UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2013
Commission File Number: 001-12970
Goldcorp Inc.
(Translation of registrants name into English)
Suite 3400 - 666 Burrard St.
Vancouver, British Columbia V6C 2X8 Canada
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ¨ Form 40-F x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
INCORPORATION BY REFERENCE
Exhibit 99.1 (Managements Discussion and Analysis of Financial Condition and Results of Operations for the Three Months Ended March 31, 2013) and Exhibit 99.2 (Condensed Interim Consolidated Financial Statements of the Company for the Three Months Ended March 31, 2013) to this Report on Form 6-K shall be incorporated by reference into Registration Statement Nos. 333-126038, 333-126039, 333-126040, 333-138760, 333-151243, 333-151251, 333-174376 and 333-181116 on Form S-8, as amended, and Registration Statement No. 333-186998 on Form F-10, as amended, of the Company to the extent not superseded by documents or reports subsequently filed or furnished by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GOLDCORP INC. | ||||||
Date: May 2, 2013 | /s/ Anna M. Tudela | |||||
Name: Anna M. Tudela | ||||||
Title: Vice-President, Regulatory Affairs and Corporate Secretary |
EXHIBIT INDEX
Exhibit |
Description of Furnished Exhibit | |
99.1 | Managements Discussion and Analysis of Financial Condition and Results of Operations for the Three Months Ended March 31, 2013 | |
99.2 | Condensed Interim Consolidated Financial Statements of the Company for the Three Months Ended March 31, 2013 | |
99.3 | Form 52-109F2 Certification of Interim Filings CEO | |
99.4 | Form 52-109F2 Certification of Interim Filings CFO |
Exhibit 99.1
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
This Managements Discussion and Analysis (MD&A) should be read in conjunction with the unaudited condensed interim consolidated financial statements of Goldcorp Inc. (Goldcorp or the Company) for the three months ended March 31, 2013 and related notes thereto which have been prepared in accordance with International Financial Reporting Standards (GAAP or IFRS) as issued by the International Accounting Standards Board (IASB). This MD&A contains forward-looking statements that are subject to risk factors set out in a cautionary note contained herein. All figures are in United States (US) dollars unless otherwise noted. References to C$ are to Canadian dollars. This MD&A has been prepared as of May 1, 2013.
FIRST QUARTER HIGHLIGHTS
Key consolidated financial information:
| Net earnings attributable to shareholders of Goldcorp of $309 million ($0.38 per share), compared with $479 million ($0.59 per share) in 2012. |
| Operating cash flows of $294 million, compared with $339 million in 2012. |
| Dividends paid of $122 million, compared to $109 million in 2012. |
| Over $4 billion of liquidity. (1) |
Key performance measures: (2)
| Goldcorps share of gold production increased to 614,600 ounces compared with 524,700 ounces in 2012 with the commencement of commercial production at Pueblo Viejo in 2013. |
| Total cash costs of $565 per gold ounce, net of by-product silver, copper, lead and zinc credits, compared with $251 per gold ounce in 2012. On a co-product basis, cash costs of $710 per gold ounce, compared with $648 per gold ounce in 2012. (3) |
| All-in sustaining costs of $1,135 per ounce compared with $814 in 2012. (4) |
| Adjusted net earnings of $253 million ($0.31 per share), compared with $404 million ($0.50 per share) in 2012. (5) |
| Goldcorps share of adjusted operating cash flows was $400 million ($0.49 per share), compared to $480 million in 2012 ($0.59 per |
share). (6) |
| Goldcorps share of free cash flows of $(211) million, compared to $(273) million in 2012. (7) |
On March 20, 2013, the Company completed an issuance of $1.5 billion of senior unsecured notes and received net proceeds of $1.48 billion. Additionally, the Company extended the $2 billion revolving credit facility to 2018.
(1) | At March 31, 2013, the Company held $1,463 million of cash and cash equivalents, $551 million of money market investments and held an undrawn $2 billion revolving credit facility. |
(2) | The Company has included the undernoted non-GAAP performance measures on an attributable basis throughout this document. Attributable performance measures include the Companys mining operations and projects and the Companys share from Alumbrera and Pueblo Viejo. The Company believes that disclosing certain performance measures on an attributable basis is a more accurate measurement of the Companys operating and economic performance and reflects the Companys view of its core mining operations. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance and ability to generate cash flow; however these performance measures do not have any standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. |
GOLDCORP | 1
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
(3) | The Company has included non-GAAP performance measures total cash costs, by-product and co-product, per gold ounce, throughout this document. In the gold mining industry, total cash costs is a common performance measure but does not have any standardized meaning. The Company follows the recommendations of the Gold Institute Production Cost Standard. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Total cash costs on a by-product basis are calculated by deducting Goldcorps share of by-product silver, copper, lead and zinc sales revenues from Goldcorps share of production costs. |
Total cash costs on a co-product basis are calculated by allocating Goldcorps share of production costs to each co-product based on the ratio of actual sales volumes multiplied by budget metal prices, as compared to realized sales prices. The budget metal prices used in the calculation of co-product total cash costs were as follows:
2013 | 2012 | 2011 | ||||||||||
Gold |
$ | 1,600 | $ | 1,600 | $ | 1,250 | ||||||
Silver |
34 | 34 | 20 | |||||||||
Copper |
3.50 | 3.50 | 3.25 | |||||||||
Lead |
0.90 | 0.90 | 0.90 | |||||||||
Zinc |
0.90 | 0.90 | 0.90 |
Using actual realized sales prices, co-product total cash costs would be $707 per gold ounce for the three months ended March 31, 2013 (2012 $654). Refer to page 40 for a reconciliation of total cash costs to reported production costs.
(4) | For 2013, in conjunction with a non-GAAP initiative being undertaken within the gold mining industry, the Company is adopting an all-in sustaining cost non-GAAP performance measure that the Company believes more fully defines the total costs associated with producing gold; however this performance measure has no standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company reports this measure on a sales basis. Refer to page 41 for a reconciliation of all-in sustaining costs. |
(5) | Adjusted net earnings and adjusted net earnings per share are non-GAAP performance measures. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to page 42 for a reconciliation of adjusted net earnings to reported net earnings attributable to shareholders of Goldcorp. |
(6) | Adjusted operating cash flows and adjusted operating cash flows per share are non-GAAP performance measures which comprise Goldcorps share of operating cash flows before working capital changes and which the Company believes provides additional information about the Companys ability to generate cash flows from its mining operations. Refer to page 43 for a reconciliation of adjusted operating cash flows before working capital changes to reported net cash provided by operating activities. |
(7) | Free cash flows is a non-GAAP performance measure which the Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Free cash flows are calculated by deducting from net cash provided by operating activities Goldcorps share of expenditures on mining interests, deposits on mining interests expenditures and capitalized interest paid, and adding Goldcorps share of net cash provided by operating activities from Alumbrera and Pueblo Viejo. Refer to page 43 for a reconciliation of free cash flows to reported net cash provided by operating activities. |
GOLDCORP | 2
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
OVERVIEW
Goldcorp is a leading gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the United States, Mexico and Central and South America. The Companys current sources of operating cash flows are primarily from the sale of gold, silver, copper, lead and zinc.
Goldcorp is one of the worlds fastest growing senior gold producers. Goldcorps strategy is to provide its shareholders with superior returns from high quality assets. Goldcorp has a strong balance sheet. Its low-cost gold production is located in safe jurisdictions in the Americas and remains 100% unhedged.
Goldcorp is listed on the New York Stock Exchange (symbol: GG) and the Toronto Stock Exchange (symbol: G).
At March 31, 2013, the Companys principal producing mining properties were comprised of the Red Lake, Porcupine and Musselwhite gold mines in Canada; the Peñasquito gold/silver/lead/zinc mine and the Los Filos and El Sauzal gold mines in Mexico; the Marlin gold/silver mine in Guatemala; the Alumbrera gold/copper mine (37.5% interest) in Argentina; the Marigold (66.7% interest) and Wharf gold mines in the United States; and the Pueblo Viejo gold/silver/copper mine in the Dominican Republic (40% interest).
The Companys significant development projects at March 31, 2013 were comprised of the Cerro Negro gold project in Argentina; the Éléonore and Cochenour gold projects in Canada; the El Morro gold/copper project (70% interest) in Chile; the Camino Rojo gold/silver project in Mexico; and the Cerro Blanco gold/silver project in Guatemala. The Company also owns a 32.0% equity interest in Primero Mining Corp. (Primero), a publicly traded company engaged in the production of precious metals with operations (primarily the San Dimas gold/silver mine) in Mexico, and a 39.8% equity interest in Tahoe Resources Inc. (Tahoe), a publicly traded company focused on the exploration and development of resource properties, with a principal objective to develop the Escobal silver project in Guatemala.
During the first quarter of 2013, the focus remained on central banks around the world as Japan announced it would begin a quantitative easing program in an effort to increase inflation. With the United States reiterating its intention to keep interest rates extraordinarily low and China maintaining a relatively accommodative path, global interest rates moved lower and equity markets improved. In Europe, leaders continued to insist on austerity measures for its weaker countries. This led to shrinking economies, rising unemployment and a failed banking system in Cyprus. Gold prices weakened steadily through the quarter, despite the unsettled conditions, with gold seeming to be losing its favoured status as a safe-haven in times of uncertainty. However, central banks remain strong proponents of holding gold as a reserve currency in contrast to Exchange Traded Funds holdings that have declined over the quarter. The gold price recorded a significant sell-off in mid-April but recovered somewhat due to physical demand purchases in the Far East.
During the first quarter of 2013 and the fourth quarter of 2012, the Company realized an average price of $1,622 and $1,692 per ounce, respectively. Production for the first quarter of 2013 decreased 12% from the prior quarter, primarily as a result of 47% lower production at Peñasquito due to higher plant throughput being offset by 43% lower gold ore grades and 13% lower metallurgical recoveries that resulted from high carbon content ore from the lower grade upper benches of Phase 4A. Carbon in ore tends to occur in shallower, lower grade portions of the Peñasco deposit. Additionally, production decreased by 14% at Red Lake due to 14% lower grades and 8% lower mill throughput due to mine sequencing.
At Peñasquito, ongoing studies to develop a long-term water strategy for the Peñasquito district are expected to be completed in the second quarter of 2013. The studies are evaluating both the development of new water sources as well as opportunities to reduce water consumption in the tailings facility. A new water source has been identified, within the Companys current permitted basin, with the potential to supply sufficient fresh water to continue the plant ramp up to full design plant throughput. Over the longer term, the studies are assessing the potential to source treated effluent water from the municipality of Saltillo to meet water demand both at Peñasquito and at potential new mining operations or expansions in and around the mine. When complete, the studies are also
GOLDCORP | 3
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
expected to enable a decision on whether to proceed with a detailed feasibility study investigating the possibility of expanding and/or reconfiguring the existing tailings facility in order to enhance water usage efficiency over the life of the mine. The well field is expected to be in production by end of the second quarter of 2014.
At Cerro Negro, the permit for the construction of the power line to connect to the grid was received in March but later than previously expected. The delay may affect the mobilization of the contractor that will construct the power line and increases the potential for initial gold production to be delayed until the first quarter of 2014.
During the first quarter of 2013, underground mine development, consisting of ramp access, ventilation raises and horizontal stope development continued to ramp up at Eureka, Mariana Central and Mariana Norte. Total underground mine development during the first quarter of 2013 was 1,789 metres, compared to 1,665 metres in the prior quarter. The Eureka and Mariana Central deposits exceeded their planned development metres for the quarter and remain the focus for development, as they will collectively contribute 93% of the contained ounces mined until the end of 2014. Development at longer-term Mariana Norte is in its early stages.
During the first quarter of 2013, the government of the Dominican Republic engaged with Barrick Gold Corporation (Barrick), the operator of Pueblo Viejo mine in which the Company holds a 40% interest, to accelerate and increase the benefits that the Dominican Republic will derive from the mine, including potentially implementing new tax measures. Barrick, while reserving its rights under the Special Lease Agreement (SLA), which cannot be unilaterally altered, continues to engage in dialogue with the government in an effort to achieve a mutually acceptable outcome. The outcome of the dialogue is uncertain but any amendments to the SLA would likely result in significant additional and accelerated payments to the government.
CORPORATE DEVELOPMENTS
During the three months ended March 31, 2013:
On March 20, 2013, the Company issued $1.5 billion of senior unsecured notes (the Companys Notes), consisting of $0.5 billion aggregate principal amount of 2.125% notes due March 15, 2018 (the 5-year Notes) and $1.0 billion aggregate principal amount of 3.70% notes due March 15, 2023 (the 10-year Notes). The Company received total proceeds of $1.48 billion, net of transaction costs. The Company intends to use these proceeds for repayment of its $863 million of convertible notes (Convertible Notes) maturing August 2014, capital expenditures, capital investments or working capital.
GOLDCORP | 4
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
SUMMARIZED FINANCIAL RESULTS (2)
Three Months Ended
|
||||||||||||||||||||||||||||||||
March 31 | December 31 | September 30 | June 30 | |||||||||||||||||||||||||||||
2013 | 2012 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||
Consolidated financial information: |
||||||||||||||||||||||||||||||||
Revenues (1)(2) |
$ 1,015 | $ 1,211 | $ 1,246 | $ 1,515 | $ 1,282 | $ 1,308 | $ 1,081 | $ 1,323 | ||||||||||||||||||||||||
Earnings from operations and associates (2) |
$ 320 | $ 504 | $ 491 | $ 545 | $ 697 | $ 610 | $ 401 | $ 550 | ||||||||||||||||||||||||
Net earnings |
$ 309 | $ 479 | $ 504 | $ 405 | $ 498 | $ 336 | $ 268 | $ 489 | ||||||||||||||||||||||||
Net earnings attributable to shareholders of Goldcorp |
$ 309 | $ 479 | $ 504 | $ 405 | $ 498 | $ 336 | $ 268 | $ 489 | ||||||||||||||||||||||||
Net earnings per share |
||||||||||||||||||||||||||||||||
Basic |
$ 0.38 | $ 0.59 | $ 0.62 | $ 0.50 | $ 0.61 | $ 0.42 | $ 0.33 | $ 0.61 | ||||||||||||||||||||||||
Diluted |
$ 0.33 | $ 0.51 | $ 0.47 | $ 0.39 | $ 0.61 | $ 0.41 | $ 0.26 | $ 0.52 | ||||||||||||||||||||||||
Cash flows from operating activities (1) (2) |
$ 294 | $ 339 | $ 677 | $ 727 | $ 432 | $ 723 | $ 511 | $ 330 | ||||||||||||||||||||||||
Dividends paid |
$ 122 | $ 109 | $ 110 | $ 91 | $ 109 | $ 82 | $ 110 | $ 82 | ||||||||||||||||||||||||
Cash and cash equivalents (2) |
$ 1,463 | $ 1,370 | $ 757 | $ 1,502 | $ 836 | $ 1,476 | $ 1,158 | $ 1,378 | ||||||||||||||||||||||||
Goldcorps share: (3) |
||||||||||||||||||||||||||||||||
Gold produced (ounces) |
614,600 | 524,700 | 700,400 | 687,900 | 592,500 | 592,100 | 578,600 | 597,100 | ||||||||||||||||||||||||
Gold sold (ounces) (1) |
595,100 | 545,700 | 645,100 | 685,000 | 617,800 | 571,500 | 532,000 | 606,400 | ||||||||||||||||||||||||
Silver produced (ounces) |
5,633,400 | 6,618,500 | 7,185,600 | 8,688,200 | 8,509,300 | 6,494,300 | 8,184,100 | 6,498,700 | ||||||||||||||||||||||||
Copper produced (thousands of pounds) |
18,800 | 24,100 | 25,400 | 18,500 | 31,200 | 28,600 | 31,500 | 28,000 | ||||||||||||||||||||||||
Lead produced (thousands of pounds) |
29,100 | 39,200 | 29,200 | 46,100 | 39,400 | 33,600 | 45,900 | 38,500 | ||||||||||||||||||||||||
Zinc produced (thousands of pounds) |
52,000 | 63,800 | 67,000 | 97,900 | 98,400 | 66,400 | 95,000 | 66,500 | ||||||||||||||||||||||||
Average realized gold price (1) (per ounce) |
$ 1,622 | $ 1,707 | $ 1,692 | $ 1,663 | $ 1,685 | $ 1,719 | $ 1,596 | $ 1,516 | ||||||||||||||||||||||||
Average London spot gold price (per ounce) |
$ 1,631 | $ 1,691 | $ 1,722 | $ 1,688 | $ 1,652 | $ 1,702 | $ 1,609 | $ 1,506 | ||||||||||||||||||||||||
Total cash costs by-product (per gold ounce) (1)(4) |
$ 565 | $ 251 | $ 360 | $ 261 | $ 220 | $ 258 | $ 370 | $ 185 | ||||||||||||||||||||||||
Total cash costs co-product (per gold ounce) (1)(5) |
$ 710 | $ 648 | $ 621 | $ 529 | $ 660 | $ 551 | $ 619 | $ 553 |
(1) | Excludes pre-commissioning sales ounces from Pueblo Viejo, prior to January 1, 2013, as costs incurred, net of proceeds from sales, were credited against capitalized project costs. |
(2) | Effective as of January 1, 2013, the Companys 37.5% interest in Alumbrera is now required to be accounted for as an investment in associate and consolidated using the equity method. The Company has restated the 2012 comparative periods to remove Alumbreras revenues, cash from operating activities and cash and cash equivalents and to include the effect of Alumbrera on earnings from operations and associates; however the 2011 quarterly results have not been restated. |
(3) | The Company has included the Companys share of Alumbrera and Pueblo Viejo in the undernoted non-GAAP performance measures. The Company believes that disclosing certain performance measures including Alumbrera and Pueblo Viejo is a more accurate measurement of the Companys operating and economic performance and reflects the Companys view of its core mining operations. |
(4) | Total cash costs per gold ounce on a by-product basis is calculated net of Goldcorps share of by-product sales revenues (by-product copper sales revenues for Alumbrera; by-product silver sales revenues for Marlin and Pueblo Viejo; by-product lead and zinc sales revenues and 75% of silver sales revenues for Peñasquito at market silver prices and 25% of silver sales revenues for Peñasquito at $4.02 per silver ounce sold to Silver Wheaton Corporation (Silver Wheaton)). |
GOLDCORP | 5
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
(5) | Total cash costs per gold ounce on a co-product basis is calculated by allocating Goldcorps share of production costs to each co-product (Alumbrera (copper); Marlin (silver); Pueblo Viejo (silver); Peñasquito (silver, lead and zinc)) based on the ratio of actual sales volumes multiplied by budget metal prices (see page 2). |
GOLDCORP | 6
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
FINANCIAL RESULTS
Commencing January 1, 2013, the Company has reported certain non-GAAP performance measures including the Companys share of Alumbrera and Pueblo Viejo. The following tables reconcile the financial information of the Company as disclosed in the Companys unaudited condensed interim financial statements to the financial information including the Companys share of Alumbrera and Pueblo Viejo.
Unaudited consolidated statements of earnings:
For the three months ended March 31, 2013
As per
unaudited financial statements |
Adjusted | Goldcorps share | ||||||||||
Revenues |
$ | 1,015 | $ | 204 | $ | 1,219 | ||||||
Production costs |
(503) | (93) | (596) | |||||||||
Depreciation and depletion |
(150) | (25) | (175) | |||||||||
Earnings from mine operations |
362 | 86 | 448 | |||||||||
Share of net earnings (losses) of associates |
37 | (32) | (5) | |||||||||
Earnings before taxes |
359 | 21 | 380 | |||||||||
Net earnings |
$ | 309 | $ | - | $ | 309 |
For the three months ended December 31, 2012
As per unaudited consolidated |
Adjusted | Goldcorps share | ||||||||||
Revenues |
$ | 1,246 | $ | 189 | $ | 1,435 | ||||||
Production costs |
(583) | (84) | (667) | |||||||||
Depreciation and depletion |
(154) | (21) | (175) | |||||||||
Earnings from mine operations |
509 | 84 | 593 | |||||||||
Share of net earnings of associates |
42 | (39) | 3 | |||||||||
Earnings before taxes |
630 | 18 | 648 | |||||||||
Net earnings |
$ | 504 | $ | - | $ | 504 |
For the three months ended March 31, 2012
As per unaudited consolidated financial statements |
Adjusted | Goldcorps share | ||||||||||
Revenues |
$ | 1,211 | $ | 138 | $ | 1,349 | ||||||
Production costs |
(489) | (70) | (559) | |||||||||
Depreciation and depletion |
(141) | (17) | (158) | |||||||||
Earnings from mine operations |
581 | 51 | 632 | |||||||||
Share of net earnings (losses) of associates |
14 | (36) | (22) | |||||||||
Earnings before taxes |
562 | 15 | 577 | |||||||||
Net earnings |
$ | 479 | $ | - | $ | 479 |
GOLDCORP | 7
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Consolidated statements of cash flows:
For the three months ended March 31, 2013
As per unaudited consolidated financial statements |
Adjusted |
Goldcorps share |
||||||||||
Operating cash flows before working capital changes |
$ | 339 | 61 | 400 | ||||||||
Net cash provided by operating activities |
$ | 294 | $ | 81 | $ | 375 | ||||||
Net cash used in investing activities |
$ | (1,078) | $ | (44) | $ | (1,122) | ||||||
Net cash provided by financing activities |
$ | 1,490 | $ | (98) | $ | 1,392 |
For the three months ended March 31, 2012
As per unaudited consolidated financial statements |
Adjusted |
Goldcorps share |
||||||||||
Operating cash flows before working capital changes |
430 | 50 | 480 | |||||||||
Net cash provided by operating activities |
$ | 339 | $ | (49) | $ | 290 | ||||||
Net cash used in investing activities |
$ | (324) | $ | 33 | $ | (291) | ||||||
Net cash used in financing activities |
$ | (103) | $ | 6 | $ | (97) |
GOLDCORP | 8
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Review of Financial Results
Three months ended March 31, 2013 compared to the three months ended March 31, 2012
Net earnings attributable to shareholders of Goldcorp for the first quarter of 2013 were $309 million, or $0.38 per share, compared to $479 million, or $0.59 per share, in the first quarter of 2012. Compared to the first quarter of 2012, net earnings attributable to shareholders of Goldcorp for the three months ended March 31, 2013 were impacted significantly by the following factors:
| Revenues decreased by $196 million, or 16%, primarily due to a $64 million decrease in gold revenues, a $94 million decrease in silver revenues and a $41 million decrease in lead and zinc revenues, net of refining charges. Lower production at Peñasquito impacted revenues as mining progressed during the quarter through the lower grade upper benches of Phase 4A as planned; |
| Production costs increased by $14 million, or 3%, resulting from higher employee, consumables and power costs and unfavourable foreign exchange movements, partially offset by lower sales volumes; |
| Depreciation and depletion increased by $9 million, or 6%, due to asset additions being put into service, partially offset by lower gold sales volumes; |
| An increase in the Companys share of net earnings of associates of $23 million, including $33 million of net earnings from Pueblo Viejo following commencement of commercial production, partially offset by a $27 million decrease in net earnings from Alumbrera. Alumbreras net earnings decreased due to a $46 million reduction in revenues as a result of lower gold and copper sales volumes and realized prices, partially offset by $16 million lower operating costs due to the lower sales volumes. Additionally, the Company recognized a $19 million impairment expense in respect of the Companys investment in Primero in the first quarter of 2012 which negatively impacted net earnings of associates in the comparative period; |
| A decrease of $6 million in corporate administration expense as a result of a $10 million decrease in share-based compensation due to lower fair values on the Companys performance share units (PSUs), partially offset by additional issuances of share options, PSUs and restricted share units (RSUs) in the first quarter of 2013. Excluding share-based compensation expense, corporate administration expense increased by $4 million due to continued Company growth; |
| A $49 million net gain on derivatives in 2013 comprised of a $33 million unrealized gain on the conversion feature of the Convertible Notes; a $14 million gain on foreign currency, heating oil, copper, lead, zinc and silver contracts; and a $2 million net gain on the Companys contract to sell 1.5 million ounces of silver to Silver Wheaton at a fixed price over each of the four years ending August 5, 2014 (the Silver Wheaton silver contract). A $55 million net gain on derivatives in 2012 comprised of a $52 million unrealized gain on the conversion feature of the Companys Convertible Notes; a $20 million gain on foreign currency, heating oil, copper, lead, zinc and silver contracts; partially offset by a $16 million loss on the Silver Wheaton silver contract; and a $1 million unrealized loss on investments in warrants; |
| Other income of $3 million in 2013 was primarily comprised of foreign exchange gains of $2 million arising from value added tax receivables denominated in Mexican pesos and $1 million of interest income. Other income of $14 million during 2012 was primarily comprised of $9 million of favourable foreign exchange gains principally arising from value added tax receivables denominated in Mexican pesos and interest income earned on the Primero $60 million convertible note and $50 million promissory note (the Primero Notes) and cash and cash equivalent balances; |
| A lower effective tax rate in the first quarter of 2013, after adjusting for non-deductible share-based compensation expense and the deferred income tax impacts of the strengthening Mexican peso, and weakening Canadian dollar and Argentine peso. The first quarter of 2012 was negatively impacted by non-deductible impairment expense in respect of the Companys investments in Primero and other marketable securities as well as net non-deductible realized and mark-to-market losses from |
GOLDCORP | 9
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
certain silver obligations to Silver Wheaton. The non-deductible impairment expense in the first quarter of 2013 was significantly lower and Goldcorp had net non-taxable realized and mark-to-market gains on the silver obligations to Silver Wheaton, resulting in a lower effective tax rate; and |
| Income tax for the first quarter of 2013 was impacted by a $17 million foreign exchange gain on the translation of deferred income tax assets and liabilities arising primarily from the Placer Dome and Glamis acquisitions in 2006 and the Camino Rojo and Cerro Negro acquisitions in 2010, compared to a $55 million gain in the first quarter of 2012. |
Adjusted net earnings amounted to $253 million, or $0.31 per share (1), for the three months ended March 31, 2013, compared to $404 million, or $0.50 per share, for the first quarter of 2012. Compared to the first quarter of 2012, adjusted net earnings decreased due to lower revenues primarily resulting from lower volumes, and higher production costs due to higher employee, consumables and power costs.
Total cash costs (by-product) increased to $565 per gold ounce (2) in the first quarter of 2013, as compared to $251 per gold ounce in the first quarter of 2012. The increase in cash costs per ounce was primarily due to lower by-product revenues.
(1) | Adjusted net earnings and adjusted net earnings per share are non-GAAP performance measures. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to page 42 for a reconciliation of adjusted net earnings to reported net earnings attributable to shareholders of Goldcorp. |
(2) | The Company has included non-GAAP performance measures total cash costs, by-product and co-product, per gold ounce, throughout this document. In the gold mining industry, total cash costs is a common performance measure but does not have any standardized meaning. The Company follows the recommendations of the Gold Institute Production Cost Standard. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Total cash costs on a by-product basis are calculated by deducting Goldcorps share of by-product silver, copper, lead and zinc sales revenues from Goldcorps share of production costs. Refer to page 40 for a reconciliation of total cash costs to reported production costs. |
GOLDCORP | 10
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Three months ended March 31, 2013 compared to the three months ended December 31, 2012
Net earnings attributable to shareholders of Goldcorp for the first quarter of 2013 were $309 million, or $0.38 per share, compared to $504 million, or $0.62 per share, in the fourth quarter of 2012. Compared to the prior quarter, net earnings attributable to shareholders of Goldcorp for the three months ended March 31, 2013 were impacted significantly by the following factors:
| Revenues decreased by $231 million, or 19%, due to a $200 million decrease in gold revenues, a $22 million decrease in silver revenues and an $11 million decrease in lead and zinc revenues, net of refining charges. Lower production at Peñasquito impacted revenues as mining progressed during the quarter through the lower grade upper benches of Phase 4A as planned; |
| Production costs decreased by $80 million, or 14%, primarily due to an $84 million reclamation and closure cost expense related to revisions in estimates at the Companys inactive and closed mines which was recognized in the prior quarter. Excluding the impact of the reclamation and closure cost expense, production costs increased marginally due to higher employee, contractor and power costs; |
| Depreciation and depletion decreased by $4 million, or 3%, due to lower sales volumes; |
| A $10 million increase in exploration costs primarily due to recognition of $10 million of investment tax credits relating to exploration activities at the Companys Canadian mine sites in the prior quarter; |
| A $5 million decrease in the Companys share of net earnings of associates due to a $49 million decrease in net earnings from Alumbrera, partially offset by $33 million of net earnings from Pueblo Viejo following commencement of commercial production in the quarter. Alumbreras net earnings decreased due to a $96 million reduction in revenues, principally due to lower sales volumes, partially offset by a $33 million reduction in operating costs due to the lower sales volumes. Additionally, the Companys net earnings of associates was impacted in the prior quarter by a $14 million impairment expense in respect of certain power assets at Pueblo Viejo; |
| Corporate administration increased by $9 million primarily due to additional issuances of share-based compensation in the first quarter of 2013; |
| A $49 million net gain on derivatives in the first quarter of 2013 comprised of a $33 million unrealized gain on the conversion feature of the Companys Convertible Notes; a $14 million gain on foreign currency, heating oil, copper, lead, zinc and silver contracts; and a $2 million net gain on the Silver Wheaton silver contract. A $126 million net gain on derivatives in the prior quarter was comprised of a $113 million unrealized gain on the conversion feature of the Companys Convertible Notes; a $9 million gain on the Companys Silver Wheaton silver contract; and a $4 million gain on foreign currency, heating oil, copper, lead, zinc and silver contracts; |
| A $12 million gain on disposition of mining interests was recognized in the prior quarter arising from the sale of the 8,422,460 Primero shares received as settlement of the outstanding $30 million principal of the Primero convertible note; |
| A higher effective tax rate in the first quarter of 2013, after adjusting for the non-deductible share-based compensation expense and the deferred income tax impacts of the strengthening Mexican peso, and weakening Canadian dollar and Argentine peso (weakening Mexican peso, Canadian dollar and Argentine peso in the fourth quarter of 2012). The 2012 fourth quarter effective tax rate was lower primarily because of the favourable impact of a total of $122 million non-taxable gains on the conversion feature on the Companys Convertible Notes and certain silver obligations to Silver Wheaton, and an $8 million non-taxable impairment reversal of the Companys investment in Primero. In comparison, in the first quarter of 2013, the total non-taxable gain on the conversion feature of the Convertible Notes and the silver obligations to Silver Wheaton was $35 |
GOLDCORP | 11
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
million. There was no impairment related adjustment to the carrying value of the Companys investment in Primero during the first quarter of 2013; and |
| Income tax for the first quarter of 2013 was impacted by a $17 million foreign exchange gain on the translation of deferred income tax assets and liabilities arising primarily from the Placer Dome and Glamis acquisitions in 2006, and the Camino Rojo and Cerro Negro acquisitions in 2010, compared to a $22 million loss in the fourth quarter of 2012. |
Adjusted net earnings amounted to $253 million, or $0.31 per share (1), for the three months ended March 31, 2013, compared to $465 million, or $0.57 per share, for the fourth quarter of 2012. Compared to the prior quarter, adjusted net earnings were significantly impacted by lower revenues as a result of lower sales volumes and lower realized prices.
