Mining Exploration News

“Daily mining exploration news on gold price”—–Gold Mining exploration corp Inc. saw its net income and revenues jump in the third quarter, and CEO Kevin McArthur says he expects to soon see gold prices in the thousand-dollar range - a price that will allow the company to achieve its goal of 50 per cent growth over the next five years.

“We continue to believe gold’s status as a safe haven in times of global uncertainty is real,” McArthur said in a Friday conference call with analysts.

“This attribute has been obscured by indiscriminate selling pressure in recent weeks … (but) our medium-and long-term view on gold price remains unchanged. I continue to believe we will be seeing a four-digit gold price in the not-too-distant future.”

McArthur’s prediction comes a day after Barrick Gold Corp. (TSX:ABX) president and interim CEO Peter Munk said he too believes gold prices will rise in tandem with a weakening U.S. dollar.

Although thousand-dollar ounces of bullion have been anticipated for years by some gold bugs, the US$1,000 mark was only surpassed briefly earlier this year. Gold hit an all-time high of US$1,032 per ounce in March.

On Friday, Gold was down $14.80 to US$723.70 an ounce.

In its third-quarter earnings report released Friday, Goldcorp said a realized gold price of US$865 per ounce in the July-September period helped push up revenues five per cent to US$552.2 million.

Goldcorp, which reports in U.S. dollars, said profit in the quarter was $297.2 million, up from $75.8 million a year earlier.

However, earnings adjusted for one-time items were $64.7 million or nine cents per share.

That was a nickel below what analysts polled by Thomson Financial were expecting.

In afternoon trading on the TSX, Goldcorp shares fell $1.98 to $22.54, a drop of almost nine per cent.

But McArthur said his company remains an industry leader.

“Today, we enjoy a top-quality balance sheet, low-cost production and the flexibility to pursue growth in a quickly moving market environment,” he said.

“Complementing these attributes is cash flow growth and our position as the lowest-cost senior gold producer.”

Goldcorp has sold off many of its non-core assets over the last two years, using that capital to expand its key projects, eliminate its debt and build a sizable cash position, McArthur said.

Continued production strength at the company’s El Sauzal mine in Mexico, as well as improvements at its Canadian mining operations - which include the Porcupine, Red Lake and Musselwhite mines in northern Ontario - helped to boost the company’s bottom line.

The company is now focused on completing its Penasquito project, also in Mexico.

“This will be our largest mine and a key driver of shareholder value for decades,” McArthur said.

Goldcorp chief financial officer Lindsay Hall added that the weakening Canadian dollar and Mexican peso led to a significant foreign exchange gain in the third quarter. That, combined with gold prices that were 26 per cent higher year-over-year, accounts for a substantial chunk of the company’s profit boost.

Hall said higher gold prices offset significant declines in copper revenues, caused by a slump in copper prices, and silver revenues. Earlier this year, Goldcorp sold its remaining 48 per cent stake in Silver Wheaton (TSX:SLW), worth $1.57 billion.

Goldcorp said its net profit per share of 42 cents - boosted by a $240.2-million non-cash foreign exchange gain on the revaluation of future tax liabilities - compared with earnings of 11 cents per share in the year-ago period, when revenue was $524 million.

Operating cash flow increased 14 per cent to $237.3 million, although earnings from operations sagged to $99.4 million from $155.4 million. Mine operating costs swelled to $279.1 million from $218.2 million and there were hefty increases in corporate administration costs and depreciation and depletion.

July-September production was 557,400 ounces of gold at cash costs of $346 an ounce. This compared with 524,000 ounces at $160 per ounce in the third quarter of 2007.

“The increase in total cash costs was due to higher consumable, energy and labour costs at the operations and the power interruptions at the Marlin mine (in Guatemala),” the company explained.

“Lower byproduct credits for silver and copper also contributed to the higher cash costs.”

Goldcorp, which remains debt-free, ended the quarter with $454 million in cash and equivalents, and confirmed its 2008 production and cost guidance of 2.3 million to 2.4 million ounces at a cash cost of under $300 an ounce.

“We’re pleased to note steady improvement at nearly all phases of mining operations from the second quarter to the third,” McArthur said.

“I look forward to continued improvements moving forward.”