UPDATE 2-Goldcorp profit drops, says Cerro Negro delayed
Oct 24 (Reuters) - Goldcorp Inc reported a drop in quarterly profit on Thursday as the price of gold declined, and the Canadian miner said first production at its Cerro Negro project in Argentina, one of its three key mine developments, would be delayed.
The company's share price rose 3 percent on the Toronto Stock Exchange to C$27.37, however, as the earnings were ahead of analysts' expectations.
Goldcorp, the world's biggest gold miner by market value, said it has suspended further exploration at Cerro Negro, and has also deferred some development there. First production will be delayed by at least three months, to midyear 2014, and the company said the project's capital cost will rise.
The project has already faced several challenges, including a permitting delay that held up construction of a key power line, rapid inflation in Argentina, the country's high taxes, and some productivity problems.
"We view the quarterly results as a slight negative to the shares," said RBC Capital Markets analyst Stephen Walker in a note to clients, highlighting the problems at Cerro Negro.
Goldcorp increased its capital cost estimate for the project to between $1.6 billion and $1.8 billion from $1.35 billion, and said it now expects production of between 130,000 ounces and 180,000 ounces of gold from Cerro Negro in 2014.
It had previously included about 400,000 ounces of gold from Cerro Negro in its 2014 output forecast of 3.2 million to 3.5 million ounces. Goldcorp will update its 2014 forecasts in January.
For 2013, Goldcorp narrowed its gold production output forecast to between 2.6 million and 2.7 million ounces at an all-in sustaining cost of between $1,050 and $1,100 per ounce. Last quarter it said it expected to produce 2.55 million to 2.8 million gold ounces in 2013, at all-in sustaining costs of $1,000 to $1,100 an ounce.
Capital spending remains on track at $2.6 billion.
Goldcorp said its net earnings for the third quarter fell to $5 million, or 1 cent a share, from $498 million, or 61 cents a share, a year earlier.
Gold prices have fallen sharply since the beginning of the year, nearing a three-year low at about $1,180 an ounce in late June. Gold was at about $1,347 on Thursday, down 20 percent this year.
Goldcorp's average realized gold price was $1,339 per ounce, down from $1,685 an ounce a year earlier. All-in sustaining costs rose to $992 per ounce from $801 an ounce. Gold sales rose 5.5 percent to 652,100 ounces.
Excluding the impact of a new license agreement with the government of the Dominican Republic and other unusual items, profit declined to $190 million, or 23 cents a share, from $441 million, or 54 cents a share, in the year-before quarter. Revenue fell to $929 million from $1.28 billion.
Analysts, on average, had expected earnings of 20 cents a share on revenue of $1.11 billion, according to Thomson Reuters I/B/E/S.
"Operations throughout our portfolio performed as planned during the third quarter and we remain on track to achieve our annual production and cost guidance," said Chuck Jeannes, Goldcorp's chief executive.