Total cash costs (by-product) increased to $565 per gold ounce (2) in the first quarter of 2013, as compared to $360 per gold ounce in the prior quarter. The increase in cash costs per ounce was primarily due to lower by-product sales credits.
(1) | Adjusted net earnings and adjusted net earnings per share are non-GAAP performance measures. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to page 42 for a reconciliation of adjusted net earnings to reported net earnings attributable to shareholders of Goldcorp. |
(2) | The Company has included non-GAAP performance measures total cash costs, by-product and co-product, per gold ounce, throughout this document. In the gold mining industry, total cash costs is a common performance measure but does not have any standardized meaning. The Company follows the recommendations of the Gold Institute Production Cost Standard. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Total cash costs on a by-product basis are calculated by deducting Goldcorps share of by-product silver, copper, lead and zinc sales revenues from Goldcorps share of production costs. Refer to page 40 for a reconciliation of total cash costs to reported production costs. |
GOLDCORP | 12
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
RESULTS OF OPERATIONS (1)
Three months ended March 31
Revenues | Gold produced |
Gold sold |
Average realized gold price (per ounce) |
Total cash costs (per gold ounce) (2) |
||||||||||||||||||||||
Red Lake |
|
2013 |
|
$ | 221 | 145,500 | 135,100 | $ | 1,628 | $ | 476 | |||||||||||||||
|
2012 |
|
$ | 195 | 114,200 | 114,800 | $ | 1,692 | $ | 523 | ||||||||||||||||
Porcupine |
|
2013 |
|
104 | 67,200 | 63,900 | 1,627 | 797 | ||||||||||||||||||
|
2012 |
|
103 | 60,700 | 60,500 | 1,696 | 786 | |||||||||||||||||||
Musselwhite |
|
2013 |
|
90 | 59,100 | 55,400 | 1,613 | 841 | ||||||||||||||||||
|
2012 |
|
94 | 53,200 | 55,800 | 1,684 | 844 | |||||||||||||||||||
Peñasquito |
|
2013 |
|
253 | 60,100 | 67,800 | 1,599 | 611 | ||||||||||||||||||
|
2012 |
|
419 | 68,600 | 87,500 | 1,766 | (751) | |||||||||||||||||||
Los Filos |
|
2013 |
|
128 | 81,500 | 78,400 | 1,620 | 589 | ||||||||||||||||||
|
2012 |
|
141 | 82,700 | 82,900 | 1,698 | 521 | |||||||||||||||||||
El Sauzal |
|
2013 |
|
26 | 18,200 | 15,700 | 1,623 | 946 | ||||||||||||||||||
|
2012 |
|
35 | 21,400 | 20,800 | 1,693 | 605 | |||||||||||||||||||
Marlin |
|
2013 |
|
124 | 50,000 | 48,700 | 1,632 | 102 | ||||||||||||||||||
|
2012 |
|
145 | 53,200 | 54,000 | 1,684 | (187) | |||||||||||||||||||
Marigold |
|
2013 |
|
51 | 31,700 | 31,700 | 1,622 | 854 | ||||||||||||||||||
|
2012 |
|
45 | 26,500 | 26,400 | 1,699 | 679 | |||||||||||||||||||
Wharf |
|
2013 |
|
18 | 12,500 | 11,200 | 1,620 | 836 | ||||||||||||||||||
|
2012 |
|
34 | 16,600 | 18,300 | 1,683 | 663 | |||||||||||||||||||
Alumbrera (1) |
|
2013 |
|
93 | 24,700 | 22,500 | 1,634 | 14 | ||||||||||||||||||
|
2012 |
|
138 | 27,600 | 24,700 | 1,771 | (1,131) | |||||||||||||||||||
Pueblo Viejo (1) |
|
2013 |
|
111 | 64,100 | 64,700 | 1,624 | 472 | ||||||||||||||||||
|
2012 |
|
- | - | - | - | - | |||||||||||||||||||
Total Goldcorps share |
|
2013 |
|
$ | 1,219 | 614,600 | 595,100 | $ | 1,622 | $ | 565 | |||||||||||||||
|
2012 |
|
$ | 1,349 | 524,700 | 545,700 | $ | 1,707 | $ | 251 |
(1) | The Company has included certain non-GAAP performance measures including the Companys share of Alumbrera and Pueblo Viejo throughout this document; however these performance measures do not have any standardized meaning. The Company believes that disclosing certain performance measures including Alumbrera and Pueblo Viejo on an attributable basis is a more accurate measurement of the Companys operating and economic performance and reflects the Companys view of its core mining operations. |
(2) | Total cash costs per gold ounce on a by-product basis is calculated net of Goldcorps share of by-product sales revenues (by-product copper sales revenues for Alumbrera; by-product silver sales revenues for Marlin and Pueblo Viejo; and by-product lead and zinc sales revenues and 75% of silver sales revenues for Peñasquito at market silver prices, and 25% of silver sales revenues for Peñasquito at $4.02 per silver ounce sold to Silver Wheaton). |
GOLDCORP | 13
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
OPERATIONAL REVIEW
Red Lake gold mines, Canada
Three Months Ended | ||||||||||||||||||||
Operating Data | March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore milled |
196,900 | 214,000 | 208,000 | 216,000 | 220,100 | |||||||||||||||
Average mill head grade (grams/tonne) |
22.91 | 26.67 | 19.18 | 16.02 | 16.32 | |||||||||||||||
Average recovery rate |
96% | 96% | 96% | 96% | 96% | |||||||||||||||
Gold (ounces) |
||||||||||||||||||||
Produced |
145,500 | 168,300 | 121,200 | 104,000 | 114,200 | |||||||||||||||
Sold |
135,100 | 170,100 | 124,200 | 99,200 | 114,800 | |||||||||||||||
Average realized gold price (per ounce) |
$ | 1,628 | $ | 1,703 | $ | 1,668 | $ | 1,604 | $ | 1,692 | ||||||||||
Total cash costs (per ounce) |
$ | 476 | $ | 403 | $ | 535 | $ | 568 | $ | 523 | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 221 | $ | 292 | $ | 207 | $ | 158 | $ | 195 | ||||||||||
Depreciation and depletion |
$ | 27 | $ | 27 | $ | 21 | $ | 17 | $ | 18 | ||||||||||
Earnings from operations |
$ | 126 | $ | 199 | $ | 110 | $ | 82 | $ | 112 | ||||||||||
Expenditures on mining interests |
$ | 65 | $ | 80 | $ | 68 | $ | 72 | $ | 61 |
Gold production for the first quarter of 2013 was executed on plan. Production of 145,500 ounces was 31,300 ounces, or 27%, more than in the first quarter of 2012 due to 40% higher grades, partially offset by 11% lower tonnage processed as planned. Mill throughput was 11% lower due to Footwall Zone re-sequencing and temporary service delays at Campbell. The successful completion of the de-stress program in the third quarter of 2012 increased grades in the High Grade Zone by 48%, as a result of increased heading availability. Campbell also delivered higher grades from numerous areas.
Cash costs for the first quarter of 2013 were $476 per ounce, a decrease of $47 per ounce, or 9%, compared to the first quarter of 2012 due to higher gold production ($79 per ounce) and a weaker Canadian dollar ($1 per ounce), partially offset by higher operating costs ($33 per ounce). The increase in operating costs was attributable to higher employee costs ($2 million) due to an increase in manpower, and an increase in consumable costs ($2 million).
Gold production for the first quarter of 2013 was 22,800 ounces, or 14%, less than in the fourth quarter of 2012 due to 14% lower grades and 8% lower mill throughput, as planned, as a result of mine sequencing in the fourth quarter of 2012 which provided access to higher grades, as compared to the first quarter of 2013.
Cash costs for the first quarter of 2013 were $73 per ounce, or 18%, higher than in the prior quarter due to lower gold production ($107 per ounce), partially offset by lower operating costs ($31 per ounce) and a weaker Canadian dollar ($3 per ounce). The decrease in operating costs was attributable to a decrease in contractor costs due to lower usage of contractors for development and less long hole drilling ($3 million) and a decrease in consumable costs ($2 million).
During the first quarter of 2013, drilling continued on the newly discovered NXT zone. To date, results indicate that the zone remains open to the west and vertically. Several drills are targeting this zone both from the 4199 exploration drift and from existing infrastructure at higher levels in the mine. Initial development of the 47 level drift, to provide closer drill access to this zone, was completed as planned during the first quarter and drilling will continue throughout the remainder of the year.
GOLDCORP | 14
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Porcupine mines, Canada
Three Months Ended | ||||||||||||||||||||
Operating Data |
March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore milled |
1,036,700 | 1,084,100 | 1,037,300 | 1,023,200 | 1,017,800 | |||||||||||||||
Hoyle Pond underground (tonnes) |
91,900 | 100,300 | 71,300 | 72,300 | 62,500 | |||||||||||||||
Hoyle Pond underground (grams/tonne) |
12.48 | 13.53 | 8.48 | 17.72 | 12.14 | |||||||||||||||
Dome underground (tonnes) |
136,000 | 141,100 | 110,400 | 101,400 | 127,800 | |||||||||||||||
Dome underground (grams/tonnes) |
3.75 | 3.52 | 4.15 | 4.75 | 5.22 | |||||||||||||||
Stockpile (tonnes) |
808,800 | 842,300 | 855,600 | 849,500 | 827,500 | |||||||||||||||
Stockpile (grams/tonne) |
0.74 | 0.81 | 0.81 | 0.81 | 0.82 | |||||||||||||||
Average mill head grade (grams/tonne) |
2.17 | 2.35 | 1.67 | 2.40 | 2.07 | |||||||||||||||
Average recovery rate |
93% | 93% | 93% | 95% | 92% | |||||||||||||||
Gold (ounces) |
||||||||||||||||||||
Produced |
67,200 | 74,100 | 53,100 | 74,900 | 60,700 | |||||||||||||||
Sold |
63,900 | 75,100 | 52,000 | 75,200 | 60,500 | |||||||||||||||
Average realized gold price (per ounce) |
$ | 1,627 | $ | 1,705 | $ | 1,659 | $ | 1,604 | $ | 1,696 | ||||||||||
Total cash costs (per ounce) |
$ | 797 | $ | 750 | $ | 929 | $ | 674 | $ | 786 | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 104 | $ | 128 | $ | 87 | $ | 121 | $ | 103 | ||||||||||
Depreciation and depletion |
$ | 13 | $ | 13 | $ | 11 | $ | 14 | $ | 13 | ||||||||||
Earnings (loss) from operations (1) |
$ | 37 | $ | (28) | $ | 24 | $ | 53 | $ | 39 | ||||||||||
Expenditures on mining interests |
$ | 22 | $ | 33 | $ | 29 | $ | 27 | $ | 22 |
(1) | Earnings from operations for the three months ended December 31, 2012 were impacted by a non-cash provision related to the revisions in estimates on the reclamation and closure cost obligations for the Porcupine mines closed sites of $83 million. |
Gold production for the first quarter of 2013 was 6,500 ounces, or 11%, higher than in the first quarter of 2012 primarily due to 5% higher grades and 2% higher tonnage processed. Porcupine currently consists of three mining operations, Hoyle Pond, Dome and Stockpile, which feed one processing facility. The Hoyle Pond underground operation experienced 47% higher tonnage and 3% higher grades due to an increased percentage of development ore and mechanized cut and fill tonnes, combined with improved sequencing of production stopes in the VAZ zone. The Dome underground operation experienced 28% lower grades, partially offset by 6% higher tonnage due to mining in higher tonnage bulk zones. Material reclaimed from Stockpile provided 10% lower grades with 2% lower tonnage as a result of the higher underground tonnage.
Cash costs for the first quarter of 2013 were $797 per ounce, an increase of $11 per ounce, or 1%, compared to the first quarter of 2012 due to higher operating costs ($58 per ounce), partially offset by higher gold production ($42 per ounce) and a weaker Canadian dollar ($5 per ounce). The increase in operating costs was primarily due to higher employee costs ($2 million) and higher consumable costs ($1 million).
Gold production for the first quarter of 2013 was 6,900 ounces, or 9%, lower than in the fourth quarter of 2012 due to 8% lower grades and 4% lower tonnage due to planned mill maintenance. The Hoyle Pond underground operation experienced 8% lower grades and 8% lower tonnage due to reduced mining in the VAZ zone as planned. The Dome underground operation experienced 7% higher grades and 4% lower tonnage due to less dilution as a result of lower tonnes from development. Material reclaimed from Stockpile provided 9%
GOLDCORP | 15
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
lower grades and 4% lower tonnage due to feeding from a lower grade portion of the stockpile and less tonnes being milled than in the fourth quarter of 2012.
Cash costs for the first quarter of 2013 were $47 per ounce, or 6%, higher than in the prior quarter due to lower gold production ($133 per ounce), partially offset by lower operating costs ($77 per ounce) and a weaker Canadian dollar ($9 per ounce). The decrease in operating costs was attributable to lower contractor costs ($3 million) and lower maintenance and consumable costs ($5 million), partially offset by higher employee costs ($2 million).
Exploration during the first quarter of 2013 focused on current ore zones at Hoyle Pond and further defining the TVZ bulk zone. Exploration platforms have been prioritized to allow for deep and lateral exploration at Hoyle Pond.
At Hoyle Deep work focused on shaft sinking below the 440m level including preparation to start the access development drive to the 980m level shaft station. Shaft sinking advanced to a total of 83 metres including the excavation of the 660m skip dump. Construction and installation work continued on the assembly of the 12 foot service hoist plant. Expenditures for the first quarter of 2013 totaled $7 million.
Work related to the Hollinger open pit project focused on the advancement of the haul road construction between the Hollinger site and the Dome mill, requiring only the final tie-in to the Hollinger property and raising of noise berms along the haul road to complete. On-site work continues to remediate voids below areas where the environmental control berm will be constructed and reverse circulation drilling has resumed to define ore prior to mining. Additional information was submitted to the Provincial Ministry of the Environment for the projects Environmental Compliance Approval for Air.
GOLDCORP | 16
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Musselwhite mine, Canada
Three Months Ended | ||||||||||||||||||||
Operating Data |
March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore milled |
325,300 | 324,600 | 339,500 | 308,100 | 327,400 | |||||||||||||||
Average mill head grade (grams/tonne) |
5.86 | 6.52 | 6.15 | 6.00 | 5.43 | |||||||||||||||
Average recovery rate |
96% | 96% | 96% | 96% | 96% | |||||||||||||||
Gold (ounces) |
||||||||||||||||||||
Produced |
59,100 | 64,000 | 65,500 | 56,500 | 53,200 | |||||||||||||||
Sold |
55,400 | 63,700 | 64,600 | 58,100 | 55,800 | |||||||||||||||
Average realized gold price (per ounce) |
$ | 1,613 | $ | 1,707 | $ | 1,655 | $ | 1,598 | $ | 1,684 | ||||||||||
Total cash costs (per ounce) |
$ | 841 | $ | 693 | $ | 699 | $ | 819 | $ | 844 | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 90 | $ | 109 | $ | 107 | $ | 93 | $ | 94 | ||||||||||
Depreciation and depletion |
$ | 11 | $ | 11 | $ | 12 | $ | 11 | $ | 10 | ||||||||||
Earnings from operations |
$ | 30 | $ | 51 | $ | 47 | $ | 32 | $ | 31 | ||||||||||
Expenditures on mining interests |
$ | 19 | $ | 22 | $ | 33 | $ | 25 | $ | 19 |
Gold production for the first quarter of 2013 was 5,900 ounces, or 11%, higher than in the first quarter of 2012 due to an 8% increase in grades, partially offset by 1% lower mill throughput. Higher grades were realized as a result of mining higher grade material from the Lynx Zone and decreased mining dilution generated from mining in areas with better ground conditions as compared to the first quarter of 2012. Mill throughput was reduced in the first quarter of 2013 due to stope delays attributed to additional ground control requirements, unscheduled conveyor repairs, and lower manpower availability due to seasonal flu.
Cash costs for the first quarter of 2013 were $841 per ounce, comparable to the first quarter of 2012.
Gold production for the first quarter of 2013 was 4,900 ounces, or 8%, lower than in the fourth quarter of 2012. The lower production was primarily attributable to a 10% decrease in grades which resulted from mining lower grade stopes as routine ground rehabilitation work was performed in certain higher grade areas, now planned to be mined in the second quarter of the year.
Cash costs for the first quarter of 2013 were $148 per ounce, or 21%, higher than in the prior quarter due to lower gold production ($105 per ounce) and higher operating costs ($51 per ounce), partially offset by a weaker Canadian dollar ($8 per ounce). The increase in operating costs was attributable to increased employee costs ($1 million), higher power costs ($1 million) and increased maintenance parts ($1 million), partially offset by lower operating development expenses ($1 million).
Exploration in the first quarter of 2013 focused on the northern extension of the PQ Deeps deposit underground and the northern and southern extension of the Lynx Zone from underground. Underground drilling has returned positive results for the northern extension of the C-block of the PQ Deeps beyond the 2012 resource boundary and the southern, up-dip extension of the Lynx Zone.
GOLDCORP | 17
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Peñasquito mine, Mexico
Three Months Ended | ||||||||||||||||||||
Operating Data | March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore mined sulphide |
9,820,000 | 10,362,400 | 10,395,400 | 9,607,300 | 7,159,500 | |||||||||||||||
Tonnes of ore mined oxide |
1,068,700 | 2,117,600 | 1,068,200 | 1,703,300 | 1,065,300 | |||||||||||||||
Tonnes of waste removed |
36,079,200 | 31,442,300 | 28,044,500 | 30,192,100 | 32,225,100 | |||||||||||||||
Tonnes of total material moved |
46,967,900 | 43,922,300 | 39,508,100 | 41,502,700 | 40,449,900 | |||||||||||||||
Ratio of waste to ore |
3.3 | 2.5 | 2.4 | 2.7 | 3.9 | |||||||||||||||
Average head grade |
||||||||||||||||||||
Gold (grams/tonne) |
0.31 | 0.55 | 0.60 | 0.48 | 0.36 | |||||||||||||||
Silver (grams/tonne) |
17.88 | 24.41 | 31.71 | 28.31 | 24.84 | |||||||||||||||
Lead |
0.22% | 0.23% | 0.26% | 0.31% | 0.31% | |||||||||||||||
Zinc |
0.43% | 0.52% | 0.70% | 0.68% | 0.56% | |||||||||||||||
Sulphide Ore |
||||||||||||||||||||
Tonnes of ore milled |
9,329,400 | 9,087,200 | 9,339,800 | 9,586,800 | 8,393,100 | |||||||||||||||
Average recovery rate |
||||||||||||||||||||
Gold |
59% | 68% | 73% | 70% | 64% | |||||||||||||||
Silver |
74% | 76% | 79% | 79% | 75% | |||||||||||||||
Lead |
69% | 67% | 78% | 76% | 73% | |||||||||||||||
Zinc |
70% | 76% | 80% | 78% | 72% | |||||||||||||||
Concentrates Produced Payable Metal Produced |
||||||||||||||||||||
Lead Concentrate (DMT) |
29,400 | 30,600 | 37,300 | 41,600 | 35,400 | |||||||||||||||
Zinc Concentrate (DMT) |
48,800 | 62,900 | 89,400 | 88,000 | 58,100 | |||||||||||||||
Gold (ounces) |
49,600 | 99,800 | 119,400 | 93,400 | 56,000 | |||||||||||||||
Silver (ounces) |
3,528,500 | 4,821,500 | 6,738,700 | 6,194,200 | 4,530,100 | |||||||||||||||
Lead (thousands of pounds) |
29,100 | 29,200 | 39,400 | 45,900 | 39,200 | |||||||||||||||
Zinc (thousands of pounds) |
52,000 | 67,000 | 98,400 | 95,000 | 63,800 | |||||||||||||||
Oxide Ore |
||||||||||||||||||||
Tonnes of ore processed |
1,068,700 | 2,117,700 | 1,068,200 | 1,703,300 | 1,065,300 | |||||||||||||||
Produced |
||||||||||||||||||||
Gold (ounces) |
10,500 | 13,100 | 6,600 | 10,400 | 12,600 | |||||||||||||||
Silver (ounces) |
404,100 | 378,800 | 239,700 | 376,500 | 425,300 | |||||||||||||||
Sulphide & Oxide Ores Payable Metal Produced |
||||||||||||||||||||
Gold (ounces) |
60,100 | 112,900 | 126,000 | 103,800 | 68,600 | |||||||||||||||
Silver (ounces) |
3,932,600 | 5,200,400 | 6,978,400 | 6,570,700 | 4,955,400 | |||||||||||||||
Lead (thousands of pounds) |
29,100 | 29,200 | 39,400 | 45,900 | 39,200 | |||||||||||||||
Zinc (thousands of pounds) |
52,000 | 67,000 | 98,400 | 95,000 | 63,800 | |||||||||||||||
Gold Equivalent Ounces (1) |
180,000 | 266,500 | 338,300 | 311,200 | 222,500 | |||||||||||||||
Sulphide and Oxide Ores Payable Metal Sold |
||||||||||||||||||||
Gold (ounces) |
67,800 | 90,400 | 132,700 | 89,300 | 87,500 | |||||||||||||||
Silver (ounces) |
3,853,000 | 4,605,300 | 7,483,300 | 5,478,900 | 7,045,000 | |||||||||||||||
Lead (thousands of pounds) |
24,200 | 23,600 | 41,700 | 42,200 | 52,400 | |||||||||||||||
Zinc (thousands of pounds) |
50,400 | 73,600 | 96,600 | 90,800 | 75,900 | |||||||||||||||
Average realized prices |
||||||||||||||||||||
Gold (per ounce) |
$ | 1,599 | $ | 1,634 | $ | 1,758 | $ | 1,584 | $ | 1,766 | ||||||||||
Silver (per ounce) (2) |
$ | 24.54 | $ | 23.38 | $ | 26.34 | $ | 23.17 | $ | 25.43 | ||||||||||
Lead (per pound) |
$ | 1.00 | $ | 0.96 | $ | 1.04 | $ | 0.84 | $ | 0.96 | ||||||||||
Zinc (per pound) |
$ | 0.89 | $ | 0.86 | $ | 0.92 | $ | 0.84 | $ | 0.98 | ||||||||||
Total Cash Costs by-product (per ounce of gold) (3) |
$ | 611 | $ | 17 | $ | (608) | $ | (425) | $ | (751) | ||||||||||
Total Cash Costs co-product (per ounce of gold) (3) |
$ | 1,128 | $ | 764 | $ | 625 | $ | 642 | $ | 726 |
GOLDCORP | 18
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Three Months Ended | ||||||||||||||||||||
Financial Data and Key Performance Indicators | March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Revenues (2) |
$ | 253 | $ | 313 | $ | 519 | $ | 337 | $ | 419 | ||||||||||
Depreciation and depletion |
$ | 38 | $ | 44 | $ | 65 | $ | 48 | $ | 50 | ||||||||||
Earnings from operations (2) |
$ | 24 | $ | 96 | $ | 245 | $ | 130 | $ | 169 | ||||||||||
Expenditures on mining interests |
$ | 48 | $ | 68 | $ | 48 | $ | 71 | $ | 72 | ||||||||||
Mining cost per tonne |
$ | 2.05 | $ | 1.78 | $ | 1.93 | $ | 1.58 | $ | 1.70 | ||||||||||
Milling cost per tonne |
$ | 7.36 | $ | 8.17 | $ | 7.39 | $ | 7.70 | $ | 9.55 | ||||||||||
General and administrative cost per tonne milled |
$ | 2.17 | $ | 2.44 | $ | 1.90 | $ | 1.52 | $ | 1.89 | ||||||||||
Off-site cost per tonne sold (lead) (4) |
$ | 564 | $ | 732 | $ | 751 | $ | 745 | $ | 623 | ||||||||||
Off-site cost per tonne sold (zinc) (4) |
$ | 321 | $ | 316 | $ | 324 | $ | 321 | $ | 350 |
(1) | Gold equivalent ounces are calculated using the following assumptions: $1,350 per ounce for gold; by-product metal prices of $24.00 per ounce silver; $3.00 per pound copper; $0.85 per pound zinc; and $0.80 per pound lead. By-product metals are converted to gold equivalent ounces by multiplying by-product metal production with the associated by-product metal price and dividing it with the gold price. |
(2) | Includes 25% of silver ounces sold to Silver Wheaton at $4.02 per ounce. The remaining 75% of silver ounces are sold at market rates. |
(3) | The calculation of total cash costs per ounce of gold is net of by-product silver, lead and zinc sales revenues. If silver, lead and zinc were treated as co-products, average total cash costs at Peñasquito for the three months ended March 31, 2013 would be $1,128 per ounce of gold, $17.45 per ounce of silver, $0.99 per pound of lead and $0.82 per pound of zinc. Production costs are allocated to each co-product based on the ratio of actual sales volumes multiplied by budget metal prices (see page 2). The actual and budget silver price for Peñasquito takes into consideration that 25% of silver ounces are sold to Silver Wheaton at $4.02 per ounce with the remaining 75% of silver ounces sold at market rates. |
(4) | Off-site costs consist primarily of transportation, warehousing, and treatment and refining charges. |
Gold production for the first quarter of 2013 of 60,100 ounces was 8,500 ounces, or 12%, less than in the first quarter of 2012 due to higher mill throughput being offset by lower ore grades as mining progressed through the lower grade upper benches of Phase 4A as planned, and lower metallurgical recoveries which was a result of high carbon content ore. The sulphide plant achieved throughput of 103,660 tonnes per day during the quarter as compared to 92,200 tonnes per day in the first quarter of 2012, consistent with the execution of planned maintenance and available water.
Co-product cash costs for the first quarter of 2013 were $1,128 per ounce, an increase of $402 per ounce, or 55%, compared to the first quarter of 2012 due to lower gold production ($211 per ounce), a stronger Mexican peso ($21 per ounce), and higher operating costs ($170 per ounce). Higher operating costs resulted primarily from increased contractor waste stripping volumes associated with the development of Phase 5 ($25 million), higher fuel and explosives consumption rates, higher fuel prices and higher labour costs which were partially offset by decreased grinding media and reagents consumption. The first quarter of 2012 reflected the impact of capitalized development costs related to stripping activities ($27 million).
Gold production for the first quarter of 2013 was 52,800 ounces, or 47%, less than in the fourth quarter of 2012 due to higher plant throughput being offset by 43% lower gold ore grades and 13% lower metallurgical recoveries that resulted from high carbon content ore from the lower grade upper benches of Phase 4A. Carbon in ore tends to occur in shallower, lower grade portions of the Peñasco deposit.
Co-product cash costs for the first quarter of 2013 were $364 per ounce, or 476%, higher than in the prior quarter due to lower gold production ($255 per ounce), a stronger Mexican peso ($50 per ounce), and higher operating costs ($60 per ounce). Higher operating costs resulted primarily from increased contractor waste stripping volumes associated with the development of Phase 5, higher labour costs, increased fuel prices and consumption rates, and the timing of maintenance, partially offset by decreased grinding media and reagents consumption.
GOLDCORP | 19
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
The provisional pricing impact from sales in the fourth quarter of 2012 that settled in the first quarter of 2013 was positively impacted by higher realized silver, lead and zinc prices during the first quarter of 2013, resulting in a positive $2 million adjustment to sales revenue. The positive adjustment primarily related to silver sales ($2 million) and zinc sales ($1 million), partially offset by a lower realized gold price ($1 million). The provisional pricing impact in the previous quarter was negative $20 million.
Ongoing studies to develop a long-term water strategy for the Peñasquito district are expected to be completed in the second quarter of 2013. The studies are evaluating both the development of new water sources as well as opportunities to reduce water consumption in the tailings facility. A new water source has been identified, within the Companys current permitted basin, with the potential to supply sufficient fresh water to continue the plant ramp up to full design plant throughput. Over the longer term, the studies are assessing the potential to source treated effluent water from the municipality of Saltillo to meet water demand both at Peñasquito and at potential new mining operations or expansions in and around the mine. When complete, the studies are also expected to enable a decision on whether to proceed with a detailed feasibility study investigating the possibility of expanding and/or reconfiguring the existing tailings facility in order to enhance water usage efficiency over the life of the mine. The well field is expected to be in production by end of the second quarter of 2014.
