A stock in a sweet spot like this might come along just once in a blue moon.
Although we just had a blue moon last month, Goldcorp's
In this respect, the Barricks of the world could become a victim of their own enormous size. In a world where truly massive gold deposits -- like those in South Africa that dominated global production for decades -- are increasingly scarce, top tier miners face a daunting (and perhaps untenable) challenge in their quest to replace production with new greenfield discoveries or through acquisitions. As we have seen, competition for gold asset purchases is heating up, and in time that will tend to drive acquisition costs sharply higher.
Goldcorp issued operating results for 2009 this week along with production and cost estimates through 2013. The numbers are rather awe-inspiring. The company outpaced its own production guidance by 100,000 ounces in 2009, and estimates a by-product cash cost $295 per ounce of gold produced. Although Goldcorp cannot compete with mid-tier producer Yamana Gold's
To conquer the gold mining world, Goldcorp anticipates 58% growth in production volume from 2.4 million ounces in 2009 to 3.8 million ounces in 2014, with every year in between yielding a solid incremental rise. Production costs for 2010 are forecast to rise to $350 per ounce.
Meanwhile, the company is investing $130 million in exploration for 2010. Making the most of sophisticated underground equipment now offered by the likes of Bucyrus
With a powerful combination of voluminous cash flow and available liquidity, enormous potential to expand reserves through exploration of existing properties, a proven track record of developing low-cost mining operations with innovative engineering solutions, and a resounding strategic victory over its rivals through recent asset purchases, Goldcorp has all the right ingredients in place for enduring outperformance of its major rivals. Fools appear to agree, as Goldcorp trounced competitors like Kinross Gold
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Gold is a hot topic on the blogs at Motley Fool CAPS. Join the free service today and see just how many Fools are taking the long view when it comes to investing in gold. The "Gold" tag at CAPS lists 47 potential investments, and you'll find Christopher's comments on most of them.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He tweets. He owns shares of Kinross Gold and Yamana Gold. The Motley Fool has a gilded disclosure policy.