WOW… the Q2 Financial Results for GOLDCORP & BARRICK are atrocious:
As I have previously mentioned, I believed gold miners would suffer less than silver or base metal mining companies this quarter due to the fact that the price of gold topped in Q3 2011. However, it seems like the SLAUGHTER CONTINUES even in the gold sector.
Barrick and Goldcorp are in the top 5 gold mining companies in the world… Barrick is number 1.
Here is the results from GOLDCORP:
Even though Goldcorp’s revenues are down we have to consider they sold less gold this past quarter. However, it wasn’t much less than the previous quarter. If we compare the two, we see that NET EARNINGS DECLINED 44% since the last quarter. This is more than I would have thought. Costs are increasing and the price paid for the metal declined.
Furthermore, if we look across all the different past quarters we can see that Goldcorp made a great deal more earnings even though the price of gold was much less than it is currently. This proves that COSTS ARE INCREASING RAPIDLY.
I did not make a chart for Barrick as their report was not easy to reproduce here. I can say this, their Q2 gold production is down and their earnings were as follows:
2011 Q2 Results
REVENUES = $3.4 BILLION
NET EARNINGS = $1.2 BILLION
2012 Q2 Results:
REVENUES = $3.3 BILLION
NET EARNINGS = $750 MILLION
Here we can see that even though revenues are about the same, net earnings have fallen 35% compared to the same time last year. So… I am proven wrong.
The gold miners profit margins are getting hammered even though the price they are getting for gold is higher than it was in the same period last year.
PASCUA LAMA…. A THORN IN THE SIDE OF BARRICK???
I believe Barrick has huge problems with its Pascua Lama mine that is located in the Ande Mountains in a glacier field. Here is their update on the mine:
Due to lower than expected productivity and persistent inflationary and other cost pressures, as previously disclosed, the company initiated a detailed review of the cost and schedule estimates for Pascua-Lama in the second quarter. Preliminary results currently indicate an approximate 50-60 percent increase in capital costs from the top end of the previously announced estimate of $4.7-$5.0 billion, with first production expected in mid-2014. The company will provide a further progress update with third quarter results.
Again… we see that there is COST INCREASES as well as problems with getting work done on schedule. Barrick was supposed to produce gold by the first quarter of 2013, now it has moved to the middle of 2014.
IS BARRICK HIDING THE FACT THAT THEY REALLY HAVE BIG PROBLEMS??