Though less profitable than a year ago,
Net earnings for the three months ended March 31 topped US$12,000 on revenue of US$10.4 million, compared with US$102,000 on US$11.6 million in the first quarter of 1999. The shortfall is attributed to a poor showing by the industrial minerals division, which translated into an operational loss of US$700,000. Cash flow from operations between the two first quarters rose to US$7.2 million from negative US$2.5 million.
The Wharf mine, in South Dakota, cranked out 23,801 oz. gold at total cash costs of US$216 per oz., similar to a year ago. By the end of the current year, the mine is expected to produce 110,000 oz. at US$212 per oz.
Wharf is Goldcorp’s sole metal producer, though the past-producing Red Lake mine is soon to reinstate itself. Situated in Northern Ontario, Red Lake is on-track to pour its first gold bar from the new High Grade zone in mid-November.
Reserves at Red Lake are pegged at 1.5 million tonnes grading 46.97 grams gold per tonne, though higher grades have been obtained in underground development samples. The reserves were calculated by Watts Griffis & McOuat, based on a gold price of US$300 per oz., 22% external dilution and the cutting of higher grades to 10, 5 or 2 oz.
In April, Goldcorp and former employees of the Red Lake mine settled a 3-year-long strike that shut down the mine in 1996. The deal saw the union decertified and about $9 million in severance pay split among the 186 workers, 45 of which will also be part of the new workforce. The severance package will be charged against second-quarter earnings.
At full steam, Red Lake is expected to crank out 240,000 oz. gold annually at an average cash cost of US$88 per oz. Plans call for 64,000 oz. to be produced this year from preproduction development.
Meanwhile, Goldcorp’s industrial minerals operations, in Saskatchewan, are being hard-hit by an oversupplied market. Consequently, the division earned only US$300,000 in the recent quarter, or two-thirds less than it did a year ago. (The results exclude Havelock Lime, which was sold on Dec. 31.)
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