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Adrian Day Image Adrian Day Chairman and CEO, Adrian Day Asset Management

Goldcorp (GG) has laid out five-year guidance, with 20%/20%/20% forecasts: production to increase by 20% to 3 million ounces by 2020; resources to increase by 20% to 50 million ounces; and all-in sustaining costs (AISC) costs to drop by 20%, to $700 by 2021.

A grand plan, and the ramp-up of two newer mines—Eleonore and Cerro Negro—lend some credibility to the targets. But the company lowered its 2017 production guidance, an inauspicious start. The company also said it expects ongoing capex to be higher than expected.

Goldcorp has a solid balance sheet, a good cost profile, a growth pipeline, including several quality exploration projects that, along with a couple of higher-cost developments projects, provide it with good optionality to higher gold prices. 

One analyst (Tony Lesiak at Canaccord) summed it up, “still rebuilding trust.” Under $15, Goldcorp is a good buy, particularly if one expects a stronger gold market.

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