Canadas Goldcorp Inc, the biggest gold miner by market value, warned late Monday that it might take an impairment charge of up to $2.7 billion on its Cerro Negro mine in Argentina due to unfavorable fiscal conditions in the country.
The Vancouver-based company said the post-tax asset write-down would be recorded in the fourth quarter, scheduled to be released in February. Goldcorp outlined import restrictions and foreign-exchange limitations imposed by the government as main contributors to the move.
“The financial consequences of these programs as well as the continuing inflationary environment in the country are negatively impacting operations at the Cerro Negro mine,” Goldcorp said in a statement.
The company, which has operations in the Americas, initiated an impairment test at the mine and an early estimate of the charge value to stand between $2.3 billion and $2.7 billion.
Goldcorp also announced its output performance for 2014 and said it reached a record of 2.871 million gold ounces during the year, but still below the companys expectations of 2.95 million to 3.10 million ounces.
The company largely blamed the below-expectations result on output difficulties at its Los Filos mine in Mexico and set-up problems at its Eleanore mine in Quebec, which is estimated to start commercial production during the first quarter.
The miner also projected 2015 production to climb 20% and land between 3.3 million and 3.6 million ounces and said the figures are taking into consideration to sale of two mines. Goldcorp is disposing of its Marigold mine in Nevada, which stopped functioning in April, and the Wharf mine in South Dakota.
After gold prices marked their second consecutive yearly decline, miners, including Goldcorp, are looking for ways to cut costs and future spending. The company is also ending extraction efforts in an area of its Red Lake mine in Canada, as the operation does not generate enough returns to qualify as viable.
Capital expenditure intended for 2015 was reduced 40% compared last year to range between $1.2 billion and $1.4 billion, Goldcorp said, while also projecting all-in sustaining cash costs of $875 to $950 an ounce, versus $950 an ounce in 2014.
Goldcorp lost 5.17% on Tuesday and closed at $20.35 in New York, marking a one-year decrease of 11.90%. The company is valued at $17.63 billion. According to the Wall Street Journal, the 16 analysts, who rate the stock at “Buy” project price targets for Goldcorp Inc to have a median of $27.40, with a high estimate of $32 and a low estimate of $16.
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