Q2 Earnings Call

355 views

Published on

Q2 Earnings Call

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
355
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Q2 Earnings Call

  1. 1. Second Quarter Conference Call J U LY 2 8 , 2 0 11
  2. 2. Management Participants Chuck Jeannes Lindsay Hall Steve Reid President and EVP & Chief Financial EVP & Chief Operating Chief Executive Officer Officer Officer2
  3. 3. Forward Looking Statements This presentation contains “forward-looking statements”, within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of Goldcorp Inc. (“Goldcorp”). Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, silver, copper, lead and zinc, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, hedging practices, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, timing and possible outcome of pending litigation, title disputes or claims and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward- looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Goldcorp to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions; risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold, silver, copper, lead and zinc; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes; delays in obtaining governmental approvals or financing or in the completion of development or construction activities and other risks of the mining industry, as well as those factors discussed in the section entitled “Description of the Business – Risk Factors” in Goldcorp’s annual information form for the year ended December 31, 2010 available at www.sedar.com. Although Goldcorp has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Goldcorp does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws. All amounts are in U.S. dollars, unless otherwise stated.3
  4. 4. Second Quarter Highlights  Production of 597,100 ounces of Au  By-product cash costs - $185/oz; co-product $553/oz  Revenues increased 62% to $1.3B  Operating cash flow* increased 84% to $717M  Adjusted net earnings increased 111% to $420M  Record cash margins of $1,331 per ounce * Operating cash flow before changes in working capital, see footnotes4
  5. 5. Revised Guidance 2011 2011 Revised 2011 Guidance1 Guidance1 Gold production (M oz) 2.65 - 2.75 2.50 – 2.55 Cash costs $/oz - By-Product $280 - $320 $180 - $220 - Co-Product $475 - $500 $500 - $550 Capital expenditures $1.5B $1.5B (+$290M at Pueblo Viejo) (+$490M at Pueblo Viejo) Exploration expenditures $170M $225M Corporate administration $125M $125M Depreciation /oz $280 $280 Tax Rate 30% 28% 1 2011 price assumptions: Au=$1250/oz, Ag=$20/oz, Cu=$3.25/lb, Zn=$0.90/lb, Pb=$0.90/lb, CAD=1.03 and MXN=12.50, Oil=$85/bbl5
  6. 6. A Robust Development Pipeline Peñasquito UG Red Lake Near Surface Scoping Agua Rica Cerro Blanco Noche Buena Feasibility El Morro (2015) Camino Rojo (2014) Éléonore (2014) Construction Cochenour (2014) Cerro Negro (2013) Pueblo Viejo (2012) Peñasquito (2010) Production Los Filos (2008) Marlin (2006) Red Lake & other operating mines6
  7. 7. OPERATIONS REVIEW Steve Reid EVP & Chief Operating Officer7
  8. 8. Operational Highlights  Solid quarterly gold production 597,100 oz  Operational consistency at Red Lake  Exploration potential grows at Porcupine  Final step in Peñasquito ramp-up  Recent Musselwhite forest fires8
  9. 9. Porcupine District – New Mineral Trend Starting to demonstrate size potential ? N9
  10. 10. Musselwhite: Recent Forest Fire10
  11. 11. Peñasquito Operating Refinement Continues in 2011 • Continued grade and recovery improvements • Delay with final step in Peñasquito ramp-up • Full year guidance revised to 250,000 oz • Manto exploration drilling progressing • District projects update: - Camino Rojo – 3 rigs operating - Noche Buena – 3 rigs operating11
  12. 12. Peñasquito – Solutions 2H 2011 Challenges to be Addressed • Supplementary feed to HPGR circuit • Cover the return-water shortfall • Additional wall construction material for tailings • Advance Chile Colorado dewatering • Outfit back-up wells in wellfield • Alternative Cyanide supplies to mitigate shortfall12
  13. 13. Marlin Strong Performance and Preparation for Future Filter Plant 40% complete Delmy Vein (approx. 1.5 width)13
  14. 14. Cerro Negro Advancing Towards First Production • Eureka ramp advanced to 1,215 metres • Increased activity to prepare for construction - Advancing permit modifications - Advancing engineering • Exploration drilling - 8 drill rigs on surface - Veins remain open14
  15. 15. Cerro Negro Large Percentage of Veins Untested Pre-mineral rock within Bonanza elevation Concession Boundary San Marcos El Retiro 4810000N Mariana Norte 11.0m Buena Vista 111.00 g/t Au Mariana Central 238 g/t Ag Mariana Sur 2.0m Eureka 5.4 g/t Au 3,244 g/t Ag 4.0m Sur Vein 3.67 g/t Au 3 g/t Ag Above Bonanza Elevation and Vein Zone Post Mineral Cover 4805000N 8.0m 20.1 g/t Au 265 g/t Ag Bajo Negro Quartz vein Fault 5 kilometers 2400000E Areas of vein tested15
  16. 16. Cochenour New Growth Driver in Red Lake District • Surface construction advancing • Shaft widening commenced • Haulage drift 29% complete - 2 drills operating - Exploration potential on unexplored ground • Surface exploration with 4 drill rigs16
  17. 17. Éléonore Significant Site Progress17
  18. 18. Éléonore Pure Gold in a Safe Jurisdiction • Exploration shaft over 400 metres depth • Exploration ramp extended over 200 metres • Receipt of Environmental and Social Impact Assessment permit on track for Q3 201118
  19. 19. Éléonore – Exploration Shaft Advancing19 May 2011
