Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Goldcorp Dives After Lowering 2012 Guidance

Out of Vancouver, British Columbia, late  Tuesday came Goldcorp’s (GG) quarterly gold production update and a sharply lowered guidance on the rest of 2012. The news was received with a thud on the market, as Goldcorp’s stock has plunged more than 9 percent intraday Wednesday to just more than $33 per share.

Goldcorp Inc. (USA) (NYSE:GG)

The company posted a 10 percent increase in gold production in Q2 of 2012 over Q1, but the overall productioon guidance for the year was reduced from 2.6 million ounces to about 2.4 million ounces.  Lower production then means a reported cash cost of about $310-$340 per ounce, up from the previous $250-$275 per ounce.

The company blames increased seismic activity and rock de-stressing concerns at its Red Lake mine and a water shortage at Peñasquito mine for the reduced production for the remainder of the year.

“We are disappointed with reducing production guidance due to operational issues at our two most important mines,” said Chuck Jeannes, Goldcorp president and CEO in a release.   “AtRed Lake, we look forward to the resumption of mining in areas of the High Grade Zone that have been inaccessible due to de-stressing activities, but grade inconsistencies in the Footwall Zoneexperienced in the first six months of 2012 necessitate a conservative approach with regard to forecasting production during the second half of the year.   At Peñasquito, the team is assessing opportunities to address water deficits as soon as possible.  We are optimistic that sufficient water will be secured to accommodate long-term throughput forecasts but until those sources are secured, we have reduced the forecasts for ongoing throughput and production. We remain encouraged that the ore body continues to meet expectations with respect to grade and recoveries.”

This recent news will not be looked upon favorably by several hedge funds, including Jeffrey Vinik’s Vinik Asset Management and Peter J. Eichler Jr.’s Aletheia Research and Management, both of which have stepped up their investments in Goldcorp during the first quarter of 2012. Vinik increased its sharehold by nearly 200 percent to a value of about $99 million, while Aletheia boosted its stake by more than 300 percent to more than $43 million.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.