Pre-commissioning of the Waste Rock Overland Conveyor continued into the first quarter of 2013. Load tests were successfully completed in the first quarter and the system will continue to be ramped up over the second quarter of 2013.
The exploration drilling program was accelerated in the first quarter of 2013 with additional drill rigs being mobilized resulting in a total of 11,600 metres, distributed in 14 holes, being achieved for the quarter. Exploration continues to focus on intersecting the copper-gold sulphide rich skarn and porphyry deposit located below and adjacent to the existing open pit. The newly discovered deposit is open both vertically and horizontally with the current exploration objective focused on delineating the size and extent of the deposit.
GOLDCORP | 20
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Los Filos mine, Mexico
Three Months Ended | ||||||||||||||||||||
Operating Data |
March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore mined |
6,770,500 | 8,319,900 | 7,030,400 | 6,587,200 | 7,391,100 | |||||||||||||||
Tonnes of waste removed |
12,163,200 | 11,170,300 | 10,564,100 | 9,069,900 | 10,368,400 | |||||||||||||||
Ratio of waste to ore |
1.8 | 1.3 | 1.5 | 1.4 | 1.4 | |||||||||||||||
Tonnes of ore processed |
6,740,700 | 8,424,800 | 7,066,600 | 6,693,300 | 7,404,300 | |||||||||||||||
Average grade processed (grams/tonne) |
0.68 | 0.70 | 0.65 | 0.69 | 0.70 | |||||||||||||||
Average recovery rate (1) |
48% | 48% | 48% | 47% | 47% | |||||||||||||||
Gold (ounces) |
||||||||||||||||||||
Produced |
81,500 | 92,800 | 79,700 | 85,200 | 82,700 | |||||||||||||||
Sold |
78,400 | 92,200 | 79,200 | 84,700 | 82,900 | |||||||||||||||
Average realized gold price (per ounce) |
$ | 1,620 | $ | 1,707 | $ | 1,648 | $ | 1,597 | $ | 1,698 | ||||||||||
Total cash costs (per ounce) |
$ | 589 | $ | 572 | $ | 575 | $ | 535 | $ | 521 | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 128 | $ | 157 | $ | 131 | $ | 136 | $ | 141 | ||||||||||
Depreciation and depletion |
$ | 15 | $ | 11 | $ | 14 | $ | 14 | $ | 11 | ||||||||||
Earnings from operations |
$ | 65 | $ | 92 | $ | 71 | $ | 76 | $ | 86 | ||||||||||
Expenditures for mining interests |
$ | 42 | $ | 25 | $ | 16 | $ | 27 | $ | 17 |
(1) | Recovery is reported on a cumulative basis to reflect the cumulative recovery of ore on the leach pad, and does not reflect the true recovery expected over time. |
Gold production for the first quarter of 2013 was 1,200 ounces, or 1%, lower than in the first quarter of 2012 due to 3% lower grades and 9% lower tonnage processed. The decrease in grades was primarily attributable to 12% lower grade ore from the Los Filos pit as planned. The decrease in tonnage processed was due to a 17% increase in waste removed in accordance with the mine plan.
Cash costs for the first quarter of 2013 were $589 per ounce, an increase of $68 per ounce, or 13%, compared to the first quarter of 2012 due to higher operating costs ($32 per ounce), lower gold production ($30 per ounce) and a stronger Mexican peso ($6 per ounce). The increase in operating costs was primarily attributable to higher employee costs ($1 million), increased reagents consumption ($1 million) and higher tires and diesel consumption ($1 million).
Gold production for the first quarter of 2013 was 11,300 ounces, or 12%, less than in the fourth quarter of 2012 primarily due to 20% lower tonnage processed and 3% lower grades. The decrease in grades was primarily attributable to 15% lower grades from the Los Filos pit, as planned. The decrease in tonnage processed was due to a 9% increase in waste removed in accordance with the mine plan.
Cash costs for the first quarter of 2013 were $17 per ounce, or 3%, higher than in the fourth quarter of 2012 due to lower gold production ($104 per ounce) and a stronger Mexican peso ($4 per ounce), partially offset by lower operating costs ($90 per ounce). The decrease in operating costs was primarily attributable to lower reagents consumption ($2 million), lower contractor costs ($1 million), a decrease in spare parts ($1 million) and diesel and explosives consumption ($1 million).
The construction of the next expansion phase of the Los Filos heap leach pad facility is progressing well and expected to be completed late in the second quarter of 2013 as planned. The 2013 exploration program continues focusing on converting the previous year addition of inferred mineral resources into reserves at El Bermejal north.
GOLDCORP | 21
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
The evaluation of mine and crushing and agglomeration expansion opportunities for Los Filos is underway and is anticipated to be completed by the end of 2013.
GOLDCORP | 22
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
El Sauzal mine, Mexico
Three Months Ended | ||||||||||||||||||||
Operating Data |
March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore mined |
544,600 | 595,900 | 529,300 | 586,600 | 576,500 | |||||||||||||||
Tonnes of waste removed |
3,206,900 | 2,774,400 | 2,776,300 | 2,802,700 | 2,678,900 | |||||||||||||||
Ratio of waste to ore |
5.9 | 4.7 | 5.2 | 4.9 | 4.6 | |||||||||||||||
Tonnes of ore milled |
479,000 | 471,900 | 464,600 | 539,500 | 516,300 | |||||||||||||||
Average mill head grade (grams/tonne) |
1.32 | 1.51 | 1.11 | 1.44 | 1.37 | |||||||||||||||
Average recovery rate |
90% | 93% | 94% | 94% | 94% | |||||||||||||||
Gold (ounces) |
||||||||||||||||||||
Produced |
18,200 | 21,300 | 15,500 | 23,600 | 21,400 | |||||||||||||||
Sold |
15,700 | 21,900 | 16,800 | 22,100 | 20,800 | |||||||||||||||
Average realized gold price (per ounce) |
$ | 1,623 | $ | 1,708 | $ | 1,670 | $ | 1,595 | $ | 1,693 | ||||||||||
Total cash costs (per ounce) |
$ | 946 | $ | 856 | $ | 806 | $ | 538 | $ | 605 | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 26 | $ | 38 | $ | 28 | $ | 36 | $ | 35 | ||||||||||
Depreciation and depletion |
$ | 6 | $ | 9 | $ | 8 | $ | 9 | $ | 9 | ||||||||||
Earnings from operations |
$ | 4 | $ | 9 | $ | 6 | $ | 13 | $ | 13 | ||||||||||
Expenditures on mining interests |
$ | 1 | $ | 1 | $ | 2 | $ | 3 | $ | 3 |
Gold production for the first quarter of 2013 was 3,200 ounces, or 15%, lower than in 2012 mainly due to 4% lower grades, consistent with the mine plan, and 7% lower tonnage milled resulting from higher than expected ore hardness.
Cash costs for the first quarter of 2013 were $946 per ounce, an increase of $341 per ounce, or 56%, compared to the first quarter of 2012 due to lower gold production ($200 per ounce), higher operating costs ($136 per ounce) and a stronger Mexican peso ($5 per ounce). The increase in operating costs was primarily due to higher employee and contractor costs ($2 million) and higher fuel, explosives and maintenance costs ($2 million).
Gold production for the first quarter of 2013 was 3,100 ounces, or 15%, lower than in the fourth quarter of 2012 primarily due to 13% lower average mill head grades and 3% lower average recovery rates due to the ore type.
Cash costs for the first quarter of 2013 were $90 per ounce, or 11%, higher than in the fourth quarter of 2012 primarily due to lower gold production ($343 per ounce) and a stronger Mexican peso ($2 per ounce), partially offset by lower operating costs ($255 per ounce). The decrease in operating costs was primarily attributable to lower contractor costs ($1 million) and lower employee, consumables and site costs ($2 million).
GOLDCORP | 23
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Marlin mine, Guatemala
Three Months Ended | ||||||||||||||||||||
Operating Data |
March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore milled |
480,300 | 481,700 | 489,100 | 487,600 | 477,900 | |||||||||||||||
Average mill head grade (grams/tonne) |
||||||||||||||||||||
Gold |
3.30 | 3.27 | 3.25 | 3.75 | 3.49 | |||||||||||||||
Silver |
110 | 122 | 111 | 113 | 118 | |||||||||||||||
Average recovery rate |
||||||||||||||||||||
Gold |
96% | 96% | 96% | 96% | 96% | |||||||||||||||
Silver |
92% | 92% | 91% | 91% | 90% | |||||||||||||||
Produced (ounces) |
||||||||||||||||||||
Gold |
50,000 | 49,500 | 47,900 | 56,700 | 53,200 | |||||||||||||||
Silver |
1,583,000 | 1,780,900 | 1,523,300 | 1,613,400 | 1,663,100 | |||||||||||||||
Gold Equivalent Ounces (1) |
78,100 | 79,200 | 73,300 | 83,600 | 80,900 | |||||||||||||||
Sold (ounces) |
||||||||||||||||||||
Gold |
48,700 | 47,300 | 49,500 | 58,300 | 54,000 | |||||||||||||||
Silver |
1,487,000 | 1,707,500 | 1,567,000 | 1,660,500 | 1,669,000 | |||||||||||||||
Average realized price (per ounce) |
||||||||||||||||||||
Gold |
$ | 1,632 | $ | 1,701 | $ | 1,665 | $ | 1,594 | $ | 1,684 | ||||||||||
Silver |
$ | 29.88 | $ | 32.24 | $ | 30.49 | $ | 28.29 | $ | 32.61 | ||||||||||
Total cash costs (per ounce) (2) |
$ | 102 | $ | (182) | $ | 40 | $ | 20 | $ | (187) | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 124 | $ | 136 | $ | 130 | $ | 140 | $ | 145 | ||||||||||
Depreciation and depletion |
$ | 31 | $ | 28 | $ | 26 | $ | 25 | $ | 21 | ||||||||||
Earnings from operations |
$ | 41 | $ | 60 | $ | 52 | $ | 66 | $ | 78 | ||||||||||
Expenditures on mining interests |
$ | 18 | $ | 31 | $ | 20 | $ | 23 | $ | 23 |
(1) | Gold equivalent ounces are calculated using the following assumptions: $1,350 per ounce for gold; by-product metal prices of $24.00 per ounce silver; $3.00 per pound copper; $0.85 per pound zinc; and $0.80 per pound lead. By-product metals are converted to gold equivalent ounces by multiplying by-product metal production with the associated by-product metal price and dividing it with the gold price. |
(2) | The calculation of total cash costs per ounce of gold is net of by-product silver sales revenues. If silver were treated as a co-product, average total cash costs at Marlin for the three months ended March 31, 2013 would be $641 per ounce of gold and $12.24 per ounce of silver (2012 $501 and $10.33, respectively). Production costs are allocated to each co-product based on the ratio of actual sales volumes multiplied by budget metal prices (see page 2). Using actual realized sales prices, the co-product total cash costs would be $646 per ounce of gold and $12.06 per ounce of silver for 2013. |
Gold and silver production for the first quarter of 2013 was 3,200 ounces, or 6%, and 80,100 ounces, or 5%, respectively, less than in the first quarter of 2012 as planned. The decrease in gold and silver ounces was due to 5% and 7% lower grades, respectively, partially offset by a 1% increase in tonnage processed and 2% increase in silver recovery. The lower grades were due to lower grade ore processed from stockpiles and lower underground grades, in accordance with the mine plan.
Cash costs for the first quarter of 2013 were $102 per ounce, an increase of $289 per ounce, or 155%, compared to the first quarter of 2012 due to higher operating costs ($104 per ounce), lower silver by-product sales credits ($96 per ounce) and lower gold production ($89 per ounce). The increase in operating costs was primarily attributable to higher consumables costs, including shotcrete for
GOLDCORP | 24
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
underground support and cement for the filter plant, higher contractor costs due to additional operational development and higher power consumption, partially offset by lower royalties due to lower sales volumes.
Gold production for the first quarter of 2013 was comparable to the fourth quarter of 2012. Silver production was 197,900 ounces, or 11%, less than in the fourth quarter of 2012 due to 10% lower grades. The lower silver grades resulted from lower underground grades, consistent with the mine plan.
Cash costs for the first quarter of 2013 were $284 per ounce, or 156%, higher than in the fourth quarter of 2012 due to lower silver by-product sales credits ($250 per ounce) and higher operating costs ($62 per ounce), partially offset by higher gold production ($28 per ounce). The increase in operating costs was primarily attributable to higher underground contractor costs due to higher operational development and higher consumables costs, partially offset by lower royalties due to lower realized prices and lower silver sales volumes.
GOLDCORP | 25
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Marigold mine, United States (Goldcorps interest 66.7%)
Three Months Ended | ||||||||||||||||||||
Operating Data | March 31 2013 | December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore mined |
2,253,600 | 2,396,800 | 1,972,800 | 1,907,000 | 1,713,200 | |||||||||||||||
Tonnes of waste removed |
6,478,600 | 6,862,500 | 6,157,000 | 7,034,400 | 6,785,400 | |||||||||||||||
Ratio of waste to ore |
2.9 | 2.9 | 3.1 | 3.7 | 4.0 | |||||||||||||||
Tonnes of ore processed |
2,253,600 | 2,396,800 | 1,972,900 | 1,907,000 | 1,713,200 | |||||||||||||||
Average grade processed (grams/tonne) |
0.40 | 0.65 | 0.46 | 0.43 | 0.65 | |||||||||||||||
Average recovery rate |
73% | 73% | 73% | 73% | 73% | |||||||||||||||
Gold (ounces) |
||||||||||||||||||||
Produced |
31,700 | 28,300 | 22,600 | 18,900 | 26,500 | |||||||||||||||
Sold |
31,700 | 28,600 | 23,000 | 18,000 | 26,400 | |||||||||||||||
Average realized gold price (per ounce) |
$ | 1,622 | $ | 1,697 | $ | 1,650 | $ | 1,588 | $ | 1,699 | ||||||||||
Total cash costs (per ounce) |
$ | 854 | $ | 847 | $ | 839 | $ | 726 | $ | 679 | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 51 | $ | 48 | $ | 38 | $ | 29 | $ | 45 | ||||||||||
Depreciation and depletion |
$ | 6 | $ | 7 | $ | 3 | $ | 3 | $ | 4 | ||||||||||
Earnings from operations |
$ | 18 | $ | 18 | $ | 14 | $ | 13 | $ | 22 | ||||||||||
Expenditures on mining interests |
$ | 22 | $ | 12 | $ | 13 | $ | 10 | $ | 10 |
Goldcorps share of Marigolds production for the first quarter of 2013 was 5,200 ounces, or 20%, higher than in the first quarter of 2012. The increase in production was attributable to 10%, or 5,100 ounces, higher recoverable gold ounces stacked to the pad in the first quarter of 2013 and fourth quarter of 2012, primarily as a result of mining in the higher grade Red Rock pit.
Ore tonnage processed increased by 32% in the first quarter of 2013 as planned, with mining focused on the lower strip ratio benches in the Target II Phase 1, Red Rock and Battle pits. Grades processed decreased by 38% in the first quarter of 2013 as expected, with ore predominately sourced from the lower grade Target II pit, as compared to the first quarter of 2012 where the ore was primarily sourced from the higher grade Basalt Phase 7 pit.
Cash costs for the first quarter of 2013 were $854 per ounce, an increase of $175 per ounce, or 26%, compared to the first quarter of 2012 due to higher operating costs ($290 per ounce), partially offset by higher gold production ($115 per ounce). The increase in operating costs was attributable to higher fuel and explosive costs due to increased unit prices ($3 million), higher employee costs ($2 million) and tire costs ($1 million), and increased royalties due to higher production and royalty rates ($3 million).
Gold production for the first quarter of 2013 was 3,400 ounces, or 12%, higher than in the fourth quarter of 2012 as a result of drawing down heap leach pad inventory. Recoverable ounces stacked on the pad in the first quarter of 2013 were 42%, or 15,500 ounces, less than in the fourth quarter of 2012; however, higher gold production was realized as opening pad inventory was 12%, or 12,500 ounces, greater than at the beginning of the fourth quarter of 2012. Additionally, the ounces produced in the first quarter of 2013 were placed closer to the heap leach pad liner resulting in a faster leach cycle time, contributing to the higher production as compared to the fourth quarter of 2012. Grade processed decreased by 38% in the first quarter of 2013 as expected, with the ore principally sourced from the lower grade Target II pit compared to the fourth quarter of 2012, where 43% of the ore was sourced from the higher grade Red Rock pit, as planned. Combined ore and waste mined was 6% lower in the first quarter of 2013 due to longer haulage cycle times attributed to backfilling the Basalt Phase 7 and 8 pits.
GOLDCORP | 26
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Cash costs for the first quarter of 2013 were $7 per ounce, or 1%, higher than in the fourth quarter of 2012 due to higher operating costs ($91 per ounce), partially offset by higher gold production ($84 per ounce). Higher operating costs were attributable to higher employee costs ($1 million), fuel costs as a result of a longer hauling cycle ($1 million), and higher tire and explosives costs ($1 million).
Drilling activity for the first quarter of 2013 was primarily focused on development drilling in the Mackay Pit Phase 1 and Red Dot deposits. Stripping activity will focus on preparation of Phase 1 of the Mackay Pit in anticipation of the electric shovel arrival in the fourth quarter of 2013. Three of the six new 290 tonne electric drive trucks acquired to phase out the smaller mechanical drive trucks were commissioned in the first quarter.
GOLDCORP | 27
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Wharf mine, United States
Three Months Ended |
||||||||||||||||||||
Operating Data | March 31 2013 | December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore mined |
700,300 | 1,390,700 | 566,100 | 1,300,000 | 716,200 | |||||||||||||||
Tonnes of ore processed |
693,100 | 751,200 | 842,800 | 853,600 | 737,900 | |||||||||||||||
Average grade processed (grams/tonne) |
0.70 | 0.77 | 0.72 | 0.70 | 0.94 | |||||||||||||||
Average recovery rate |
80% | 80% | 78% | 78% | 75% | |||||||||||||||
Gold (ounces) |
||||||||||||||||||||
Produced |
12,500 | 13,700 | 19,500 | 18,300 | 16,600 | |||||||||||||||
Sold |
11,200 | 15,200 | 20,100 | 17,400 | 18,300 | |||||||||||||||
Average realized gold price (per ounce) |
$ | 1,620 | $ | 1,709 | $ | 1,652 | $ | 1,593 | $ | 1,683 | ||||||||||
Total cash costs (per ounce) |
$ | 836 | $ | 849 | $ | 595 | $ | 602 | $ | 663 | ||||||||||
Financial Data | ||||||||||||||||||||
Revenues |
$ | 18 | $ | 25 | $ | 35 | $ | 31 | $ | 34 | ||||||||||
Depreciation and depletion |
$ | 1 | $ | - | $ | 1 | $ | 1 | $ | 1 | ||||||||||
Earnings from operations |
$ | 8 | $ | 12 | $ | 20 | $ | 17 | $ | 18 | ||||||||||
Expenditures on mining interests |
$ | 1 | $ | 3 | $ | 1 | $ | 3 | $ | 1 |
Gold production for the first quarter of 2013 was 4,100 ounces, or 25%, lower than in the first quarter of 2012 due to 6% less tonnage processed at 26% lower grades, and temporary solution distribution issues associated with the start up of leaching on heap leach pad four in the first two months of the quarter. Tonnage and grade were in accordance with the mining plan.
Cash costs for the first quarter of 2013 were $836 per ounce, an increase of $173 per ounce, or 26%, compared to the first quarter of 2012 due to lower gold production ($420 per ounce), partially offset by lower operating costs ($247 per ounce). Lower operating costs were attributable to lower production taxes, royalties and maintenance and consumables costs ($3 million).
Gold production for the first quarter of 2013 was 1,200 ounces, or 9%, lower than in the fourth quarter of 2012 due to solution distribution issues during the heap leach pad four start up. 8% lower tonnage processed and 9% lower grades were as planned.
Cash costs for the first quarter of 2013 were 2%, or $13 per ounce, lower than in the fourth quarter of 2012 due to lower operating costs ($308 per ounce), offset by lower gold production ($295 per ounce). Lower operating costs were attributable to lower production taxes and royalties ($2 million), lower maintenance, consumables and other costs due to timing of crusher repairs and lower cyanide consumption due to start up issues on heap leach pad four ($2 million).
GOLDCORP | 28
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Alumbrera mine, Argentina (Goldcorps interest 37.5%)
Three Months Ended
|
||||||||||||||||||||
Operating Data | March 31 2013 |
December 31 2012 |
September 30 2012 |
June 30 2012 |
March 31 2012 |
|||||||||||||||
Tonnes of ore mined |
1,693,200 | 2,936,600 | 3,252,900 | 3,270,300 | 2,311,700 | |||||||||||||||
Tonnes of waste removed |
5,865,300 | 6,126,500 | 6,853,000 | 6,233,100 | 5,394,500 | |||||||||||||||
Ratio of waste to ore |
3.4 | 2.1 | 2.1 | 1.9 | 2.3 | |||||||||||||||
Tonnes of ore milled |
3,513,200 | 3,915,500 | 3,815,200 | 3,656,500 | 3,499,900 | |||||||||||||||
Average mill head grade |
||||||||||||||||||||
Gold (grams/tonne) |
0.34 | 0.35 | 0.45 | 0.43 | 0.36 | |||||||||||||||
Copper |
0.32% | 0.34% | 0.44% | 0.45% | 0.39% | |||||||||||||||
Average recovery rate |
||||||||||||||||||||
Gold |
65% | 71% | 74% | 71% | 67% | |||||||||||||||
Copper |
75% | 85% | 85% | 86% | 79% | |||||||||||||||
Produced |
||||||||||||||||||||
Gold (ounces) |
24,700 | 31,800 | 40,500 | 36,700 | 27,600 | |||||||||||||||
Copper (thousands of pounds) |
18,800 | 25,400 | 31,200 | 31,500 | 24,100 | |||||||||||||||
Sold |
||||||||||||||||||||
Gold (ounces) |
22,500 | 40,600 | 55,700 | 9,700 | 24,700 | |||||||||||||||
Copper (thousands of pounds) |
16,500 | 33,400 | 44,300 | 6,800 | 21,600 | |||||||||||||||
Average realized price |
||||||||||||||||||||
Gold (per ounce) |
$ | 1,634 | $ | 1,663 | $ | 1,715 | $ | 1,561 | $ | 1,771 | ||||||||||
Copper (per pound) |
$ | 3.37 | $ | 3.47 | $ | 3.62 | $ | 2.35 | $ | 4.25 | ||||||||||
Total cash costs (per gold ounce) (1) |
$ | 14 | $ | (894) | $ | (628) | $ | (207) | $ | (1,131) | ||||||||||
Financial Data (2) | ||||||||||||||||||||
Revenues |
$ | 93 | $ | 189 | $ | 256 | $ | 32 | $ | 138 | ||||||||||
Depreciation and depletion |
$ | 15 | $ | 21 | $ | 25 | $ | 9 | $ | 17 | ||||||||||
Earnings from operations |
$ | 22 | $ | 84 | $ | 103 | $ | 3 | $ | 51 | ||||||||||
Expenditures on mining interests |
$ | 21 | $ | 6 | $ | 16 | $ | 4 | $ | 3 |
(1) | The calculation of total cash costs per ounce of gold is net of by-product copper sales revenue. If copper were treated as a co-product, total cash costs for the three months ended March 31, 2013 would be $915 per ounce of gold and $2.24 per pound of copper (2012 $918 and $2.18, respectively). Production costs are allocated to each co-product based on the ratio of actual sales volumes multiplied by budget metal prices (see page 2). Using actual realized sales prices, the co-product total cash costs for the three months ended March 31, 2013 would be $953 per ounce of gold and $2.20 per pound for copper. |
(2) | As a result of the application of IFRS 10 Consolidated Financial Statements (IFRS 10), the Companys 37.5% interest in Alumbrera, which was previously proportionately consolidated in the Companys consolidated financial statements, has been classified as an investment in associate and is accounted for using the equity method with the Companys share of net earnings and net assets separately disclosed in the Consolidated Statements of Earnings and Consolidated Balance Sheets, respectively. The financial data disclosed in the table represents the financial data of Alumbrera on a proportionate rather than on an equity basis. |
Goldcorps share of Alumbreras gold and copper production in the first quarter of 2013 was 2,900 ounces, or 11%, and 5.3 million pounds, or 22%, respectively, lower than in the first quarter of 2012, primarily due to lower grades and lower recoveries. Gold and copper grades were 6% and 18% lower, respectively, than in the first quarter of 2012, as during the first quarter of 2013, the ore processed came from the lower benches in phase 10 with lower grades due to its proximity to the barren core. Additionally, a higher
GOLDCORP | 29
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
tonnage was processed from low grade stockpiles. Production is expected to recover over the remainder of 2013 as mining moves into higher grade areas with no impact to anticipated full year production.
Ore mined in the first quarter of 2013 was 27% lower than in the first quarter of 2012 due to the lower availability of trucks and loaders resulting from certain temporary importation restrictions on the supplier which were resolved by the end of the quarter.
Cash costs in the first quarter of 2013 were $14 per ounce, an increase of $1,145 per ounce compared to the first quarter of 2012 primarily due to lower by-product sales credits ($1,335 per ounce) and lower gold production volume ($175 per ounce), partially offset by lower operating costs ($254 per ounce) and lower YMAD royalties and export tax ($111 per ounce). The decrease in operating costs was mainly attributable to higher capitalized development related to stripping activities, partially offset by higher employee and contractor costs, and higher maintenance and repair costs. Additionally, Goldcorp received $21 million of dividends from Alumbrera during the quarter.
Goldcorps share of Alumbreras gold and copper production during the first quarter of 2013 was 7,100 ounces, or 22%, and 6.6 million pounds, or 26%, lower than in the fourth quarter of 2012, respectively, due to lower head grades and lower recoveries. Gold and copper head grades were lower than in the prior quarter by 3% and 6%, respectively, as mining moved into the lower benches in phase 10 and higher tonnage processed from lower grade stockpiles.
Ore milled in the first quarter of 2013 was 10% lower than in the fourth quarter of 2012 as a consequence of the ore processed containing higher gypsum content. Ore mined in the first quarter of 2013 was 42% lower than in the fourth quarter of 2012 due to lower truck availability and longer hauling distances.
Cash costs for the first quarter of 2013 were $908 per ounce, or 101%, higher than in the fourth quarter of 2012 primarily due to lower gold production ($1,875 per ounce), lower per ounce by-product sales credits ($457 per ounce) and higher YMAD royalties ($232 per ounce), partially offset by lower operating costs ($1,625 per ounce) and lower export taxes ($30 per ounce). The decrease in operating costs was mainly attributable to lower maintenance and repair costs in the first quarter of 2013, as well as lower consumables due to lower tonnage processed, and lower employee and other costs as a result of higher devaluation of the Argentinian peso in this quarter compared with the fourth quarter of 2012.
The provisional pricing impact of lower realized copper prices during the first quarter of 2013 was $4 million, or $178 per ounce.
The feasibility study for the Agua Rica project is in progress and is expected to be completed during the second half of 2013.
GOLDCORP | 30
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Pueblo Viejo mine, Dominican Republic (Goldcorps interest 40%)
Three Months Ended | ||||||||||||
Operating Data |
March 31 2013 |
December 31 2012 |
September 30 2012 |
|||||||||
Tonnes of ore mined |
1,156,000 | 1,466,700 | 1,019,900 | |||||||||
Tonnes of waste removed |
398,500 | 469,200 | 648,100 | |||||||||
Ratio of waste to ore |
0.34 | 0.32 | 0.64 | |||||||||
Tonnes of ore processed |
288,700 | 206,700 | 89,400 | |||||||||
Average grade (grams/tonne) |
||||||||||||
Gold |
7.20 | 6.99 | 0.57 | |||||||||
Silver |
47.13 | 55.63 | 4.2 | |||||||||
Average recovery rate |
||||||||||||
Gold |
96 | % | 94 | % | 61 | % | ||||||
Silver |
27 | % | 48 | % | 63 | % | ||||||
Produced |
||||||||||||
Gold (ounces) |
64,100 | 43,700 | 1,000 | |||||||||
Silver (ounces) |
117,800 | 177,200 | 7,600 | |||||||||
Sold |
||||||||||||
Gold (ounces) |
64,700 | 6,320 | - | |||||||||
Silver (ounces) |
201,800 | - | - | |||||||||
Average realized price |
||||||||||||
Gold (per ounce) |
$ | 1,624 | $ | 1,696 | $ | - | ||||||
Silver (per ounce) |
$ | 30.18 | $ | - | $ | - | ||||||
Total cash costs (per gold ounce) (1) |
$ | 472 | $ | - | $ | - | ||||||
Financial Data (2) | ||||||||||||
Revenues |
$ | 111 | $ | - | $ | - | ||||||
Depreciation and depletion |
$ | 10 | $ | - | $ | - | ||||||
Earnings from operations |
$ | 64 | $ | - | $ | - | ||||||
Expenditures on mining interests |
$ | 37 | $ | 129 | $ | 84 |
(1) | Excludes pre-commissioning sales ounces from Pueblo Viejo, prior to January 1, 2013, as costs incurred, net of proceeds of sales, were credited against capitalized project costs. |
(2) | The Companys 40% interest in Pueblo Viejo is classified as an investment in associate and is accounted for using the equity method with the Companys share of net earnings and net assets separately disclosed in the Consolidated Statements of Earnings and Consolidated Balance Sheets, respectively. The financial data disclosed in the table represents the financial data of Pueblo Viejo on a proportionate rather than on an equity basis. |
On January 8, 2013, the Company announced commercial production. The key highlights for the first quarter of 2013 are as follows:
Construction was completed and ramp up will continue during the first half of 2013 to full capacity.
