners, the mind naturally turns to Toronto's BARRICK GOLD and Denver's NEWMONT MINING. Barrick sold 1.89 million oz of gold during Q3 2007, realizing a net income of $345 million. During the same period, Newmont sold 1.61 million oz and netted $397 million. Goldcorp's net earnings were less, $75.8 million, but neither of the two larger companies had higher average realized prices per ounce; both grossed "only" US$681/oz.
Where Goldcorp far outshines the larger producers is in its low cash costs. Goldcorp's cash cost was $140/oz of gold. Barrick's was $370/oz, and Newmont chalked up a cash cost of $388/oz.
Goldcorp is consolidating its ownership of Canadian mines, having bought out its partner, KINROSS GOLD, at the Musselwhite, Dome and Hoyle Pond mines, all in Ontario. It is controlling costs by combining and streamlining operations at its neighbouring Campbell and Red Lake mines in northwest Ontario. It is increasing production at its Mexican and Latin American mines, and it has three projects under development.
The future looks golden despite downward pressure on the price of the yellow metal.