The news overshadowed disappointing adjusted earnings, though the company maintained its full-year guidance.

The US$1.96-billion writedown reflects the exploration potential of Penasquito, Vancouver-based Goldcorp said. It is the company’s first major impairment charge this year, as it previously avoided the writedowns that have plagued competitors like Barrick Gold Corp. and Kinross Gold Corp.

“Penasquito continues to possess strong exploration upside, but due to lower metals prices, the current in situ market value of exploration potential has decreased significantly,” chief executive Chuck Jeannes said in a statement.

“This mine is a key driver of our long-term financial performance and this charge simply aligns the carrying value of the asset, which was established over seven years ago, with the current market environment for exploration properties in the gold industry.”

After stripping out the Penasquito impairment, Goldcorp’s adjusted profit was US$117-million, or US14¢ a share. The results fell far below the average analyst estimate of US24¢. The company had a profit of US41¢ in the second quarter of 2012.

The stock was down about 1% in afternoon trading on Thursday following the announcement, while shares of other gold companies increased alongside the gold price.

Mr. Jeannes said that Goldcorp’s production of 646,000 ounces came in as expected, but the company was dragged down by weaker gold prices, the timing of gold production, and a temporary increase in inventory at the Red Lake mine in Ontario.

Goldcorp’s all-in costs in the quarter were US$1,279 an ounce, which was not far below its average realized gold price of US$1,358.

THE CANADIAN PRESS/Aaron Vincent “This mine is a key driver of our long-term financial performance and this charge simply aligns the carrying value of the asset, which was established over seven years ago, with the current market environment for exploration properties in the gold industry,” Goldcorp president Chuck Jeannes said Thursday in a statement.

There was also some positive news out of Penasquito, as Goldcorp said it has identified a new water source for the mine. That removes a key obstacle to ramping up production.

For 2013, Goldcorp maintained its production guidance of 2.55 to 2.8 million ounces of gold at total cash costs of US$1,000 to US$1,100 an ounce.

 “Despite recent market volatility, our business remains very sound,” Mr. Jeannes said.  “Our operations are performing as planned and the project pipeline continues to advance impressively.”