With a net loss of $1.93 billion in it's second quarter due to a write off of a Mexican property, Goldcorp is looking to adjust expenses. The priceof gold has effected many mining companies, especially in the exploration sector and is also being felt by the gold giant.
"Gold production across the portfolio was as planned during the second quarter, but revenues and operating cash flows were significantly impacted by lower realized gold prices, timing of gold production and a temporary increase in inventory at Red Lake," said Chuck Jeannes, Goldcorp President and Chief Executive Officer. "Almost half of our total quarterly gold and silver sales occurred in the month of June, which coincided with a period of particularly weak prices for the metals.
"Goldcorp is uniquely positioned in the industry with a solid balance sheet and quality growth profile, and we are taking action to maintain these competitive advantages. In response to lower metals prices and resulting lower-than-expected cash flow this year, we have implemented company-wide spending reductions that will help to safeguard our strong financial position while keeping intact the key elements of our industry-leading growth profile.
"Market factors have also necessitated a reassessment of the book value of our portfolio, which has led to an after-tax charge of $1.96 billion, consisting primarily of impairment to the value of exploration potential at Peñasquito. Peñasquito continues to possess strong exploration upside, but due to lower metals prices, the current in situ market value of exploration potential has decreased significantly. 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."
At Red Lake in Ontario, gold production for the second quarter was 122,500 ounces at a total cash cost of $523 per ounce on a by-product basis. Drilling continued on the NXT zone during the quarter and results indicate that the zone remains open vertically and to the west. Several drills are targeting this zone both from the 4199 exploration drift and from existing infrastructure at higher levels in the mine. Additional development of the 47 level drift to provide closer drill access to this zone was completed as planned during the second quarter and drilling will continue throughout the remainder of the year.
At Porcupine in Ontario, gold production in the second quarter totaled 69,800 ounces at a total cash cost of $782 per ounce on a by-product basis. Two key exploration platforms were completed in the second quarter of 2013 which enabled deeper exploration to commence on the down-plunge extension of the 1060 and VAZ zones. Surface exploration completed a winter drilling program in the surrounding regional targets and findings are being compiled with results expected by year-end 2013. The Hoyle Pond Deep project continued to advance, which will access deeper discovered zones of gold mineralization and enhance operational flexibility and efficiencies throughout the Hoyle Pond underground complex.
At the Hollinger Pit project, in light of the current metal prices, the company is advancing alternatives including a smaller pit which has stronger economics than the previous plan while also addressing the reclamation and safety issues associated with this historic mining.