Goldcorp Lower guidance = falling selling price

Gold :: Locality: Red Lake Mine (Goldcorp Mine; Arthur White Mine), Balmertown, Red Lake Gold District, Kenora District, Ontario, Canada (Locality at mindat.org) :: Size: 2.5 X 2.5 x 1.7 cm. :: A beautiful leaf gold “sail” of microcrystalline gold is attached to the ship-like matrix on this aesthetic thumbnail specimen from the Red Lake Mine of Ontario. The gold color is a lustrous, rich yellow. Excellent material from this rich mine. Ex. Mark Mauthner Collection. (Photo credit: Wikipedia)

Goldcorp* (G : TSX : $33.90)

Goldcorp reduced its full-year 2012 gold production guidance to 2.35-2.45 million ounces compared to previous guidance of 2.60 million ounces. Due to the lower expected production, total cash cost guidance has also been revised to $310-340 per ounce of gold on a by-product basis and $625-650 per ounce on a co-product basis.

This compares to previous guidance of $250-275 per ounce on a by-product basis and $550-600 per ounce on a co-product basis. The company also reduced its by-product production for silver, zinc and lead, with copper production remaining unchanged. The reason for the production cut comes from the company’s two large mines, Red Lake and Penasquito. At Red Lake gold production in the second quarter continued to be affected by the previously-announced operating delays in the High Grade Zone due to the need for rock de-stressing cuts at the 41 and 45 levels.

 The impact of continued seismic activity has increased over the last several weeks, and in connection with the company’s continued commitment to the highest possible safety standards has slowed the advance of de-stressing efforts. The first level is expected to be completed later in the third quarter.

 This is expected to deliver improved operating performance in the High Grade Zone over the second half of 2012. Inconsistent mineralization in the Footwall Zone encountered in the first quarter has also continued into the second quarter while production in the Campbell Zone improved slightly compared to the first quarter.

 At the company’s Penasquito mine second quarter mill throughput was affected by inadequate water supply in the month of June. Prolonged drought conditions in the region have contributed to lower-thanexpected water recharge in the well field as well as lower-than-expected water production from the pit dewatering program.

This condition limited plant throughput in June and is also expected to affect plant throughput in the second half of 2012. The company holds permits for sufficient quantities of water and is currently working to drill additional wells to increase water  production. Concurrently, work is also underway to increase the quantity of water reclaimed from the tailings facility.

For the quarter the company produced 578,600 ounces, an increase of 10% compared to the first quarter of 2012.