Goldcorp announced this morning that it plans to buy Osisko Mining Corp.
Canadian gold miner Goldcorp Inc. (TSE:G, Market cap 20.54B, P/E – , Div/yield 0.05/2.53, EPS -1.63, Shares outstanding 812.26M,) expects its annual gold production to expand by up to 18% this year despite plans to curtail costs and capital spending in the next two years, the company revealed last week.
The Vancouver-based company, which is one of the world’s largest gold miners, plans to produce between three million and 3.15 million ounces of gold this year, achieving growth of between 13% and 18%. The increase will come from higher grades at its flagship Peñasquito operations in Mexico, the ramp-up of Pueblo Viejo in the Dominican Republic and the expected start of gold production at Cerro Negro in Argentina and Éléonore in Quebec.
The gold miner projects that silver production will grow at a rapid rate this year as well, reaching between 34 million and 36 million ounces, of which about 22 million to 25 million ounces will be extracted at Peñasquito.
Goldcorp forecasts annual capital expenditure of $2.3 billion to $2.5 billion this year, of which some 60% will be earmarked for projects and 40% for operations. Cash costs are forecast to range between $950 and $1,000 per ounce in 2014, against an average of $1,065 per ounce in 2013.
The company is upbeat that over the next two years gold production will expand by 50%. At the same time, cash costs are seen to decline by 15% to 20%, helping the company to improve margins and achieve free cash flow growth.
Goldcorp said it produced 767,000 ounces of gold in the last quarter of 2013, bringing its annual output to 2.67 million ounces, or 11% more than in the previous year.
Goldcorp announced this morning that it plans to buy Osisko Mining Corp. (TSE:OSK, Market cap 2.27B, P/E – , Div/yield – , EPS -1.04, Shares outstanding 439.19M) in a cash and stock deal valued at $2.6 billion (or $5.95/OSK share.)
Goldcorp is a well-run mining company. It is reducing its unit production costs, while increasing its annual output. This is a good strategy in a period of weak gold prices.
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