Goldcorps share of Pueblo Viejos gold production was 64,100 ounces, with cash costs of $472 per gold ounce. Production was 10% lower than expected, primarily due to lower tonnes of ore processed as a result of slower than expected ramp up of the autoclave facility and issues with certain critical components during start up that were largely resolved by the end of the first quarter of 2013.
Cash costs in the first quarter of 2013 were $472 per ounce, a decrease of $113 per ounce, or 19%, as compared to the Companys estimate for the first quarter of 2013, primarily due to lower operating costs as a result of lower production.
Overall construction of the 215 MW dual fuel power plant is 80% complete, with the engine hall completed and 210 towers of the total of 314 for the power line have been erected. The power plant is expected to be commissioned by the end of the third quarter of 2013.
GOLDCORP | 31
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Commissioning activities related to the copper circuit continued during the quarter and first copper production is expected to commence during the third quarter of 2013.
On February 27, 2013, President Medina of the Dominican Republic, in his first Independence Day speech to the National Assembly, announced that the government would submit to Congress a bill that would establish a tax on unforeseen income of mineral-exporting companies unless Pueblo Viejo Dominicana Corporation (PVDC) would promptly agree to the governments demands to increase the benefits to the government under the SLA at the Pueblo Viejo mine.
Barrick, the mine operator, while fully reserving its rights under the SLA, which cannot be unilaterally altered, has engaged in dialogue with representatives of the government in an effort to achieve a mutually acceptable outcome. This could potentially involve a renegotiation of the SLA and/or the imposition of other measures, for instance to provide for an increase in the payment of taxes in the earlier years of the mine life, and could have a significant negative effect on project economics and, in particular, the distribution of profits and cash flows of the mine. To date, the parties have been unable to reach agreement. The government has threatened to take unilateral action, such as introducing the unforeseen income tax announced by the President or blocking the export of minerals. Such actions would constitute a violation of the SLA, which provides for international arbitration of disputes under the Arbitration Rules of the International Chamber of Commerce. Any such actions taken by the government in an effort to extract greater revenues would negatively affect the profitability and cash flow of the mine. The potential operational impacts of any such action are difficult to predict at this time. Depending on the nature and extent of any unilateral actions that the government may take, the joint venture partners could, among other things, decide to curtail, or suspend production at the mine, or to pay the tax under protest, while pursuing their rights under international arbitration. The Company is also aware of various legal proceedings which, among other things, seek to challenge the constitutionality of the SLA.
On April 4, 2013, the main opposition party in the Dominican Republic introduced a bill in the Chamber of Deputies that would establish a windfall profit tax on PVDC. To the Companys knowledge, no further action has been taken by the Chamber of Deputies with respect to this bill.
On March 13, 2013, customs authorities in the Dominican Republic prevented PVDC from exporting a shipment of gold and silver from the Pueblo Viejo mine. The shipment was subsequently released and shipped out of the Dominican Republic on March 18, 2013. In late March and early April 2013, PVDC was informed of certain additional requirements that will apply to shipments of gold and silver from the Pueblo Viejo mine. PVDC is complying with these new measures.
GOLDCORP | 32
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
PROJECTS REVIEW
Cerro Negro Project, Argentina
The Cerro Negro gold project is an advanced-stage, high grade vein system located in the province of Santa Cruz, Argentina. The land position comprises 215 square kilometres with numerous high grade gold and silver veins. As of December 31, 2012, Cerro Negro contained 5.74 million ounces of proven and probable gold reserves (18.91mt at 9.43g/t) as compared to 4.54 million ounces at December 31, 2011 due to a successful exploration program focused on the Mariana Central, Mariana Norte and San Marcos veins. With annual production expected to average 525,000 ounces of gold in its first five full years of production, Cerro Negro is well-positioned as Goldcorps next cornerstone gold mine.
During the first quarter of 2013, advancements were made at Cerro Negro in the overall categories of infrastructure and construction, mine development and exploration. Advancements continue in key areas of the project. The permit for the construction of the power line to connect to the grid was received during March but later than previously expected. The delay may affect the mobilization of the contractor that will construct the power line and increases the potential for initial gold production to be delayed until the first quarter of 2014.
Key assumptions in achieving first gold production and the current capital cost estimates include:
| Energization of the power line by the end of the year and mechanical completion of the plant; |
| Improved concrete and steel erection productivity rates; |
| Continued positive labour relations; |
| Inflation and foreign currency exchange rates; and |
| Normal winter weather conditions. |
Manpower levels increased to planned project levels with more than 2,700 people, consisting of 545 employees and more than 2,200 contractors. Safety initiatives remain a priority with all activities, and the project successfully completed 1 million hours of work without a lost time injury on March 20. Efforts continue to train and develop a local workforce. There were positive developments in the local hiring programs as many of the recently added employees are local residents of Santa Cruz who have graduated from an introduction to mining training program offered by Goldcorp in partnership with a local university.
Infrastructure and Construction
Engineering, Procurement and Construction Management (EPCM) activities advanced well with detailed engineering at 92% complete by the end of the first quarter of 2013, with EPCM total progress nearing 62%.
Key activities and developments in the first quarter of 2013 include:
| Commenced erection of structural steel for the grinding building with 638 tonnes erected, representing 36% completion; |
| Ball mill mounted on trunions; |
| Primary crusher area ready for crusher installation and structural steel; |
| Started construction of the retaining wall for the primary crusher and achieved 26% completion; and |
| Installation of the liner in the tailings facility remains on plan for completion at or ahead of schedule. |
Mine Development
Underground mine development, consisting of ramp access, ventilation raises and horizontal stope development continued to ramp up at Eureka, Mariana Central and Mariana Norte during the first quarter of 2013. The Eureka deposit remains the most advanced deposit in terms of total development, with initial stope production commencing on April 1 with blasting of the slot raise for the initial production stope. Mariana Norte and Mariana Central deposits are scheduled to begin ore development in the second and third quarters, respectively. The following outlines the first and prior quarters development progress and project-to-date progress:
GOLDCORP | 33
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Three Months Ended | ||||||||||||
Development Area (Metres) |
March 31 2013 |
December 31 2012 |
Cumulative Project to date |
|||||||||
Eureka |
1,283 | 1,174 | 8,693 | |||||||||
Mariana Central |
324 | 292 | 814 | |||||||||
Mariana Norte |
182 | 199 | 491 | |||||||||
Total |
1,789 | 1,665 | 9,998 |
Total underground mine development during the first quarter of 2013 was 1,789 metres, which compares to 1,665 metres in the prior quarter. The Eureka and Mariana Central deposits exceeded their planned development metres for the quarter and remain the focus for development, as they will collectively contribute 93% of the contained ounces mined until the end of 2014. Development at longer-term Mariana Norte is in its early stages. Although poorer than expected near-surface rock conditions were experienced, which required additional ground support, conditions at Mariana Norte are improving in April as the ramp is advanced deeper.
The cumulative stockpile of ore from Cerro Negro, consisting initially of development ore from the Eureka deposit, exceeds the budgeted tonnes and grades. The quantity of material in the stockpile is consistent with the mine plan to reach a total year-end forecast of cumulative ore from the three deposits of 295,904 tonnes.
Three Months Ended | ||||||||||||
Cerro Negro Production (Surface Stockpile) |
March 31 2013 |
December 31 2012 |
Cumulative Project to date |
|||||||||
Tonnes |
11,004 | 15,166 | 51,320 | |||||||||
Grade Au (g/t) |
13.93 | 11.08 | 11.69 | |||||||||
Grade Ag (g/t) |
277.5 | 204.0 | 219.5 |
Exploration
During the first quarter of 2013, exploration activities at Cerro Negro have focused on an extensive surface geological mapping and sampling program over the various Cerro Negro concessions. The mapping and sampling program has identified a number of new targets that will be drill tested for the first time throughout 2013. Exploration drilling activities for Cerro Negro for 2013 commenced in late April.
Capital Expenditures
At March 31, 2013, total project expenditures and future commitments were $962 million, excluding exploration, of which $652 million was spent and $310 million was committed. Capital expenditures and capitalized exploration, including deposits on mining interests and net of capitalized interest, for the three months ended March 31, 2013 were $152 million and $2 million, respectively.
Total estimated Cerro Negro capital expenditures were $1.35 billion at January 1, 2013 which did not include inflationary impacts in 2014. Associated with the potential delay in first gold production to the first quarter of 2014, capital spending in 2014 will increase. Continuation of the current inflation rate without a corresponding devaluation of the peso to the US dollar would further impact the capital spending in 2014.
GOLDCORP | 34
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Éléonore Project, Canada
The Éléonore project is located in the northeast corner of the Opinaca Reservoir in the James Bay region of Quebec, Canada. The Éléonore deposit is a major gold discovery in a relatively unexplored area in the Province of Quebec, located in the core of what Goldcorp believes to be a promising new gold district in North America. Proven and probable gold reserves at Éléonore at December 31, 2012 were 3.03 million ounces (12.48mt at 7.56g/t). Initial capital expenditures are estimated to be $1.75 billion as at January 1, 2013. Ongoing work with regard to mine planning and initial development capital is now complete with initial capital estimates confirmed based on the geological information available at this time. First gold production remains on track for late 2014. Forecast average life-of-mine gold production from Éléonore at full production is approximately 600,000 ounces per year. |
Environment
Permitting is progressing in line with on-going construction activities.
Engineering and Construction
Engineering and construction activities progressed significantly during the quarter. Key activities and development in the first quarter of 2013 include:
| Commenced construction of the industrial waste water treatment plant; |
| Construction of the paste backfill plant began with 50% of the foundations completed; |
| Started the expansion of the ore and waste pad (11% completed); |
| Commenced construction of the assay laboratory; |
| Continued construction of the tailings management facility, with 76% completed; |
| Continued construction of the concentrator building to allow ball mill installation to start, as planned, by mid-May 2013; |
| Started the construction of the final upgrades on the portable and the waste water systems; |
| Delivered 300 of the 400 room total of the permanent camp for immediate occupation; and |
| Changeover of the exploration shaft is substantially complete. |
Exploration
Exploration for the quarter focused on in-fill drilling in the Upper mine area. A total of 18,884 metres of diamond drilling was completed from strategic working platforms in the exploration ramp, as compared to 17,161 metres in the prior quarter. Currently, six diamond drills are conducting definition and exploration drilling with results to date consistent with expectations. Drilling has commenced on the lower portion of the mine.
Mine Development
The exploration ramp excavation progressed as planned, with 426 metres during the quarter as compared to 516 metres in the prior quarter. The ramp has now reached 2,940 metres in length, which corresponds to a vertical depth of nearly 470 metres below surface. Additionally, 304 metres of lateral development was achieved compared with 57 metres in the prior quarter. The production shaft reached a depth of 220 metres, with 138 metres during the quarter, as compared to 13 metres in the prior quarter which is in line with plan. Conversion of the exploration shaft from sinking to design operating mode was successfully completed as planned, which included the skip cage assembly and loading pocket installation, and commissioning is completed and all systems are working as per design and which has allowed off-shaft development on the 650 metre level to commence. Another important milestone was achieved with the beginning of the excavation of three important levels: 690 metre, 650 metre and 400 metre.
At March 31, 2013, total project expenditures since January 1, 2011, excluding investment tax credits and capitalized interest, were $1.0 billion, $818 million of which was spent and $189 million of which was committed. Capital expenditures, excluding capitalized interest and investment tax credits, during the three months ended March 31, 2013, amounted to $123 million.
GOLDCORP | 35
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Cochenour Project, Canada
The Cochenour Project combines the existing workings of the historic Cochenour mine with the Bruce Channel gold discovery. The Cochenour/Bruce Channel deposit is located down dip from the historic Cochenour mine and is a key component of Goldcorps consolidation plans in the Red Lake district. A study of the overall project has been completed in the fourth quarter of 2012 that has concluded that the centre of the Bruce Channel ore body is lower than previously expected, necessitating the deepening of the Cochenour shaft by 245 metres. Initial capital expenditures are estimated to be $540 million at January 1, 2013, excluding the $108 million spent prior to 2011 and move first gold production into the first half of 2015. Following ramp-up to full production, forecast life-of-mine gold production from Cochenour is expected to be between 225,000 250,000 ounces per year. As a result of 2012 drilling, inferred resources increased to 3.25 million ounces of gold (9.05mt at 11.18g/t) as compared to 3.21 million ounces of gold at December 31, 2011. For construction and planning purposes, the Company continues to estimate the Cochenour project as a mineable deposit of 5 million gold ounces. |
Widening of the old Cochenour shaft continued to advance during the first quarter of 2013, with 120 metres slashed to a total depth of 651 metres, as compared to 108 metres in the prior quarter. A concrete liner was also placed for a total concrete depth of 640 metres, as compared to 517 metres in the prior quarter. The advance rates are consistent with plan.
Advancing of the 5-kilometre Cochenour Red Lake Haulage Drift continued with 71% completed at the end of the first quarter of 2013, with expected completion in the fourth quarter of 2013. Two drills continue to work in the haulage drift to test the potential of the underexplored area. Underground exploration diamond drilling of the Bruce Channel Deposit will commence in the second half of the year once the haulage drift is close enough to drill from and drilling platforms are excavated.
At March 31, 2013, total project expenditures since January 1, 2011, excluding investment tax credits, were $247 million, $238 million of which was spent and $9 million of which was committed. Capital expenditures, excluding investment tax credits, during the three months ended March 31, 2013 amounted to $22 million. These have been included in total expenditures on mining interests in Red Lake, and consist mainly of exploration, construction of surface infrastructure, shaft slashing (widening) and sinking, and development of the Cochenour Red Lake Haulage Drift.
El Morro Project, Chile (Goldcorps interest 70%)
El Morro is an advanced stage, world-class gold/copper project in northern Chile, one of the most attractive mining jurisdictions in the world. El Morro contained 6.73 million ounces (Goldcorps share) of proven and probable gold reserves (449.51mt at 0.47g/t) at December 31, 2012, compared to 5.84 million ounces at December 31, 2011, due to a redesign of the ultimate pit based on higher gold and copper prices. Located in the Atacama region of Chile approximately 80 kilometres east of the city of Vallenar and at a 4,000 metre altitude, El Morro comprises a large, 36-square kilometre land package with significant potential for organic growth through further exploration. Two principal zones of gold-copper mineralization have been identified to date the El Morro and La Fortuna zones and the Company has identified several additional targets as part of its regional exploration plan. Future exploration efforts will also test the potential bulk-mineable gold and copper production below the bottom of the current pit. |
All El Morro project field construction activities remain suspended since April 27, 2012 pending the definition and implementation by the Chilean environmental permitting authority of a community consultation process which corrects certain deficiencies in that process as specifically identified by the Antofogasta Court of Appeals. The Chilean authorities and local communities continue to refine and advance this new consultation process with the Companys support. Overall project activities continue to be focused on gathering information to support permit applications for submission following the completion of the administrative process and optimization of the project including securing long-term power supply.
At March, 2013, total project expenditures and commitments were $274 million, of which $204 million was spent and $70 million was committed. Capital expenditures, excluding capitalized interest, during the three months ended March 31, 2013 were $13 million.
GOLDCORP | 36
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Camino Rojo Project, Mexico
The Camino Rojo project is located approximately 50 kilometres southeast of Goldcorps Peñasquito mine with a 3,389 square kilometre land position which includes the Represa deposit. Successful drilling at the Camino Rojo project has contributed 1.63 million ounces to proven and probable gold reserves (66.76mt at 0.76g/t) at December 31, 2012, based on a positive study for mining of near-surface oxide and transition mineralization with conventional heap leach processing. The Company is following up on positive exploration results in the sulphide portions of the deposit that are expected to defer development of the oxide heap leach operation until the scope of the sulphide opportunity is better understood. |
During the first quarter of 2013, an agreement was signed with the Ejido San Tiburcio covering 2,500 hectares of land including the Represa resource, West Extension sulphide zone, and the Don Julio prospect, providing long-term surface rights at Camino Rojo. The agreement provides the access and surface rights needed to construct and operate an oxide mine and surface facilities. In addition, a five-year exploration agreement was signed with Ejido San Tiburcio that provides permission to explore and drill on another 2,500 hectares of Ejido land.
Exploration drilling resumed late in the first quarter with six diamond-core drills completing 2,026 metres during the quarter, in six in-fill holes in the West Extension. The bulk of the core from these holes is being dedicated to metallurgical testing of the sulphide and transition zones in the West Extension. In-fill metallurgical drilling of the West Extension is planned to accelerate in the second quarter with a total of 10 drills operating.
At March 31, 2013, total project expenditures were $47 million. Capitalized expenditures, excluding capitalized interest, during the three months ended March 31, 2013 amounted to $9 million.
Cerro Blanco Project, Guatemala
The Cerro Blanco Project is located in southwestern Guatemala and is considered to be a classic hot springs gold deposit with typical bonanza type gold mineralization. At December 31, 2012, Cerro Blanco contained 1.27 million ounces of measured and indicated gold resources (2.52mt at 15.64g/t). The activities in 2012 were focused on accessing the mineralized zone from underground. |
Activities continued to focus on the updated project feasibility study which is now expected to be completed in the second half of 2013.
As of March 31, 2013, total project expenditures were $148 million. Capital expenditures, including deposits on mining interests, during the three months ended March 31, 2013 amounted to $3 million.
GOLDCORP | 37
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
OTHER OPERATING EXPENSES AND ASSOCIATES
Three Months Ended March 31 |
||||||||
2013 | 2012 | |||||||
Exploration and evaluation costs |
$ | 13 | $ | 19 | ||||
Share of net earnings of associates |
(37) | (14) | ||||||
Corporate administration |
66 | 72 | ||||||
$ | 42 | $ | 77 |
Exploration and evaluation costs during the three months ended March 31, 2013 decreased by $6 million as compared to the three months ended March 31, 2012, due to timing of the Companys drilling programs.
The Companys share of net earnings of associates of $37 million for the three months ended March 31, 2013, was comprised of $33 million of net earnings from Pueblo Viejo following commencement of commercial production and $9 million of net earnings from Alumbrera, partially offset by net losses of $5 million from Tahoe and Primero. The Companys share of net earnings of associates for the three months ended March 31, 2012 was primarily comprised of $36 million of net earnings from Alumbrera, partially offset by a $19 million impairment expense recognized in respect of the Companys investment in Primero in the first quarter of 2012.
Included in corporate administration is share-based compensation expense of $18 million for the three months ended March 31, 2013 (2012 $28 million) which has decreased due to lower fair values for the Companys PSUs, partially offset by issuances of stock options, PSUs and RSUs during the first quarter of 2013. Excluding share-based compensation expense, corporate administration for the three months ended March 31, 2013 increased by $4 million, compared to the three months ended March 31, 2012. The increase was primarily attributable to continued Company growth.
OTHER INCOME (EXPENSES)
Three Months Ended March 31 |
||||||||
2013 | 2012 | |||||||
Losses on securities, net |
$ | (3) | $ | (5) | ||||
Gains on derivatives, net |
49 | 55 | ||||||
Finance costs |
(10) | (6) | ||||||
Other income |
3 | 14 | ||||||
$ | 39 | $ | 58 |
At March 31, 2013, the Company recognized a net loss of $3 million (2012 $5 million) on certain of the Companys available-for-sale equity securities which was comprised of a $5 million impairment expense (2012 $5 million) recognized in respect of certain of the Companys equity securities, partially offset by a $2 million gain (2012 $nil) recognized on disposition of certain marketable securities.
The Company recorded a net gain on derivatives of $49 million for the three months ended March 31, 2013 (2012 net gain of $55 million). During the quarter, the Company recognized a $33 million unrealized gain representing the change in fair value of the conversion feature of the Companys Convertible Notes during the period (2012 unrealized gain of $52 million). The Company has entered into foreign currency, heating oil, copper, lead, zinc and silver contracts. These contracts are classified as derivatives and marked-to-market at each period end with changes in fair value recorded in net earnings. The Company recorded a net gain of $14 million on these contracts (2012 net gain of $20 million). Additionally, the Company recognized a net gain of $2 million relating to the Silver Wheaton silver contract (2012 total loss of $16 million).
During the three months ended March 31, 2013, the Company incurred finance costs of $10 million (2012 $6 million) primarily comprised of accretion of reclamation and closure cost obligations.
GOLDCORP | 38
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
The Company recognized other income of $3 million during the three months ended March 31, 2013, primarily comprised of foreign exchange gains of $2 million arising from value added tax receivables denominated in Mexican pesos, and interest income. Other income of $14 million in the comparative period was primarily comprised of $9 million of favourable foreign exchange gains principally arising from value added tax receivables denominated in Mexican pesos and interest income earned on the Primero Notes and cash balances.
INCOME TAXES
Income taxes for the three months ended March 31, 2013 totaled $50 million (2012 $83 million). Excluding the foreign exchange impacts on deferred income taxes, income tax expense was approximately 18% of earnings before taxes and share-based compensation expense (2012 23%).
The lower effective tax rate in the first quarter of 2013 is primarily due to the first quarter of 2012 being negatively impacted by non-deductible impairment expense of the Companys investments in Primero and other marketable securities as well as net non-deductible realized and mark-to-market losses from certain silver obligations to Silver Wheaton. The non-deductible impairment expense in the first quarter of 2013 was significantly lower and Goldcorp had net non-taxable realized and mark-to-market gains on the silver obligations to Silver Wheaton. Adjusted for non-deductible and non-taxable items (including the derivative gains on the conversion feature of the Convertible Notes), and excluding the foreign exchange impacts on deferred taxes, the effective tax rate for the three months ended March 31, 2013 and 2012 were 20% and 24%, respectively.
GOLDCORP | 39
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
NON-GAAP MEASURE TOTAL CASH COSTS (BY-PRODUCT) PER GOLD OUNCE CALCULATION
The Company has included non-GAAP performance measures total cash costs, by-product and co-product, per gold ounce throughout this document. In addition to conventional measures, the Company uses these performance measures to monitor its operating cash costs internally and believes these measures provide investors and analysts with useful information about the Companys underlying cash costs of operations and the impact of by-product revenues on the Companys cost structure. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company reports total cash costs on a sales basis. In the gold mining industry, this is a common performance measure but does not have any standardized meaning. The Company follows the recommendations of the Gold Institute Production Cost Standard.
By-product cash costs incorporate Goldcorps share of all production costs, adjusted for changes in estimates at the Companys closed and inactive mines which are non-cash in nature, and include Goldcorps share of by-product credits, and treatment and refining charges included within revenue. Additionally, cash costs are adjusted for realized gains and losses arising on the Companys commodity and foreign currency contracts which the Company enters into to mitigate the Companys exposure to fluctuations in by-product metal prices, heating oil prices and foreign exchange rates and which may impact the Companys operating costs.
The Company reports total cash costs, by-product and co-product per gold ounce on an attributable basis. The Company believes that calculating cash costs on an attributable basis, which includes the Companys proportionate share of Alumbrera and Pueblo Viejo, rather than on an equity basis, is a more accurate measure of the Companys economic and operating performance and reflects the Companys view of its core mining operations.
The following table provides a reconciliation of total cash costs (by-product) per ounce to the unaudited condensed interim consolidated financial statements for each of the three months ended:
March 31 2013 |
December 31 2012 |
March 31 2012 |
||||||||||
Per the condensed interim consolidated financial statements: |
||||||||||||
Production costs (1) |
$ | 503 | $ | 583 | $ | 489 | ||||||
Non-cash reclamation and closure costs |
- | (84) | - | |||||||||
Treatment and refining charges on concentrate sales |
22 | 29 | 41 | |||||||||
By-product silver, copper, lead and zinc sales |
(214) | (252) | (363) | |||||||||
Realized gains on foreign currency, heating oil, copper, lead, zinc and silver contracts and foreign exchange |
(5) | (4) | (5) | |||||||||
Other |
(1) | (3) | - | |||||||||
Goldcorps share of Alumbrera and Pueblo Viejo: |
||||||||||||
Production costs |
93 | 84 | 70 | |||||||||
Treatment and refining charges on concentrate sales |
4 | 6 | 4 | |||||||||
By-product silver and copper sales |
(66) | (127) | (99) | |||||||||
Goldcorps share of total cash costs (by-product) |
336 | 232 | 137 | |||||||||
Divided by ounces of Goldcorps share of gold sold |
595,100 | 645,100 | 545,700 | |||||||||
Total cash costs (by-product) per gold ounce (2) |
$ | 565 | $ | 360 | $ | 251 |
(1) | $20 million in royalties are included in production costs per the unaudited interim condensed consolidated financial statements (three months ended December 31, 2012 $21 million, three months ended March 31, 2012 $22 million). |
(2) | If silver, lead and zinc for Peñasquito, silver for Marlin and Pueblo Viejo and copper for Alumbrera were treated as co-products, total cash costs for the three months ended March 31, 2013 would be $710 per ounce of gold (three months ended December 31, 2012 $621 per ounce of gold; three months ended March 31, 2012 $648 per gold ounce). |
GOLDCORP | 40
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
NON-GAAP MEASURE ALL-IN SUSTAINING COSTS PER GOLD OUNCE CALCULATION
The Company, in conjunction with a non-GAAP initiative being undertaken within the gold mining industry, has adopted an all-in sustaining cost performance measure; however, this performance measure has no standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The industry project to define all-in sustaining costs is ongoing and the Company expects to conform its all-in sustaining costs definition to the measure that is approved by the industry participants.
All-in sustaining costs include total production cash costs incurred at the Companys mining operations, which forms the basis of the Companys by-product cash cost. Additionally, the Company includes sustaining capital expenditures, corporate administrative expense, exploration and evaluation costs and reclamation cost accretion. The Company believes that this measure represents the total costs of producing gold from current operations and provides the Company and other stakeholders of the Company with additional information of the Companys operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of gold production from current operations, new project capital is not included. Additionally, certain other cash expenditures, including tax payments, dividends and financing costs, are not included. The Company reports this measure on a sales basis.
