Goldcorp coasts at Red Lake

GoldCorp (G-T) has revised its production forecast for the Red Lake gold mine after cranking out more bullion than expected during the second quarter.

Situated in northern Ontario, the mine cranked out 130,491 ounces of the yellow metal at a cash cost of US$60 per oz. A 10% increase in headgrades, to 84 grams per tonne, and record average recovery rates of 92.3% were the contributing factors.

Red Lake is now expected to produce 500,000 ounces at less than US$60 per oz. in 2002 — 5% more than previously forecast. The revision is but the latest of several (fortunately, all good) that have been made since production got under way over a year ago.

Production at the Wharf open-pit mine in South Dakota was below expectations, having rung in at 18,524 ounces, at US$281 per oz. The disappointment was caused by adverse ground conditions encountered in the area now being mined.

Wharf is expected to pick up the pace over the remainder of the year and to have produced approximately 90,000 ounces in all by the time it ends. Cash costs for the year are projected at US$250 per oz.

Goldcorp earned nearly US$14 million (or 8 per share) on second-quarter revenue of US$47 million, compared with US$15 million (9 per share) on US$44 million in the corresponding period of 2001. The recent period benefitted from stronger bullion prices, but not enough to ovecome a higher income tax provision caused by last year’s changes to the Ontario income tax rate.

Cash flow from operations rang in at US$21 million, down US$5.6 million from a year ago. Here, the reduction mainly reflects Goldcorp’s decision to hold back 6,697 ounces of production, opting instead to place the bullion in inventory.

Goldcorp now holds 143,595 ounces in its vault, of which over half was bought on the open market at an average US$323 per oz. Bullion held as inventory is carried at the lower of average cost or net value, whereas bullion held as an investment is carried at net value so that any gains or losses can be included in earnings.

Goldcorp sold 142,300 ounces during the quarter at an average US$313 per oz. Total operating expenses were down slighly, at US$14.2 million.

On June 30, Goldcorp had nearly US$293 million in current assets and US$35 million in current liabilities for a working capital of US$257 million. The company remains debt-free.

Goldcorp paid a dividend of US2.5 per share during the quarter and intends to do so again in each of the current and final quarters of the year.

Goldcorp options now trade on California’s Pacific Exchange and on the Montreal Exchange under the ticker symbol G. This is addition to established listings on the American Stock Exchange and the Chicago Board of Options.

Goldcorp has more than 182 million shares outstanding, or 206 million on a fully diluted basis.