Goldcorp hikes dividend payment on record cash flow

Despite a 2% decline in gold production from the last quarter, Vancouver-based Goldcorp (g-t, gg-n) posted a strong performance on the back of record high gold prices.

The company reported record revenues and operating cash flows for the second consecutive quarter. “Continued strong gold demand in the third quarter, along with Goldcorp’s lowest quarterly cash costs in over two years, resulted in record cash margins of US$979 per oz., generating significant growth in both cash flow and earnings,” stated Chuck Jeannes, president of Goldcorp.

Adjusted net earnings for the third quarter, ended Sept. 30, totaled US$231 million, or 31? per share, compared to US$141 million, or 19? per share, for the same period a year ago. Revenues increased to US$886 million, a 28% increase over the same period a year ago and a 5% increase over the second quarter.

Gold production for the quarter was slightly down at 596,200 oz. from 609,500 oz. produced in the second quarter, primarily due to the sale of the San Dimas mine in Mexico in August and lower production from Los Filos due to the annual wet season.

Total cash costs for the quarter were only US$260 per oz., compared to US$295 per oz. in 2009, benefiting from higher by-product credit sales from Penasquito. Cash costs on a co-product basis were US$429 per oz.

“Penasquito’s ability to contribute meaningfully to our third quarter earnings and record cash flow in just its first month in commercial production is indicative of its emerging position as a powerful driver of financial performance,” stated Jeannes.

The company generated US$471 million in operating cash flow before changes in working capital, versus US$322 million in last year’s third quarter. These cash flows funded some US$238 million in capital investments at Goldcorp’s mines and projects.

In light of the company’s performance and its confidence in the strength of future cash flows, Goldcorp is doubling its annual dividend to US36? per share.

“Goldcorp’s current financial strength and growing cash flows enable us to significantly increase our dividend while also executing on our plan to deliver 50% production growth over the next five years,” Jeannes stated.

Goldcorp is on scheduled to produce more than 2.5 million oz. gold in 2010, with total cash costs coming in at below the previously announced guidance of US$350 per oz.

Goldcorp successfully transformed itself into a senior gold producer by making a number of key acquisitions in recent years, including Wheaton River, Virginia Gold, Placer Dome’s Canadian assets and Glamis Gold.

Its operations are comprised of the Red Lake, Porcupine and Musselwhite gold mines in Ontario; the recently built Penasquito gold-silver-lead-zinc mine, along with the Los Filos and El Sauzal gold mines in Mexico; the Marlin gold-silver mine in Guatemala; a 37.5% interest in the Alumbrera gold-copper mine in Argentina; and the Wharf and 66.7%-owned Marigold gold mines in the United States.

Goldcorp maintains a pipeline of significant development projects, including a 40% interest in the Pueblo Viejo gold project in the Dominican Republic, which is expected to come into production in the last quarter of 2011 or early 2012.

By the end of the this year, Goldcorp expects to complete scoping or prefeasibility studies for the Éléonore gold project in Quebec, Noche Buena near Penasquito and Cochenour in Red Lake, Ontario, as well as an updated feasibility study for the El Morro copper-gold project in Chile.