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Overview of Senior Gold Producers in Canada

GOLDCORP INC

Overview

Incorporated in 1994, Goldcorp Inc. (Goldcorp) is one of the leading gold producing companies in the world. Headquartered in Vancouver, British Columbia, Canada, the company is engaged in mining activities including exploration, extraction, and processing of gold. It operates four mines in Canada, one each in Argentina and Mexico, and has two joint venture mines. In 2016, Goldcorp was the fourth largest producer of gold in the world with production of 2.873 million ounces of gold at an ‘All In Sustaining Costs’ (AISC)[1] of $856 per ounce. Goldcorp’s sources of operating cash flows include sale of gold, zinc, and copper. Its primary product is gold doré, which is primarily sold in the London spot market. The company also sells silver, copper, lead and zinc concentrate produced from it’s mines to third party smelters and refineries.

In 2016, Goldcorp underwent a change in leadership and operations, resulting in a more decentralized model, wherein each mine manager was made responsible for growing the Net Asset Value (NAV) of his or her respective mine while the corporate office focuses on allocating capital. Post this reorganization, the company laid out a five-year strategy to increase gold production and gold reserves by 20% and decrease AISC by 20%.

Current Strategy and Performance

Goldcorp’s vision for sustained profitable growth and a strong balance sheet for the future includes working on existing as well as new mines. The company will continue exploration at existing camps, bring about operational efficiencies, take advantage of economies of scale through large assets with longer lives, increase its access to capital, and try to advance its internal pipeline. Its long-term goal is to have a Net debt/EBITA < 1X. (Corporate Presentation, Jan 17, 2017)

Over the next five years Goldcorp has a 20/20/20 strategy: to increase production and reserves by 20% and decrease AISC by 20%. The company aims to ramp up its gold production to 3-4 million ounces per year from six to eight large scale camps. Goldcorp also aims to increase its reserves from 50 million ounces in 2017 to 60 million in 2021 by focusing on strategic investments in new core camp sites and increasing exploration at existing camps.  Finally, it plans to reduce it’s AISC from $850 to $700 per ounce. To drive AISC down, the company has set a target to achieve $250 million in annual sustainable efficiencies. It plans to achieve this target by decreasing capital expenditures, increasing efficiencies through innovation, and optimizing its portfolio through disinvestment of non-core assets. The company expects to achieve its target of $250 million reduction in AISC in the following proportion: 5% through reduction in capital costs, 40% through higher metal production and 55% through lower operating cost. Several pre-feasibility studies of specific mines are underway to convert existing resources into reserves.

Goldcorp’s results in 2017 have indicated that it is on track to achieve its 20/20/20 target. The company’s operational projects delivered strong performance with a rising production and falling AISC trend. In 2017, $100 million was allocated towards exploration, which has already resulted in an increase of 53.5 million ounces of proven and probable reserves. Goldcorp is also optimizing its portfolio through divestitures and investments in growth projects and strategic deals (see M&A section below). Total proceeds from disinvestments in 2017 were $500 million. Goldcorp also made significant investments in new exploration and development projects, all of which are in line with the company’s goal of increasing production and reserves by 20%.

 

Year

Gold Production

(million ounces)

Cash cost by-product

($ per ounce)

AISC

(per ounce)

2016 2.87 573 856
2017* 2.50 500 850

*Guidance

The third quarter results indicated that the company is on track to achieve $200 million of annual sustainable efficiencies out of the $250 million in 2017 itself. The company realized $115 million in annual sustainable efficiencies at Cerro Negro and corporate offices through staff reductions and other cost saving initiatives. The company is in the process of implementing a water reduction strategy that will bring costs down due to lower reliance on water, making them an environment friendly company.