  20. 20. El Morro World Class Project in Mining Friendly Chile • Road access to property established • Condemnation drilling commenced - Additional drills to be added • Feasibility study update expected in Q3 2011 - Including project configuration optimization20
  21. 21. FINANCE REVIEW Lindsay Hall EVP & Chief Financial Officer21
  22. 22. Q2 2011 Highlights ($ millions, except for per share amounts) Q2 2011 Q1 2011 Gross margin 811 765 Depreciation and depletion (178) (164) Earnings from mine operations 633 601 Net earnings attributable to 489 651 Shareholders of Goldcorp Inc. Adjusted net earnings (a) 420 397 Basic EPS $0.61 $0.82 Adjusted EPS (a) $0.52 $0.5022
  23. 23. Q2 2011 Operational Highlights Q2 2011 Q1 2011 Gold production (oz) 597,100 637,600 Gold sales (oz) 606,400 627,300 Cash costs by-product ($/oz) 185 188 Cash costs co-product ($/oz) 553 504 Realized gold price ($/oz) 1,516 1,394 Margin by-product ($/oz) (d) 1,331 1,206 Total silver sold (million oz) 6.8 5.9 Total copper sold (million lbs) 26.4 21.4 Total lead sold (million lbs) 41.2 31.4 Total zinc sold (million lbs) 60.3 59.5 Realized silver price ($/oz) 30.65 28.91 Realized copper price ($/lb) 4.15 4.27 Realized lead price ($/lb) 1.15 1.21 Realized zinc price ($/lb) 1.03 1.07 Capital expenditures ($ million) 404 35923
  24. 24. Q2 Statement of Cash Flows ($ Million) Q2 2011 Q1 2011 Operating activities Operating cash flow before change in working capital (c) 717 463 Change in non-cash working capital (387) 123 Cash provided by operating activities of continuing operations 330 586 Investing activities Expenditures and deposits on mining interests (413) (352) Proceeds on dispositions-mining interests, securities - 519 Repayment on capital invested in PV - 64 Purchase of securities and other (25) - Income taxes paid on disposition of SLW shares & San Dimas assets - (19) Cash used in investing activities of continuing operations (438) 212 Financing activities Common shares issued on exercise of warrants 358 - Common shares issued, net 26 11 Dividends (82) (75) Cash provided by (used in) financing activities 302 (64)24
  25. 25. Sector Leading Cash Margins REALIZED GOLD PRICE $1,516 ($ per Oz) $1,240 $978 $868 1,331 $703 966 683 563 540 305 295 274 163 185 2007 2008 2009 2010 2011 YTD By-Product Cash Costs Cash Margin25
  26. 26. • Gold Production Growth Leader SUPERIOR • Low Cost Producer INVESTMENT • Outstanding Balance Sheet PROPOSITION • Low Political Risk • Responsible Mining26
  27. 27. Footnotes a) Adjusted net earnings and adjusted earnings per share are non-GAAP measures. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Company’s performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to page 39 of the 2011 second quarter MD&A for a reconciliation of adjusted net earnings to reported net earnings. b) The Company has included a non-GAAP performance measure, total cash cost per gold ounce, throughout this document. The Company reports total cash costs on a sales basis. In the gold mining industry, this is a common performance measure but does not have any standardized meaning, and is a non-GAAP measure. The Company follows the recommendations of the Gold Institute standard. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to page 38 of the 2011 second quarter MD&A for a calculation of total cash cost per gold ounce. c) Operating cash flow before working capital changes and operating cash flows before working capital changes per share are non- GAAP measures which the Company believes provides a better indicator of the Company’s ability to generate cash flow from its mining operations.27
  28. 28. Footnotes d) The Company has included a non-GAAP performance measure, margin per gold ounce, throughout this document. The Company reports margin on a sales basis. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Margin per gold ounce is calculated as follows: Q2 2011 Q1 2011 Revenues per financial statements (millions) $1,323 $1,216 Treatment and refining charges on concentrate sales 33 30 By-product copper, silver, lead and zinc sales credit (437) (372) Gold revenues (millions) $919 $874 Divided by ounces of gold sold 606,400 627,300 Realized gold price per ounce $1,516 $1,394 Deduct total cash costs per ounce of gold (1) ($185) ($188) Margin per gold ounce $1,331 $1,206 (1) Refer to footnote b.28
  29. 29. Endnotes 1. All Mineral Reserves and Mineral Resources have been calculated as at December 31, 2010 in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101, or the AusIMM JORC equivalent. Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Goldcorp’s Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. Calculations have been prepared by employees of Goldcorp, its joint venture partners or its joint venture operating companies, as applicable, under the supervision of Maryse Belanger, Director Technical Services. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property. Varying cut-off grades have been used depending on the mine and type of ore contained in the reserves. Goldcorp’s normal data verification procedures have been employed in connection with the calculations. For a breakdown of Reserves and Resources by category and for a more detailed description of the key assumptions, parameters and methods used in calculating Goldcorp’s Reserves and Resources, see Goldcorp’s Annual information Form/ Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission. 2. Goldcorp’s exploration programs are designed and conducted under the supervision of Charlie Ronkos, Senior Vice President, Exploration of Goldcorp. For information on geology, exploration activities generally, and drilling and analysis procedures on Goldcorp’s material properties, see Goldcorp’s Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.29

×