Goldcorp Inc. (GG) reported solid fourth-quarter 2010 results. Reported net earnings in the quarter were $331.8 million compared with $66.7 million in the fourth quarter of 2009. Adjusted net earnings were $417.1 million, or 57 cents per share compared with $182.7 million, or 25 cents per share in the fourth quarter of 2009. Results exceeded the Zacks Consensus Estimate of 49 cents.
The increase was driven by higher gold and silver prices and increased bullion production.
Net earnings in 2010 were a record $1.6 billion or $2.14 per share compared with $240.2 million or $0.33 per share in the prior year. Adjusted net earnings totaled $1.0 billion, or $1.37 per share compared with $588.2 million or 80 cents per share in 2009.
Revenue
In the fourth quarter of 2010, revenues increased 70% year over year to $1,319.4 million, on gold sales of 678,600 ounces. The increase was driven by strong performance at its Red Lake mine in northern Ontario and the first full quarter of commercial production at its Penasquito gold-silver mine in Mexico. In fiscal 2010, revenues jumped 40% year over year to $3.8 billion on gold sales of 2.4 million ounces.
In the fourth quarter of 2010, gold production was 689,600 ounces at a total cash cost of $164 per ounce versus production of 601,300 ounces in the fourth quarter of 2009. The increase was driven primarily by RedLake, Musselwhite and record production at both Marlin in Guatemala and Los Filos in Mexico.
Financial Position
At the end of December 31, 2010, cash and cash equivalents was $596.1 million versus $699.5 million at the end of December 31, 2009. Long-term debt was $747.1 million versus $719.0 million at the end of December 31, 2009.
In the fourth quarter of 2010, operating cash flows before working capital totaled $646.1 million or 87 cents per share. Cash flow from operations before changes in working capital increased 45% to $1.7 billion or $2.33 per share in 2010 from $1.2 billion in 2009.
Project Pipeline
PuebloViejo: Construction of Pueblo Viejo in the Dominican Republic continues to advance with its first production expected in the first quarter of 2012. Overall construction is nearly 50% complete, approximately 75% of the capital has been committed and all four autoclaves are on site and have been placed on their foundations. Pre-production capital estimate is now expected to be $3.3$3.5 billion (100% basis) a 1015% increase from the previous estimate largely due to higher labor, power supply, freight and steel product related costs as well as general inflation.
Cerro Negro: The Cerro Negro project is anticipated to be completed at the end of the first quarter of 2011. The company is deploying ten exploration drill rigs to further delineate and extend these large new vein zones and test new vein targets in an effort to further expand the overall gold resources in 2011.
Camino Rojo and Noche Buena: Exploration and development work continued at Camino Rojo and Noche Buena, the two advanced-stage satellite exploration projects near Penasquito. At Camino Rojo, exploration activities have commenced with drilling and airborne geophysics now underway. At Noche Buena, drilling will continue during 2011 with the objective of adding further oxide resources and expanding the sulphide zones.
El Morro: At the El Morro project, approval of the Environmental Impact Assessment (EIA) is anticipated in the first quarter of 2011. Once the EIA has been approved, condemnation drilling will commence, focusing on selected areas of plant, mine waste, tailing and camp.
We maintain our Neutral recommendation on Goldcorp. Currently, it holds a Zacks #3 Rank (Hold) on the stock.