Quarterly Results for 2017

In the first quarter of 2017, Goldcorp reported net earnings of $170 million ($0.20 per share), compared to net earnings of $80 million ($0.10 per share) in the prior-year period. Majority of the improvement in net earnings can be attributed to higher realized metal prices, lower depreciation and depletion costs due to lower sales volumes, and lower corporate administration and restructuring costs. First quarter operating cash flows were $227 million (adjusted operating cash flows were $269 million), which were used to fund the growth pipeline, repurchase a gold stream, and pay dividends. Available liquidity at the end of the quarter was $3.1 billion. Cash flow provided from operating activities for the three months ended March 31, 2017 increased by $168 million compared to the same period in the prior year, primarily due to a net cash outflow from changes in working capital of $206 million in 2016 as compared to $23 million in 2017. Gold production was 655,000 ounces at an AISC of $800 per ounce as compared to 784,000 ounces at AISC of $836 per ounce for the first quarter of 2016.

In the second quarter of 2017, Goldcorp reported net earnings of $135 million ($0.16 per share), compared to net loss of $78 million ($0.09 per share) in the prior-year period. The increase in net earnings was primarily due to higher sales of gold. Operating cash flows for the second quarter of 2017 were $158 million while the adjusted operating cash flows were $320 million compared to $204 million for the same period in the previous year. Revenues increased by 9% and production costs decreased by 9% during this period. AISC stayed constant at $800 per ounce during the second quarter, while production was reported at 635,000 ounces as compared to $613,000 for the second quarter of 2016.

In the third quarter of 2017, Goldcorp reported net earnings of $111 million ($0.13 per share), compared to net earnings of $59 million ($0.07 per share) in the prior-year period. Operating cash flows for the third quarter were $315 million (compared to $267), while the adjusted operating cash flows were $308 million compared to $401 million for the same period in the previous year. Gold production was 633,000 ounces at an AISC of $827 per ounce, compared to 715,000 ounces at an AISC of $812 per ounce during the same period in 2016. Almost the entire decline can be attributed to closure of non-core mines. The decrease in gold production was also caused due to lower sales at Red Lake due to lower grade ore, impact of sale of Los Filos in April 2017, and closure of Marlin during the second quarter. The reasons for increase in AISC were lower gold sales and higher sustaining capital. This quarter reported an increase of 88% in quarterly profit that was helped by an increase in the company’s income tax recovery and higher earnings from its Peñasquito mine in Mexico. This quarter reported a downward trend (currently 1.3 times) of adjusted net debt-to-EBITDA with an expectation of a decrease below 1 times in 2019. With over $3 billion of liquidity and strong free cash flows generation from core assets, the company aims to bring net debt to zero over the next five years. Overall, Goldcorp’s results are in line with its 2017 targets for 2.5 million ounces of gold production at AISC of $825 per ounce.

Goldcorp’s Quarterly Performance (Gold): 2017
  First Quarter Second Quarter Third Quarter
Production (000 ounces) 655 635 633
Cash cost by-product

($ per ounce)

540 510 483
AISC ($ per ounce) 800 800 827

Goldcorp’s Operations

Goldcorp operates four mines in Canada, one each in Argentina and Mexico, and has two joint venture mines. It’s main operating mine properties include Éléonore, Musselwhite, Porcupine and Red Lake mines in Canada; the Peñasquito mine in Mexico; the Cerro Negro mine in Argentina; and the Pueblo Viejo mine (40.0% interest) in the Dominican Republic. The table below gives a snap shot of Goldcorp’s core mines.

Goldcorp’s 100% owned Mining Operations and Projects: 2016
Name Location Contribution to Production (%) Contribution to Revenue (%) Production

(ounces)

Reserves

(million ounces)

AISC

($ per ounce)

PENASQUITO Mexico 16 24 465,000 8.95 967
CERRO NEGRO Argentina 13 12 363,000 4.86 705
RED LAKE Ontario 10 9 324,000 2.17 872
PORCUPINE Ontario 10 8 277,000 8.05 1 898
ÉLÉONORE Quebec 10 8 274.000 3.80 981
MUSSLEWHITE Ontario 9 7 261,000 1.85 678

