Goldcorp Case Study

Why Goldcorp Will Get Better
Goldcorp (GG) has lost almost 38% of its market capitalization this year, and the company’s latest results haven’t done much to improve investor confidence. In fact, when Goldcorp reported its third-quarter results at the end of last month, it posted a surprise loss and missed Wall Street’s estimate by a wide margin. The weakness in gold prices and higher depreciation created pressure on Goldcorp’s bottom line in the quarter, which is why the company failed to report growth despite an impressive increase in the top line.
However, in my opinion, investors should not miss the positives about Goldcorp as I believe that the company is quite capable of making a comeback. Let’s see why.
Goldcorp’s production profile is

These mines attained their first commercial production recently. In fact, Cerro Negro’s third-quarter production has increased at a triple-digit rate to 161,100 gold equivalent ounces from 22,900 gold equivalent ounces last year. Also, the production at Eleonore jumped to 86,700 ounces of gold from 18,300 ounces of gold last year.
But, what’s even more impressive is that despite this impressive increase in production, Goldcorp was able to lower its costs, as a result of which the company was able to improve cash flow. For instance, the company has reduced its all-in-sustaining costs by over 21% to $848 per ounce from $1,067 per ounce last year. Also, its all-in costs have dropped by more than 40% to $949 per ounce from $1,577 per ounce in the third quarter of 2014.
Goldcorp was able to achieve these strong results due to its operating for excellence initiative. The company has achieved benefits of about $250 million through this program in the first nine months of the year. As a part of this initiative, Goldcorp is undertaking steps to increase recovery rates, improve grades, and implement steps to reduce costs as we will shortly