Posted: ’09-MAR-07 08:00′ GMT – – Archive

After its recent announcement of the pending sale of the Amapari gold mine in Brazil to GPJ Ventures, Canadian gold miner Goldcorp decided wrote off $175 million of the operation, impacting the company’s fourth-quarter 2006 profit by 35%.

Total cash cost of $524/oz for the year at Amapari were impacted by the lower than expected gold production during the first nine months of 2006 and associated costs of plant retrofit and modification programs. Meanwhile, proven and probable reserves have been revised downward to 485,000 ounces, which reflects the exclusion of sulfide mineralization previously included in proven and probable reserves.

During a conference call with analysts Thursday to discuss financial results, Goldcorp President and CEO Kevin McArthur admitted that he was “less than happy” with the recoveries at Argentina’s Alumbrera gold and copper mine. Gold and copper production were, respectively, 32% and 16% lower during the fourth quarter due to lower grades, which were in line with expectations, but were also blamed on lower recoveries as a result of processing high gypsum content ore. Alumbrera is now studying several processing and mine plan enhancements to improve recoveries. McArthur told analysts that the recovery problem is not anticipated to persist. If you are in the market of buying gold, you can check out our guide on how to buy gold here.

Goldcorp has budgeted $750 million in capex this year including $315 million for the Peñasquito project in Zacatecas State in Mexico, $110 million for the Red Lake Complex in Canada, and $95 million for the Los Filos and San Dimas projects in Mexico. McArthur said $55 million will be spent on exploration, including $23 million in Canada and $22 million in Mexico.

The company plans to mine 2.6 million ounces of gold at an average cash cost of $150/oz this year.

FINANCIALS – Earnings for Q4 Gold mining

Net earnings for the fourth quarter of 2006 were $66 million or 11-cents per share, compared with $102 million or 30-cents per share for the fourth quarter of 2005.

For 2006 Goldcorp reported record net earnings of $408.3 million or 93-cents per share, compared to $286 million or 91 cents per share in 2005.

During the second quarter of 2006, Goldcorp entered into 66 million pounds of copper forward contracts on its expected 2007 production and 30 million pounds of copper on its anticipated 2008 production. The fair value of these contract resulted in a $2 million current derivative asset and a $6.1 million long-term liability as of December 31, 2006. A mark-to-market loss of $4.1 million was reported for 2006.

As of December 31, 2006, the company reported cash and cash equivalents of $555 million and working capital of $418 million.

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