The mining industry seems simple enough to understand: grab some shovels and start digging stuff out of the ground. But that's not to say that it's easy to identify how companies make their money. For example, Goldcorp (GG) includes the sale of silver, copper, zinc, and lead as revenue sources. This being said, the company predominantly relies on the sale of gold to keep the lights on. Whereas it reported $3.5 billion in sales for fiscal 2016, gold sales accounted for $2.86 billion -- 81.5% of overall revenue -- according to its 2016 annual report; revenue from silver sales only amounted to $384 million, while revenues from other mineral sales totaled $265 million.

Operating mines across the Americas, Goldcorp is in the nascent stages of a five-year plan that management expects will grow net asset value per share. Let's dig a little deeper and see how the sale of gold figures into the company's picture.

A pickaxe rests on a pile of gold nuggets.

Image source: Getty Images.

Golden nuggets of insight

Goldcorp maintains gold-mining operations in Canada and throughout Latin America, but it is the company's lone operation in Mexico that provided the lion's share of revenue last year. Penasquito, Mexico's largest gold-producing mine, accounted for 465,000 ounces of gold production and $1.04 billion in revenue in fiscal 2016, far outpacing the company's second most productive mine, Cerro Negro, which reported 363,000 ounces of gold production and $532 million in revenue for fiscal 2016.

It may be tempting to conclude that Penasquito's high all-in sustaining costs (AISC) precluded it from being one of the more profitable operations in the company's portfolio -- the mine's AISC were $937 per gold ounce in FY 2016, whereas Goldcorp's overall AISC were $856 per ounce -- but this would be fairly short-sighted.

A Goldcorp employee pours melted gold.

Image source: Getty Images.

According to Goldcorp's 2016 annual report, Penasquito processed lower ore grade and reported lower throughput due to harder ore types processed in 2016; consequently, it accounted for only $99 million in earnings from operations. A noticeable drop in performance from the $360 million in earnings from operations it reported in 2015, Penasquito -- the company's most profitable mine in 2015 -- was Goldcorp's fourth most profitable mine in 2016.

So, which gold mine provided the most green in 2016? That title goes to Pueblo Viejo. Located in the Dominican Republic, Pueblo Viejo -- in which Goldcorp holds a 40% interest and Barrick Gold (GOLD -1.92%) holds a 60% interest -- provided Goldcorp with $387 million in earnings from operations for 2016 -- more than double the $181 million it contributed in 2015.

A future worth its weight in gold

Clearly, mining gold is the company's bread and butter, and it will most likely continue to serve the same role in the years to come. In presenting its five-year growth plan, management revealed a three-pronged approach to help the company reach its five-year goal of growing shareholder value. First, management aspires to increase gold production from the 2.87 million ounces it reported in fiscal 2016 to a level between three million and four million ounces from six to eight large-scale projects by 2021. The company has several expansionary projects in development that will help the company achieve this target, such as the Pyrite Leach Project at Penasquito.

Management is also working to increase its gold reserves by 20% over the next five years. Whereas reserves totaled 42.3 million ounces at the end of fiscal 2016, management expects success in its exploration projects to result in gold reserves of 50 million ounces by 2021. In addition to organic growth, the company will likely look to acquisitions to achieve this target. For example, it recently announced another partnership with Barrick Gold, one in which the two companies will embark on a 50/50 joint venture to consolidate two gold projects: Cerro Casale, which has 23 million ounces of proven and probable gold reserves, and Caspiche, which has 23 million ounces of measured and indicated gold reserves.

Looking to further increase net asset value per share, management has identified a target of reducing AISC by 20% over the next five years. The company, which reported AISC of $856 per gold ounce in fiscal 2016, aspires to bring this down to approximately $700 per gold ounce by 2021. By optimizing its portfolio and divesting less-profitable projects like the recently announced Los Filos, the company will achieve a better profit margin.

Investor takeaway

Clearly, Goldcorp makes most of its money by mining gold -- much more than any other mineral the company mines. Looking at a more granular level, though, we find that digging the yellow stuff out of the ground in the company's Latin American mines yields much more green than those located in the Great White North. Of the company's six most lucrative mines, it was Penasquito, Cerro Negro, and Pueblo Viejo (located in Mexico, Argentina, and the Dominican Republic, respectively) that provided $538 million in earnings from operations for fiscal 2016 -- significantly more than the $305 million provided by the company's three Canadian mines: Red Lake, Porcupine, and Musselwhite.

Investors can monitor the progress at the Cerro Negro project in order to assess how well the company is executing its growth strategy; a ramp-up in production is also expected this year, resulting in gold production about 13% higher than the 363,000 ounces reported in 2016. And in terms of reducing expenses, look for management to meet its forecast of AISC falling to approximately $825 per gold ounce at Penasquito.