Goldcorp slashes dividend after $4.3-billion loss after major writedown

VANCOUVER – Goldcorp has become the latest mining company to show the effects of lower commodity prices, slashing its dividend by two-thirds after reporting a US$4.3-billion net loss in the fourth quarter.

The Vancouver-based miner (TSX:G) booked a US$3.9-billion impairment in the quarter, largely due to 15 per cent downward revision of its long-term gold price outlook to US$1,100 an ounce after prices plunged in the latter half of last year.

“I hate that we’ve had to take such a large writedown,” outgoing chief executive Chuck Jeannes said during a conference call Friday.

“I’m certainly aware that our shareholders are disappointed with some of the news this morning and I definitely share that disappointment.”

Goldcorp, which reports in U.S. dollars, said its fourth-quarter loss amounted to US$5.14 a share and compared with a net loss of $2.4 billion or $2.94 a share in the same quarter the year before.

For the year, the company reported a loss of US$4.16 billion, or $5.03 per share, compared with a loss of $2.2 billion or $2.66 a share a year earlier.

Goldcorp cut its annual dividend from 24 cents to eight cents and switched to quarterly from monthly payments.

At US$1,100 an ounce for gold, the company would have to pay out almost all of its free cash flow in dividends at the previous rate, Jeannes said.

“As shareholders none of us like a dividend cut, but I personally am more interested in seeing that the company has the resources to invest in organic growth opportunities,” he said.

Gold prices have seen a sharp recovery so far in 2016 to over US$1,200 an ounce from an eight-year low of US$1,049 last November.

But long term, Goldcorp is taking a conservative outlook.

The company also revised downward its long-term production forecast, and now expects to produce between 2.8 million and 3.1 million ounces this year compared with 3.5 million in 2015, saying it is focusing on “profitable ounces in a volatile price environment.”

Jeannes is scheduled to step down Feb. 29 as head of Goldcorp after seven years, with former HudBay Minerals (TSX:HBM) chief executive David Garofalo taking his place.