Goldcorp juggernaut keeps on truckin’

Goldcorp (G-T) has turned in a very strong quarterly performance that once again demonstrates both the exceptional quality of the Red Lake mine in northwestern Ontario and management’s canny ability to maximize on its good fortune.

“It was a good quarter,” said CEO Robert McEwen during a conference call Thursday morning. “We saw an increases in earnings, in gold that we’re holding, and we’ve increased our forecast for the year in terms of production.”

Due mainly to higher gold prices, second-quarter earnings jumped 11% to US$17.8 million (US10 per share) on revenues of US$48.8 million, compared with earnings of US$15.2 million (US9) on revenues of US$48.2 million for the same period last year. More impressively, profits rose even though the company held back 14% (21,648 oz.) of its gold production from sale.

Goldcorp’s gold bullion holdings grew during the quarter by 10% to 7.6 tonnes (245,224 oz.), and the company now has more gold than Mexico, and is closing in fast on Canada’s official gold reserve.

Second-quarter gold production was 149,354 oz. at a cash cost of US$100 per oz. sold, virtually even with the 149,015 oz. gold produced at a cash cost of US$86 per oz. and sold during the same period in 2002.

The flagship Red Lake Mine produced 129,860 oz. gold at a cash cost of US$73 per oz. during the second quarter, compared with 130,491 oz. at a cash cost of US$60 per oz. last year. The average ore grade at Red Lake during the period was 2.47 oz. gold per ton (84.7 grams per tonne) compared with 2.45 oz./t (84.0 g/t) processed during the second quarter of 2002.

The remainer of the production came from the Wharf heap-leach mine in South Dakota.

For all of 2003, the gold-production forecast for the Red Lake mine has been increased 20,000 oz. to 530,000 oz., bring the total estimate for 2003 to 601,000 oz. gold at a cash production cost of US$100 per oz.

The company also reports that its US$94-million Red Lake mine expansion project is on schedule and on budget. The project involves sinking a new 4,000-ton-per-day production shaft to a depth of 7,150 ft.

Goldcorp expects to have the headframe and hoist installed and ready for shaft-sinking by the beginning of 2004, with an eye to having 2007 be the first full year of mining at an expanded, 700,000-oz.-per-year production rate.

Goldcorp remains debt-free and has liquid treasury assets of US$353 million at June 30, 2003, consisting of: US$200 million in cash, mostly in Canadian funds; US$85 million in gold bullion; and US$68 million in marketable securities, mainly junior gold shares.