In its second-quarter earnings relase, Goldcorp reported lower year-on-year results and a decision to proceed with expansions at both its Peñasquito and Musselwhite mines. The company reported second-quarter gold production of 613,400 ounces (oz) at all-in sustaining costs (AISC) of $1,067/oz, compared to 908,000 oz at AISC of $853/oz in 2015. Lower gold production was expected in the second quarter mainly due to planned lower ore grades, a 10-day mill shutdown for planned maintenance at Peñasquito and the exhaustion of surface stockpiles at Cerro Negro, which contributed significantly to mill feed in 2015. Further, the company said a slower than expected ramp up after the mill shutdown at Peñasquito and the decision to accelerate a large workforce reduction at Cerro Negro had a short-term, negative impact on second-quarter gold production.
Goldcorp did reconfirm 2016 guidance for gold production of between 2.8 and 3.1 million oz, at AISC of between $850/oz and $925/oz. Production is expected to increase in the third and fourth quarters as the plant at Peñasquito retured to normal operations in July and higher grades are expected from a number of mines. AISC are expected to decrease as a result of higher production.
“The decision to accelerate a significant organizational restructuring had a short-term, negative impact on gold production. With the decentralization of our business well under way and new mine management installed at the majority of our operations to reflect the new business model, Goldcorp is poised to deliver better gold production and cost performance,” said David Garofalo, president and CEO, Goldcorp. “We continued to advance our robust project pipeline with the decision to proceed to construction with high rate of return expansions at our Peñasquito and Musselwhite mines.”
The $420 million pyrite leach project at Peñasquito and a $90 million materials handling project at Musselwhite are expected to increase gold production commencing in 2019. During the quarter, the company also completed the Hoyle Deep project at Porcupine and the acquisition of Kaminak.