1 Includes reserves from their development projects at Borden and Century

M&A Activity by Goldcorp Inc. in the Past Twelve Months:

  • Sold Cerro Blanco Gold project and Mita Geothermal project to Bluestone Resources Inc for USD 17.90 M. The transaction was announced on 1/11/2017 and completed on 05/31/2017. The deal was a 100% cash deal[2]
  • Sold Los Filos Mine to Leagold Corp for USD 350 M. The transaction was announced on 01/12/2017 and completed on 04/07/2017. The deal was settled using a combination of cash (279 M) and stock (71M)[3]
  • Sold 30% ownership of El Oro project to Candente Gold Corp for USD 0.14 M. The transaction was completed on 01/25/2017. The deal was a 100% stock deal
  • Acquired El Morro gold stream from New Gold Inc. for CAD 65 M. The transaction was announced on 02/09/2017 and completed on 02/17/2017. The deal was a 100% cash deal[4]
  • Acquired Quedrada Seca project from Kinross Gold Corp for USD 20 M. The transaction was announced on 03/28/2017 and completed on 06/10/2017. The deal was a 100% cash deal[5]
  • Acquired Exeter Resource Corp for CAD 199.06 M. The transaction was announced on 03/28/2017 ad completed on 08/09/2017. It was a 100% stock deal[6]
  • Acquired a minority 25% stake in Cerro Casale Gold Deposit from Barrick Gold Corp for CAD 260 M. The transaction was announced on 03/28/2017 and completed on 06/09/2017. The deal was a 100% cash deal[7]
  • Acquired a minority 25% stake in Cerro Casale Gold Deposit from Kincross Gold Corp for CAD 240 M. The transaction was completed on 06/28/2017. The deal was a 100% cash deal[8]
  • Announced the sale of Mother Lode property to Corvus Gold Inc. for USD 0.60 M. The transaction was announced on 06/06/2017 and is expected to be completed by 06/09/2017. The deal was a 100% stock deal
  • Announced a Joint Venture with Barrick Gold Corp. The transaction was completed on 06/13/2017. Financial terms of the transaction are undisclosed
  • Announced the sale of Camino Rojo Gold Silver Mine to Orla Mining Ltd for USD 28.63 M. The transaction was announced on 06/22/2017 and completed on 07/11/2017. The terms of the deal show a 100% stock settlement[9]
  • Sold a minority 21% stake In San Nicolas Copper/Zinc Deposit to Teck Resources Ltd. The transaction was announced on 06/29/2017 and completed on 10/18/2017. The deal was a 100% cash deal[10]

Summary

Realizing the industry declining trends and limitations to organic growth, Goldcorp has taken measures to maintain its position as the world’s fourth largest mining company. It has stated its 20/20/20 vision and followed it up through an aggressive strategy of selling not so profitable mines and assets and getting into strategic partnerships through several M&A deals. It has posted strong results for 2017 and has been able to increase its net earnings per share to $0.13 from $0.07 in the third quarter of the previous year. The company is on track to achieve its target of $250 million of annual efficiencies and continues to focus on lowering costs and increasing production. It is also on track to achieve its target of 60 million ounces of gold reserves by 2021 with 53.5 million already achieved primarily through conversion of 4.7 million ounces into mineral reserves at Century, a joint venture with Barrick resulting in the acquisition of 8.4 million ounces of gold mineral reserves. Goldcorp has a healthy portfolio of six mines, four development projects and three joint ventures in line with the its strategy and vision for growth.

BARRICK GOLD CORPORATION

Overview

Founded in 1983 by Peter Munk, Barrick Gold Corporation is the largest gold mining company in the World. Headquartered in Toronto, Ontario, Barrick is engaged in operations in several countries with more than 75% of its gold production coming from the Americas region, including Argentina, Canada, Dominican Republic, Peru and the United States. The company also has mining operations and projects in Australia, Chile, Papua New Guinea, Saudi Arabia, and Zambia. At the end of 2016, Barrick had proven and probable gold reserves of 85.9 million ounces. It has one of the most technologically advanced mining operations in the world that explains its low cost, low debt and high yield production.

