Meanwhile, Vancouver’s largest mining company, Teck Resources Ltd. (TSX:TCK) posted a modest profit of $15 million – or $0.03 per share.
Goldcorp is not the only large gold mining company that has been punished by investors, despite gold prices being up by 24% since the beginning of this year – from US$1,078 to US$1,336 per ounce.
Barrick Gold (TSX:ABX) also suffered a share price drop of about 3% after it too posted financials that were below analyst expectations.
Goldcorp’s shares were trading at $24.91 per share at the close of markets July 27. Following a disappointing second quarter financial report, shares dropped as low as $23.12 per share this morning before recovering somewhat.
Goldcorp recorded a net profit of $392 million in Q2 2015. The $78 million loss it posted in Q2 ($0.09 per share) is being attributed to lower production, as a result of a 10-day mill shut down at the company’s Peñasquito mine in Mexico, as well as lower ore grades.
A corporate restructuring that included a workforce reduction also contributed to lower production in the first half. Goldcorp produced 1.6 million ounces of gold in the first half of 2015; production was down to 1.4 million in the first half of 2016.
"While lower production was expected in the second quarter, the decision to accelerate a significant organizational restructuring had a short-term, negative impact on gold production,” said Goldcorp CEO David Garofalo.
Going forward, the company expects decentralization and optimization of its workforce and corporate structure will result in annual savings of $250 million starting in 2018.
As for Teck, the company has struggled to cope with prolonged low copper and metallurgical coal prices for about five years now. Steel-making coal accounts for nearly half of Teck’s business.
A prolonged global glut and lower demand have kept met coal prices at about a third of what they were in 2011. Prices are slowly beginning to rebound. Teck has signed agreements with buyers to ship coal at US$92.50 per tonne, the company states in its Q2 financials.
"While the commodity cycle continues to be challenging, we are starting to see some positive changes in the direction of zinc and steelmaking coal prices," said Teck CEO Don Lindsay.
Teck’s $15 million profit in the second half of 2016 is lower than the first half of 2015, which was $63 million ($0.11 per share).
