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.
Investor’s Digest of Canada, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846