Current Vision and Strategy

Barrick prides in being a company that believes in collective ownership. Its vision is to generate wealth through responsible mining by involving all stakeholders. These include their employees, the countries they operate in, and the people and communities they partner with.  The company’s long-term objective is to continuously grow the free cash flow per share year after year. Their strategy to achieve this goal is multi-dimensional. It includes maintaining and growing industry-leading margins, driving innovation and digital transformation, managing the portfolio and allocating capital with discipline and rigor, and leveraging partnerships to not only promote the company culture but also use it as a competitive advantage to achieve results. What distinguishes Barrick from its competitors is its deep commitment to partnerships and use of cutting edge technology in every aspect of the business. 

Year Gold Production

(million ounces)

Cost of sales

($ per ounce)

AISC

(per ounce)

2016 5.52 798 730
2017* 5.3-5.5 790-810 740-770
2018* 4.8-5.3 790-840 710-770
2019* 4.6-5.1 800-870 700-770

*Guidance

The company’s priorities for 2017 include generating free cash flow at $1000 per ounce, advancing projects and exploration, reducing $1.5 billion in debt in 2017 and a total of $5 billion by 2018, accelerating digital transformation, and developing talent for the future.

Quarterly Results for 2017

Barrick reported first quarter net earnings of $679 million ($0.58 per share), compared to a net loss of $83 million ($0.07 per share) in the prior-year period. Majority of the improvement in net earnings can be attributed to net impairment reversals recorded in the first quarter of 2017 (divestments and partnerships). Net earnings also benefited from lower currency translation losses compared to the first quarter of 2016. Adjusted net earnings for the first quarter were $162 million ($0.14 per share), compared to $127 million ($0.11 per share) in the prior-year period. Higher adjusted net earnings reflect the impact of higher gold and copper prices, partially offset by higher depreciation, higher exploration and evaluation expenses, and slightly higher direct mining costs. Operating cash flow was higher ($495 million, compared to $451 million in the first quarter of 2016) due to higher gold and copper prices, as well as lower interest payments, reflecting the impact of significant debt reduction completed over the past year. Free cash flow was lower ($161 million, compared to $181 million in the first quarter of 2016) due to higher planned sustaining capital expenditures in the first quarter as well as increased project spending at Barrick Nevada. These increases were partially offset by higher operating cash flow. In this quarter, total debt was reduced by $178 million.

Barrick’s second quarter net earnings were $1.084 billion ($0.93 per share), compared to $138 million ($0.12 per share) in the prior-year period. This significant increase in net earnings was primarily due to $882 million in gains related to the sale of a 50 percent interest in the Veladero mine, and the sale of a 25 percent interest in the Cerro Casale project. Adjusted net earnings for the second quarter were $261 million ($0.22 per share), compared to $158 million ($0.14 per share) in the prior-year period. Higher adjusted net earnings were attributed to aF 10 percent decrease in direct mining costs, higher gold and copper sales volumes, and higher copper prices. Operating cash flow was lower ($448 million, compared to $527 million in the second quarter of 2016) primarily due to higher payment of taxes. Free cash flow was lower ($43 million, compared to $274 million in the second quarter of 2016), reflecting higher capital expenditures and lower operating cash flows. Barrick further reduced its total debt by $309 million in the second quarter, bringing total debt down by $487 million in the first six months of the year.