The Company reports all-in sustaining costs per gold ounce on an attributable basis. The Company believes that calculating costs on an attributable basis, which includes the Companys proportionate share of Alumbrera and Pueblo Viejo, rather than on an equity basis, is a more accurate measure of the Companys economic and operating performance and reflects the Companys view of its core mining operations. The following table provides a reconciliation of all-in sustaining costs per ounce to the unaudited condensed interim consolidated financial statements for each of the three months ended:
March 31 2013 |
March 31 2012 |
|||||||
Total cash costs (by-product) |
$ | 336 | $ | 137 | ||||
Corporate administration |
66 | 72 | ||||||
Exploration and evaluation costs |
13 | 19 | ||||||
Reclamation cost accretion |
5 | 4 | ||||||
Sustaining capital expenditures |
255 | 212 | ||||||
All-in sustaining costs |
$ | 675 | $ | 444 | ||||
Gold sales ounces |
595,100 | 545,700 | ||||||
All-in sustaining costs per gold ounce |
$ | 1,135 | $ | 814 |
Sustaining capital expenditures are defined as those expenditures which do not increase annual gold ounce production at a mine site and excludes all expenditures at the Companys projects and certain expenditures at the Companys operating sites which are deemed expansionary in nature. The following table reconciles sustaining capital expenditures to the Companys total capital expenditures for each of the three months ended:
March 31 2013 |
March 31 2012 |
|||||||
Expenditures on mining interests and deposits per unaudited interim consolidated financial statements |
$ | 533 | $ | 587 | ||||
Expenditures on mining interests by Alumbrera and Pueblo Viejo (1) |
44 | (33) | ||||||
|
|
|||||||
Total attributable expenditures on mining interests and deposits |
$ | 577 | $ | 554 | ||||
Sustaining capital expenditures |
255 | 212 | ||||||
Project capital expenditures and other |
322 | 342 | ||||||
$ | 577 | $ | 554 |
(1) | Expenditures on mining interests by Alumbrera and Pueblo Viejo represent mining interests expenditures net of additional funding investments which are included in expenditures on mining interests per the consolidated financial statements. |
GOLDCORP | 41
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
NON-GAAP MEASURE ADJUSTED NET EARNINGS
The Company has included non-GAAP performance measures, adjusted net earnings and adjusted net earnings per share, throughout this document. Adjusted net earnings excludes gains/losses and other costs incurred for acquisitions and disposals of mining interests, impairment charges, unrealized and non-cash realized gains/losses of financial instruments and foreign exchange impacts on deferred income tax as well as significant non-cash, non-recurring items. The Company also excludes the net (earnings) losses from the Companys equity investments in Primero and Tahoe. The Company excludes these items from net earnings to provide a measure which allows the Company and investors to evaluate the results of the underlying core operations of the Company and its ability to generate cash flow. The Companys adjusted net earnings does include the Companys equity share of net earnings from Alumbrera and Pueblo Viejo as the Company considers those operations to comprise part of the Companys core mining portfolio and significant contributors to the Companys financial results. Accordingly, this performance measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
The following table provides a reconciliation of adjusted net earnings to the unaudited condensed interim consolidated financial statements for each of the three months ended:
March 31 2013 |
December 31 2012 |
March 31 2012 |
||||||||||||
Net earnings attributable to shareholders of Goldcorp per consolidated financial statements | $ | 309 | $ | 504 | $ | 479 | ||||||||
Revisions in estimates and liabilities incurred on reclamation and closure costs, net of tax | - | 60 | - | |||||||||||
Share of net losses of associates, net of tax (1) |
5 | 16 | 22 | |||||||||||
Losses on securities, net of tax |
3 | - | 5 | |||||||||||
Gains on derivatives, net of tax |
(41) | (122) | (50) | |||||||||||
Gains on disposition of mining interests, net of tax |
- | (12) | - | |||||||||||
Unrealized (gains) losses on foreign exchange translation of deferred income tax assets and liabilities | (17) | 22 | (55) | |||||||||||
Other |
(6) | (3) | 3 | |||||||||||
Total adjusted net earnings |
$ | 253 | $ | 465 | $ | 404 | ||||||||
Weighted average shares outstanding (000s) |
811,668 | 811,394 | 810,046 | |||||||||||
Adjusted net earnings per share |
$ | 0.31 | $ | 0.57 | $ | 0.50 |
(1) | The Companys share of net earnings (losses) on associates includes the Companys share of net earnings (losses) of Primero and Tahoe which the Company excludes from performance measures on an attributable basis. |
GOLDCORP | 42
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
NON-GAAP MEASURE ADJUSTED OPERATING CASH FLOWS
The Company has included a non-GAAP performance measure Goldcorps share of adjusted operating cash flows, throughout this document. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance and ability to operate without reliance on additional external funding or use of available cash. This performance measure comprises Goldcorps share of operating cash flows before working capital changes on an attributable basis, which includes the Companys proportionate share of Pueblo Viejo and Alumbrera, as the Company believes that disclosing certain performance measures on an attributable basis is a more accurate measurement of the Companys operating and economic performance and reflects the Companys view of its core mining operations. Accordingly, this performance measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
The following table provides a reconciliation of Goldcorps share of adjusted operating cash flows to net cash provided by operating activities per the unaudited condensed interim consolidated financial statements for the three months ended March 31:
2013 | 2012 | |||||||
Net cash provided by operating activities |
$ | 294 | $ | 339 | ||||
Change in working capital |
45 | 91 | ||||||
Net cash provided by (used in) operating activities of Alumbrera and Pueblo Viejo |
81 | (49) | ||||||
Change in working capital of Alumbrera and Pueblo Viejo |
(20) | 99 | ||||||
Goldcorps share of adjusted operating cash flows |
$ | 400 | $ | 480 |
NON-GAAP MEASURE FREE CASH FLOWS
The Company has included a non-GAAP performance measure Goldcorps share of free cash flows, throughout this document. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Companys performance and ability to operate without reliance on additional external funding or use of available cash. The Company has calculated this performance measure on an attributable basis, including the Companys proportionate share of Pueblo Viejo and Alumbrera, rather than on an equity basis, as the Company believes that disclosing certain performance measures on an attributable basis is a more accurate measurement of the Companys operating and economic performance and reflects the Companys view of its core mining operations. Accordingly, this performance measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
The following table provides a reconciliation of Goldcorps share of free cash flows to net cash provided by operating activities per the unaudited condensed interim consolidated financial statements for the three months ended March 31:
2013 | 2012 | |||||||
Net cash provided by operating activities |
$ | 294 | 339 | |||||
Expenditures on mining interests |
(479) | (537) | ||||||
Deposits on mining interests expenditures |
(54) | (50) | ||||||
Interest paid |
(9) | (9) | ||||||
Consolidated free cash flows |
$ | (248) | $ | (257) | ||||
Net cash provided by (used in) operating activities of Alumbrera and Pueblo Viejo |
81 | (49) | ||||||
Expenditures on mining interests by Alumbrera and Pueblo Viejo (1) |
(44) | 33 | ||||||
Goldcorps share of free cash flows |
$ | (211) | $ | (273) |
(1) | Expenditures on mining interests by Alumbrera and Pueblo Viejo represent mining interests expenditures net of additional funding investments which are included in expenditures on mining interests per the consolidated financial statements. |
GOLDCORP | 43
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
FINANCIAL INSTRUMENTS RISK EXPOSURE
The Company manages its exposure to financial risks, including credit risk, liquidity risk, currency risk, interest rate risk and price risk, in accordance with its Risk Management Policy. The Companys Board of Directors oversees managements risk management practices by setting trading parameters and reporting requirements. The Risk Management Policy provides a framework for the Company to manage the risks it is exposed to in various markets and to protect itself against adverse price movements. All transactions undertaken are to support the Companys ongoing business. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes.
The following describes the types of risks that the Company is exposed to and its objectives and policies for managing those risk exposures:
(i) | Credit risk |
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. There has been no change in the Companys objectives and policies for managing this risk during the three months ended March 31, 2013.
(ii) | Liquidity risk |
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. There has been no significant change in the Companys objectives and policies for managing this risk during the three months ended March 31, 2013.
During the three months ended March 31, 2013, the Company generated operating cash flows of $294 million (2012 $339 million). At March 31, 2013, Goldcorp held cash and cash equivalents of $1,463 million (December 31, 2012 $757 million; January 1, 2012 $1,458 million) and working capital of $2,230 million (December 31, 2012 $1,127 million; January 1, 2012 $2,130 million) which the Company defines as current assets less current liabilities. The Company also held $551 million of deposits with terms greater than 90 days at March 31, 2013 (December 31, 2012 $nil; January 1, 2012 $272 million).
On March 20, 2013, the Company issued two tranches of notes totalling $1.5 billion, consisting of $500 million of 5-year Notes with a coupon rate of 2.125% and $1.0 billion of 10-year Notes with a coupon rate of 3.70% (the Notes). The Notes are unsecured and interest is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2013. The Company received proceeds of $1.48 billion, net of transaction costs. Holders of the Notes may redeem their holding at any time during the three months prior to maturity.
During the three months ended March 31, 2013, the Companys Cerro Negro project in Argentina entered into a 1-year $131 million credit facility agreement with Alumbrera. The principal drawn bears interest at 2% per annum. At March 31, 2013, Cerro Negro had drawn $131 million against the facility which has been recorded in other current liabilities.
On December 18, 2012, the Company entered into a 1-year $469 million Argentine peso ($100 million) credit facility with a third party in Argentina. This credit facility will be used to fund construction at the Companys Cerro Negro project. The facility bears interest at Badlar, the average interest rate paid on short-term deposits over $1 million Argentine pesos, plus a floating margin based on 75% of the differential between the general lending rate and the deposit rate set by the Standard Bank Argentina S.A. At March 31, 2013, the Company had drawn $45 million against the credit facility (December 31, 2012 $45 million; January 1, 2012 $nil) which has been recorded in other current liabilities.
Of the $1 million interest incurred on the draw down of the credit facilities for the three months ended March 31, 2013 (2012 $nil), $1 million (2012 $nil) has been capitalized as part of the costs of qualifying mining properties.
GOLDCORP | 44
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
At March 31, 2013, the Company had an undrawn $2.0 billion revolving credit facility available. The Company extended the $2 billion revolving credit facility to 2018.
At March 31, 2013, the Company had letters of credit outstanding and secured deposits in the amount of $421 million (December 31, 2012 $427 million; January 1, 2012 $308 million).
In the opinion of management, the working capital at March 31, 2013, together with future cash flows from operations and available funding facilities, is sufficient to support the Companys commitments. At March 31, 2013, the Companys capital and operating commitments over the next twelve months amounted to $780 million (December 31, 2012 $755 million; January 1, 2012 $768 million). The Companys total planned capital expenditures for 2013 are $2.8 billion, 40% of which relate to operations and the remaining 60% to projects (Cerro Negro, Éléonore, Cochenour, El Morro and Camino Rojo).
For the periods beyond 2013, the Companys cash flows from operations and available funding under the Companys loan and credit facilities are expected to sufficiently support further expansions and growth. Peñasquito will be the main driver of the Companys gold production growth expected in the next five years, with significant contributions from Red Lake, Pueblo Viejo and Cerro Negro.
(iii) | Market risk |
Currency risk
Currency risk is the risk that the fair values or future cash flows of the Companys financial instruments will fluctuate because of changes in foreign currency exchange rates. There has been no change in the Companys objectives and policies for managing this risk during the three months ended March 31, 2013.
The Company is exposed to currency risk through financial assets and liabilities and deferred income tax assets and liabilities denominated in currencies other than US dollars (the foreign currencies).
During the three months ended March 31, 2013, the Company recognized a net foreign exchange gain of $2 million (2012 $9 million). Based on the Companys net exposures (other than those relating to taxes) at March 31, 2013, a 10% depreciation or appreciation of the foreign currencies against the US dollar would result in an approximate $12 million decrease or increase in the Companys after-tax net earnings, respectively.
During the three months ended March 31, 2013, the Company recognized a net foreign exchange gain of $20 million in income tax expense on income taxes receivable/(payable) and deferred taxes (2012 $51 million). Based on the Companys net exposures relating to taxes at March 31, 2013, a 10% depreciation or appreciation of the foreign currencies against the US dollar would result in an approximate $144 million decrease or increase in the Companys after-tax net earnings, respectively.
During the three months ended March 31, 2013 and in accordance with its Risk Management Policy, the Company entered into Canadian dollar and Mexican peso forward and option contracts to purchase and sell the respective foreign currencies at pre-determined US dollar amounts. These contracts were entered into to normalize operating expenses incurred by the Companys foreign operations as expressed in US dollar terms.
Interest rate risk
Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk primarily on its outstanding borrowings, its share of the Pueblo Viejo project financing and credit facility and its cash and cash equivalents, money market investments, certain short-term credit facilities and interest-bearing receivables.
There has been no significant change in the Companys exposure to interest rate risk and there has been no change to its objectives and policies for managing these risks during the three months ended March 31, 2013.
GOLDCORP | 45
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Price risk
Price risk is the risk that the fair value or future cash flows of the Companys financial instruments will fluctuate because of changes in market prices. There has been no change in the Companys objectives and policies for managing this risk and no significant change to the Companys exposure to price risk during the three months ended March 31, 2013.
OTHER RISKS AND UNCERTAINTIES
There were no significant changes to the Companys exposure to risks and other uncertainties, including risks relating to the Companys foreign operations and environmental regulation, as described in the 2012 year end Managements Discussion and Analysis during the three months ended March 31, 2013 other than as follows:
Government Regulation
Mexico
During the first quarter of 2013, the Mexican government introduced a bill which proposes a 5% tax-deductible mining duty calculated on an operating mines taxable income before the deduction of interest, taxes, depreciation and amortization. The bill is progressing through the Mexican legislative process and is currently ready for discussion at the level of the Mexican Senate. The senate has not yet approved the proposal and is expected to review it during the next session scheduled for September 2013. If approved, the new mining duty would be applicable on a prospective basis and would therefore affect future earnings from the Companys mining operations in Mexico.
Dominican Republic
On February 27, 2013, President Medina of the Dominican Republic, in his first Independence Day speech to the National Assembly, announced that the government would submit to Congress a bill that would establish a tax on unforeseen income of mineral-exporting companies unless Pueblo Viejo Dominicana Corporation (PVDC) would promptly agree to the governments demands to increase the benefits to the government under the SLA at the Pueblo Viejo mine.
Barrick, the mine operator, while fully reserving its rights under the SLA, which cannot be unilaterally altered, has engaged in dialogue with representatives of the government in an effort to achieve a mutually acceptable outcome. This could potentially involve a renegotiation of the SLA and/or the imposition of other measures, for instance to provide for an increase in the payment of taxes in the earlier years of the mine life, and could have a significant negative effect on project economics and, in particular, the distribution of profits and cash flows of the mine. To date, the parties have been unable to reach agreement. The government has threatened to take unilateral action, such as introducing the unforeseen income tax announced by the President or blocking the export of minerals. Such actions would constitute a violation of the SLA, which provides for international arbitration of disputes under the Arbitration Rules of the International Chamber of Commerce. Any such actions taken by the government in an effort to extract greater revenues would negatively affect the profitability and cash flow of the mine. The potential operational impacts of any such action are difficult to predict at this time. Depending on the nature and extent of any unilateral actions that the government may take, the joint venture partners could, among other things, decide to curtail, or suspend production at the mine, or to pay the tax under protest, while pursuing their rights under international arbitration. The Company is also aware of various legal proceedings which, among other things, seek to challenge the constitutionality of the SLA.
On April 4, 2013, the main opposition party in the Dominican Republic introduced a bill in the Chamber of Deputies that would establish a windfall profit tax on PVDC. To the Companys knowledge, no further action has been taken by the Chamber of Deputies with respect to this bill.
On March 13, 2013, customs authorities in the Dominican Republic prevented PVDC from exporting a shipment of gold and silver from the Pueblo Viejo mine. The shipment was subsequently released and shipped out of the Dominican Republic on March 18, 2013. In late
GOLDCORP | 46
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
March and early April 2013, PVDC was informed of certain additional requirements that will apply to shipments of gold and silver from the Pueblo Viejo mine. PVDC is complying with these new measures.
OUTSTANDING SHARE DATA
As of May 1, 2013, there were 812 million common shares of the Company issued and outstanding and 19 million stock options outstanding which are exchangeable into common shares at exercise prices ranging between C$16.87 per share to C$48.72 per share.
BASIS OF PREPARATION
The Companys unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting (IAS 34) as issued by the IASB. Accordingly, certain disclosures included in annual financial statements prepared in accordance with IFRSs as issued by the IASB have been condensed or omitted and the Companys unaudited condensed interim consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements for the year ended December 31, 2012.
The accounting policies applied in preparation of the Companys unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in the Companys consolidated financial statements for the year ended December 31, 2012, with the exception of the application of certain new and amended IFRSs issued by the IASB, which were effective from January 1, 2013. Those new and revised IFRSs which had a significant impact on the Companys unaudited condensed interim consolidated financial statements are described in note 3 to the Companys unaudited condensed interim consolidated financial statements. Note 3 includes reconciliations of the Companys consolidated balance sheets, consolidated statements of earnings and comprehensive income and consolidated statements of cash flows for the 2012 comparative periods which were previously disclosed in the Companys consolidated financial statements.
CRITICAL JUDGEMENTS AND ESTIMATES
The Companys management makes judgements in its process of applying the Companys accounting policies in the preparation of its unaudited condensed interim consolidated financial statements. In addition, the preparation of financial data requires that the Companys management make assumptions and estimates of effects of uncertain future events on the carrying amounts of the Companys assets and liabilities at the end of the reporting period and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting effects on the carrying amounts of the Companys assets and liabilities are accounted for prospectively. The critical judgements and estimates applied in the preparation of the Companys unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in notes 5 and 6 to the Companys consolidated financial statements for the year ended December 31, 2012.
CHANGES IN ACCOUNTING POLICIES
Application of new and revised accounting standards
The Company has applied the following new and revised IFRSs in these unaudited condensed interim consolidated financial statements and the Company has restated the 2012 comparative periods, where applicable, accordingly.
Effective from January 1, 2013, IFRS 10 Consolidated Financial Statements (IFRS 10) supersedes SIC 12 Consolidation Special Purpose Entities and the requirements relating to consolidated financial statements in IAS 27 Consolidated and Separate Financial Statements. Concurrent with the issuance of IFRS 10, the IASB issued IFRS 11 Joint Arrangements (IFRS 11) and IFRS 12
GOLDCORP | 47
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Disclosure of Interests in Other Entities (IFRS 12) and reissued IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures.
Consolidation
IFRS 10 establishes control as the basis for an investor to consolidate its investees and defines control as an investors power over an investee with exposure, or rights, to variable returns from the investee and the ability to affect the investors returns through its power over the investee.
Joint arrangements
IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities Non-Monetary Contributions by Venturers. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures based on the rights and obligations of the parties to the joint arrangements. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (joint venturers) have rights to the net assets of the arrangement. IFRS 11 requires that a joint operator recognize its portion of assets, liabilities, revenues and expenses of a joint arrangement, while a joint venturer recognizes its investment in a joint arrangement using the equity method.
Disclosure of interests in other entities
IFRS 12 combines and enhances the disclosure requirements for the Companys subsidiaries, joint arrangements, associates and unconsolidated structured entities. The requirements of IFRS 12 include enhanced reporting of the nature of risks associated with the Companys interests in other entities, and the effects of those interests on the Companys consolidated financial statements.
As a result of the application of these standards, the Companys 37.5% interest in Alumbrera, which was previously proportionately consolidated in the Companys consolidated financial statements, has been classified as an investment in associate and is accounted for using the equity method with the Companys share of net earnings and net assets separately disclosed in the Consolidated Statements of Earnings and Consolidated Balance Sheets, respectively.
The Company has accounted for this change in consolidation retrospectively using the transitional requirements of IFRS 10 and the Company has restated the 2012 comparative periods accordingly. A reconciliation of the Companys 2012 comparative periods, as previously disclosed, to the 2012 comparative periods disclosed in the Companys unaudited condensed interim consolidated financial statements is as follows:
Condensed Interim Consolidated Balance Sheets:
At January 1, 2012 | ||||||||||||
As previously reported |
Adjusted | As presented |
||||||||||
Current assets |
$ | 2,950 | $ | (139) | $ | 2,811 | ||||||
Mining interests Owned by subsidiaries |
22,673 | (424) | 22,249 | |||||||||
Mining interests Investments in associates |
1,536 | 404 | 1,940 | |||||||||
Other non-current assets |
2,215 | (69) | 2,146 | |||||||||
Total assets |
$ | 29,374 | $ | (228) | $ | 29,146 | ||||||
Total liabilities |
$ | (7,889) | $ | 228 | $ | (7,661) | ||||||
Net assets |
$ | 21,485 | $ | - | $ | 21,485 |
GOLDCORP | 48
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
At December 31, 2012 | ||||||||||||
As previously reported |
Adjusted | As presented |
||||||||||
Current assets |
$ | 2,528 | $ | (333) | $ | 2,195 | ||||||
Mining interests Owned by subsidiaries |
24,279 | (377) | 23,902 | |||||||||
Mining interests Investments in associates |
2,088 | 575 | 2,663 | |||||||||
Other non-current assets |
2,317 | (98) | 2,219 | |||||||||
Total assets |
$ | 31,212 | $ | (233) | $ | 30,979 | ||||||
Total liabilities |
$ | (8,283) | $ | 233 | $ | (8,050) | ||||||
Net assets |
$ | 22,929 | $ | - | $ | 22,929 | ||||||
Condensed Interim Consolidated Statements of Earnings and Comprehensive Income:
|
| |||||||||||
For the three months ended March 31, 2012 | ||||||||||||
As previously reported |
Adjusted | As presented |
||||||||||
Revenues |
$ | 1,349 | $ | (138) | $ | 1,211 | ||||||
Earnings from mine operations |
632 | (51) | 581 | |||||||||
Share of net (losses) earnings of associates |
(22) | 36 | 14 | |||||||||
Earnings before taxes |
577 | (15) | 562 | |||||||||
Net earnings |
$ | 479 | $ | - | $ | 479 | ||||||
Other comprehensive income, net of tax |
17 | - | 17 | |||||||||
Total comprehensive income |
$ | 496 | $ | - | $ | 496 | ||||||
Condensed Interim Consolidated Statement of Cash Flows:
|
| |||||||||||
For the three months ended March 31, 2012 | ||||||||||||
As previously reported |
Adjusted | As presented |
||||||||||
Net earnings |
$ | 479 | $ | - | $ | 479 | ||||||
Share of net (losses) earnings of associates |
22 | (36) | (14) | |||||||||
Other |
(179) | 53 | (126) | |||||||||
Net cash provided by operating activities |
$ | 322 | $ | 17 | $ | 339 | ||||||
Net cash used in investing activities |
$ | (327) | $ | 3 | $ | (324) | ||||||
Net cash used in financing activities |
$ | (103) | $ | - | $ | (103) |
Fair value measurement
IFRS 13 Fair Value Measurement (IFRS 13) defines fair value and sets out a single framework for measuring fair value which is applicable to all IFRSs that require or permit fair value measurements or disclosures about fair value measurements. IFRS 13 requires that when using a valuation technique to measure fair value, the use of relevant observable inputs should be maximized while unobservable inputs should be minimized. The Company has applied IFRS 13 on a prospective basis, commencing January 1, 2013.
GOLDCORP | 49
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Employee benefits
A revised IAS 19 Employee Benefits (IAS 19) has introduced significant changes to the accounting for defined benefit plans and other employee benefits. The amendments include elimination of the options to defer or recognize actuarial gains and losses in full in profit or loss and instead mandates the immediate recognition of all actuarial gains and losses in other comprehensive income. The amended IAS 19 also requires calculation of net interest on the net defined benefit liability or asset using the discount rate used to measure the defined benefit obligation.
In addition, other changes incorporated into the amended standard include changes made to the date of recognition of liabilities for termination benefits, and changes to the definitions of short-term employee benefits and other long-term employee benefits which may impact on the classification of liabilities associated with those benefits.
The Company has adopted these amendments retrospectively; however, these amendments to IAS 19 did not have a significant impact on the Companys unaudited condensed interim consolidated financial statements.
Stripping costs in the production phase of a surface mine
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (IFRIC 20) clarifies the requirements for accounting for the costs of stripping activity in the production phase when two benefits accrue: (i) usable ore that can be used to produce inventory; and (ii) improved access to further quantities of material that will be mined in future periods. The Company has applied IFRIC 20 on a prospective basis in compliance with the transitional requirements of IFRIC 20. The application of IFRIC 20 did not result in an adjustment to the Companys unaudited condensed interim consolidated financial statements.
Financial statement presentation
Amendments to IAS 1 Presentation of Financial Statements (IAS 1), effective for annual periods beginning on or after July 1, 2012, require an entity to group items presented in the statement of other comprehensive income on the basis of whether they may be reclassified to profit or loss subsequent to initial recognition. For those items presented before tax, the amendments to IAS 1 also require that the tax related to the two separate groups be presented separately.
CHANGES IN ACCOUNTING STANDARDS NOT YET EFFECTIVE
Financial instruments
The IASB intends to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety with IFRS 9 Financial Instruments (IFRS 9) which will be effective for annual periods commencing on or after January 1, 2015. IFRS 9 is intended to reduce the complexity for the classification and measurement of financial instruments. The Company is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.
OUTLOOK
For 2013, the Company expects to produce between 2.55 and 2.80 million ounces of gold at a total cash cost of $525 to $575 per ounce on a by-product basis. On a co-product basis, the Company is forecasting total cash costs between $700 to $750 per ounce of gold. Cash costs are expected to rise from 2012 levels primarily due to industry-wide cost inflation and the impacts of lower grades and by-product production at Peñasquito in 2013.
Assumptions used to forecast total cash costs for 2013 include by-product metal prices of $30.00 per ounce silver; $3.50 per pound copper; $0.90 per pound zinc; $0.90 per pound lead; an oil price of $100.00 per barrel; and the Canadian dollar and Mexican peso at $1.00 and $12.75, respectively, to the US dollar. All-in sustaining costs, on a by-product basis, are expected to be between $1,000 $1,100 per ounce as Pueblo Viejo ramps up operations.
GOLDCORP | 50
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
Capital expenditures for 2013 are forecast at approximately $2.8 billion of which approximately 60% is allocated to projects and 40% to operations. Exploration expenditures in 2013 are expected to amount to approximately $225 million, of which approximately one third is expected to be expensed. Goldcorps primary focus will remain on the replacement of reserves mined and on extending existing gold zones at all of its prospective mines and projects. Corporate administration expense, excluding share-based compensation, is forecast at $180 million for 2013. Depreciation, depletion and amortization expense is expected to be approximately $335 per ounce of gold sold. The Company expects an overall effective tax rate of 29% for 2013.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Companys management, with the participation of its President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and procedures. Based upon the results of that evaluation, the Companys President and Chief Executive Officer and Executive Vice President and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Companys disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in reports it files is recorded, processed, summarized and reported, within the appropriate time periods, and is accumulated and communicated to management, including the President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
The Companys management, with the participation of its President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision of the President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, the Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Companys internal control over financial reporting includes policies and procedures that:
| Pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company; |
| Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that the Companys receipts and expenditures are made only in accordance with authorizations of management and the Companys Directors; and |
| Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the Companys consolidated financial statements. |
There has been no change in the Companys internal control over financial reporting during the three months ended March 31, 2013 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
Limitations of Controls and Procedures
The Companys management, including the President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, believes that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the
GOLDCORP | 51
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of Goldcorp. Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, silver, copper, lead and zinc, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, hedging practices, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, timing and possible outcome of pending litigation, title disputes or claims and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as plans, expects, is expected, budget, scheduled, estimates, forecasts, intends, anticipates, believes or variations of such words and phrases or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved or the negative connotation thereof.
Forward-looking statements are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performances or achievements of Goldcorp to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Goldcorp will operate in the future, including the price of gold, anticipated costs and ability to achieve goals. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, among others, gold price volatility, discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries, mining operational and development risks, litigation risks, regulatory restrictions (including environmental regulatory restrictions and liability), activities by governmental authorities (including changes in taxation), currency fluctuations, the speculative nature of gold exploration, the global economic climate, dilution, share price volatility, competition, loss of key employees, additional funding requirements and defective title to mineral claims or property. Although Goldcorp has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.
Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, level of activity, performance or achievements of Goldcorp to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions; risks related to international operations, including economical and political instability in foreign jurisdictions in which Goldcorp operates; risks related to current global financial conditions; risks related to joint venture operations; actual results of current exploration activities; environmental risks; future prices of gold, silver, copper, lead and zinc; possible variations in ore reserves, grade or recovery rates; mine development and operating risks; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; risks related to indebtedness and the service of such indebtedness, as well as those factors discussed in the section entitled Description of the Business Risk Factors in Goldcorps Annual Information Form for the year ended December 31, 2012 available at www.sedar.com. Although Goldcorp has attempted to |
GOLDCORP | 52
First Quarter Report 2013
(in United States dollars, tabular amounts in millions, except where noted)
identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Forward-looking statements are made as of the date hereof and accordingly are subject to change after such date. Except as otherwise indicated by Goldcorp, these statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. Forward-looking statements are provided for the purpose of providing information about managements current expectations and plans and allowing investors and others to get a better understanding of our operating environment. Goldcorp does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws.
CAUTIONARY NOTE REGARDING RESERVES AND RESOURCES
Scientific and technical information contained in this MD&A was reviewed and approved by Maryse Belanger, P.Geo., Senior Vice-President, Technical Services for Goldcorp, and a qualified person as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101). All mineral reserves and mineral resources have been calculated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and NI 43-101, or the AusIMM JORC equivalent. All mineral resources are reported exclusive of mineral reserves and mineral resources which are not mineral reserves do not have demonstrated economic viability. Information on data verification performed on the mineral properties mentioned in this MD&A that are considered to be material mineral properties to the Company are contained in Goldcorps Annual Information Form for the year ended December 31, 2012 and the current technical report for those properties, all available at www.sedar.com.
