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XMFSinchiruna (26.58)

Goldcorp Gleams With Golden Promise



February 25, 2011 – Comments (3) | RELATED TICKERS: GG , AUY , AEM

You all know full well that I'm seldom at a loss for words, but words scarcely suffice to convey the beauty of these earnings results from Goldcorp. They herald the overdue arrival of gold mining stocks onto the forefront of the world stage. They have the potential to trigger a sort of industry-wide repricing event as a sector which has still largely been ignored by the financial establishment finally inserts itself into their previously gold-bashing universe.

Goldcorp Gleams With Golden Promise


Goldcorp churned up 689,600 ounces of gold during the fourth quarter of 2010. Thanks to a byproduct cash cost of just $164 per ounce that continues to set the standard among major producers, the miner's immense cash flow of $646.1 million for the period equates to $937 for every single ounce of gold produced!

The revenue statistics are sweeter still, with a 70% increase to $1.32 billion, which represents a phenomenal $1,944 for every gold ounce sold. How is that possible, you may ask, when the company's average realized gold price for the period was $1,378 per ounce? Byproduct credits, primarily for copper and silver production, are providing substantial benefit to miners' cost and cash flow structures, now that prices for these metals have themselves rocketed higher. Those byproduct credits, along with gold's relentless ascent, carried Goldcorp's fourth-quarter margin to $1,214 per ounce.


To the delight of silver stream holder Silver Wheaton (NYSE: SLW), Goldcorp's newly ramped-up Penasquito mine yielded 4.6 million ounces of silver during the fourth quarter. Combined with increased silver output from the Marlin mine, Goldcorp's total silver production reached an astonishing 6.8 million ounces in the fourth quarter alone. For reference, that byproduct silver volume is 2.5 times greater than the 2.7 million ounces produced by Hecla Mining (NYSE: HL) during the period.


Having examined each of Goldcorp's multiple development projects in considerable detail, this Fool ascribes a very strong likelihood of success to Goldcorp's aggressive five-year growth plan. Combining that outlook with further anticipated increases in the price of gold -- which CEO Chuck Jeannes relates to "gold's continued reemergence as an essential asset class for investment portfolios" -- I continue to place Goldcorp near the pinnacle of golden opportunities among mining stocks.

3 Comments – Post Your Own

#1) On February 25, 2011 at 4:18 PM, XMFSinchiruna (26.58) wrote:

Here's a must-watch video!

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#2) On February 25, 2011 at 9:46 PM, XMFSinchiruna (26.58) wrote:

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#3) On February 25, 2011 at 9:48 PM, XMFSinchiruna (26.58) wrote:

Between now and Monday, February 28th be prepared for panicked short sellers who cannot make delivery to try every trick in the book to buy back their short positions.

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