Earnings season for the gold producers began yesterday after the closing bell and the early results were mixed.
Goldcorp (GG) reported earnings of $0.52, largely in-line with expectations. However, the company lowered its 2011 production guidance by 170,000 ounces to a new range of 2.5 to 2.55 million ounces after operational issues at its Penasquito mine in Mexico. John Bridges, analyst at JP Morgan, noted that Goldcorp had a “tough quarter but should be back to growth by 2012.” On the other hand, TD Newcrest analyst Greg Barnes downgraded Goldcorp to “buy” from “action list buy” and lowered his price target to $68.00 from $70.
With respect to Agnico-Eagle Mine (AEM), which also released second quarter earnings after the bell yesterday, Bridges noted, “AEM reported production in line with our estimates but with higher costs. It reported gold sales of 237,310 ozs during the quarter, in line with our estimate of 238,066ozs, though costs at $565/oz were higher than our estimated $552/oz.”
Newmont Mining (NEM), which reports its Q2 earnings on Friday, announced a 50% increase in its dividend to $0.30 per share in the third quarter. The dividend hike “was declared in consideration of Newmont’s second quarter 2011 average realized gold sales price of $1,501 an ounce (i.e. between $1,500 – $1,599 per ounce).”
“Under the Company’s recently announced gold price-linked dividend guideline, it is contemplated that each quarterly dividend will be determined as a function of Newmont’s average realized gold sales price for the preceding quarter. The Company’s quarterly dividend will increase at a rate of $0.05 per share for each $100 per ounce rise in the average realized gold sales price for the preceding quarter.”
Platinum Group Metals Advancing to Production
The start of underground tunneling is scheduled for late July 2011. Full commercial construction is budgeted at $443 million and is expected to involve project loan financing once a full mining rights are approved and concentrate off-take terms are established. Full Platinum Group Metals News Release.
- In March 2011, Platinum Group Metals received the consent of the South African Department of Mineral Resources (DMR) for the Company’s plan for underground development of decline access for Project 1 and related environmental management program.
- In April 2011, the Company filed a mining right application and social and labor program with the DMR for the Project 1 Platinum Mine. This application was later accepted for processing by the DMR.
- In May 2011, construction for Phase 1 on surface infrastructure, excavation and construction began – it is proceeding safely and is on schedule.
- In early July 2011, the Company announced that underground mining contractor JIC Mining Services was awarded the contract for Phase 1 underground development of twin 1,200 meter central decline tunnels into the Project 1 platinum deposit for the purposes of retrieving a bulk sample and information for further mine design. JIC is now mobilizing to site.
