After the market close yesterday, March 11, Goldcorp (GG) reported fourth quarter 2009 earnings of 25 cents a share (excluding one-time items). That was in line with the Wall Street consensus. Revenue climbed by 27.8% to $778 million. That was substantially above the $732 million Wall Street estimate.
For the quarter Goldcorp reported production of 601,300 ounces of gold.
The news was good enough so that investors can pardon CEO Chuck Jeannes if he sounded like he was crowing. “Achieving record gold production at the lowest cash costs of any major gold mining company while increasing gold reserves for a sixth consecutive year made 2009 a very successful year for Goldcorp,” he said in his company’s press release. “In addition, we brought one of our cornerstone mines, Penasquito, into operational production on time and on budget and repositioned another, the prolific Red Lake mine, for long term success. With Pueblo Viejo advancing on time toward first gold production in late 2011, the three major drivers of our five-year, 57% growth profile remain well on track. We also enhanced our outstanding project pipeline with the recent closing of two acquisitions that brought us the Camino Rojo project near Penasquito and the El Morro project in Chile.
Even the cost story was positive.
For the full year the company produced 2.42 million ounces of gold at total cash cost of $295 an ounce. That compares to a total cash cost of $305 per gold ounce in 2008. In calculating cash cost, the value of by-products (in this case copper and silver) are deducted from the costs of producing the gold. In 2009 Goldcorp’s cash cost fell because of higher prices for copper and silver.
As of March 12, I’m going to raise my target price of $50 a share by December from the previous target of $48 by October 2010.
Full disclosure: I own shares of Goldcorp in my personal portfolio.
The Chief Currency Strategist for CMC Markets was interviewed on CNBC recently. He predicted a looming gold price collapse for the immediate future due to the dollar’s upside as the Fed reduces liquidity without raising rates. He recommends selling gold and waiting for it to go to 1000 or 980 before buying again. The rational he used was that gold hit an all time high vs. the Euro recently and the US Dollar has been strong vs. the Euro.Therefore gold will go lower vs. the US Dollar.
“Gold fears Bernacke. Gold’s movement against the Euro is crucial to weigh ‘true’ performance. Gold price remains vulnerable to about $1020 followed by $980. More downside seen for gold ahead. US Dollar friendly landscape expected to continue, pressuring the Euro.”
This is similiar to what a Deusche Bank representative recently told Bloomberg his FOREX people were telling him.
Things may change as the year moves on. And a buying opportunity may then present itself.
Jim;
Thanks for all today’s updates and have great weekend!
Thanks Jim! I’m sold on this one. I was just waiting on good news and an entry point. You provided the good news and today the market provided a good entry point(39.36). How opportune 😉
henry2009
Yesterday you posted on Citigroup. Today New Constructs Research reported that “Citigroup is a dangerous stock”. David Trainer talking to The Street said its financials are not as good as they may seem and the valuation is sky high. So caveat emptor. Good luck.