The process of mining minuscule gold particles out of tons of solid rock presents its fair share of challenges even when everything goes smoothly. So when every miner in turn faces one or more of those inevitable unexpected setbacks, sometimes you just have to chalk it up to the risks of the trade. As I've quipped before: If mining were easy, they'd call it "scooping".
As investors in mining stocks, that's where a long-term-investment horizon becomes critical to wait out the occasional bump in the road. Goldcorp
At Red Lake, recent seismic activity has slowed efforts to perform "de-stressing" cuts in portions of the underground mine where pressure needs to be relieved to ensure a safe work environment. The delay in completing those maintenance operations means production in the mine's High Grade Zone has been hampered. Combined with an encounter with "inconsistent mineralization" in the mine's Footwall Zone, these setbacks forced Goldcorp to reduce 2012 production guidance at Red Lake by roughly 25% to between 460,000 and 510,000 ounces of gold.
In the aftermath of Agnico-Eagle Mines'
Goldcorp's troubles at Penasquito were weather-related, as portions of central Mexico are experiencing drought conditions of late. Mill throughput suffered as a result of inadequate water supply during June, and the shortage is expected to continue affecting the operation during the second half. Small-cap silver miner Great Panther Silver
Goldcorp lowered its 2012 production forecast at Penasquito by about 11% to between 370,000 and 390,000 ounces. That shortfall will impact Penasquito royalty holder Royal Gold
Fortunately, Goldcorp possesses an impressive portfolio of robust gold operations paired with an exciting growth pipeline in the works to help absorb these recent setbacks. As a result, Goldcorp still expects consolidated gold production for 2012 to exceed 2.35 million ounces of gold. And while reduced production volume will push costs upward for the time being, the miner still will remain near the top of the industry with a low by-product cash cost between $310 and $340 per ounce. Although my near-term outlook for Goldcorp's stock performance has been scaled back accordingly, my long-term outlook remains decidedly bullish. Since I still believe Goldcorp is one of the finest specimens one can place within a precious metals investment portfolio, I will not alter my long-term bullish CAPScall on the stock that I've had in place since 2008. To stay tuned for more coverage on Goldcorp and the full suite of precious metal miners, please bookmark my article list or follow me on Twitter.
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