Goldcorp Inc.: 1st Quarter 2004 Results-Golden! More Gold Produced, More Gold In Inventory, More Profits
Wednesday April 21, 8:24 pm ET
Goldcorp Inc.'s (NYSE:GG - News; TSX:G - News) robust business platform continued to generate exceptional returns during the 1st quarter 2004. The highlights are:
- Terrific Margins: 68% Gross Operating; 52% Net Operating; 36% Net Profit
- Gold production increased by 19% compared with 1st quarter 2003;
- 33% of production withheld from sale;
- Earnings increased 22% compared with 1st quarter 2003;
Revenues of $48.3 million were up from $47.5 million for the same period in 2003.
Earnings of $17.3 million, or $0.09 per share compared with $14.2 million, or $0.08 per share, for the corresponding period in 2003, represented a year over year increase of 22% in total earnings or, an 18% increase in per share earnings.
Compared to the 1st quarter, 2003, earnings were positively affected by a 20% year over year increase in the realized gold price to $411 per ounce ($343 in 2003), lower exploration expenses, increases in interest income, and gains from foreign currency and marketable securities. These positive factors more than offset the effects of a stronger Canadian dollar and an increase in corporate administration expenses. The higher corporate administration expense is largely the result of expensing stock options. Corporate administrative expense includes stock option expense of $1.3 million in the first quarter of 2004.
This improvement in earnings occurred despite the fact that 33% of production was withheld from sale, compared with 3% of production withheld from sale during the 1st quarter, 2003.
Bullion adjusted Earnings for the 1st quarter, 2004 would have been $0.14 per share, which represents an outstanding 75% increase compared with the bullion adjusted earnings for the same period in 2003.
Cash flow from operations during the quarter was negative $3.5 million, or negative $0.02 per share, compared with negative $14.3 million, or negative $0.08 per share for the 1st quarter, 2003. Cash flow was negative as a result of two factors: First, the high level of gold production withheld from sale; and Second, the payment of $26.5 million in taxes. These tax payments represented both initial installments for 2004 taxes and final installments for 2003. The final payments for 2003 of $13.5 million are the result of the extra earnings generated in the 4th quarter of 2003 resulting from the disposal of the Company's bullion inventory.
For the balance of 2004, quarterly tax payments are expected to decline relative to the 1st quarter, 2004. Cash flow increased during the quarter, compared with the same period in 2003, primarily as a result of the lower level of tax payments compared with those made in the 1st quarter, 2003 ($32.9 million).
If all the gold produced during the quarter had been sold, the Bullion adjusted Cash flow would have been $12.6 million, or $0.07 per share, compared with negative $12.1 million, or negative $0.07 per share, for the 1st quarter, 2003.
During the quarter, Goldcorp generated terrific results: 68% Gross Operating margin; 52% Net Operating margin and 36% Net Profit Margin. ROIC (Return on invested Capital) was 14%.
Furthermore, on a Bullion Adjusted basis the margins were even stronger: 70% Gross Operating; 56% Net operating, 37% Net Profit and ROIC of 20%.
At the end of the 1st quarter, 2004 Goldcorp's gold inventory had reached 2.25 tonnes, or 72,716 ounces. We asked our shareholders to tell us how much gold we should hold back from sale and you told us loud and clear to "hold back more!" Therefore, we made the decision to accelerate the accumulation of the new gold inventory to reach previous levels by holding back 33% (51,925 ounces) of the 1st quarter, 2004 production. It is anticipated that a comparable percentage of gold production will be held back in future quarters until the gold inventory reaches the previous level of 266,730 ounces equal to 8.3 tonnes which was sold during the fourth quarter of 2003.
Gold production was 159,327 ounces at a cash cost of $100 per ounce sold, compared with 133,743 ounces at a cash cost of $99 per ounce sold during the same period in 2003.
The Red Lake Mine produced 140,228 ounces of gold during the quarter, at a cash cost of $77 per ounce sold, compared with 117,339 ounces at a cash cost of $74 per ounce sold during the 1st quarter, 2003. The year over year increase in production was the result of a higher average grade of ore processed at the Red Lake Mine and a higher mill recovery rate. The grade (concentration of gold) was 2.52 ounces of gold per ton (opt) or 86.4 grams per tonne (gpt) compared with a grade of 2.09 opt (71.7 gpt) processed during the 1st quarter, 2003 and a recovery rate of 90.3% compared with 87.5% during the corresponding period in 2003.
Production costs increased at the Red Lake Mine compared to the same period in 2003 as a result of a stronger Canadian dollar and an increase in the contribution of gold produced from concentrate (7,000 ounces compared with zero in the 1st quarter, 2003). Excluding the ounces produced from concentrate, the cash cost of production was $72 per ounce.
During the quarter, the contract with Dynatec, to provide mining and related underground services at the Red Lake Mine, was renewed for a further three (3) years. Goldcorp has been pleased with the performance of Dynatec since mining of the High Grade Mineralization commenced in 2000 and the Company looks forward to continuing the working relationship with Dynatec.
The Wharf Mine produced 19,099 ounces of gold during the quarter, at a cash cost of $238 per ounce sold, compared with 16,404 ounces at a cash cost of $278 per ounce sold during the 1st quarter, 2003. The increased production levels and lower costs at the Mine were due to a higher ore grade processed compared with the same period in 2003 (0.03 opt (1.0 gpt) compared with 0.02 opt (0.7 gpt)).
At Saskatchewan Minerals, revenue and operating profit and cash flow decreased compared with the corresponding period in 2003 due to lower sales volumes, increased transportation and gas costs, and a stronger Canadian dollar.
Complete operating statistics for all operations are found starting on page 11 of Goldcorp's March 31, 2004 interim MD&A.
Work is progressing well towards sinking the new shaft at the Mine. It is scheduled to be completed to its final depth of 7,150 feet (ft) (2179 metres (m)) in the second half of 2006. During the 1st quarter 2004, capital expenditures totaled approximately $6 million, and are forecast to be $30 million for the full year 2004. To date, a total of $46 million has been expended on the project, and total remaining expenditures to complete the expansion are forecast to be $55 million (based on a CDN$:US$ exchange rate of 1.32). The shaft is currently (21/4/04) at a depth of 635ft (194m).
In the 4th quarter 2003, Goldcorp increased its total annual regular dividend by 20% to $0.18 per share and increased the frequency of installments on this total, from bi-monthly to monthly. 2004 will be the first full year of these payments. In addition, the $0.10 per share special dividend, made possible by the sale of gold inventory, was paid to shareholders on January 13, 2004. Currently, the total dividend payments anticipated for 2004 are $0.28 per share. The Company is particularly pleased to be able to deliver on its promise of paying increasing dividends as the gold price rises.
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