In the third quarter, the company reported a net loss of $11 million ($0.01 per share), compared to net earnings of $175 million ($0.15 per share) in the prior-year period. The decrease can be attributed to lower gold production and lower realized prices, as well as the impact of Tanzania’s concentrate export ban on Acacia and higher tax provision. In addition, debt extinguishment costs, direct mining costs, exploration and evaluation costs, and depreciation expenses were higher than the prior-year period. Adjusted net earnings for the third quarter were $186 million ($0.16 per share), compared to $278 million ($0.24 per share) in the prior-year period. Significant adjusting items included pre-tax and non-controlling interest effects. Operating cash flow was significantly lower ($532 million, compared to $951 million in the third quarter of 2016), due to lower gold sales, higher cash taxes paid, and higher direct mining costs. Operating cash flow was also impacted by lower cash flows attributable to non-controlling interests, increase in exploration, evaluation and project expenses, and lower gold prices. Free cash flow was lower ($225 million, compared to $674 million in the third quarter of 2016) due to higher capital expenditures combined and lower operating cash flows.

Barrick’s Quarterly Performance (Gold): 2017
  First Quarter Second Quarter Third Quarter
Production (million ounces) 1.309 1.432 1.243
Cost of Sales ($ per ounce) 833 726 820
AISC ($ per ounce) 772 710 772

Based on the performance in the first three quarters, Barrick’s guidance for the full-year gold production is 5.3-5.5 million ounces, at a cost of sales of $790-$810 per ounce, and all-in sustaining costs of $740-$770 per ounce. Total debt in the first three quarters of the year was reduced by $1.5 billion, exceeding the target for 2017. Barrick’s goal is to reduce total debt to $5 billion by the end of 2018.

Barrick’s Operations

Barrick’s five core mines in the Americas are expected to account for about 70% of the total production in 2017, at a cost of sales (applicable to gold) of $770-$800 per ounce, and all-in sustaining costs of $640-$660 per ounce. These mines have an average reserve grade of 1.84 grams per tonne, in some cases more than double than that of competitors, making them among the most attractive assets in the entire gold industry. Barrick has copper mines as well and its copper production in 2016 was 415 million pounds.

Barrick’s Major Gold Mining Operations and Projects: 2016
Name Location Production

(ounces)

Cost of Sales

(per ounce)

Reserves

(million ounces)

AISC

($ per ounce)

Barrick Nevada*

Cortez

Goldstrike

Nevada

 

 

1,060,000

1,100,000

 

901

852

 

10.2

8.1

 

517

714

Lagunas Norte Peru    435,000 651 4.2 529
Pueblo Viejo

(60% ownership)

Dominican Republic    700,000 564 8.1 490
Hemlo Ontario    235,000 795 1.6 839
Turquoise Ridge

(75% ownership)

Nevada    266,000 603 4.0 625
Kalgoorlie

(50% ownership)

Australia    376,000 762 4.1 706

*Barrick Nevada is an integrated gold mining operation that combines Cortez and Goldstrike properties in Nevada

M&A Activity by Barrick in the Past Twelve Months

  • Sold a 25% stake in Cerro Casale Gold Deposit to Goldcorp Inc for CAD 260 M. The transaction was announced on 03/28/2017 and completed on 06/09/2017. The deal was a 100% cash deal[11]
  • Sold a 50% stake in Veladero Gold Mine to Shandong Gold Mining Co Ltd for USD 960 M. The transaction was announced on 04/06/2017 and completed on 06/30/2017. The deal was a 100% cash deal[12]
  • Announced a joint venture with Goldcorp Inc. The transaction was completed on 06/13/2017. Financial terms of the transaction are undisclosed

KINROSS GOLD CORPORATION

Overview

Founded in 1993 by Robert Buchan, Kinross Gold Corporation is a Canadian based gold and silver mining company. Headquartered in Toronto, Kinross has a diverse portfolio of mines and projects in the United States, Brazil, Chile, Ghana, Mauritania, and Russia. The company has a strong portfolio of nine mines across three core regions: Americas, West-Africa and Russia. The strongest region is Americas with five mines that account for more than 60% of the company’s gold production. In 2016, Kinross produced 2.8 million ounces of gold at a cost of sales of $712 per ounce and an All-In Sustaining Cost (AISC) of $984 per ounce. For the seventh consecutive year, Kinross Gold was named one of Canada’s Best 50 Corporate Citizens by Corporate Knights magazine in 2016.

