Goldcorp takes US$2.3-billion writedown on 'cornerstone' Argentine project

Goldcorp Inc. reported a US$2.4-billion net loss in its latest quarter as it took a big writedown charge on its Cerro Negro project, but the company’s chief executive says he still has high hopes for the Argentine mine.

“This is an accounting charge and does not reflect losses of gold ounces in the ground or our expectations for this asset,” Charles Jeannes told investors during a conference call Thursday.

“Quite the contrary, we continue to believe Cerro Negro will be a cornerstone operation for Goldcorp for a long time to come.”

The news came after the gold miner announced a loss of $2.94 per diluted share in the fourth quarter compared with a loss of US$1.1 billion or $1.34 per diluted share in the last three months of 2013.

The loss includes the US$2.3-billion hit that Goldcorp took in relation to a drop in the value of the Cerro Negro project, which began commercial production last month.

On an adjusted basis, Goldcorp says it earned US$55 million or seven cents per share, down from nine cents per share in the fourth quarter of 2013. Analysts had estimated an adjusted profit of 12 cents per share for the quarter, according to Thomson Reuters.

The company’s revenue in the fourth quarter was US$835 million, down from US$956 million in the comparable period of 2013.

Goldcorp says it will strive to increase its gold reserves while keeping costs contained over the coming year.

“While we were unsuccessful in that regard this (past) year, this is a matter of timing more than anything else,” said Jeannes. “We have a number of exciting exploration developments throughout the portfolio that leave us well positioned for gold reserve growth in the year ahead.”

Most of the major players in the Canadian mining sector have been striving to trim expenses in light of sagging prices for precious metals.

John Thornton, chairman of Barrick Gold Corp., said Thursday that he plans to transform the gold miner into a leaner, more focused company. Barrick has taken billions in losses recently, including a writedown on the value of its massive Pascua-Lama project in South America, which was billions over budget before it was put on ice.

For the full year, Goldcorp’s revenue dropped to $3.4 billion last year from $3.6 billion in 2013. Its net loss was reduced to $2.16 billion from $2.71 billion in 2013, when the company recorded $2.67 billion of asset impairments.

In January, Goldcorp agreed to pay Agnico Eagle Mines Ltd. (TSX:AEM) $43 million for its stake in Probe Mines Ltd. (TSXV:PRB).