Cautionary Note to United States investors concerning estimates of measured, indicated and inferred resources: United States investors are advised that while the terms measured, indicated and inferred resources are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. Inferred mineral resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. |
GOLDCORP | 53
Exhibit 99.2
First Quarter Report 2013
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
(In millions of United States dollars, except for per share amounts Unaudited)
Three Months Ended March 31 |
||||||||||
Note | 2013 | 2012 | ||||||||
Note 3 | ||||||||||
Revenues |
8(c) | $ | 1,015 | $ | 1,211 | |||||
Mine operating costs |
||||||||||
Production costs |
5 | (503) | (489) | |||||||
Depreciation and depletion |
6(g) & 8 | (150) | (141) | |||||||
(653) | (630) | |||||||||
Earnings from mine operations |
362 | 581 | ||||||||
Exploration and evaluation costs |
6(c) | (13) | (19) | |||||||
Share of net earnings from associates |
7 | 37 | 14 | |||||||
Corporate administration |
(66) | (72) | ||||||||
Earnings from operations and associates |
8 | 320 | 504 | |||||||
Losses on securities, net |
11(b) | (3) | (5) | |||||||
Gains on derivatives, net |
11(a) | 49 | 55 | |||||||
Finance costs |
(10) | (6) | ||||||||
Other income |
3 | 14 | ||||||||
Earnings before taxes |
359 | 562 | ||||||||
Income taxes |
10 & 11(d)(iii) | (50) | (83) | |||||||
Net earnings attributable to shareholders of Goldcorp Inc. |
$ | 309 | $ | 479 | ||||||
Net earnings per share |
||||||||||
Basic |
13 | $ | 0.38 | $ | 0.59 | |||||
Diluted |
13 | 0.33 | 0.51 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
GOLDCORP | 1
First Quarter Report 2013
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions of United States dollars Unaudited)
Three Months Ended March 31 |
||||||||||
Note | 2013 | 2012 | ||||||||
Note 3 | ||||||||||
Net earnings attributable to shareholders of Goldcorp Inc. |
$ | 309 | $ | 479 | ||||||
Other comprehensive (loss) income, net of tax |
11(b) | |||||||||
Items that may be reclassified subsequently to net earnings: |
||||||||||
Mark-to-market (losses) gains on available-for-sale securities |
(34) | 12 | ||||||||
Reclassification adjustment for impairment losses included in net earnings |
4 | 5 | ||||||||
Reclassification adjustment for realized gains on disposition of
available-for-sale |
(1) | - | ||||||||
$ | (31) | $ | 17 | |||||||
Total comprehensive income attributable to shareholders of Goldcorp Inc. |
$ | 278 | $ | 496 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
GOLDCORP | 2
First Quarter Report 2013
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of United States dollars Unaudited)
Three Months Ended March 31 |
||||||||||
Note | 2013 | 2012 | ||||||||
Note 3 | ||||||||||
Operating Activities |
||||||||||
Net earnings |
$ | 309 | $ | 479 | ||||||
Adjustments for: |
||||||||||
Dividends from associate |
7(f) | 21 | - | |||||||
Reclamation expenditures |
(3) | (5) | ||||||||
Losses on securities, net |
11(b) | 3 | 5 | |||||||
Items not affecting cash: |
||||||||||
Depreciation and depletion |
6(g) & 8 | 150 | 141 | |||||||
Share of net earnings of associates |
7 | (37) | (14) | |||||||
Share-based compensation expense |
12 | 18 | 28 | |||||||
Unrealized gains on derivatives, net |
11(a) | (49) | (55) | |||||||
Accretion of reclamation and closure cost obligations |
5 | 4 | ||||||||
Deferred income tax recovery |
10 | (83) | (151) | |||||||
Other |
5 | (2) | ||||||||
Change in working capital |
14 | (45) | (91) | |||||||
Net cash provided by operating activities |
294 | 339 | ||||||||
Investing Activities |
||||||||||
Expenditures on mining interests |
8(e) | (479) | (537) | |||||||
Deposits on mining interests expenditures |
(54) | (50) | ||||||||
Interest paid |
6(b), 8(e) & 9 | (9) | (9) | |||||||
Purchases of money market securities and other investments |
11(d)(ii) & 14 | (553) | (14) | |||||||
Proceeds from sales of securities and other investments, net |
8 | 273 | ||||||||
Other |
1 | 8 | ||||||||
Net cash used in investing activities |
(1,086) | (329) | ||||||||
Net cash provided by investing activities of discontinued operations |
14 | 8 | 5 | |||||||
Financing Activities |
||||||||||
Debt borrowings, net of borrowing costs |
9 | 1,481 | - | |||||||
Borrowings from associate |
11(d)(ii) | 131 | - | |||||||
Common shares issued, net of issue costs |
- | 6 | ||||||||
Dividends paid to shareholders |
13 | (122) | (109) | |||||||
Net cash provided by (used in) financing activities |
1,490 | (103) | ||||||||
Effect of exchange rate changes on cash and cash equivalents |
- | - | ||||||||
Increase (decrease) in cash and cash equivalents |
706 | (88) | ||||||||
Cash and cash equivalents, beginning of period |
757 | 1,458 | ||||||||
Cash and cash equivalents, end of period |
14 | $ | 1,463 | $ | 1,370 |
Supplemental cash flow information (note 14)
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
GOLDCORP | 3
First Quarter Report 2013
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(In millions of United States dollars Unaudited)
Note | March 31 2013 |
December 31 2012 |
January 1 2012 |
|||||||||||
Note 3 | Note 3 | |||||||||||||
Assets |
||||||||||||||
Current assets |
||||||||||||||
Cash and cash equivalents |
14 | $ | 1,463 | $ | 757 | $ | 1,458 | |||||||
Money market investments |
11(d)(ii) | 551 | - | 272 | ||||||||||
Accounts receivable |
11(a) | 454 | 567 | 403 | ||||||||||
Inventories and stockpiled ore |
749 | 696 | 550 | |||||||||||
Notes receivable |
5 | 5 | 40 | |||||||||||
Other |
218 | 170 | 88 | |||||||||||
3,440 | 2,195 | 2,811 | ||||||||||||
Mining interests |
||||||||||||||
Owned by subsidiaries |
6 | 24,289 | 23,902 | 22,249 | ||||||||||
Investments in associates |
6 & 7 | 2,693 | 2,663 | 1,940 | ||||||||||
6 | 26,982 | 26,565 | 24,189 | |||||||||||
Goodwill |
1,737 | 1,737 | 1,737 | |||||||||||
Investments in securities |
126 | 162 | 207 | |||||||||||
Notes receivable |
28 | 37 | 42 | |||||||||||
Deposits on mining interests expenditures |
121 | 95 | 73 | |||||||||||
Other |
198 | 188 | 87 | |||||||||||
Total assets |
8 | $ | 32,632 | $ | 30,979 | $ | 29,146 | |||||||
Liabilities |
||||||||||||||
Current liabilities |
||||||||||||||
Accounts payable and accrued liabilities |
$ | 785 | $ | 830 | $ | 545 | ||||||||
Income taxes payable |
154 | 101 | 32 | |||||||||||
Derivative liabilities |
11(a) | 70 | 68 | 65 | ||||||||||
Other |
11(d)(ii) | 201 | 69 | 39 | ||||||||||
1,210 | 1,068 | 681 | ||||||||||||
Deferred income taxes |
5,344 | 5,434 | 5,442 | |||||||||||
Long-term debt |
9 | 2,275 | 783 | 737 | ||||||||||
Derivative liabilities |
11(a) | 36 | 79 | 237 | ||||||||||
Provisions |
495 | 500 | 355 | |||||||||||
Income taxes payable |
60 | 62 | 113 | |||||||||||
Other |
113 | 124 | 96 | |||||||||||
Total liabilities |
8 | 9,533 | 8,050 | 7,661 | ||||||||||
Equity |
||||||||||||||
Shareholders equity |
||||||||||||||
Common shares, stock options and restricted share units |
17,131 | 17,117 | 16,992 | |||||||||||
Investment revaluation reserve |
20 | 51 | 43 | |||||||||||
Retained earnings |
5,735 | 5,548 | 4,237 | |||||||||||
22,886 | 22,716 | 21,272 | ||||||||||||
Non-controlling interests |
213 | 213 | 213 | |||||||||||
Total equity |
23,099 | 22,929 | 21,485 | |||||||||||
Total liabilities and equity |
$ | 32,632 | $ | 30,979 | $ | 29,146 |
Commitments and contingencies (notes 11(d)(ii) & 15)
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
GOLDCORP | 4
First Quarter Report 2013
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions of United States dollars, shares in thousands Unaudited)
Common Shares | ||||||||||||||||||||||||||||||||
Shares issued, fully paid with no par value |
Amount | Stock options and restricted |
Investment revaluation reserve |
Retained earnings |
Attributable
to of Goldcorp Inc. |
Non-controlling interests |
Total | |||||||||||||||||||||||||
At January 1, 2013 |
811,519 | $ | 16,865 | $ | 252 | $ | 51 | $ | 5,548 | $ | 22,716 | $ | 213 | $ | 22,929 | |||||||||||||||||
Total comprehensive income |
||||||||||||||||||||||||||||||||
Net earnings |
- | - | - | - | 309 | 309 | - | 309 | ||||||||||||||||||||||||
Other comprehensive loss |
- | - | - | (31) | - | (31) | - | (31) | ||||||||||||||||||||||||
- | - | - | (31) | 309 | 278 | - | 278 | |||||||||||||||||||||||||
Stock options exercised and |
467 | 23 | (23) | - | - | - | - | - | ||||||||||||||||||||||||
Share-based compensation |
- | - | 14 | - | - | 14 | - | 14 | ||||||||||||||||||||||||
Dividends (note 13) |
- | - | - | - | (122) | (122) | - | (122) | ||||||||||||||||||||||||
At March 31, 2013 |
811,986 | $ | 16,888 | $ | 243 | $ | 20 | $ | 5,735 | $ | 22,886 | $ | 213 | $ | 23,099 | |||||||||||||||||
Common Shares | ||||||||||||||||||||||||||||||||
Shares issued, fully paid with no par value |
Amount | Stock options and restricted |
Investment revaluation reserve |
Retained earnings |
Attributable to shareholders of Goldcorp Inc. |
Non-controlling interests |
Total | |||||||||||||||||||||||||
At January 1, 2012 |
809,941 | $ | 16,793 | $ | 199 | $ | 43 | $ | 4,237 | $ | 21,272 | $ | 213 | $ | 21,485 | |||||||||||||||||
Total comprehensive income |
||||||||||||||||||||||||||||||||
Net earnings |
- | - | - | - | 479 | 479 | - | 479 | ||||||||||||||||||||||||
Other comprehensive income |
- | - | - | 17 | - | 17 | - | 17 | ||||||||||||||||||||||||
- | - | - | 17 | 479 | 496 | - | 496 | |||||||||||||||||||||||||
Stock options exercised and |
331 | 15 | (9) | - | - | 6 | - | 6 | ||||||||||||||||||||||||
Share-based compensation |
- | - | 24 | - | - | 24 | - | 24 | ||||||||||||||||||||||||
Dividends (note 13) |
- | - | - | - | (109) | (109) | - | (109) | ||||||||||||||||||||||||
At March 31, 2012 |
810,272 | $ | 16,808 | $ | 214 | $ | 60 | $ | 4,607 | $ | 21,689 | $ | 213 | $ | 21,902 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
GOLDCORP | 5
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2013
1. | DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS |
Goldcorp Inc. is the ultimate parent company of its consolidated group (Goldcorp or the Company). The Company is incorporated and domiciled in Canada, and its registered office is at Suite 3400 666 Burrard Street, Vancouver, British Columbia, V6C 2X8.
The Company is a gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the United States, Mexico, and Central and South America. The Companys current sources of operating cash flows are primarily from the sale of gold, silver, copper, lead and zinc.
At March 31, 2013, the Companys principal producing mining properties were comprised of the Red Lake, Porcupine and Musselwhite gold mines in Canada; the Peñasquito gold/silver/lead/zinc mine, and the Los Filos and El Sauzal gold mines in Mexico; the Marlin gold/silver mine in Guatemala; the Alumbrera gold/copper mine (37.5% interest) in Argentina (note 3); the Marigold (66.7% interest) and Wharf gold mines in the United States; and the Pueblo Viejo gold/silver/copper mine (40% interest) in the Dominican Republic (note 15(a)).
The Companys significant development projects at March 31, 2013 were comprised of the Cerro Negro gold project in Argentina; the Éléonore and Cochenour gold projects in Canada; the El Morro gold/copper project (70% interest) in Chile, the Camino Rojo gold/silver project in Mexico and the Cerro Blanco gold/silver project in Guatemala. The Company also owns a 32.0% equity interest in Primero Mining Corp. (Primero), a publicly traded company engaged in the production of precious metals with operations (primarily the San Dimas gold/silver mine (San Dimas) in Mexico, and a 39.8% equity interest in Tahoe Resources Inc. (Tahoe), a publicly traded company focused on the exploration and development of resource properties, with a principal objective to develop the Escobal silver project in Guatemala (Escobal).
2. | BASIS OF PREPARATION |
These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting (IAS 34) as issued by the International Accounting Standards Board (IASB). Accordingly, certain disclosures included in annual financial statements prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the IASB have been condensed or omitted. These unaudited condensed interim consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements for the year ended December 31, 2012.
The accounting policies applied in preparation of these unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in the Companys consolidated financial statements for the year ended December 31, 2012, with the exception of the application of certain new and amended IFRSs issued by the IASB, which were effective from January 1, 2013. Those new and revised IFRSs that had a significant impact on the Companys unaudited condensed interim consolidated financial statements are described in note 3. Note 3 includes reconciliations of the Companys unaudited condensed interim consolidated balance sheets, consolidated statements of earnings, consolidated statements of comprehensive income and consolidated statements of cash flows for the 2012 comparative periods which were previously disclosed in the Companys unaudited condensed interim consolidated financial statements.
The Companys management makes judgements in its process of applying the Companys accounting policies in the preparation of its unaudited condensed interim consolidated financial statements. In addition, the preparation of the financial data requires that the Companys management make assumptions and estimates of effects of uncertain future events on the carrying amounts of the Companys assets and liabilities at the end of the reporting period and the reported amounts of revenues and expenses during the
GOLDCORP | 6
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting effects on the carrying amounts of the Companys assets and liabilities are accounted for prospectively. The critical judgements and estimates applied in the preparation of the Companys unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in notes 5 and 6 to the Companys audited consolidated financial statements for the year ended December 31, 2012.
The Companys interim results are not necessarily indicative of its results for a full year.
Basis of consolidation
These unaudited condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries. All amounts are expressed in millions of United States (US) dollars, unless otherwise stated. References to C$ are to Canadian dollars. The principal subsidiaries (mine sites and operating segments) of Goldcorp and their geographic locations at March 31, 2013 were as follows:
Direct parent company (mine site and operating segment) (note 8) |
Location | Ownership interest |
Mining properties and development projects owned (note 6) | |||
Red Lake Gold Mines Ontario Partnership (Red Lake) |
Canada | 100% | Red Lake and Campbell Complexes, and Cochenour project | |||
Goldcorp Canada Ltd./Goldcorp Inc. (Porcupine) |
Canada | 100% | Porcupine mines | |||
Goldcorp Canada Ltd./Goldcorp Inc. (Musselwhite) |
Canada | 100% | Musselwhite mine | |||
Les Mines Opinaca Ltée (Éléonore) |
Canada | 100% | Éléonore project | |||
Minera Peñasquito S.A. de C.V. and Camino Rojo S.A. de C.V. (Peñasquito) | Mexico | 100% | Peñasquito mine, and Camino Rojo and Noche Buena projects | |||
Desarrollos Mineros San Luis S.A. de C.V. (Los Filos) |
Mexico | 100% | Los Filos mines | |||
Minas de la Alta Pimeria S.A. de C.V. (El Sauzal) |
Mexico | 100% | El Sauzal mine | |||
Montana Exploradora de Guatemala S.A. (Marlin) |
Guatemala | 100% | Marlin mine | |||
Entre Mares de Guatemala S.A. (Cerro Blanco) |
Guatemala | 100% | Cerro Blanco project | |||
Oroplata S.A. (Cerro Negro) |
Argentina | 100% | Cerro Negro project | |||
Marigold Mining Company (Marigold) |
United States | 66.7% | Marigold mine | |||
Wharf Resources (USA) Inc. (Wharf) |
United States | 100% | Wharf mine | |||
Sociedad Contractual Minera El Morro (El Morro) |
Chile | 70% | El Morro project
| |||
Intercompany assets and liabilities, equity, income, expenses and cash flows between the Company and its subsidiaries are eliminated.
These unaudited condensed interim consolidated financial statements also include the following significant investments in associates that are accounted for using the equity method:
| ||||||
Associates (note 7) | Location | Ownership interest |
Mining properties and development projects owned (note 6) | |||
Minera Alumbrera Limited (Alumbrera) |
Argentina | 37.5% | Alumbrera mine (note 3) | |||
Pueblo Viejo Dominicana Corporation (Pueblo Viejo) |
Dominican Republic |
40% | Pueblo Viejo mine (note 15(a)) | |||
Primero Mining Corp. |
Mexico | 32.0% | San Dimas mine | |||
Tahoe Resources Inc. |
Guatemala | 39.8% | Escobal
|
GOLDCORP | 7
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
Intercompany transactions between the Company and its associates are recognized only to the extent of unrelated investors interests in the associates. Intercompany balances between the Company and its associates are not eliminated. Where necessary, adjustments have been made to the financial statements of the Companys subsidiaries and associates to conform the significant accounting policies used in their preparation to those used by the Company.
3. | CHANGES IN ACCOUNTING POLICIES |
Application of new and revised accounting standards
The Company has applied the following new and revised IFRSs in these unaudited condensed interim consolidated financial statements and the Company has restated the 2012 comparative periods, where applicable, accordingly.
Effective from January 1, 2013, IFRS 10 Consolidated Financial Statements (IFRS 10) supersedes SIC 12 Consolidation Special Purpose Entities and the requirements relating to consolidated financial statements in IAS 27 Consolidated and Separate Financial Statements. Concurrent with the issuance of IFRS 10, the IASB issued IFRS 11 Joint Arrangements (IFRS 11) and IFRS 12 Disclosure of Interests in Other Entities (IFRS 12) and reissued IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures.
Consolidation
IFRS 10 establishes control as the basis for an investor to consolidate its investees and defines control as an investors power over an investee with exposure, or rights, to variable returns from the investee and the ability to affect the investors returns through its power over the investee.
Joint arrangements
IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities Non-Monetary Contributions by Venturers. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures based on the rights and obligations of the parties to the joint arrangements. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (joint venturers) have rights to the net assets of the arrangement. IFRS 11 requires that a joint operator recognize its portion of assets, liabilities, revenues and expenses of a joint arrangement, while a joint venturer recognizes its investment in a joint arrangement using the equity method.
Disclosure of interests in other entities
IFRS 12 combines and enhances the disclosure requirements for the Companys subsidiaries, joint arrangements, associates and unconsolidated structured entities. The requirements of IFRS 12 include enhanced reporting of the nature of risks associated with the Companys interests in other entities, and the effects of those interests on the Companys consolidated financial statements.
As a result of the application of these standards, the Companys 37.5% interest in Alumbrera, which was previously proportionately consolidated in the Companys consolidated financial statements, has been classified as an investment in associate and is accounted for using the equity method with the Companys share of net earnings and net assets separately disclosed in the Consolidated Statements of Earnings and Consolidated Balance Sheets, respectively.
The Company has accounted for this change in consolidation retrospectively using the transitional requirements of IFRS 10 and the Company has restated the 2012 comparative periods accordingly. A reconciliation of the Companys 2012 comparative periods, as previously disclosed, to the 2012 comparative periods disclosed in these unaudited condensed interim consolidated financial statements is as follows:
GOLDCORP | 8
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
Condensed Interim Consolidated Balance Sheets:
At January 1, 2012 |
||||||||||||
As |
Adjusted | As presented |
||||||||||
Current assets |
$ | 2,950 | $ | (139) | $ | 2,811 | ||||||
Mining interests Owned by subsidiaries |
22,673 | (424) | 22,249 | |||||||||
Mining interests Investments in associates |
1,536 | 404 | 1,940 | |||||||||
Other non-current assets |
2,215 | (69) | 2,146 | |||||||||
Total assets |
$ | 29,374 | $ | (228) | $ | 29,146 | ||||||
Total liabilities |
$ | (7,889) | $ | 228 | $ | (7,661) | ||||||
Net assets |
$ | 21,485 | $ | - | $ | 21,485 | ||||||
At December 31, 2012 | ||||||||||||
As |
Adjusted | As presented |
||||||||||
Current assets |
$ | 2,528 | $ | (333) | $ | 2,195 | ||||||
Mining interests Owned by subsidiaries |
24,279 | (377) | 23,902 | |||||||||
Mining interests Investments in associates |
2,088 | 575 | 2,663 | |||||||||
Other non-current assets |
2,317 | (98) | 2,219 | |||||||||
Total assets |
$ | 31,212 | $ | (233) | $ | 30,979 | ||||||
Total liabilities |
$ | (8,283) | $ | 233 | $ | (8,050) | ||||||
Net assets |
$ | 22,929 | $ | - | $ | 22,929 | ||||||
Condensed Interim Consolidated Statements of Earnings and Comprehensive Income: |
| |||||||||||
For the three months ended March 31, 2012 |
||||||||||||
As |
Adjusted | As presented |
||||||||||
Revenues |
$ | 1,349 | $ | (138) | $ | 1,211 | ||||||
Earnings from mine operations |
632 | (51) | 581 | |||||||||
Share of net (losses) earnings of associates |
(22) | 36 | 14 | |||||||||
Earnings before taxes |
577 | (15) | 562 | |||||||||
Net earnings |
$ | 479 | $ | - | $ | 479 | ||||||
Other comprehensive income, net of tax |
17 | - | 17 | |||||||||
Total comprehensive income |
$ | 496 | $ | - | $ | 496 |
GOLDCORP | 9
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
Condensed Interim Consolidated Statement of Cash Flows:
For the three months ended March 31, 2012 |
||||||||||||
As previously reported |
Adjusted | As presented |
||||||||||
Net earnings |
$ | 479 | $ | - | $ | 479 | ||||||
Share of net losses (earnings) of associates |
22 | (36) | (14) | |||||||||
Other |
(179) | 53 | (126) | |||||||||
Net cash provided by operating activities |
$ | 322 | $ | 17 | $ | 339 | ||||||
Net cash used in investing activities |
$ | (327) | $ | 3 | $ | (324) | ||||||
Net cash used in financing activities |
$ | (103) | $ | - | $ | (103) |
Fair value measurement
IFRS 13 Fair Value Measurement (IFRS 13) defines fair value and sets out a single framework for measuring fair value which is applicable to all IFRSs that require or permit fair value measurements or disclosures about fair value measurements. IFRS 13 requires that when using a valuation technique to measure fair value, the use of relevant observable inputs should be maximized while unobservable inputs should be minimized. The Company has applied IFRS 13 on a prospective basis, commencing January 1, 2013.
Employee benefits
A revised IAS 19 Employee Benefits (IAS 19) has introduced significant changes to the accounting for defined benefit plans and other employee benefits. The amendments include elimination of the options to defer or recognize actuarial gains and losses in full in profit or loss and instead mandates the immediate recognition of all actuarial gains and losses in other comprehensive income. The amended IAS 19 also requires calculation of net interest on the net defined benefit liability or asset using the discount rate used to measure the defined benefit obligation.
In addition, other changes incorporated into the amended standard include changes made to the date of recognition of liabilities for termination benefits, and changes to the definitions of short-term employee benefits and other long-term employee benefits which may impact on the classification of liabilities associated with those benefits.
The Company has adopted these amendments retrospectively; however, these amendments to IAS 19 did not have a significant impact on the Companys unaudited condensed interim consolidated financial statements.
Stripping costs in the production phase of a surface mine
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (IFRIC 20) clarifies the requirements for accounting for the costs of stripping activity in the production phase when two benefits accrue: (i) usable ore that can be used to produce inventory; and (ii) improved access to further quantities of material that will be mined in future periods. The Company has applied IFRIC 20 on a prospective basis in compliance with the transitional requirements of IFRIC 20. The application of IFRIC 20 did not result in an adjustment to the Companys unaudited condensed interim consolidated financial statements.
Financial statement presentation
Amendments to IAS 1 Presentation of Financial Statements (IAS 1), effective for annual periods beginning on or after July 1, 2012, require an entity to group items presented in the statement of other comprehensive income on the basis of whether they may be reclassified to profit or loss subsequent to initial recognition. For those items presented before tax, the amendments to IAS 1 also require that the tax related to the two separate groups be presented separately.
GOLDCORP | 10
FIrst Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
4. | CHANGES IN ACCOUNTING STANDARDS NOT YET EFFECTIVE |
Financial instruments
The IASB intends to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety with IFRS 9 Financial Instruments (IFRS 9) which will be effective for annual periods commencing on or after January 1, 2015. IFRS 9 is intended to reduce the complexity for the classification and measurement of financial instruments. The Company is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.
5. | PRODUCTION COSTS |
Three months ended March 31 | 2013 | 2012 | ||||||
Raw materials and consumables |
$ | 281 | $ | 226 | ||||
Salaries and employee benefits (a ) |
127 | 112 | ||||||
Contractors |
95 | 83 | ||||||
Royalties |
20 | 22 | ||||||
Change in inventories (b ) |
(50) | 16 | ||||||
Other |
30 | 30 | ||||||
$ | 503 | $ | 489 |
(a) | Excludes $26 million (2012 $16 million) of salaries and employee benefits included in corporate administration expense. |
(b) | The change in inventories represents an increase in finished goods inventories of $22 million, an increase of $10 million in stockpiled ore, and an increase of $18 million in work-in-process inventories (2012 a decrease of $27 million, a decrease of $7 million, and an increase of $18 million, respectively). |
GOLDCORP | 11
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
6. | MINING INTERESTS |
Mining properties | ||||||||||||||||||||||||
Depletable | Non-depletable | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Reserves and resources |
Reserves and resources |
Exploration potential |
Plant and equipment (h )( i) |
Investments in associates |
Total | |||||||||||||||||||
Cost |
||||||||||||||||||||||||
At January 1, 2013 (note 3) |
$ | 7,395 | $ | 6,528 | $ | 8,506 | $ | 4,278 | $ | 2,663 | $ | 29,370 | ||||||||||||
Expenditures on mining interests (b )( c) |
165 | 137 | - | 206 | 14 | 522 | ||||||||||||||||||
Share of net earnings of associates |
- | - | - | - | 37 | 37 | ||||||||||||||||||
Dividends from associate (note 7(f)) |
- | - | - | - | (21) | (21) | ||||||||||||||||||
Transfers and other movements (f) |
24 | 295 | (310) | 29 | - | 38 | ||||||||||||||||||
At March 31, 2013 |
7,584 | 6,960 | 8,196 | 4,513 | 2,693 | 29,946 | ||||||||||||||||||
Accumulated depreciation and depletion | ||||||||||||||||||||||||
At January 1, 2013 (note 3) |
(1,942) | - | - | (863) | (2,805) | |||||||||||||||||||
Depreciation and depletion (g ) |
(90) | - | - | (74) | (164) | |||||||||||||||||||
Transfers and other movements (f) |
(5) | - | - | 10 | 5 | |||||||||||||||||||
At March 31, 2013 |
(2,037) | - | - | (927) | (2,964) | |||||||||||||||||||
Carrying amount March 31, 2013 |
$ | 5,547 | $ | 6,960 | $ | 8,196 | $ | 3,586 | $ | 2,693 | $ | 26,982 | ||||||||||||
Mining properties | ||||||||||||||||||||||||
Depletable | Non-depletable | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Reserves and |
Reserves and resources |
Exploration potential |
Plant and equipment (h )( i) |
Investments in associates (d)(e) |
Total | |||||||||||||||||||
Cost |
||||||||||||||||||||||||
At January 1, 2012 (note 3) |
$ | 6,604 | $ | 5,682 | $ | 8,821 | $ | 3,339 | $ | 1,940 | $ | 26,386 | ||||||||||||
Expenditures on mining interests (b )( c) |
642 | 624 | - | 721 | 514 | 2,501 | ||||||||||||||||||
Share of net earnings of associates (d )( e) |
- | - | - | - | 210 | 210 | ||||||||||||||||||
Transfers and other movements (f ) |
149 | 222 | (315) | 218 | (1) | 273 | ||||||||||||||||||
At December 31, 2012 (note 3) |
7,395 | 6,528 | 8,506 | 4,278 | 2,663 | 29,370 | ||||||||||||||||||
Accumulated depreciation and depletion | ||||||||||||||||||||||||
At January 1, 2012 (note 3) |
(1,581) | - | - | (616) | (2,197) | |||||||||||||||||||
Depreciation and depletion (g ) |
(356) | - | - | (294) | (650) | |||||||||||||||||||
Transfers and other movements (f ) |
(5) | - | - | 47 | 42 | |||||||||||||||||||
At December 31, 2012 (note 3) |
(1,942) | - | - | (863) | (2,805) | |||||||||||||||||||
Carrying amount December 31, 2012 |
$ | 5,453 | $ | 6,528 | $ | 8,506 | $ | 3,415 | $ | 2,663 | $ | 26,565 |
GOLDCORP | 12
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
A summary by property of the carrying amount of mining properties is as follows:
Mining Properties | ||||||||||||||||||||||||||||
Depletable | Non-depletable | |||||||||||||||||||||||||||
Reserves and resources |
Reserves and |
Exploration potential |
Plant and equipment (h )( i) |
March 31 2013 |
December 31 2012 (note 3) |
January 1 2012 (note 3) |
||||||||||||||||||||||
Red Lake (j) |
$ | 676 | $ | 937 | $ | 734 | $ | 475 | $ | 2,822 | $ | 2,786 | $ | 2,592 | ||||||||||||||
Porcupine |
318 | 61 | - | 142 | 521 | 512 | 442 | |||||||||||||||||||||
Musselwhite |
174 | 4 | 112 | 237 | 527 | 519 | 467 | |||||||||||||||||||||
Éléonore (b ) |
- | 1,324 | - | 501 | 1,825 | 1,704 | 1,235 | |||||||||||||||||||||
Peñasquito (b )( j) |
3,089 | 788 | 5,590 | 1,240 | 10,707 | 10,676 | 10,488 | |||||||||||||||||||||
Los Filos |
583 | 23 | - | 176 | 782 | 755 | 733 | |||||||||||||||||||||
El Sauzal |
56 | - | - | 13 | 69 | 76 | 101 | |||||||||||||||||||||
Marlin |
461 | 64 | 35 | 163 | 723 | 739 | 725 | |||||||||||||||||||||
Cerro Blanco |
- | 170 | - | 7 | 177 | 175 | 129 | |||||||||||||||||||||
Cerro Negro (a)(b) |
- | 2,302 | 1,527 | 437 | 4,266 | 4,125 | 3,670 | |||||||||||||||||||||
Marigold |
166 | 17 | - | 81 | 264 | 248 | 222 | |||||||||||||||||||||
Wharf |
24 | - | - | 17 | 41 | 41 | 36 | |||||||||||||||||||||
El Morro (b) |
- | 1,270 | 112 | 17 | 1,399 | 1,383 | 1,272 | |||||||||||||||||||||
Corporate and Other (k ) |
- | - | 86 | 80 | 166 | 163 | 137 | |||||||||||||||||||||
$ | 5,547 | $ | 6,960 | $ | 8,196 | $ | 3,586 | $ | 24,289 | $ | 23,902 | $ | 22,249 | |||||||||||||||
Investments in associates | ||||||||||||||||||||||||||||
Alumbrera (note 3) |
563 | 575 | 404 | |||||||||||||||||||||||||
Pueblo Viejo |
1,593 | 1,546 | 1,052 | |||||||||||||||||||||||||
Primero (d)( e ) |
201 | 197 | 100 | |||||||||||||||||||||||||
Tahoe |
336 | 345 | 384 | |||||||||||||||||||||||||
2,693 | 2,663 | 1,940 | ||||||||||||||||||||||||||
$ | 26,982 | $ | 26,565 | $ | 24,189 |
(a) | Argentinas current inflationary and foreign exchange rate environment was evaluated as at March 31, 2013. A key assumption in Cerro Negros current life of mine after-tax cash flow projections is that inflation would be offset by a devaluation of the Argentine pesos following production start-up. Should this assumption regarding the future macroeconomic situation in Argentina change, and sustained inflation continues, without a commensurate change in the foreign exchange rate, the impact on the estimated recoverable amount of Cerro Negro could be adversely impacted. |
(b) | Includes capitalized borrowing costs incurred during the three months ended March 31 as follows: |
2013 | 2012 | |||||||
Éléonore |
$ | 4 | $ | 3 | ||||
Camino Rojo (j) |
2 | 2 | ||||||
Cerro Negro |
8 | 6 | ||||||
El Morro |
3 | 4 | ||||||
$ | 17 | $ | 15 |
The amounts capitalized were determined by applying the weighted average cost of borrowings during the three months ended March 31, 2013 and 2012 of 8.57% proportionately to the accumulated qualifying expenditures on mining interests.
