It certainly is hit or miss with earnings from gold companies lately, which reflects the wide range of issues challenging miners of all kinds. Between the equipment backlogs, labor strikes, currency woes, financing constraints, geopolitical tensions, accidents, power shortages, and rising input costs … it's a wonder anything ever makes it out of the ground.
With these formidable challenges in mind, I tend to be forgiving when an otherwise solid miner falls prey to one or two of these external factors -- provided the fundamental outlook remains unaltered. Already this earnings season, my Foolish colleague David Lee Smith absolved Freeport-McMoRan
On the heels of a solid first quarter, Goldcorp
Based on Goldcorp's operational updates, I believe the production shortfall experienced in the second quarter will have only a near-term impact on the company's growth. While Goldcorp lowered 2008 guidance from 2.6 million ounces to 2.3 million ounces, and raised projected costs from $250 per ounce to below $300, the important thing is that the broader objective of 50% growth over the next five years remains intact.
Ending on a positive note, Goldcorp kept the mining mergers and acquisitions fire burning by announcing a $1.5 billion friendly bid to acquire junior exploration company Gold Eagle Mines. Gold Eagle had been the target of a strategic acquisition of shares by Agnico- Eagle in June, and the move likely spurred Goldcorp into action. With a promising gold property near Goldcorp's flagship Red Lake mine in Ontario, the purchase would make a lot of sense for Goldcorp.
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Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly in CAPS under the username TMFSinchiruna. He owns shares of Agnico-Eagle, Freeport-McMoRan, and Silver Wheaton. The Motley Fool has a disclosure policy.