An industry leader in gold mining, Goldcorp (NYSE:GG) recently reported its first-quarter earnings. Blowing away analysts' expectations by $0.11, the company reported earnings of $0.20 per share. But there's much more to a company's quarterly performance than just one number, so let's dig in and take a closer look at how the company fared in its first quarter.

Making a big production of lower production

Investors were probably impressed with Goldcorp's earnings figures, but that may not have stopped them from doing a double-take at the company's gold production of 655,000 ounces for Q1 -- a 16.5% year-over-year decrease. The decline in production, primarily, was attributed to lower grade and lower ore mined and milled at the Red Lake mine in Canada, but management reported that higher production at Penasquito mitigated the overall decrease.

A gold nugget is held between a thumb and forefinger.

Image source: Getty Images.

Although the gold production figure may seem disconcerting, it's important to recognize that the figure was in line with management's estimates. During an investor presentation in January, the company forecast gold production to total 2.5 million ounces in fiscal 2017; moreover, management reaffirmed this estimate during the earnings presentation. The importance of management's reaffirming this figure transcends the current fiscal year. It's an auspicious sign that the company is progressing toward achieving its five-year goal of achieving annual gold production of approximately 3 million ounces in 2021.

More notable than the company's gold output, perhaps, was its zinc production, which rose 13.5% year over year. Although the company's bread and butter is the sale of gold, the sale of zinc is not something to disregard. Management reported that the 7% year-over-year decline in revenue was largely due to lower gold and silver sales -- 18% and 11%, respectively -- however, the top-line decrease was offset by a 21% rise in zinc sales.

Keeping costs in check

Arguably, one of the more lustrous figures revealed in the company's Q1 earnings report was all-in sustaining costs (AISC): $800 per gold ounce, a 4.3% reduction over the same period last year.

Small gold nuggets lie beside a gold bar.

Image source: Getty Images.

According to management, the improvement resulted from several factors; for example, lower sustaining capital expenditures, administrative expenses, and lower production costs all contributed to the reduction.

But the greatest factor -- favorably affecting AISC by $100 per ounce -- was "higher realized by-product prices, primarily at Penasquito," according to the company's first-quarter report. And what mineral, besides gold, is produced at Penasquito, you ask? It's good ol' zinc. So yet again we see how favorably this mineral affected the company's earnings.

During its presentation, management reaffirmed its forecast for AISC in fiscal 2017 for between $808 and $893 per gold ounce. Like the reaffirmed gold production estimate for fiscal 2017, the reaffirmed AISC range suggests that the company is effectively executing its five-year strategy to grow net asset value per share. By 2021, management expects to reduce AISC about 20% -- to $700 per gold ounce -- from the $850 in AISC it anticipates in fiscal 2017.

Hitting the target

Besides increasing gold production 20% and reducing AISC 20% by 2021 to grow net asset value per share, management has set the shorter-term goal of of identifying $250 million in annual sustainable efficiencies that are to be implemented by 2018. As of Q4 2016, Goldcorp had identified 60% of the $250 million target, and during its Q1 earnings report, it reported that it had identified the remaining 40%. Furthermore, management expects 40% of the savings to be fully realized by the end of 2017.

The company's mines in Latin America are the greatest source of the identified efficiencies; Penasquito, in Mexico, and Cerro Negro, in Argentina, are expected to account for $55 million and $65 million in annual sustained efficiencies, respectively. Porcupine, located in Ontario, and the other Canadian mines are expected to account for $35 million and $40 million in annual sustained efficiencies, respectively.

Though the program has not fully been implemented, it is already affecting growth in the company's operational cash flow. For example, in the first quarter of 2016, Goldcorp reported operational cash flow of $227 million -- a whopping 285% increase over the $59 million it reported in Q1 2016. Illustrating how pleased it is with the early identification of the efficiencies, management stated that it expects to increase the target in 2019 and beyond.

Investor takeaway

Growing its operational cash flow and meeting expectations in terms of gold production and cost-reductions are two reasons that indicate the company enjoyed a successful start to the new year. But it seems that a theme that emerged from the earnings report was that investors shouldn't underestimate the value zinc provides to the company.

Moving forward, investors, of course, should monitor the company's progress in executing its three-pronged strategy -- growing gold production, decreasing costs, and growing gold reserves -- to increase net asset value per share, but they should certainly keep an eye on the contributions zinc is making to the company's top and bottom lines.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.