Current Vision and Strategy

Kinross prides in being a responsible mining company. The company follows an approach that combines company-wide policies and standards with site-based responsibility plans to manage operations in a manner that enables them to generate opportunities for local communities. In 2016, Kinross had more than 123,000 stakeholder interactions and spent more than $2 billion in the countries where the company has operations, generating direct and indirect economic value in the communities. Kinross has been able to maintain a strong balance sheet for several years in a row through a culture of continuous improvement and cost management. The company’s strategy is to develop a pipeline of low-risk organic development projects at their existing operations to potentially extend mine life and continue production at a lower cost in the coming years. It strives to maintain one of the best safety records in the industry

 

Year

Gold Production

(million ounces)

Cost of sales

($ per ounce)

AISC

(per ounce)

2016 2.8 712 984
2017* 2.5-2.7 660-720 925-1025

*Guidance

Quarterly Results for 2017

During the first quarter of 2017, net earnings were $134.6 million ($0.11 per share), compared with $35.0 million ($0.03 per share), in the same period of 2016.  The change was primarily attributed to an increase in operating earnings due to impairment reversal and insurance recoveries.  The Company recorded a tax expense of $2.9 million, compared with an income tax recovery of $12.7 million in the first quarter of 2016.  Adjusted net earnings in the first quarter of 2017 were $23.4 million ($0.02 per share), compared with adjusted net earnings of $21.2 million ($0.02 per share), for the same period in 2016.  Net cash flow from operating activities decreased ($207.8 million in the first quarter of 2017 from $214.5 million in the first quarter of 2016), primarily due to less favorable working capital changes. During the first quarter of 2017, adjusted operating cash flow increased ($250.9 million from $207.6 million in the same period of 2016) due to the increase in the net earnings described above. All-in sustaining cost per gold ounce sold was more or less the same ($953, compared with $956 in quarter one in 2016).

During the second quarter of 2017, net earnings were $33.1 million ($0.03 per share) compared with a net loss of $25 million ($0.02 per share), in the same period of 2016. This positive change is attributable to an increase in operating earnings partly due to a lower income tax expense. Adjusted net earnings were $54.9 million ($0.04 per share) compared to net loss of $9.8 million ($0.01 per share) in 2016. The decrease in net cash flow (from $315.9 million to $179.7 million) due to less favorable working capital changes was partly offset by the increase in operating earnings. Operating cash flow also increased from $187.2 million to $230.8 million during the same period due to the increase in operating earnings. Capital expenditures during the period were $200.7 million compared to $114 million during the previous year period, primarily due to spending on expansion of some mines. During the second quarter of 2017, all-in sustaining cost per ounce of gold sold was $910, compared to $988 in the second quarter in 2016.

During the third quarter of 2017, net earnings were $60.1 million ($0.05 per share) compared to $2.5 million ($0.0 per share), during the same period of 2016. This positive change is attributable to an increase in operating earnings partly due to a lower income tax expense. Adjusted net earnings were $84.1 million ($0.07 per share) compared to $128.7 million ($0.10 per share) in 2016. The decrease in adjusted net earnings was mainly due to decrease in revenue and income tax recovery recognized during the quarter. The decrease in net cash flow (from $266.2 million to $197.7 million) due to less favorable working capital changes was partly offset by the increase in operating earnings. Operating cash flow also increased a bit from $320.3 million to $320.8 million during the same period due decrease in overhead and exploration costs. Capital expenditures increased from $153.8 million to $204.7 million, primarily due to spending on expansion of some mines. All-in sustaining cost per ounce of gold sold was $937, compared to $1001 in the third quarter in 2016.

