Recent gains in the price of gold have boosted shares of Goldcorp (GG) to the tune of 28%. However, given that the company's capital spending will decrease next year while production will increase, you can expect Goldcorp's already strong position to become even stronger.

Maintaining production growth
Goldcorp's guidance states that the company expects to produce 3 million – 3.15 million ounces of gold in 2014. The start of commercial production in Cerro Negro in Argentina and Eleonore in Canada will increase total production to 3.6 million-3.8 million in 2015.

Goldcorp stated that Cerro Negro was on track to commence gold production in the middle of this year, while first gold from Eleonore is expected by year end. Capital expenditures for 2014 are anticipated to range between $2.3 billion and $2.5 billion, roughly in line with the previous year's spending.

However, as Cerro Negro and Eleonore won't demand significant capital spending in 2015, total expenditures will come down. Goldcorp stated that its sustaining capital needs are $1 billion-$1.1 billion per year. 

The company has several development projects like El Morro in Chile and Camino Rojo in Mexico. However, Goldcorp stated that it is going to spend a couple of hundred million dollars on them in 2015. Taking into account the sustaining capital figure, the rough estimate for 2015 capital spending will be $1.4 billion-$1.6 billion. As production grows, so does revenue, if we don't assume a major drop in gold prices. At the same time, expenditures will be down, which is a good sign for free cash flow.

Osisko may contribute to growth if offer is accepted
Back in January, Goldcorp made an offer to acquire Osisko Mining for $2.4 billion. The key asset of Osisko is the Canadian Malartic mine in Quebec, Canada, which holds an estimated 10.1 million ounces of gold reserves. However, Osisko filed a lawsuit against Goldcorp accusing it of improper activities related to the offer.

The hearing of the lawsuit is set for March 3 to 5, 2014. Until then, it is difficult to say whether Goldcorp will be able to add as much as half a million ounces of gold production per year from Canadian Malartic.

In another asset management move, Goldcorp recently decided to sell Marigold mine to Silver Standard Resources (NASDAQ: SSRI). Silver Standard will pay $275 million of cash, 66.7% of which will go to Goldcorp and 33.3% of which will go to Barrick Gold (GOLD -0.96%).

Marigold was a high-cost mine, and its divestment perfectly fits into Goldcorp cost containment strategy. Goldcorp expects that its all-in sustaining costs will be between $950 and $1,000 per ounce in 2014. In comparison, Barrick Gold expects 2014 all-in sustaining costs in the range of $920-$980 per ounce.

For Silver Standard Resources, the transaction is a move to diversify into gold as well as add another producing mine. The company had only one producing mine, Pirquitas in Argentina, prior to the deal. Argentina's strong inflation added uncertainty to mining projects in the country, including Goldcorp's Cerro Negro and Barrick's troubled Pascua-Lama. That's why Silver Standard was happy to acquire a producing mine in a safe jurisdiction.

Bottom line
Goldcorp's cash flow will significantly improve in the next year. The company has recently maintained its annual dividend at $0.60 per share, which currently yields 2.18%. As major capital spending will soon be behind it, the company could dedicate the released cash to increasing the payout for shareholders.