Goldcorp benefits from Havelock sale

Toronto-based Goldcorp (G-T) pocketed a respectable profit in 1999, thanks largely to the sale of its Havelock Lime division.

The company earned US$11 million (or 15 per share) on revenue of US$51.7 million, compared with a loss of US$1.8 million (3 per share) on revenue of US$56.2 million in 1998. Much of the turnaround occurred in the fourth quarter, when Havelock Lime was sold for US$20.6 million, resulting in a pretax gain of US$11.7 million.

The Wharf heap-leach mine in South Dakota (currently Goldcorp’s sole producer) cranked out 107,221 oz. gold during 1999, 2.7% less than in the previous year; total operating costs came in at US$220 per oz., down US$1 from a year ago; and the company sold its gold for an average US$278 per oz., or 5% lower than that realized in 1998.

Proven and probable reserves at Wharf are estimated at 26 million tonnes grading 1.1 grams per tonne, sufficient for seven years of production at current rates.

Saskatchewan Minerals and the Havelock Lime operations chipped in US$4.3 million in operating profit on revenue of US$22 million in 1999, compared with US$6.6 million on revenue of US$24.4 million in 1998. Cash flow fell to US$5.5 million from US$7.9 million, with the decrease attributable to lower product prices.

Meanwhile, construction and development of the High Grade zone at the Red Lake mine is more than half-finished. Startup is scheduled for November.

Goldcorp recently announced a 17% increase in High Grade’s reserves, to 1.5 million tonnes grading 46.97 grams, equivalent to 2.3 million contained ounces. Another 378,294 tonnes grading 33.26 grams are classified as inferred.

No progress has been made in the bitter standoff between management and the Red Lake mine employees, who have been on strike since 1996. Nevertheless, the company says it is prepared to employ contractors to carry out production if an amicable agreement cannot be reached.

In addition to the High Grade zone, Red Lake hosts 1.92 million tonnes of sulphide-bearing material averaging 12.77 grams. Such material kept the mine fed for 48 continuous years before the strike forced its closure, yielding 3 million ounces along the way.

At Dec. 31, Goldcorp had US$55.8 million in working capital and no debt. Its cash and short-term investments were valued at US$46.8 million.

Huntington Resources (HUN-V) has changed its name to Vulcan Ventures (VVC-V) on a 1-new-for-5-old-share basis.