Goldcorp cashes in on gold rally

Higher gold prices and a slew of encouraging earnings reports augured well for Canadian producers over the Oct. 21-28 report period. The Toronto Stock Exchange’s gold sub-group climbed 10.71 points to finish the week at 205.02.

Goldcorp set the pace by announcing its best quarter ever, with earnings of US$24.6 million in the three months ended Sept. 30. Profits are up 30% over the corresponding period of a year ago, and this development, in combination with recent surges in spot gold, has prompted the company to increase annual dividends by 20% and pay them on a monthly basis. Goldcorp finished the period at $20.47, for a gain of $1.17.

Although Meridian Gold was less celebratory than its peer, the company still netted US$7.9 million in the recent period. Third-quarter earnings rang in 14% less than a year ago, reflecting higher taxes and expenses arising from the now-stalled Esquel project in Argentina. The company gained 79 to end at $16.15.

Barrick Gold offset flat year-over-year earnings growth in the recent period by showing a 49% increase in cash flow, to US$188 million. Higher realized prices fueled the improvement, though they also forced the major to record an after-tax charge of US$20 million arising from derivative losses. Barrick was up 77 at $25.37.

Junior producer Cambior fared far worse than its bigger cousins, pocketing 80% less profit than a year ago. A stronger loonie and a 17% reduction in output are to blame. Two bright spots on the recent period were a 36% reduction in the company’s hedge book and the discovery of more mineralization at the Westwood property in northwestern Quebec, about 2 km west of the company’s Doyon mine. Cambior slipped 3 to $3.84.

Gold itself rose US$4.60 over the five trading days to settle at a London morning fix of US$386.50 on Oct. 28. New Yorkers were less optimistic about the yellow metal, pegging its worth at US$382.80 per oz. by the end of the period’s close, for a loss of US$4.60 on the final day of trading.

Nickel put in another strong showing, tacking on US8 to be fixed at US$5.09 per lb. on the morning of Oct. 28. Lead and copper were each up a penny, whereas zinc stayed put.

Both Noranda and Teck Cominco reported better third-quarter earnings, thanks to stronger metal prices. The former netted US$20 million, versus a loss of US$43 million a year ago, while the latter pocketed $19 million, versus $5 million. Noranda was up a nickel at $15.43, while Teck Cominco’s B-series were up 35 at $16.50.

Despite nickel’s appreciation, Sherritt International slipped a nickel to $5.05 on news that it wants to convert half of its 6% convertible debentures to 7% notes and extend their maturity date by seven years. The exchange, which includes a reduction in the conversion price, frees up cash for long-term growth plans; however, it will be withdrawn if less than $150 million worth of debentures are tendered.

Canadian Zinc was among the highest percentage gainers of the period, rising 27% in value on a volume of nearly 9 million shares. The company is trying to raise $7 million in new equity in order to finance a feasibility study at its Prairie Creek zinc-lead-silver project in the Northwest Territories. Canadian Zinc finished the period at 95.