Tickers in this Article: GG, NEM, KGC, ABX
Goldcorp (NYSE:GG) reviewed the company's operations and discussed its large inventory of growth projects coming on line over the next few years. These and other details were provided by the company at a recent analyst day held for the institutional investment community. TUTORIAL: Commodities: Introduction

Goldcorp has more than a dozen mines either in operation or planned across various countries in North and South America. In 2011, the company expects 78% of its production to come out of Canada (43%), Mexico (29%) and the United States (6%).

Other gold producers are more diversified than Goldcorp. Barrick Gold (NYSE:ABK) estimates that 32% of its 2011 production will be from the Australia Pacific or African region.

Cash Margins and Production
Goldcorp has seen its cash margins soar over the last five years as gold prices continued its outstanding performance. Cash margins moved from $577 per ounce in 2006 to $966 per ounce in 2010.

Goldcorp produced 2.52 million ounces of gold in 2010, and is guiding 2011 production to be in a range of 2.65 to 2.75 million ounces. The company expects to grow production at a 10% compound annual growth rate of through 2015 and reach production of 4 million ounces by that time.

Newmont Mining Corporation (NYSE:NEM) reported that the company produced 5.4 million ounces of gold in 2010, while Kinross Gold Corporation (NYSE: KGC) reported 2010 production of 2.33 million ounces of gold.

Cerro Negro
Goldcorp has four mines under construction and is assessing the potential of six other properties. One major upcoming project for Goldcorp is the Cerro Negro property located in the Santa Cruz region of Argentina. This project is scheduled to start production beginning in 2013 and the company expects the property to support average annual production of 550,000 ounces of gold during the first five years of operation.

Goldcorp estimates that the total capital cost will be $750 million, including $130 million in 2011. This will also be a low cost operation with cash costs estimated at $290 per ounce during the 12 year life of the mine.

Financials and Risk
Goldcorp has benefited from the prodigious cash flow generated during the gold bull market, and has a solid balance sheet. The company has $1.1 billion in cash, $863 million of convertible debt due in 2014 and an undrawn $1.5 billion credit line.

The major risk for investors in Goldcorp or any other gold producer is a breakdown or collapse in gold prices. Many pundits have been predicting this event for some time but the metal keeps surprising the market. The recent market fears regarding inflation has also provided gold and other precious metals with another move higher.

The Bottom Line
Investors looking for an opportunity to invest in the gold bull market can participate through owning shares of Goldcorp, a fast growing producer with operations in North and South America. (To learn more, see 8 Reasons To Own Gold.)


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