Kinross’s Quarterly Performance (Gold): 2017
  First Quarter Second Quarter Third Quarter
Production (ounces) 671,956 694,874 653,993
Cost of Sales ($ per ounce) 701 660 662
AISC ($ per ounce) 953 910 937

Based on its quarterly performance, Kinross is targeting the high end of its production guidance range of 2.5-2.7 million ounces of gold production for 2017. The company is still maintaining its low-end cost of sales guidance range of $660 – $720 per gold ounce and its all-in sustaining cost guidance range of $925 – $1,025 per gold ounce sold. The company expects to meet its 2017 capital expenditure forecast of approximately $900 million (+/- 5%). Other operating costs are expected to be between $140 – $150 million for 2017. Kinross has a strong liquidity position with cash and cash equivalents of $1billion at the end of this quarter.

Kinross’s Operations in 2016

Kinross has a targeted portfolio of nine mines located in three core regions: the Americas, West Africa and Russia. Americas contributes 61% of the gold production followed by Russia at 22% and West Africa at 17%. There is strong focus on Americas, Kinross’s strongest region with five mines that contribute more than 60% of their gold production. In 2016, Kinross reported 31 million ounces of proven and probable gold reserves with almost an equal amount of measured and indicated gold reserves. The table below gives a snapshot of their key mines in the three regions.

Kinross’s Major Gold Mining Operations and Projects: 2016
                Name Location Production

(ounces)

Cost of Sales

(per ounce)

Reserves

(million ounces)

Fort Knox USA 409,844 741 1.5
Kettle River Buckhorn USA 112,274 652 0.025
Round Mountain USA 378,264 773 3.1
Bald Mountain USA 130,144 1,182 2.1
Paracatu Brazil 480,014 717 9.0
Tasiast Mauritania 175,176 1,061 8.0
Chirano Ghana 211,954 921 0.87
Kupol & Dvoinoye Russia 734,143 441 1.7

M&A Activity by Kinross in the Past Twelve Months

  • Acquired a 9.40% stake in Nighthawk Gold Corp for CAD 6.38 M. The transaction was completed on 11/02/2016. The deal was a 100% cash deal
  • Acquired a minority stake in Renaissance Gold Inc. for CAD 1.26 M. The transaction was announced on 02/20/2017 and completed on 05/15/2017. The deal was a 100% cash deal
  • Announced the acquisition of a 10.57% stake in Bonterra Resources Inc. The transaction was announced on 03/22/2017 and is still pending. The deal was a 100% cash deal[13]
  • Sold Quebrada Seca project to Goldcorp Inc. for USD 20 M. The transaction was announced on 03/28/2017 and completed on 06/10/2017. The deal was a 100% cash deal[14]
  • Sold a 25% stake in Cerro Casale Gold Deposit to Goldcorp Inc. for USD 240 M. The transaction was completed on 03/28/2017. The deal was a 100% cash deal[15]
  • Sold White Gold Properties to White Gold Corp for CAD 59.12 M. The transaction was announced on 05/18/2017 and completed on 06/14/2017. The deal was a settled using a combination of cash (25 M) and stock (17.5 M)[16]
  • Announced sale of DeLamar Gold and Silver Project/USA to Integra Resources Corp for CAD 7.5 M. The transaction was announced on 09/18/17 and completed on 11/03/2017. The deal was settled using a combination of cash and stock.[17]
Comparison: Goldcorp, Barrick and Kinross
Goldcorp Barrick Kinross
2015 2016 2017* 2015 2016 2017* 2015 2016 2017*
Gold Production

(million ounces)

3.46 2.87 2.5 6.1 5.52 5.3-5.5 2.6 2.8 2.5-2.7
Cost of Sales

($ per ounce)

605** 573** 500** 859 798 790-810 696 712 660-720
AISC

(per ounce)

894 856 850 831 730 740-770 975 984 925-1025
Reserves

(million ounces)

40.7 42.3 53.5 91.9 85.9 NA 33.2 31.0 NA

*Latest guidance

**Goldcorp reports cash cost by-product per ounce, which does not have a standardized meaning

 

Sources:

  1. http://www.kinross.com
  2. https://barrick.com
  3. https://www.goldcorp.com
  4. https://www.prnewswire.com

[1] The Company reports AISC on a gold ounces sold basis. This performance measure was adopted because of an initiative undertaken within the gold mining industry; however, this performance measure has no standardized meaning and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company follows the guidance note released by the World Gold Council, which became effective January 1, 2014. The World Gold Council is a non-regulatory market development organization for the gold industry whose members comprise global senior gold mining companies.

