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Peñasquito mine. (Image courtesy of Goldcorp)
Canadian miner Goldcorp (NYSE:GG) (TSX:G), one of the best performing gold companies, reported Thursday an unexpected third-quarter loss driven mainly by lower metal grades at its Peñasquito mine in Mexico, which forced the firm to take a $36 million writedown.
The Vancouver-based company said it will process the low-grade ore when Peñasquito nears the end of its life and said the writedown also “recognizes lower anticipated recoveries” from the stockpiles.
Goldcorp also absorbed losses of $85 million from foreign exchange translation of deferred income tax assets and liabilities, $14 million in losses on derivatives and $13 million in losses on the impairment against the carrying amount of El Sauzal mine, also in Mexico. The company suspended production at the operation in early September and it has had to fast-track closure activities due to previously reported pit wall instability.
The firm also suspended operations at its Los Filos mine for about a month in April because of a dispute with a group of local landowners.
Earlier this month, Chile’s Supreme Court halted the company’s $3.9 billion El Morro gold and copper project until local indigenous groups who oppose it are better consulted.
As a consequence of these challenges, costs of producing an ounce of gold for the company climbed to $1,066 from $995 last year.
Despite the gloomy figures, Goldcorp still expects to meet its overall production guidance for the year of 2.95 to 3.1 million ounces, though it will come in at the low end of that range.
