Higher output at Red Lake

Thanks to unexpectedly high headgrades, the Red Lake gold mine in northwestern Ontario is exceeding the production forecasts of its owner, Goldcorp (G-T).

The mine, which began commercial production on Jan. 1, cranked out 146,512 oz. during the first quarter at a cash cost of US$60 per oz. This includes an inventory adjustment of 9,000 oz.; but even without those extra ounces, the head grade averaged 2.62 oz., versus the 2.1 oz. predicted in the feasibility study.

Goldcorp now expects to crank out 500,000 oz. in 2001, at a cash cost of US$100 per oz. About a fifth of the output will come from the Wharf open-pit mine in South Dakota, where 26,000 oz. were produced during the recent quarter at a cost of US$206 per oz.

In 2001, Goldcorp expects to generate US$70.3 million in cashflow (or 86 per share), assuming a gold price of US$260. Earnings, in turn, are projected at US$34.1 million (42 per share).

An annual dividend of 10 has been declared, to be paid in March and September.

At the end of March, Goldcorp had US$38 million in cash and no debt. It does not hedge any production.

The recent quarter also saw Goldcorp launch its second internet exploration contest, the so-called Global Search Challenge. The contest, along with the winners of the first challenge, was announced at the annual convention of the Prospectors & Developers Association of Canada, held recently in Toronto.

A total of US$30,000 in prizes is to be awarded every four months, over the next two years, to the best five submissions. Another US$20,000 is earmarked for the best proposal in each year.

Goldcorp also intends to spend US$1.8 million following up any recommendations.