GOLDCORP | 13
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
(c) | During the three months ended March 31, 2013, the Company incurred $37 million (2012 $63 million) in exploration and evaluation expenditures, of which $24 million (2012 $44 million) have been capitalized and included in expenditures on mining interests. The remaining $13 million of expenditures (2012 $19 million) were expensed. |
(d) | During the year ended December 31, 2012, the Company recognized a reversal of impairment expense of $65 million in respect of the Companys equity investment in Primero, primarily due to an increase in Primeros quoted market price in 2012. The Company had previously recognized a $65 million impairment expense during the year ended December 31, 2011. |
(e) | On August 7, 2012, the Company received an additional 8,422,460 Primero shares as settlement of the outstanding $30 million principal of the 1-year convertible note receivable from Primero. As a result of the share issuance, the Companys shareholding increased to 40.9% of the issued and outstanding common shares of Primero. Subsequently, on October 10, 2012, the Company completed a secondary offering of the 8,422,460 shares for total proceeds of C$44 million ($45 million) and recognized a gain of $12 million, net of selling costs of $2 million. Immediately following completion of the sale, the Companys shareholding decreased to 32.2% of the issued and outstanding common shares of Primero. |
(f) | Transfers and movements primarily represent the reclassification of carrying amounts of reserves, resources and exploration potential as a result of the conversion of the categories of mining properties, and deposits on mining interests which are capitalized and included in the carrying amounts of the related mining properties during the period. |
(g) | Depreciation and depletion expensed for the three months ended March 31, 2013 was $150 million (2012 $141 million) as compared to total depreciation and depletion of $164 million (2012 $143 million) due to the capitalization of depreciation of $12 million (2012 $12 million) relating to development projects, and movements in amounts allocated to work-in-progress inventories of $2 million (2012 ($10) million). Depletion expense for the three months ended March 31, 2013 included $3 million (2012 $2 million) of depletion expense relating to the Companys reclamation assets. |
(h) | At March 31, 2013, assets under construction, and therefore not yet being depreciated, included in the carrying amount of plant and equipment amounted to $912 million (December 31, 2012 $771 million; January 1, 2012 $453 million). |
(i) | At March 31, 2013, finance leases included in the carrying amount of plant and equipment amounted to $82 million (December 31, 2012 $86 million; January 1, 2012 $2 million). |
(j) | The Companys 100% interests in the Camino Rojo gold project in Mexico and the Cochenour gold project in Canada are included in the carrying amounts of the Peñasquito mining property and Red Lake mining property, respectively. |
(k) | Corporate and other includes exploration properties in Mexico with a carrying value as at March 31, 2013 of $86 million (December 31, 2012 $86 million; January 1, 2012 $86 million). |
GOLDCORP | 14
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
7. | INVESTMENTS IN ASSOCIATES |
At March 31, 2013, the Company has a 37.5% interest in Alumbrera(a) (f) (note 3), a 40% interest in Pueblo Viejo(a)(b) (note 15(a)), a 32.0% interest in Primero(a) (c) (g) and a 39.8% interest in Tahoe(a)( c ) which are accounted for using the equity method and the Company adjusts each associates financial results where appropriate to give effect to uniform accounting policies. Summarized financial information of Alumbrera, Pueblo Viejo, Primero, and Tahoe on a 100% basis and reflecting adjustments made by the Company including fair value adjustments made at the time of acquisition and adjustments for differences in accounting policies, is as follows:
Three months ended March 31, 2013 | ||||||||||||||||
Alumbrera | Pueblo Viejo | Other | Total | |||||||||||||
Revenues | $ | 247 | $ | 278 | $ | 46 | $ | 571 | ||||||||
Production costs | (150) | (91) | (22) | (263) | ||||||||||||
Depreciation and depletion | (40) | (26) | (11) | (77) | ||||||||||||
Earnings from mine operations | $ | 57 | $ | 161 | $ | 13 | $ | 231 | ||||||||
Net earnings (losses) of associates | $ | 24 | $ | 82 | $ | (9) | $ | 97 | ||||||||
The Companys equity share of net earnings (losses) of associates | $ | 9 | $ | 33 | $ | (5) | $ | 37 | ||||||||
Three months ended March 31, 2012 | ||||||||||||||||
Alumbrera | Pueblo Viejo | Other | Total | |||||||||||||
Revenues | $ | 369 | $ | - | $ | 7 | $ | 376 | ||||||||
Production costs | (186) | - | (3) | (189) | ||||||||||||
Depreciation and depletion | (47) | - | (2) | (49) | ||||||||||||
Earnings from mine operations | $ | 136 | $ | - | $ | 2 | $ | 138 | ||||||||
Net earnings (losses) of associates | $ | 95 | $ | 2 | $ | (9) | $ | 88 | ||||||||
The Companys share of earnings (losses) of associates | $ | 36 | $ | 1 | $ | (4) | $ | 33 | ||||||||
Impairment expense of investment in associate | - | - | (19) | (19) | ||||||||||||
The Companys equity share of net earnings (losses) of associates | $ | 36 | $ | 1 | $ | (23) | $ | 14 |
GOLDCORP | 15
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
As at March 31, 2013 | ||||||||
Alumbrera | Pueblo Viejo | |||||||
Current assets |
$ | 826 | $ | 405 | ||||
Non-current assets |
1,278 | 6,924 | ||||||
2,104 | 7,329 | |||||||
Current liabilities |
262 | 2,319 | ||||||
Non-current liabilities |
342 | 1,027 | ||||||
604 | 3,346 | |||||||
Net assets |
$ | 1,500 | $ | 3,983 | ||||
The Companys equity share of net assets of associates |
$ | 563 | $ | 1,593 | ||||
As at December 31, 2012 | ||||||||
Alumbrera | Pueblo Viejo (d) | |||||||
Current assets |
$ | 887 | $ | 259 | ||||
Non-current assets |
1,268 | 6,977 | ||||||
2,155 | 7,236 | |||||||
Current liabilities |
286 | 287 | ||||||
Non-current liabilities |
336 | 3,085 | ||||||
622 | 3,372 | |||||||
Net assets |
$ | 1,533 | $ | 3,864 | ||||
The Companys equity share of net assets of associates |
$ | 575 | $ | 1,546 | ||||
As at January 1, 2012 | ||||||||
Alumbrera | Pueblo Viejo | |||||||
Current assets |
$ | 370 | $ | 116 | ||||
Non-current assets |
1,315 | 4,721 | ||||||
1,685 | 4,837 | |||||||
Current liabilities |
241 | 213 | ||||||
Non-current liabilities |
367 | 1,995 | ||||||
608 | 2,208 | |||||||
Net assets |
$ | 1,077 | $ | 2,629 | ||||
The Companys equity share of net assets of associates |
$ | 404 | $ | 1,052 |
The Companys equity share of cash flows of Alumbrera, Pueblo Viejo, Primero and Tahoe are as follows:
Three months ended March 31, 2013 | ||||||||||||||||
Alumbrera | Pueblo Viejo | Other | Total | |||||||||||||
Net cash provided by operating activities |
$ | 65 | $ | 37 | $ | 7 | $ | 109 | ||||||||
Net cash used in investing activities (e) |
$ | (119) | $ | (34) | $ | (21) | $ | (174) | ||||||||
Net cash (used in) provided by financing activities |
$ | (21) | $ | 12 | $ | (7) | $ | (16) |
GOLDCORP | 16
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
Three months ended March 31, 2012 | ||||||||||||||||
Alumbrera | Pueblo Viejo | Other | Total | |||||||||||||
Net cash used in operating activities |
$ | (17) | $ | (33) | $ | - | $ | (50) | ||||||||
Net cash used in investing activities (e) |
$ | (3) | $ | (98) | $ | (8) | $ | (109) | ||||||||
Net cash provided by (used in) financing activities |
$ | - | $ | 137 | $ | (3) | $ | 134 | ||||||||
Alumbrera | Pueblo Viejo | Other | Total | |||||||||||||
Opening net assets of the Companys investments in associates at January 1, 2013 | $ | 575 | $ | 1,546 | $ | 542 | $ | 2,663 | ||||||||
Expenditures and investments, net of distributions (note 6) |
- | 14 | - | 14 | ||||||||||||
Dividends from associate (f) |
(21) | - | - | (21) | ||||||||||||
Companys share of net earnings (losses) of associates |
9 | 33 | (5) | 37 | ||||||||||||
Carrying value of the Companys investment in associates at March 31, 2013 | $ | 563 | $ | 1,593 | $ | 537 | $ | 2,693 | ||||||||
Alumbrera | Pueblo Viejo | Other | Total | |||||||||||||
Opening net assets of the Companys investments in associates at January 1, 2012 | $ | 404 | $ | 1,052 | $ | 484 | $ | 1,940 | ||||||||
Expenditures and investments, net of distributions (note 6) |
8 | 506 | - | 514 | ||||||||||||
Ownership interest in associates acquired in the year (note 6(e)) |
- | - | 30 | 30 | ||||||||||||
Partial disposition of investment in associate (note 6(e)) |
- | - | (31) | (31) | ||||||||||||
Impairment expense reversal of investment in associate (note 6(d)) |
- | - | 65 | 65 | ||||||||||||
Companys share of net earnings (losses) of associates (d) |
163 | (12) | (6) | 145 | ||||||||||||
Carrying value of the Companys investment in associates at December 31, 2012 | $ | 575 | $ | 1,546 | $ | 542 | $ | 2,663 |
(a) | At March 31, 2013, the Companys share of associates commitments was $85 million (December 31, 2012 $92 million; January 1, 2012 $331 million). These commitments are included in the Companys consolidated commitments. |
(b) | On January 8, 2013, the Company announced commercial production at the Pueblo Viejo mine. |
(c) | The quoted market values of the Companys investments in Primero and Tahoe at March 31, 2013 was $208 million and $1.0 billion, respectively, based on the closing share prices. |
(d) | During the year ended December 31, 2012, Pueblo Viejo recognized an impairment expense of $35 million, net of tax (Goldcorps share $14 million), in respect of certain power assets. |
(e) | Net cash used in investing activities represents expenditures on mining interests. |
(f) | During the three months ended March 31, 2013, the Company received dividends of $21 million (2012 $nil) from Alumbrera. |
(g) | On December 13, 2012, Primero announced its intention to acquire 100% of the issued and outstanding shares of Cerro Resources NL (Cerro). Cerro holds a 69% interest in the feasibility stage Cerro del Gallo project in Mexico. The remaining 31% of the Cerro del Gallo project is held by the Company. Upon completion of the transaction, the Company would hold a direct and indirect holding of approximately 53% in the project. |
GOLDCORP | 17
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
8. | SEGMENTED INFORMATION |
Significant information relating to the Companys reportable operating segments is summarized in the tables below:
Revenues (c ) | Depreciation and depletion |
Earnings (loss) from |
Expenditures on mining |
|||||||||||||
Three months ended March 31, 2013 |
||||||||||||||||
Red Lake (a ) |
$ | 221 | $ | 27 | $ | 126 | $ | 65 | ||||||||
Porcupine |
104 | 13 | 37 | 22 | ||||||||||||
Musselwhite |
90 | 11 | 30 | 19 | ||||||||||||
Éléonore |
- | - | - | 112 | ||||||||||||
Peñasquito (a ) |
253 | 38 | 24 | 48 | ||||||||||||
Los Filos |
128 | 15 | 65 | 42 | ||||||||||||
El Sauzal |
26 | 6 | 4 | 1 | ||||||||||||
Marlin |
124 | 31 | 41 | 18 | ||||||||||||
Cerro Blanco |
- | - | - | 3 | ||||||||||||
Alumbrera (2) (note 3) |
- | - | 9 | - | ||||||||||||
Cerro Negro (h ) |
- | - | - | 132 | ||||||||||||
Marigold |
51 | 6 | 18 | 22 | ||||||||||||
Wharf |
18 | 1 | 8 | 1 | ||||||||||||
El Morro |
- | - | - | 16 | ||||||||||||
Pueblo Viejo (2) |
- | - | 33 | 14 | ||||||||||||
Other (b ) |
- | 2 | (75) | 7 | ||||||||||||
Consolidated segment total |
$ | 1,015 | $ | 150 | $ | 320 | $ | 522 | ||||||||
Alumbrera (1)(2) |
$ | 93 | $ | 15 | $ | 12 | $ | 21 | ||||||||
Pueblo Viejo (1)(2) |
111 | 10 | 31 | 23 | ||||||||||||
Attributable segment total (1) |
$ | 1,219 | $ | 175 | $ | 363 | $ | 566 |
(1) | The Company reports certain non-GAAP performance measures including Alumbrera and Pueblo Viejo on a proportionate basis instead of equity basis. |
(2) | The net total of expenditures on mining interests for Alumbrera and Pueblo Viejo represent expenditures on mining interests on a proportionate basis instead of equity basis. |
GOLDCORP | 18
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
Revenues (c ) | Depreciation and depletion |
Earnings (loss) from |
Expenditures on mining |
|||||||||||||
Three months ended March 31, 2012 | ||||||||||||||||
Red Lake (a) |
$ | 195 | $ | 18 | $ | 112 | $ | 61 | ||||||||
Porcupine |
103 | 13 | 39 | 22 | ||||||||||||
Musselwhite |
94 | 10 | 31 | 19 | ||||||||||||
Éléonore |
- | - | - | 87 | ||||||||||||
Peñasquito (a ) |
419 | 50 | 169 | 72 | ||||||||||||
Los Filos |
141 | 11 | 86 | 17 | ||||||||||||
El Sauzal |
35 | 9 | 13 | 3 | ||||||||||||
Marlin |
145 | 21 | 78 | 23 | ||||||||||||
Cerro Blanco |
- | - | - | 12 | ||||||||||||
Alumbrera (2) (note 3) |
- | - | 36 | - | ||||||||||||
Cerro Negro (h ) |
- | - | - | 52 | ||||||||||||
Marigold |
45 | 4 | 22 | 10 | ||||||||||||
Wharf |
34 | 1 | 18 | 1 | ||||||||||||
El Morro |
- | - | - | 28 | ||||||||||||
Pueblo Viejo (2) |
- | - | 1 | 138 | ||||||||||||
Other (b ) |
- | 4 | (101 | ) | 7 | |||||||||||
Consolidated segment total |
$ | 1,211 | $ | 141 | $ | 504 | $ | 552 | ||||||||
Alumbrera (1)(2) |
$ | 138 | $ | 17 | $ | 15 | $ | 3 | ||||||||
Pueblo Viejo (1)(2) |
- | - | (1 | ) | (57 | ) | ||||||||||
Attributable segment total (1) |
$ | 1,349 | $ | 158 | $ | 518 | $ | 498 |
(1) | The Company reports certain non-GAAP performance measures including Alumbrera and Pueblo Viejo on a proportionate basis instead of equity basis. |
(2) | The net total of expenditures on mining interests for Alumbrera and Pueblo Viejo represent expenditures on mining interests on a proportionate basis instead of equity basis. |
GOLDCORP | 19
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
Total Assets | ||||||||||||
At March 31 2013 |
At December 31 2012 |
At January 1 2012 |
||||||||||
Red Lake (a) |
$ | 3,577 | $ | 3,477 | $ | 3,039 | ||||||
Porcupine |
561 | 552 | 483 | |||||||||
Musselwhite |
559 | 550 | 488 | |||||||||
Éléonore |
1,939 | 1,808 | 1,269 | |||||||||
Peñasquito (a ) |
11,685 | 11,790 | 11,363 | |||||||||
Los Filos |
1,402 | 1,223 | 1,226 | |||||||||
El Sauzal |
138 | 140 | 222 | |||||||||
Marlin |
859 | 872 | 1,159 | |||||||||
Cerro Blanco |
181 | 180 | 133 | |||||||||
Alumbrera (note 3) |
563 | 575 | 404 | |||||||||
Cerro Negro (h ) |
5,491 | 5,312 | 4,732 | |||||||||
Marigold |
371 | 356 | 324 | |||||||||
Wharf |
73 | 83 | 105 | |||||||||
El Morro |
1,438 | 1,395 | 1,292 | |||||||||
Pueblo Viejo |
1,593 | 1,546 | 1,052 | |||||||||
Other (b ) |
2,202 | 1,120 | 1,855 | |||||||||
Total |
$ | 32,632 | $ | 30,979 | $ | 29,146 | ||||||
Total Liabilities | ||||||||||||
At March 31 2013 |
At December 31 2012 |
At January 1 2012 |
||||||||||
Red Lake (a) |
$ | 95 | $ | 124 | $ | 95 | ||||||
Porcupine |
252 | 259 | 173 | |||||||||
Musselwhite |
80 | 93 | 81 | |||||||||
Éléonore |
484 | 492 | 392 | |||||||||
Peñasquito (a ) |
2,916 | 3,011 | 2,947 | |||||||||
Los Filos |
144 | 116 | 103 | |||||||||
El Sauzal |
60 | 60 | 60 | |||||||||
Marlin |
112 | 115 | 97 | |||||||||
Cerro Blanco |
2 | 3 | 5 | |||||||||
Alumbrera (note 3) |
- | - | - | |||||||||
Cerro Negro (h ) |
1,542 | 1,362 | 1,203 | |||||||||
Marigold |
70 | 71 | 71 | |||||||||
Wharf |
38 | 39 | 51 | |||||||||
El Morro |
446 | 468 | 448 | |||||||||
Pueblo Viejo |
- | - | - | |||||||||
Other (b ) |
3,292 | 1,837 | 1,935 | |||||||||
Total |
$ | 9,533 | $ | 8,050 | $ | 7,661 |
GOLDCORP | 20
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
(a) | The Companys 100% interests in the Cochenour gold project in Canada and Camino Rojo gold project in Mexico are included in the Red Lake and Peñasquito reportable operating segments, respectively. |
(b) | Other includes corporate activities, the Companys investments in and results of Primero and Tahoe, certain exploration properties in Mexico and corporate assets which have not been allocated to the above segments. Total corporate assets and liabilities at March 31, 2013 were $1,579 million and $3,292 million, respectively (December 31, 2012 $492 million and $1,837 million, respectively; January 1, 2012 $1,285 million and $1,935 million, respectively). At March 31, 2013, exploration properties in Mexico had total assets and total liabilities with carrying values of $86 million and $nil, respectively (December 31, 2012 $86 million and $nil, respectively; January 1, 2012 $86 million and $nil, respectively). |
(c) | The Companys principal product is gold doré with the refined gold bullion sold primarily in the London spot market. Concentrate produced at Peñasquito and Alumbrera, containing both gold and by-product metals, is sold to third party refineries. |
The Companys revenues (excluding attributable share of revenues from associates) for the three months ended March 31 are as follows:
2013 | 2012 | |||||||
Gold |
$ | 823 | $ | 887 | ||||
Silver |
138 | 232 | ||||||
Copper |
3 | - | ||||||
Zinc |
36 | 58 | ||||||
Lead |
15 | 34 | ||||||
$ | 1,015 | $ | 1,211 |
(d) | Intersegment sales and transfers are eliminated in the above information reported to the Companys chief operating decision maker. |
(e) | Segmented expenditures on mining interests include capitalized borrowing costs, net of investment tax credits and are presented on an accrual basis. Expenditures on mining interests and interest paid in the Condensed Interim Consolidated Statements of Cash Flows are presented on a cash basis. For the three months ended March 31, 2013, the change in accrued expenditures and investment tax credits was an increase of $27 million (2012 increase of $7 million). |
(f) | The $39 million of net income (2012 $58 million) which reconciles the Companys total earnings from operations and associates of $320 million (2012 $504 million) to the Companys net earnings before tax of $359 million (2012 $562 million) primarily arose from corporate activities and would be primarily allocated to the Other reportable operating segment. |
(g) | The attributable segment total of earnings (loss) from operations and associates eliminates certain non-operating expenses/(income) which are included in Alumbrera and Pueblo Viejos net equity earnings on a consolidated basis. |
(h) | In respect of government regulations, the Company became subject to import restrictions enacted in Argentina relating to equipment, materials and services required for the construction of the Cerro Negro project. In addition, new import substitution requirements were announced in May 2012 requiring the Company to submit its import programs for review 120 days in advance. These new regulations have subjected the Company to delays in the project schedule. |
GOLDCORP | 21
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
9. | DEBT FINANCING |
At March 31 2013 |
At December 31 2012 |
At January 1 2012 |
||||||||||
$1.5 billion notes (a) |
$ | 1,480 | $ | - | $ | - | ||||||
$863 million convertible senior notes (b) |
795 | 783 | 737 | |||||||||
$ | 2,275 | $ | 783 | $ | 737 |
(a) | On March 20, 2013, the Company issued two tranches of notes totalling $1.5 billion, consisting of $500 million of 5-year notes (5-year Notes) with a coupon rate of 2.125% and $1.0 billion of 10-year notes (10-year Notes) with a coupon rate of 3.70% (collectively, the Notes or the Companys Notes) which mature on March 15, 2018 and March 15, 2023, respectively. The Notes are unsecured and interest is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2013. The Company received total proceeds of $1.48 billion, net of transaction costs. Holders of the Notes may redeem their holding at any time during the three months prior to maturity. The 5-year Notes and the 10-year Notes will be accreted to face value over the term of the Notes using an annual effective interest rate of 2.34% and 3.82%, respectively. |
(b) | On June 5, 2009, the Company issued convertible senior notes (the Convertible Notes) with an aggregate principal amount of $863 million. The Convertible Notes are unsecured and bear interest at an annual rate of 2.0% payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2010, and mature on August 1, 2014. |
Holders of the Convertible Notes may convert the Convertible Notes at their option at any time during the period from May 1, 2014 to the maturity date and at any time during the period from June 5, 2009 to May 1, 2014, subject to certain market and other conditions. The Convertible Notes are convertible into the Companys common shares at a conversion rate of 20.8407 common shares for every $1,000 principal amount of the Convertible Notes, subject to adjustment in certain events. Subject to satisfaction of certain conditions, the Company may, upon conversion by the holder, elect to settle in cash or a combination of cash and common shares. The Convertible Notes are non-redeemable, except upon occurrence of certain changes in Canadian withholding tax laws or a fundamental change.
The option to settle in cash upon conversion results in the conversion feature of the Convertible Notes being accounted for as an embedded derivative which must be separately accounted for at fair value upon initial recognition. Subsequently, the conversion feature is measured at fair value at each reporting date and the movement reported in net earnings (notes 11(a) & 11(c)(ii)). The carrying amount of the debt component upon initial recognition was calculated as the difference between the proceeds received for the Convertible Notes and the fair value of the conversion feature, and is accreted to the face value of the Convertible Notes over the term of the Convertible Notes using an annual effective interest rate of 8.57%.
Of the $16 million of interest incurred on the Companys Notes and the Convertible Notes for the three months ended March 31, 2013 (2012 $15 million), which includes $12 million of accretion (2012 $11 million), $16 million has been capitalized as part of the costs of qualifying mining properties (2012 $15 million) (note 6(b)).
GOLDCORP | 22
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
10. | INCOME TAXES |
Three months ended March 31 | 2013 | 2012 | ||||||
Current income tax expense |
$ 133 | $ 234 | ||||||
Deferred income tax recovery |
(83) | (151) | ||||||
Income taxes |
$ 50 | $ 83 |
Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings before taxes. These differences result from the following items:
Three months ended March 31 | 2013 | 2012 | ||||||
Earnings before taxes |
$ 359 | $ 562 | ||||||
Canadian federal and provincial income tax rates |
25.0% | 25.0% | ||||||
Income tax expense based on Canadian federal and provincial income tax rates |
90 | 141 | ||||||
Increase (decrease) attributable to: |
||||||||
Impact of foreign exchange on deferred income tax assets and liabilities (note 11(d)(iii)) |
(17 | ) | (55 | ) | ||||
Other impacts of foreign exchange (note 11(d)(iii)) |
(6 | ) | - | |||||
Non-deductible expenditures |
4 | 8 | ||||||
Effects of different foreign statutory tax rates on earnings of subsidiaries |
(2 | ) | 10 | |||||
Non-taxable mark-to-market gains on Convertible Notes (note 11(a)) |
(8 | ) | (13 | ) | ||||
Impact of Mexican inflation on tax values |
(9 | ) | (7 | ) | ||||
Other |
(2 | ) | (1 | ) | ||||
$ 50 | $ 83 |
GOLDCORP | 23
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
11. | FINANCIAL INSTRUMENTS |
(a) | Financial assets and liabilities classified as at fair value through profit or loss (FVTPL) |
The Companys financial assets and liabilities classified as at FVTPL (note 11(c)(ii)) are as follows:
At March 31 2013 |
At December 31 2012 |
At January 1 2012 |
||||||||||
Current derivative assets (1) |
||||||||||||
Foreign currency, heating oil, copper, lead, zinc and silver contracts |
$ | 55 | $ | 42 | $ | 20 | ||||||
Investments in warrants |
- | - | 1 | |||||||||
$ | 55 | $ | 42 | $ | 21 | |||||||
Current derivative liabilities |
||||||||||||
Foreign currency, heating oil, copper, lead, zinc and silver contracts |
$ | (33 | ) | $ | (30 | ) | $ | (28 | ) | |||
Non-financial contract to sell silver to Silver Wheaton (i) |
(37 | ) | (38 | ) | (37 | ) | ||||||
$ | (70 | ) | $ | (68 | ) | $ | (65 | ) | ||||
Non-current derivative liabilities |
||||||||||||
Non-financial contract to sell silver to Silver Wheaton (i ) |
$ | (11 | ) | $ | (22 | ) | $ | (53 | ) | |||
Conversion feature of Convertible Notes (notes 9 & 11(c)(ii)) |
(25 | ) | (57 | ) | (184 | ) | ||||||
$ | (36 | ) | $ | (79 | ) | $ | (237 | ) |
(1) | Included in other current assets on the Condensed Interim Consolidated Balance Sheets. |
In addition, accounts receivable arising from sales of metal concentrates have been designated and classified as at FVTPL (note 11(c)(ii)) by the Company as follows:
At March 31 2013 |
At December 31 2012 |
At January 1 2012 |
||||||||||
Arising from sales of metal concentrates classified as at FVTPL |
$ | 147 | $ | 298 | $ | 249 | ||||||
Not arising from sales of metal concentrates classified as loans and receivables |
307 | 269 | 154 | |||||||||
Accounts receivable |
$ | 454 | $ | 567 | $ | 403 |
The net gains on derivatives for the three months ended March 31 were comprised of the following:
2013 | 2012 | |||||||||
Realized gains (losses) |
||||||||||
Foreign currency, heating oil, copper, lead, zinc and silver contracts |
$ 5 | $ 5 | ||||||||
Non-financial contract to sell silver to Silver Wheaton (i) |
(5 | ) | (5 | ) | ||||||
- | - | |||||||||
Unrealized gains (losses) |
||||||||||
Foreign currency, heating oil, copper, lead, zinc and silver contracts |
9 | 15 | ||||||||
Investments in warrants |
- | (1 | ) | |||||||
Non-financial contract to sell silver to Silver Wheaton (i ) |
7 | (11 | ) | |||||||
Conversion feature of Convertible Notes |
33 | 52 | ||||||||
49 | 55 | |||||||||
$ 49 | $ 55 |
GOLDCORP | 24
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
(i) | Non-financial contract to sell silver to Silver Wheaton Corporation (Silver Wheaton) |
At March 31, 2013, management estimates that the fair value of the Companys commitment to deliver 1.5 million ounces of silver to Silver Wheaton during each of the four contract years ending August 5, 2014 at a fixed price per ounce is $48 million (December 31, 2012 $60 million; January 1, 2012 $90 million). The fair value was estimated as the difference between the forward market prices of silver for the remainder of the four contract years ending August 5, 2014 ranging from $28.35 to $28.64 per ounce (December 31, 2012 $30.24 to $30.42 per ounce; January 1, 2012 $28.04 to $29.55 per ounce) and the fixed price of $4.04 per ounce, subject to an annual adjustment for inflation, receivable from Silver Wheaton, multiplied by the remaining ounces to be delivered, and discounted using the Companys after-tax weighted average cost of capital. The remaining total ounces to be delivered by the Company as at March 31, 2013 were 2.0 million ounces (December 31, 2012 2.4 million ounces; January 1, 2012 3.9 million ounces).