[2] Source: https://globenewswire.com/news-release/2017/05/31/1005004/0/en/Bluestone-Completes-Acquisition-of-the-Cerro-Blanco-Gold-and-Mita-Geothermal-Projects-from-Goldcorp.html

[3] Source: http://www.newswire.ca/news-releases/leagold-completes-the-acquisition-of-the-los-filos-gold-mine-618666343.html

[4] Source: https://www.gurufocus.com/news/481722/goldcorp-buys-new-golds-gold-stream-in-el-morro-mine

[5] Source: http://www.marketwired.com/press-release/kinross-completes-sale-of-cerro-casale-interest-tsx-k-2221209.htm

[6] Source: http://www.newswire.ca/news-releases/goldcorp-completes-acquisition-of-exeter-638184143.html

[7] Source: http://www.barrick.com/investors/news/news-details/2017/Barrick-Completes-Sale-of-25-Percent-of-Cerro-Casale-to-Goldcorp-and-Forms-New-Joint-Venture/default.aspx

[8] Source: http://www.marketwired.com/press-release/kinross-completes-sale-of-cerro-casale-interest-tsx-k-2221209.htm

[9] Source: http://www.marketwired.com/press-release/orla-mining-announces-completion-of-acquisition-of-camino-rojo-project-from-goldcorp-2239879.htm

[10] Source:http://www.newswire.ca/news-releases/goldcorp-completes-sale-of-its-21-minority-interest-in-the-san-nicolas-copper-zinc-project-651501083.html

[11] Source: http://www.barrick.com/investors/news/news-details/2017/Barrick-Completes-Sale-of-25-Percent-of-Cerro-Casale-to-Goldcorp-and-Forms-New-Joint-Venture/default.aspx

[12] Source: http://www.marketwired.com/press-release/barrick-and-shandong-complete-formation-of-joint-venture-at-veladero-mine-nyse-abx-2224706.htm

[13] Source: http://www.newswire.ca/news-releases/bonterra-announces-strategic-investment-by-kinross-gold-616839664.html

[14] Source: http://www.marketwired.com/press-release/kinross-completes-sale-of-cerro-casale-interest-tsx-k-2221209.htm

[15] Source: http://www.marketwired.com/press-release/kinross-completes-sale-of-cerro-casale-interest-tsx-k-2221209.htm

[16] Source: http://www.marketwired.com/press-release/white-gold-corp-completes-acquisition-white-gold-properties-from-kinross-gold-corporation-2221863.htm

[17] Source: https://globenewswire.com/news-release/2017/11/03/1174675/0/en/Integra-Resources-Completes-Acquisition-of-DeLamar-Gold-and-Silver-Project-and-Receives-TSX-Venture-Listing-Approval.html

Related Reading for Metals & Mining

Metals & MiningValuation of Metals & Mining Companies Part III: Credit · Valuation of Metals & Mining Companies Part II: Multiples · Valuation of Metals & Mining Companies Part I: Introduction · Types of Mining Methods · Overview of Senior Gold Producers in Canada · Steel Industry Trends · Net Asset Value in Mining · Metals & Mining Streaming Primer · Precious Metals – Gold, Silver and PGM · Metals and Mining Trends · Metals & Mining Investment Banking · The Economy in Chile ·
Prithvi
Prithvi
Prithvi was a risk advisory summer intern at Ernst and Young. He will graduate from the UBC Sauder School of Business in 2020 with a double option in finance and accounting. Outside of school, he works as an analyst at Corporate Finance Institute and is a member of ACIIC, a student run investment club. He is also a former national level tennis player.
https://www.linkedin.com/in/prithvi-khanna/

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