How Goldcorp Could Crush Newmont Mining and Barrick Gold

Goldcorp (GG) will release its quarterly report on Thursday, and the huge plunge in the price of gold so far in 2013 has taken a huge toll on the company's financial prospects. Yet even as investors brace themselves for Goldcorp earnings to drop precipitously this quarter, the company could be in a strong position to outpace rivals Barrick Gold (GOLD -3.98%) and Newmont Mining (NEM -4.00%) once gold prices start to recover from their depressed levels.

Goldcorp benefits from being one of the lowest-cost producers of gold in the industry. As a result, it has found ways to remain profitable even in light of the swoon in gold prices that has sent the popular SPDR Gold (GLD -2.47%) ETF to levels not seen since 2010. But with Newmont, Barrick, and Goldcorp all facing the same pricing environment, the key to success is to get strong results from lucrative mining properties that have growth potential even when gold prices are low. Let's take an early look at what's been happening with Goldcorp over the past quarter and what we're likely to see in its report.

Stats on Goldcorp

Source: Yahoo! Finance.

When will gold prices rescue Goldcorp earnings?
In recent months, analysts have had mixed views about Goldcorp earnings, raising their near-term projections slightly but knocking another 10% off their estimates for the 2014 year. The stock has continued to fall, losing another 9% of its value since late July.

Goldcorp's second quarter was just an example of how badly the drop in gold prices hurt the entire industry. Goldcorp got hit twice, with revenue from production clearly losing value as gold prices fell, but also as the company had to take a massive $1.96 billion writedown on its key Penasquito mine. Low gold prices made developing Penasquito less profitable, forcing the company to reflect the new economic reality in its financials.

But Goldcorp retains some key advantages over its rivals. Newmont Mining suffers from a higher cost structure, with expectations for all-in costs of between $1,100 and $1,200 per ounce in 2013 leaving precious little breathing room given current gold-price levels. Moreover, even though Barrick Gold gave lower cost guidance than Goldcorp, delays in Barrick's Pascua-Lama project have raised concerns about whether the company can actually deliver on its promised results.

Just yesterday, Goldcorp got the extremely favorable news that the Chilean government has granted an environmental permit to allow its El Morro copper and gold project to move forward. The mine, in which Goldcorp has a 70% stake and New Gold (NGD -1.71%) has the remaining 30%, has reserves of 8.4 million ounces of gold and 6.1 million pounds of copper. With Barrick and Newmont also having seen trouble in getting Chilean projects pushed forward, a breakthrough for Goldcorp carries even more weight.

In the Goldcorp earnings report, watch closely to see if the company changes its projections about its production costs. Any cost-saving measures that the miner can implement could give it further breathing room over Newmont Mining and Barrick Gold as they all struggle to survive gold's tough times.

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