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Goldcorp Profit Beats Estimates as Mining Costs Fall

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July 31 (Bloomberg) -- Goldcorp Inc., the largest gold producer by market value, reported second-quarter earnings that beat analysts’ estimates after costs fell more than expected.

Net income was $181 million, or 22 cents a share, compared with a year-earlier net loss of $1.93 billion, or $2.38, Vancouver-based Goldcorp said today in a statement. Profit excluding one-time items was 20 cents, beating the 14-cent average of 21 estimates compiled by Bloomberg. Sales rose 5.6 percent to $906 million, trailing the $1.02 billion average estimate.

Goldcorp, which this month started output at the first of three new mines, is among producers working to reduce costs after the metal’s 28 percent slump last year, the most in more than three decades. The world’s biggest gold miners have cut budgets, sold less-profitable assets and adjusted operating plans to improve efficiencies.

Goldcorp’s average so-called all-in sustaining cost was $852 an ounce of gold, compared with $1,227 a year earlier and the $921 average of three estimates.

Goldcorp reported a “solid” quarter with much lower than expected costs, said Andrew Quail, a New York-based analyst at Goldman Sachs Group Inc.

“Lower costs highlight Goldcorp’s operational strength,” he said in a note today.

Output Forecast

The company reported second-quarter gold production of 648,700 ounces, compared with 646,000 ounces a year earlier and the 664,000 average of six estimates.

Goldcorp declined 1.3 percent to C$29.86 in Toronto while gold for immediate delivery in London fell 1 percent to $1,283.29 an ounce.

The company reiterated its 2014 gold output forecast of 2.95 million to 3.1 million ounces and said it expects costs will come in at the low end of its $950 to $1,000 range. Goldcorp said capital spending this year will be $2.3 billion to $2.4 billion, after narrowing the range from an previous $2.3 billion to $2.5 billion.

The company also reduced its development-cost forecast by $100 million for the Cerro Negro mine in Argentina, which started production this month.

In April, Goldcorp terminated a hostile C$3.3 billion ($3 billion) bid for Osisko Mining Corp. after Osisko agreed to be bought by two other companies. Goldcorp also expressed interest in buying African gold mines from Newmont Mining Corp. earlier this year during merger talks between Newmont and Barrick, people familiar with the situation said July 18.

Gold averaged $1,290 an ounce on the Comex in New York in the second quarter, 9 percent less than a year earlier and 0.3 percent lower than the first quarter.

(An earlier version of this story corrected second-quarter gold production.)

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Steven Frank

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