Goldcorp triples Q1 net earnings despite lower production from Red Lake

Vancouver – Robust metal prices and the strong performance of the Alumbrera gold-copper mine allowed Goldcorp (G-T, GG-N) to post net earnings of US$92.4 million, or US$0.27 per share, for its latest quarter, triple net earnings of US$29.5 million in the comparable period of 2005.

Gold production in the first quarter of 2006 increased to 295,100 oz. from 275,400 oz. a year earlier. Total cash costs averaged minus US$88 per oz. in the latest quarter, net of by-product copper and silver credits, compared with US$92 per oz. in the 2005 first quarter.

The Red Lake gold mine situated in Ontario’s Red Lake mining district produced 121,300 oz. gold in the first quarter, down from 198,500 oz. a year earlier, because of lower grades and re-alignment of the mining plan to allow new development at depth and to accommodate the integration of the newly acquired Campbell operation.

The average mill-feed grade slipped to an average of 59 grams gold per tonne in the latest quarter from 104 grams in the first quarter of 2005. The lower grades combined with a stronger Canadian dollar contributed to higher production costs, which averaged US$130 per oz., compared with US$81 per oz. a year earlier.

Goldcorp holds a 37.5% interest in the Alumbrera mine in Argentina, an open-pit operation that produced 62,300 oz. gold and 40.8 million lbs. of copper in the latest quarter, compared with 47,600 oz. gold and 32.8 million lbs. copper a year earlier. Total cash costs decreased in the first quarter to minus US$1,310 per oz. gold, net of by-product copper credits, compared with minus US$389 per oz. during the same period in 2005. (If copper production was treated as a co-product, average cash costs for the latest quarter would be US$162 per oz. gold and US$1.04 per lb. copper.)

Luismin Mines, Goldcorp’s Mexican mining division, achieved record production levels in the first quarter largely because of a 30% increase in capacity at the large San Dimas mine. Gold production totaled 47,800 oz., up 20% from a year earlier, while silver production of 2.19 million oz. was up 16% from the first quarter of 2005. Total cash costs averaged US$117 per oz., net of by-product silver sales, down from US$145 per oz. a year earlier.

The new Amapari mine in Brazil produced 20,400 oz. gold at total cash costs of US$464 per oz., reflecting an early wet season, lower than expected recoveries and production, and appreciation of the Brazilian currency against the U.S. dollar. The Peak mine in Australia contributed 35,300 oz. gold, plus 2.1 million lbs. copper, at total cash costs of US$192 per oz. gold (net of by-product copper).

Goldcorp paid dividends of US$15.3 million in the first quarter of this year, and also completed the acquisition of Virginia Gold Mines and its Eleonore gold project in Quebec. More recently, Goldcorp closed an agreement to acquire the Canadian assets of Placer Dome from Placer’s new owner Barrick Gold (ABX-T, ABX-N) for cash of about US$1.6 billion, subject to final adjustments.