It may sound funny, but I've been known to cheer when the mining stocks I own encounter temporary setbacks affecting production.
Given my underlying thesis that gold remains securely locked in a long-term bull market trend, a minor delay in getting gold out of the ground to me just means that the gold is likely to fetch higher prices down the road. For shareholders, it's a bit like holding exposure to gold in an underground vault. Markets, meanwhile, are notoriously short-term biased, so they're prone to presenting long-term investors with attractive entry points in the wake of these common hiccups.
As a result, Mackie Research cut its price target for Goldcorp by 4%, to just over $72, while of course maintaining its buy rating given the implied 47% gain from the current share price. Reflecting the preeminence of Penasquito among Silver Wheaton's
Before Fools decide whether they share the market's disappointment with Goldcorp's revised production targets, let's have a look at how the company fared financially through such a supposedly challenging quarter. The miner's adjusted net income surged 111% to $420 million, and cash flow expanded 84% to $717 million. Goldcorp produced nearly 600,000 ounces of gold at a cash cost of just $185 per ounce, yielding an expanded margin of $1,331 for every ounce sold. That cost came in well below the prior-year level thanks to skyrocketing credits for by-product copper, silver, lead, and zinc; even as rising cost pressures across the industry pushed the co-product cost upward to $553 per ounce. The miner bettered its 2011 cost guidance by $100 per ounce, setting a new standard for low-cost leaders like Yamana Gold
Fools take note: Goldcorp referenced "strong potential upside" from regional exploration targets around the El Morro project in Chile. I remind Fools to consider the implications for my top 10 pick New Gold
When you combine Goldcorp's unbridled financial success with an unaltered outlook for 60% production growth over the next five years, I believe the stock's dip back beneath $50 offers long-term investors a glistening opportunity to consider some exposure to the greatest of gold's major miners.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Goldcorp, New Gold, and Silver Wheaton. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.