(b) | Financial assets designated as available-for-sale |
The Companys investments in marketable securities (included in other current assets) and investment in securities (classified as non-current assets) are designated as available-for-sale. The unrealized (losses) gains on available-for-sale investments recognized in other comprehensive (loss) income (OCI) for the three months ended March 31 were as follows:
2013 | 2012 | |||||||
Mark-to-market (losses) gains on available-for-sale securities |
$ | (38 | ) | $ | 14 | |||
Deferred tax recovery (expense) in OCI |
4 | (2 | ) | |||||
Unrealized (losses) gains on equity securities, net of tax |
(34 | ) | 12 | |||||
Reclassification adjustment for impairment losses included in net earnings, net of tax of $1 million (2012 $nil) |
4 | 5 | ||||||
Reclassification adjustment for realized gains on disposition of available-for-sale securities recognized in net earnings, net of tax recovery of $1 million |
(1 | ) | - | |||||
$ | (31 | ) | $ | 17 |
At March 31, 2013, the Company recognized a net loss of $3 million (2012 $5 million) on the Companys available-for-sale equity securities which was comprised of an impairment expense of $5 million (2012 $5 million) recognized in respect of certain of the Companys equity securities, and a $2 million gain (2012 $nil) recognized on disposition of certain marketable securities.
(c) | Fair value information |
(i) | Fair value measurements of financial assets and liabilities recognized on the Condensed Interim Consolidated Balance Sheets |
The categories of the fair value hierarchy that reflect the significance of inputs used in making fair value measurements are as follows:
Level 1 quoted prices in active markets for identical assets or liabilities;
Level 2 inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 inputs for the asset or liability that are not based on observable market data.
At March 31, 2013, the levels in the fair value hierarchy into which the Companys financial assets and liabilities are measured and recognized on the Condensed Interim Consolidated Balance Sheets at fair value on a recurring basis are categorized as follows:
GOLDCORP | 25
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
March 31, 2013 | December 31, 2012 | January 1, 2012 | ||||||||||||||||||||||
Level 1 | Level 2 | Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||||||||
Cash and cash equivalents (note 14) |
$ | 1,463 | $ | - | $ | 757 | $ | - | $ | 1,458 | $ | - | ||||||||||||
Marketable securities (1) |
3 | - | 12 | - | 15 | - | ||||||||||||||||||
Accounts receivable arising from sales of metal concentrates (note 11(a)) |
- | 147 | - | 298 | - | 249 | ||||||||||||||||||
Investments in warrants |
- | - | - | - | 1 | - | ||||||||||||||||||
Investments in equity securities |
126 | - | 162 | - | 207 | - | ||||||||||||||||||
Current derivative assets (note 11(a)) |
- | 55 | - | 42 | - | 21 | ||||||||||||||||||
Current derivative liabilities (note 11(a)) |
- | (70) | - | (68) | - | (65) | ||||||||||||||||||
Non-current derivative liabilities: |
||||||||||||||||||||||||
Non-financial contract to sell silver to Silver Wheaton (note 11(a)) |
- | (11) | - | (22) | - | (53) | ||||||||||||||||||
Conversion feature of Convertible Notes (note 11(a)) |
- | (25) | - | (57) | - | (184) |
(1) | Included in other current assets on the Condensed Interim Consolidated Balance Sheets. |
At March 31, 2013, there were no financial assets and liabilities measured and recognized at fair value on a non-recurring basis.
The Companys policy for determining when a transfer occurs between levels in the fair value hierarchy is to assess the impact at the date of the event or the change in circumstances that could result in a transfer. There were no transfers between level 1 and level 2 during the three months ended March 31, 2013.
At March 31, 2013, there were no financial assets or liabilities measured and recognized on the Condensed Interim Consolidated Balance Sheets at fair value that would be categorized as level 3 in the fair value hierarchy above (December 31, 2012 $nil; January 1, 2012 $nil).
(ii) | Valuation methodologies for Level 2 financial assets and liabilities |
Accounts receivable arising from sales of metal concentrates:
The Companys metal concentrate sales contracts are subject to provisional pricing with the selling price adjusted at the end of the quotational period. At each reporting date, the Companys accounts receivable on these contracts are marked-to-market based on a quoted forward price for which there exists an active commodity market.
Current derivative assets and liabilities:
The Companys current derivative assets and liabilities are comprised of commodity and currency forward and option contracts and the current portion of the Companys non-financial contract to sell silver to Silver Wheaton. The fair values of the forward contracts are calculated using discounted contractual cash flows based on quoted forward curves and discount rates incorporating LIBOR and the applicable yield curve. The fair values of the option contracts are priced using an option pricing model which utilizes a combination of quoted prices and market-derived inputs, including volatility estimates and option adjusted credit spreads.
Non-financial contract to sell silver to Silver Wheaton:
The fair value of ounces to be delivered is calculated using quoted silver forward prices over the contractual term less the fixed price of $4.04 per ounce, subject to an annual adjustment for inflation, and discounted using the Companys after-tax weighted average cost of capital (note 11(a)(i)).
GOLDCORP | 26
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
Conversion feature of convertible senior notes:
The fair value of the conversion feature is calculated using an option pricing model. The model utilizes a discounted cash flow analysis using a discount rate with an option adjusted credit spread, and the closing price of the Companys Convertible Notes at the balance sheet date, which are traded in an active market (notes 9 & 11(a)).
(iii) | Fair values of financial assets and liabilities not already measured and recognized at fair value on the Consolidated Balance Sheets |
At March 31, 2013, the carrying amounts of accounts receivable not arising from sales of metal concentrates, and accounts payable and accrued liabilities are considered to be reasonable approximations of their fair values due to the short-term nature of these instruments.
$1.5 billion notes:
The initial recognition amount of the Companys Notes has been accreted from March 20, 2013 to March 31, 2013 based on an annual effective interest rate of 2.34% and 3.82% for the 5-year Notes and 10-year Notes, respectively (note 9). At March 31, 2013, the carrying amount of the Notes was $1.48 billion, which includes $1.5 million of accrued interest payable included in accounts payable and accrued liabilities. As the Companys Notes were issued on March 20, 2013, the carrying value of the Companys Notes represents the approximate fair value at March 31, 2013.
Convertible senior notes:
The initial recognition amount of the liability component of the Companys Convertible Notes has been accreted from June 5, 2009 to March 31, 2013 based on an annual effective interest rate of 8.57% (note 9). At March 31, 2013, the fair value of the liability component of the Companys Convertible Notes calculated using the closing price of the Convertible Notes at March 31, 2013 and bifurcating the fair value of the conversion option, was $875 million, compared to a carrying amount of $795 million, which includes $4 million of accrued interest payable included in accounts payable and accrued liabilities at March 31, 2013.
Primero 5-year Promissory Note:
The Primero 5-year Promissory Note has been accreted during the three months ended March 31, 2013 based on an annual effective interest rate of 5.50%. Management estimates the market interest rate on similar borrowings has decreased to approximately 4.26% per annum as at March 31, 2013. Accordingly, the fair value of the Primero 5-year Promissory Note has increased to $34 million, compared to a carrying amount of $33 million.
The fair value of financial assets and liabilities not already measured and recognized at fair value are measured using Level II inputs of the fair value hierarchy.
(d) | Financial instruments and related risks |
The Company manages its exposure to financial risks, including credit risk, liquidity risk, currency risk, interest rate risk and price risk, in accordance with its Risk Management Policy. The Companys Board of Directors oversees managements risk management practices by setting trading parameters and reporting requirements. The Risk Management Policy provides a framework for the Company to manage the risks it is exposed to in various markets and to protect itself against adverse price movements. All transactions undertaken are to support the Companys ongoing business. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes.
The following describes the types of risks that the Company is exposed to and its objectives and policies for managing those risk exposures:
GOLDCORP | 27
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
(i) | Credit risk |
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. There has been no change in the Companys objectives and policies for managing this risk during the three months ended March 31, 2013.
(ii) | Liquidity risk |
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. There has been no significant change in the Companys objectives and policies for managing this risk during the three months ended March 31, 2013.
During the three months ended March 31, 2013, the Company generated operating cash flows of $294 million (2012 $339 million). At March 31, 2013, Goldcorp held cash and cash equivalents of $1,463 million (December 31, 2012 $757 million; January 1, 2012 $1,458 million) and working capital of $2,230 million (December 31, 2012 $1,127 million; January 1, 2012 $2,130 million) which the Company defines as current assets less current liabilities. The Company also held $551 million of deposits with terms greater than 90 days at March 31, 2013 (December 31, 2012 $nil; January 1, 2012 $272 million).
On March 20, 2013, the Company issued two tranches of notes totalling $1.5 billion, consisting of $500 million of 5-year Notes with a coupon rate of 2.125% and $1.0 billion of 10-year Notes with a coupon rate of 3.70% (note 9). The Notes are unsecured and interest is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2013. The Company received proceeds of $1.48 billion, net of transaction costs. Holders of the Notes may redeem their holding at any time during the three months prior to maturity.
During the three months ended March 31, 2013, the Companys Cerro Negro project in Argentina entered into a 1-year $131 million credit facility agreement with Alumbrera. The principal drawn bears interest at 2% per annum. At March 31, 2013, Cerro Negro had drawn $131 million against the facility which has been recorded in other current liabilities.
On December 18, 2012, the Company entered into a 1-year $469 million Argentine peso ($100 million) credit facility with a third party in Argentina. This credit facility will be used to fund construction at the Companys Cerro Negro project. The facility bears interest at Badlar, the average interest rate paid on short-term deposits over $1 million Argentine pesos, plus a floating margin based on 75% of the differential between the general lending rate and the deposit rate set by the Standard Bank Argentina S.A. At March 31, 2013, the Company had drawn $45 million against the credit facility (December 31, 2012 $45 million; January 1, 2012 $nil) which has been recorded in other current liabilities.
Of the $1 million interest incurred on the draw down of the credit facilities for the three months ended March 31, 2013 (2012 $nil), $1 million (2012 $nil) has been capitalized as part of the costs of qualifying mining properties (note 6(b)).
At March 31, 2013, the Company had an undrawn $2.0 billion revolving credit facility available. The Company extended the $2 billion revolving credit facility to 2018.
At March 31, 2013, the Company had letters of credit outstanding and secured deposits in the amount of $421 million (December 31, 2012 $427 million; January 1, 2012 $308 million).
In the opinion of management, the working capital at March 31, 2013, together with future cash flows from operations and available funding facilities, is sufficient to support the Companys commitments. At March 31, 2013, the Companys capital and operating commitments over the next twelve months amounted to $780 million (December 31, 2012 $755 million; January 1, 2012 $768 million). The Companys total planned capital expenditures for 2013 are $2.8 billion, 40% of which relate to operations and the remaining 60% to projects (Cerro Negro, Éléonore, Cochenour, El Morro and Camino Rojo).
GOLDCORP | 28
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
For the periods beyond 2013, the Companys cash flows from operations and available funding under the Companys loan and credit facilities are expected to sufficiently support further expansions and growth. Peñasquito will be the main driver of the Companys gold production growth expected in the next five years, with significant contributions from Red Lake, Pueblo Viejo and Cerro Negro.
(iii) | Market risk |
Currency risk
Currency risk is the risk that the fair values or future cash flows of the Companys financial instruments will fluctuate because of changes in foreign currency exchange rates. There has been no change in the Companys objectives and policies for managing this risk during the three months ended March 31, 2013.
The Company is exposed to currency risk through financial assets and liabilities and deferred income tax assets and liabilities denominated in currencies other than US dollars (the foreign currencies).
During the three months ended March 31, 2013, the Company recognized a net foreign exchange gain of $2 million (2012 $9 million). Based on the Companys net exposures (other than those relating to taxes) at March 31, 2013, a 10% depreciation or appreciation of the foreign currencies against the US dollar would result in an approximate $12 million decrease or increase in the Companys after-tax net earnings, respectively.
During the three months ended March 31, 2013, the Company recognized a net foreign exchange gain of $20 million in income tax expense on income taxes receivable/(payable) and deferred taxes (2012 $51 million). Based on the Companys net exposures relating to taxes at March 31, 2013, a 10% depreciation or appreciation of the foreign currencies against the US dollar would result in an approximate $144 million decrease or increase in the Companys after-tax net earnings, respectively.
During the three months ended March 31, 2013 and in accordance with its Risk Management Policy, the Company entered into Canadian dollar and Mexican peso forward and option contracts to purchase and sell the respective foreign currencies at pre-determined US dollar amounts. These contracts were entered into to normalize operating expenses incurred by the Companys foreign operations as expressed in US dollar terms.
Interest rate risk
Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk primarily on its outstanding borrowings, its share of the Pueblo Viejo project financing and credit facility and its cash and cash equivalents, money market investments, certain short-term credit facilities and interest-bearing receivables.
There has been no significant change in the Companys exposure to interest rate risk and there has been no change to its objectives and policies for managing these risks during the three months ended March 31, 2013.
Price risk
Price risk is the risk that the fair value or future cash flows of the Companys financial instruments will fluctuate because of changes in market prices. There has been no change in the Companys objectives and policies for managing this risk and no significant change to the Companys exposure to price risk during the three months ended March 31, 2013.
GOLDCORP | 29
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
12. | SHARE-BASED COMPENSATION AND OTHER RELATED INFORMATION |
(a) | Stock options |
The Company granted 2.7 million stock options to its employees and officers during the three months ended March 31, 2013, which vest over a period of 3 years, are exercisable at C$33.48 per option, expire in 2018, and had a total fair value of $20 million at the date of grant. The Company granted 1.5 million stock options during the three months ended March 31, 2012, which vest over a period of 3 years, are exercisable at C$48.72 per option, expire in 2017 and had a total fair value of $18 million at the date of grant.
The fair value of stock options granted during the three months ended March 31 was calculated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
2013 | 2012 | |||||||
Expected life |
3 years | 3 years | ||||||
Expected volatility |
36.9% | 37.6% | ||||||
Expected dividend yield |
1.8% | 1.1% | ||||||
Estimated forfeiture rate |
9.3% | 9.0% | ||||||
Risk-free interest rate |
1.2% | 1.1% | ||||||
Weighted average share price of options granted |
$ 32.57 | $ 48.80 | ||||||
Weighted average fair value per option |
$ 8.15 | $ 12.87 |
The expected volatility assumption is based on the historical and implied volatility of Goldcorps Canadian dollar common share price on the Toronto Stock Exchange. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options expected life.
The following table summarizes the changes in outstanding stock options during the three months ended March 31, 2013 and 2012:
Options Outstanding (000s) |
Weighted Average Exercise Price (C$/option) |
|||||||
At January 1, 2013 |
16,345 | $ 42.01 | ||||||
Granted |
2,684 | 33.48 | ||||||
Exercised |
(8) | 21.16 | ||||||
Forfeited |
(53) | 46.93 | ||||||
At March 31, 2013 |
18,968 | $ 40.80 | ||||||
At January 1, 2012 |
17,574 | $ 41.49 | ||||||
Granted |
1,536 | 48.72 | ||||||
Exercised |
(181) | 34.45 | ||||||
Forfeited |
(94) | 45.52 | ||||||
At March 31, 2012 |
18,835 | $ 42.13 |
During the three months ended March 31, 2013, the weighted average share price at the date stock options were exercised was C$33.97 (2012 C$47.15).
GOLDCORP | 30
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
The following table summarizes information about the Companys stock options outstanding at March 31, 2013:
Options Outstanding | Options Exercisable | |||||||||||||||||||||||
Exercise Prices (C$/option) |
Options Outstanding |
Weighted Average Exercise Price (C$/option) |
Weighted Average Remaining Contractual Life (years) |
Options Outstanding and Exercisable |
Weighted Average Exercise Price (C$/option) |
Weighted Average Remaining Contractual Life (years) |
||||||||||||||||||
$16.87 $19.23 |
667 | $ | 18.48 | 1.7 | 667 | $ | 18.48 | 1.7 | ||||||||||||||||
$24.40 $25.71 |
629 | 25.64 | 4.2 | 629 | 25.64 | 4.2 | ||||||||||||||||||
$28.84 $31.93 |
632 | 31.02 | 3.2 | 632 | 31.02 | 3.2 | ||||||||||||||||||
$33.48 $35.66 |
4,774 | 34.41 | 3.3 | 2,055 | 35.60 | 1.2 | ||||||||||||||||||
$37.82 $40.79 |
1,662 | 39.62 | 0.3 | 1,634 | 39.62 | 0.3 | ||||||||||||||||||
$44.50 $46.76 |
4,332 | 44.53 | 2.1 | 2,767 | 44.52 | 2.1 | ||||||||||||||||||
$48.16 $48.72 |
6,272 | 48.28 | 3.1 | 3,784 | 48.23 | 3.0 | ||||||||||||||||||
18,968 | $ | 40.80 | 2.7 | 12,168 | $ | 40.40 | 2.1 |
(b) | Restricted share units (RSUs) |
The Company issued 1.6 million RSUs during the three months ended March 31, 2013, which vest over 3 years and which have a total fair value of $49 million based on the market value of the underlying shares at the date of issuance (weighted average fair value per RSU $33.60). There were 1.2 million RSUs issued during the three months ended March 31, 2012 which vest over 3 years and had a total fair value of $51 million at the date of issuance. At March 31, 2013, there were 2.5 million RSUs outstanding (December 31, 2012 1.4 million; January 1, 2012 0.7 million).
(c) | Stock options and restricted share units compensation expense |
Total stock options and RSUs vested during the three months ended March 31, 2013 and recorded as share-based compensation expense which is included in corporate administration in the Condensed Interim Consolidated Statements of Earnings with a corresponding credit to shareholders equity was $14 million (2012 $24 million).
(d) | Performance share units (PSUs) compensation expense |
During the three months ended March 31, 2013, the Company issued 294,897 PSUs with a total fair value of $7 million at the date of issuance. During the three months ended March 31, 2012, the Company issued 183,155 PSUs with a total fair value of $8 million at the date of issuance. The fair value of PSUs granted during the three months ended March 31 was calculated as of the date of grant using a binomial pricing model with the following weighted average assumptions:
2013 | 2012 | |||||||
Expected life |
3 years | 3 years | ||||||
Expected volatility |
33.5% | 37.2% | ||||||
Expected dividend yield |
1.8% | <1.0% | ||||||
Estimated forfeiture rate |
9.3% | 9.0% | ||||||
Risk-free interest rate |
1.2% | 1.1% | ||||||
Weighted average share price |
$ | 34.33 | $ | 47.20 |
Total share-based compensation expense included in corporate administration in the Condensed Interim Consolidated Statements of Earnings relating to PSUs for the three months ended March 31, 2013 was $3 million (2012 $4 million).
GOLDCORP | 31
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
At March 31, 2013, the carrying amount of PSUs outstanding and included in current liabilities and other non-current liabilities was $10 million and $2 million, respectively (December 31, 2012 $3 million and $5 million, respectively; January 1, 2012 $nil and $7 million, respectively). At March 31, 2013, the total intrinsic value of PSUs outstanding and vested was $nil (December 31, 2012 $nil; January 1, 2012 $nil).
(e) | Phantom restricted units (PRUs) |
On January 22, 2013, the Board of Directors approved a Phantom Restricted Units Plan (the Plan). Under the Plan, participants will be granted a number of PRUs and will be entitled to a cash payment equivalent to the fair market value of one common share for each PRU held by the participant on the vesting date.
The Company issued 397,681 PRUs during the three months ended March 31, 2013, which vest over 3 years and which have a total fair value of $12 million based on the market value of the underlying shares at the date of issuance (weighted average fair value per unit $32.57). At March 31, 2013, the total carrying amount of PRUs outstanding and included in current liabilities and other non-current liabilities was $1 million (December 31, 2012 $ nil; January 1, 2012 $nil).
(f) | Employee share purchase plan |
During the three months ended March 31, 2013, the Company recorded compensation expense of $1 million (2012 $1 million) in corporate administration in the Condensed Interim Consolidated Statements of Earnings, representing the Companys contributions to the employee share purchase plan measured using the market price of the underlying shares at the dates of contribution.
(g) | Issued share capital |
The Company has an unlimited number of authorized shares and does not reserve shares for issuances in connection with the exercise of stock options and the vesting of restricted share units.
13. | PER SHARE INFORMATION |
Net earnings per share for the three months ended March 31 were calculated based on the following:
2013 | 2012 | |||||||
Basic net earnings |
$ | 309 | $ | 479 | ||||
Effect of dilutive securities: |
||||||||
Conversion feature of Convertible Notes change in fair value recognized in earnings |
(33) | (52) | ||||||
Diluted net earnings |
$ | 276 | $ | 427 | ||||
Net earnings per share for the three months ended March 31 were calculated based on the following: |
||||||||
(in thousands) | 2013 | 2012 | ||||||
Basic weighted average number of shares outstanding |
811,668 | 810,046 | ||||||
Effect of dilutive securities: |
||||||||
Stock options |
589 | 2,033 | ||||||
Restricted share units |
2,494 | 1,726 | ||||||
Convertible Notes |
18,235 | 17,975 | ||||||
Diluted weighted average number of shares outstanding |
832,986 | 831,780 |
GOLDCORP | 32
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
The weighted average number of stock options outstanding during the three months ended March 31, 2013 was 17.2 million (2012 17.8 million), of which 2.9 million was dilutive (2012 11.6 million) and included in the above tables. The effect of the remaining 14.3 million stock options (2012 6.2 million) was anti-dilutive because the underlying exercise prices exceeded the average market price of the underlying common shares of C$34.88 (2012 C$46.42).
Dividends declared:
During the three months ended March 31, 2013, the Company declared and paid to its shareholders dividends of $0.15 per share for total dividends of $122 million (2012 $0.135 per share for total dividends of $109 million). For the period April 1, 2013 to May 2, 2013, the Company declared dividends payable of $0.05 per share for total dividends of approximately $41 million.
14. | SUPPLEMENTAL CASH FLOW INFORMATION |
Three months ended March 31 | 2013 | 2012 | ||||||
Change in operating working capital |
||||||||
Accounts receivable |
$ | 91 | $ | (169) | ||||
Inventories and stockpiled ore |
(59) | 1 | ||||||
Accounts payable and accrued liabilities |
(79) | 39 | ||||||
Income taxes payable |
8 | 36 | ||||||
Other |
(6) | 2 | ||||||
$ | (45) | $ | (91) | |||||
|
||||||||
Three months ended March 31 | 2013 | 2012 | ||||||
Operating activities include the following cash received (paid): |
||||||||
Interest received |
$ | 2 | $ | 1 | ||||
Interest paid |
(5) | - | ||||||
Income taxes paid |
(123) | (198) | ||||||
Investing activities include the following cash received (paid): |
||||||||
Purchases of money market investments |
(551) | (10) | ||||||
Purchases of available-for-sale securities |
(2) | (4) | ||||||
Investing activities of discontinued operations include the following cash received: |
||||||||
Principal repayment on promissory note receivable from Primero |
8 | 5 |
At March 31 2013 |
At December 31 2012 |
At January 1 2012 |
||||||||||
Cash and cash equivalents are comprised of: |
||||||||||||
Cash |
$ | 291 | $ | 455 | $ | 151 | ||||||
Short-term money market investments |
1,172 | 302 | 1,307 | |||||||||
$ | 1,463 | $ | 757 | $ | 1,458 |
GOLDCORP | 33
First Quarter Report 2013
(In millions of United States dollars, except where noted Unaudited)
15. | CONTINGENCIES |
Due to the size, complexity and nature of the Companys operations, various legal and tax matters are outstanding from time to time. In the event that managements estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its consolidated financial statements on the date such changes occur.
(a) | On February 27, 2013, President Medina of the Dominican Republic, in his first Independence Day speech to the National Assembly, announced that the government would submit to Congress a bill that would establish a tax on unforeseen income of mineral-exporting companies unless Pueblo Viejo Dominicana Corporation (PVDC) would promptly agree to the governments demands to increase the benefits to the government under the SLA at the Pueblo Viejo mine. |
Barrick Gold Corp (Barrick), the mine operator, while fully reserving its rights under the SLA, which cannot be unilaterally altered, has engaged in dialogue with representatives of the government in an effort to achieve a mutually acceptable outcome. This could potentially involve a renegotiation of the SLA and/or the imposition of other measures, for instance to provide for an increase in the payment of taxes in the earlier years of the mine life, and could have a significant negative effect on project economics and, in particular, the distribution of profits and cash flows of the mine. To date, the parties have been unable to reach agreement. The government has threatened to take unilateral action, such as introducing the unforeseen income tax announced by the President or blocking the export of minerals. Such actions would constitute a violation of the SLA, which provides for international arbitration of disputes under the Arbitration Rules of the International Chamber of Commerce. Any such actions taken by the government in an effort to extract greater revenues would negatively affect the profitability and cash flow of the mine. The potential operational impacts of any such action are difficult to predict at this time. Depending on the nature and extent of any unilateral actions that the government may take, the joint venture partners could, among other things, decide to curtail, or suspend production at the mine, or to pay the tax under protest, while pursuing their rights under international arbitration. The Company is also aware of various legal proceedings which, among other things, seek to challenge the constitutionality of the SLA.
On April 4, 2013, the main opposition party in the Dominican Republic introduced a bill in the Chamber of Deputies that would establish a windfall profit tax on PVDC. To the Companys knowledge, no further action has been taken by the Chamber of Deputies with respect to this bill.
On March 13, 2013, customs authorities in the Dominican Republic prevented PVDC from exporting a shipment of gold and silver from the Pueblo Viejo mine. The shipment was subsequently released and shipped out of the Dominican Republic on March 18, 2013. In late March and early April 2013, PVDC was informed of certain additional requirements that will apply to shipments of gold and silver from the Pueblo Viejo mine. PVDC is complying with these new measures.
GOLDCORP | 34
CORPORATE OFFICE |
STOCK EXCHANGE LISTING | |
Park Place Suite 3400 666 Burrard Street Vancouver, BC V6C 2X8 Canada |
Toronto Stock Exchange: G New York Stock Exchange: GG | |
Tel: (604) 696-3000 |
TRANSFER AGENT | |
Fax: (604) 696-3001 |
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www.goldcorp.com |
CIBC Mellon Trust Company | |
TORONTO OFFICE
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(Canadian Stock Transfer Company Inc. acts as Administrative Agent for CIBC Mellon Trust Company) Suite 1600 1066 West Hastings Street Vancouver, BC V6E 3X1 Canada Toll free in Canada and the US: (800) 387-0825 | |
Suite 3201 130 Adelaide Street West |
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Toronto, ON M5H 3P5 Canada |
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Tel: (416) 865-0326 |
Outside of Canada and the US: | |
Fax: (416) 359-9787 |
(416) 682-3860 | |
RENO OFFICE
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inquiries@canstockta.com www.canstockta.com | |
Suite 310 5190 Neil Road |
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Reno, NV 89502 United States |
AUDITORS | |
Tel: (775) 827-4600 |
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Fax: (775) 827-5044 |
Deloitte LLP | |
Vancouver, BC | ||
MEXICO OFFICE
Paseo de las Palmas 425 - 15 Lomas de Chapultepec 11000 Mexico, D.F. Tel: 52 (55) 5201-9600
GUATEMALA OFFICE
5ta avenida 5 55 zona 14 Europlaza Torre 1 Nivel 6 oficina 601 Guatemala City Guatemala, 01014 Tel: 502 2329 2600 |
INVESTOR RELATIONS
Jeff Wilhoit Vice President, Investor Relations Toll free: (800) 567-6223 Email: info@goldcorp.com
REGULATORY FILINGS
The Companys filings with the Ontario Securities Commission can be accessed on SEDAR at www.sedar.com. | |
The Companys filings with the US Securities and | ||
ARGENTINA OFFICE
Maipu 255, Piso 12 C1084ABE Capital Federal Buenos Aires, Argentina Tel: 54 114 323 7000
CHILE OFFICE
Avda. Apoquindo 4501, oficina 703 Las Condes Santiago 7580125, Chile Tel: 562 898 9300 |
Exchange Commission can be accessed on EDGAR at www.sec.gov. | |
GOLDCORP | 35
Exhibit 99.3
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Charles Jeannes, President and Chief Executive Officer of Goldcorp Inc., certify the following:
1. | Review: I have reviewed the unaudited condensed interim consolidated financial report and interim Managements Discussion and Analysis (MD&A) (together, the interim filings) of Goldcorp Inc. (the issuer) for the interim period ended March 31, 2013; |
2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the unaudited condensed interim consolidated financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
4. | Responsibility: The issuers other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings, for the issuer. |
5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuers other certifying officer and I have, as at the end of the period covered by the interim filings, |
(a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
(i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
(ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
(b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuers GAAP. |
- 2 -
5.1 | Control framework: The control framework the issuers other certifying officer and I used to design the issuers ICFR is Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission. |
5.2 | N/A. |
5.3 | N/A. |
6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuers ICFR that occurred during the period beginning on January 1, 2013 and ended on March 31, 2013 that has materially affected, or is reasonably likely to materially affect, the issuers ICFR. |
Date: May 2, 2013 |
/s/ Charles Jeannes |
Signature: Charles Jeannes |
Title: President and Chief Executive Officer |
Exhibit 99.4
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Lindsay Hall, Executive Vice President and Chief Financial Officer of Goldcorp Inc., certify the following:
1. | Review: I have reviewed the unaudited condensed interim consolidated financial report and interim Managements Discussion and Analysis (MD&A) (together, the interim filings) of Goldcorp Inc. (the issuer) for the interim period ended March 31, 2013; |
2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the unaudited condensed interim consolidated financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
4. | Responsibility: The issuers other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings, for the issuer. |
5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuers other certifying officer and I have, as at the end of the period covered by the interim filings, |
(a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
(i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
(ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
(b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuers GAAP. |
- 2 -
5.1 | Control framework: The control framework the issuers other certifying officer and I used to design the issuers ICFR is Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission. |
5.2 | N/A. |
5.3 | N/A. |
6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuers ICFR that occurred during the period beginning on January 1, 2013 and ended on March 31, 2013 that has materially affected, or is reasonably likely to materially affect, the issuers ICFR. |
Date: May 2, 2013 |
/s/ Lindsay Hall |
Signature: Lindsay Hall |
Title: Executive Vice President and Chief Financial Officer |