Analysts
surveyed by Investor’s Digest of Canada this month rated Goldcorp among
the best gold stocks to invest in. Of the 11 analysts polled, nine
rated this Vancouver-based company’s mining stock a “buy” and two a
“hold”.
Credit
Suisse likes what gold stock Goldcorp Inc. (TSX─G; NYSE─GG) is doing at
its Cerro Negro gold mine in Argentina. A good thing too, given the
mine’s potential. Not only does it boast reserves of 5.3 million
ounces, but it has total resources of 6.2 million ounces.
In
fact, there’s a strong possibility that reserves could grow over the
life of the mine itself, says Anita Soni, an analyst with Credit Suisse
Group in Toronto.
In
the meantime, Goldcorp has restarted exploration at the site which had
been stalled for over a year, pending resolution of a dispute regarding
taxes on in-situ proven reserves.
And
although mill throughputs at Cerro Negro have been lower than expected,
this is likely to be only temporary, says Ms. Soni, who blames the
skimpier volumes on a power grid tie-in.
She
also blames the subpar performance on a slowdown in the use of
stockpiles to match the milling rate to the rates for both hauling and
mining.
Nonetheless, she suggests the lower throughputs will cut this senior Canadian gold mining stock’s net earnings by $0.01 a share.
Both gold and silver recoveries strong
Still,
Ms. Soni admits that year-to-date recoveries at Cerro Negro are coming
in strong with gold at 91.5 per cent. Not only is this 150 basis points
above her own estimate, but it is 150 basis points higher than Goldcorp
itself had been hoping for.
Silver
recoveries are also proving robust, hitting the tape at over 79 per
cent — 400 basis points above Ms. Soni’s forecast, as well as 1,900
basis points above the company’s estimate.
In
the meantime, Goldcorp continues to pinpoint the third quarter of this
year for a ramp-up at Cerro Negro’s Eureka vein — in-line with Ms.
Soni’s forecast. The company is also targeting the fourth quarter of
2015 for a ramp-up at Mariana, another Cerro Negro vein.
For Ms. Soni, Goldcorp merits a recommendation of “sector outperform,” along with a 12-month price target of US$27.
Nine analysts rate this gold stock a buy
Our
market forecasters were on-side with Ms. Soni this month. Of the 10
other firms we polled, eight rated Goldcorp a “buy” among gold stocks
to invest in and only two a “hold”, lofting the company into 10th spot
on our list of must-have stocks.
Headquartered
in Vancouver, Goldcorp boasts five mines in Canada and the U.S., three
mines in Mexico and two in both Central and South America.
For
the three months ended Sept. 30, Goldcorp swung to a net loss of US$44
million or a nickel a share, from net earnings of $5 million, or a
penny a share, for the similar period in 2013.
Revenue
was also lower, sliding to US$859 million from $895 million, whereas
earnings from mine operations slid to US$137 million from $228 million.
For
the nine months ended Sept. 30, Goldcorp swung to net earnings of
US$237 million, or $0.30 a share, from a net loss of $1.6 billion, or
$2.03 a share, for the similar period in 2013.
Revenue
declined modestly to US$2.6 billion from $2.7 billion, while earnings
from mine operations fell to US$586 million from $745 million for the
similar period in 2013.
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