GOLDCORP INC. (All Amounts in $US)
VANCOUVER, April 26, 2017 /PRNewswire/ - 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 Three months ended
March 31, 2017 March 31, 2016
--- -------------- --------------
Gold production(1) (ounces) 655,000 784,000
-------------------------- ------- -------
Gold sales(1) (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 $ - $(61) $(0.07)
exchange on tax assets and
liabilities and
losses
------
Reduction in the Company's
obligation to $(26) $(26) $(0.03)
fund its share of Alumbrera's
reclamation
costs
-----
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 By-Product Treatment Total Cash Ounces Total Cash
and Costs:
Credits Refining Costs: by- (thousands) by-
Charges product
per
Costs (a) on product ounce (b),
Concentrate (c)
Sales
-----
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 By-Product Treatment Total Cash Ounces Total Cash
and Costs:
Credits Refining Costs: by- (thousands) by-
Charges product
per
Costs (a) on product ounce (b),
Concentrate (c)
Sales
-----
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 Corporate Exploration & Reclamation Sustaining Total Ounces Total
cash Administration evaluation cost
accretion capital AISC (thousands) AISC per
costs: costs and
by- amortization expenditures ounce(a)
product
-------
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 $302 $36 $7 $8 $104 $457 539 849
associates
$
Pueblo Viejo 42 - - - 9 51 95 541
Other 5 - - 3 - 8 12 623
associate
---------
TOTAL $349 $36 $7 $11 $113 $516 646 $800
===== ==== === === === ==== ==== === ====
Three months ended March 31, 2016
($ millions unless stated otherwise)
Total Corporate Exploration Reclamation Sustaining Total Ounces Total
cash Administration & cost
evaluation accretion capital AISC (thousands) AISC per
costs:
by- costs and expenditures ounce(a)
product amortization
------- ------------
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 $375 $57 $10 $12 $131 $585 658 891
associates
$
Pueblo Viejo 40 - - 1 9 50 112 443
Other 31 - - 2 - 33 29 1,115
associate
---------
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.
