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Canadian miners Goldcorp and New Gold both report misses on revenue and earnings per share

Last updated: 09:29 25 Oct 2018 EDT, First published: 09:08 25 Oct 2018 EDT

Gold coins
Goldcorp and New Gold miss on their EPS and revenue for the third quarter, respectively

Canadian miners Goldcorp Inc (TSX:G) (NYSE:G) and New Gold Inc (TSX:NGD) (NYSE-American:NGD) both reported misses in third quarter earnings per share and revenues, with Goldcorp pinning the blame for its performance on lower metals production while New Gold had to contend with finance costs from its operations. 

Goldcorp said operating results were impacted primarily by lower production of all metals at the Peñasquito mine due to lower throughput and planned lower grades from stockpiles during the commissioning of the now fully constructed Peñasquito Pyrite Leach Project.

The company said its prospects should improve going forward as metals output ramps up.

READ: Barrick Gold's 3Q profit weakens, revenue drops as metals prices continue to slide

"With our renewed focus on exploration, we essentially replaced gold reserve depletion across our operating assets, establishing a strong foundation to achieve our gold reserve target of 60 million ounces by 2021," said David Garofalo, president and CEO of Goldcorp.

He added: "The commissioning of the PLP at Peñasquito, ongoing development of the Materials Handling system at Musselwhite and the near completion of the ramp up at both Cerro Negro and Éléonore are expected to lead to significantly improved gold production and costs in the fourth quarter of 2018."

Goldcorp said EPS came in with a loss of $0.08 on a net loss of $101 million, compared with earnings of $0.01 last year off a profit of $111 million and expectations it would reached $0.06. Revenues hit $621 million, from $853 million a year ago and the consensus of $875.74 million.

Gold production was at 503,000 ounces at a cost of $999 per ounce, compared to 633,000 ounces at $827 per ounce for the three months ended September 30, 2017.

The miner expects gold production and operating costs to improve substantially in the fourth quarter of 2018 to approximately 620,000 ounces of gold at approximately $750 per ounce as substantially all of Peñasquito's production will come from higher grade ore from the main Peñasco pit, and Éléonore and Cerro Negro continue their ramp ups to optimum production rates.

Proven and probable gold mineral reserves are 52.8 million ounces. Goldcorp mineral reserves increased at Musselwhite with the higher-grade extension of PQ Deeps and the addition of the WEL zone and at Cerro Negro, with an inaugural mineral reserve estimate at the Silica Cap deposit.

Goldcorp is a senior gold producer focused on responsible mining practices with safe, low-cost production from a high-quality portfolio of mines.

Shares of Goldcorp fell 4.4% to US$9.97 in the premarket in New York, having closed on Wednesday 2.16% off at US$10.44. in Canada, the stock settled 2.65% lower on Wednesday at C$13.59. 

NEW GOLD swings to loss

New Gold's EPS swung to a net loss of $0.01, compared with the expectation it would post a profit of $0.01 and the year-ago level of break even. Quarterly revenue hit $147.1 million, sharply below the year-ago level of $170.3 million and the expected consensus of $227.3 million.

The company likewise expressed optimism about its performance in the fourth quarter of 2018.  

"The fourth quarter will be a pivotal quarter for New Gold as we advance a short-term operational plan at Rainy River to reposition this core operation for long-term success. We are confident that additional productivity improvements will be realized during the fourth quarter," said Renaud Adams, the company's president and CEO.

For the nine-month period, the company said gold production reached 344,890 ounces, higher than the prior-year period as additional ounces from Rainy River more than offset the planned lower production at New Afton, Mesquite and Cerro San Pedro. 

Copper production of 68.7 million pounds and silver production of 0.6 million ounces were lower than the prior-year period, consistent with planned lower copper and silver production in 2018.

New Gold is a Canadian-focused intermediate gold mining company, with a portfolio of four producing assets. The company is based in Toronto.

Reporting by Rene Pastor, contactable on rene.pastor@proactiveinvestors.com

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