VANCOUVER – Goldcorp Inc. (TSX:G) reported a first-quarter profit of US$479 million on Wednesday as it faced difficult conditions at its Red Lake mine and lower grade ore.
The results fell short of analyst expectations as poor ground conditions delayed work at the mine in Red Lake, Ont., and lower than expected grades of ore in other areas of the mine cut into production.
“Solid operating results throughout most of our mine portfolio were offset by a challenging first quarter at Red Lake,” Goldcorp president and chief executive Chuck Jeannes said in a statement.
“Adverse ground conditions at Red Lake delayed the development of new mining faces in the high grade zone which, taken together with lower grade in other areas of the mine, led to our slow start to 2012.”
Gold production at Red Lake totalled 114,200 ounces for the quarter, down from 186,100 ounces a year ago.
The gold miner, which keeps its books in U.S. dollars, said the profit amounted to 51 cents per diluted share in its latest quarter, down from $651 million or 81 cents per diluted share a year ago.
Revenue grew to $1.35 billion, up from $1.22 billion.
Excluding one-time items, the company reported an adjusted profit of $404 million or 50 cents per share, compared with $392 million or 49 cents per share a year ago.
The average analyst estimate had been for a profit of 58 cents per share, according to those surveyed by Thomson Reuters.
For the quarter, Goldcorp produced 524,700 ounces of gold, down from 637,600 a year ago, while it saw an average realized price of $1,707 per ounce, up from $1,394.
Total cash costs amounted to $251 per ounce on a by-product basis, up from $188 a year ago.
Silver production amounted to 6.6 million ounces compared 6.1 million ounces in the first three months of 2011.
Despite the problems at Red Lake, Jeannes said the company’s Mexican operations were a particular area of strength in the first quarter with the commissioning of the final component of processing line at the Penasquito mine.
Gold production at Penasquito in the quarter was 68,600 ounces, up from 57,600 a year ago.
“The pace of construction and development activities at our growth projects remained impressive in the first quarter as well,” Jeannes said.
“The Pueblo Viejo joint venture in the Dominican Republic is nearing completion and set to be our next source of new gold production in mid-2012. The Cerro Negro project in Argentina continues to progress toward expected initial gold production in the second half of 2013, and ongoing exploration success there is enhancing the prospects for additional gold reserve growth.”
Goldcorp is Canada’s second-largest gold company.
The company has mines as well as exploration and development projects in Canada, the United States, Mexico and Guatemala and Argentina.
Shares in Goldcorp, which reported its results after the close of markets, were up 54 cents at $40.49 on the Toronto Stock Exchange on Wednesday.