With better-than-expected production from the Red Lake mine in northwestern Ontario, Goldcorp (G-T) has posted first-quarter earnings of US$14.7 million (or 18 per share).
The company broke even a year ago.
During the three months ended March 31, cash flow was US$28.4 million, up from US$7.2 million a year earlier. The quarter’s earnings and cash flow were the best since the corporation was restructured in early 1994. Revenues rose to US$48.3 million from a year-ago US$10.4 million.
The quarter’s gold production tallied 172,784 oz. at a cash cost of US$78 per oz. This was lower than the original estimate of US$88 per oz. The bulk of production came from the re-christened Red Lake mine, which churned out 146,512 oz. at US$54 per oz. in its first full quarter of production. The mine encountered better-than-anticipated grades, lower-than-anticipated mining costs and increased recoveries. Goldcorp produced 23,801 oz. at US$216 per oz. in the same period a year earlier.
Red Lake began commercial production at the beginning of this year. Originally, a feasibility study called for first-year production of 240,000 oz. at US$88 per oz. Full-year production from the mine is now expected to hit 400,000 oz. at less than US$75 per oz.
At the end of January, Red Lake’s high-grade reserves were upped to 3 million oz. from 2.3 million oz. The increase was attributed to an increase in the reserve grade to 1.68 oz. per ton from 1.37 oz.
Goldcorp has budgeted US$8 million for exploration at the Red Lake mine and $3 million for regional exploration in the Red Lake area during 2001.
Work at the mine will focus on expanding the high-grade reserves, which extend for 1,300 ft. to a depth of 5,700 ft. The company is looking to double this vertical extent. Initial work is focusing on possible extensions of the Hanging Wall 5 and Hanging Wall A zones, which account for more than 25% of the reserves.
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