Update Goldcorp (GG)

03/12/2010 12:30 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

After the market close yesterday, March 11, Goldcorp (GG) reported fourth quarter 2009 earnings of 25 cents a share (excluding one-time items). That was in line with the Wall Street consensus. Revenue climbed by 27.8% to $778 million. That was substantially above the $732 million Wall Street estimate.

For the quarter Goldcorp reported production of 601,300 ounces of gold.

The news was good enough so that investors can pardon CEO Chuck Jeannes if he sounded like he was crowing. "Achieving record gold production at the lowest cash costs of any major gold mining company while increasing gold reserves for a sixth consecutive year made 2009 a very successful year for Goldcorp,” he said in his company’s press release. "In addition, we brought one of our cornerstone mines, Penasquito, into operational production on time and on budget and repositioned another, the prolific Red Lake mine, for long term success. With Pueblo Viejo advancing on time toward first gold production in late 2011, the three major drivers of our five-year, 57% growth profile remain well on track. We also enhanced our outstanding project pipeline with the recent closing of two acquisitions that brought us the Camino Rojo project near Penasquito and the El Morro project in Chile.

Even the cost story was positive.

For the full year the company produced 2.42 million ounces of gold at total cash cost of $295 an ounce. That compares to a total cash cost of $305 per gold ounce in 2008. In calculating cash cost, the value of by-products (in this case copper and silver) are deducted from the costs of producing the gold. In 2009 Goldcorp’s cash cost fell because of higher prices for copper and silver.

As of March 12, I’m going to raise my target price of $50 a share by December from the previous target of $48 by October 2010.

Full disclosure: I own shares of Goldcorp in my personal portfolio.

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