Higher costs in H2 will be temporary, Goldcorp CEO says

Goldcorp CEO Chuck Jeannes said costs will rise in the second half of 2014 before dropping next year, with the increase partly due to planned spending at the Peñasquitogold-silver mine in Mexico.

The Vancouver-based company reported all-in sustaining costs (AISCs) of US$852/oz gold in Q2 and US$840/oz in the previous quarter, down from US$1,227/oz and US$1,134/oz in the corresponding periods of 2013, respectively.

But 2014 guidance remains at US$950-US$1,000/oz due to higher costs due in H2, Jeannes told the Bank of America Merrill Lynch 20th Annual Canada Mining Conference in Toronto.

The reason for the higher costs is increased sustaining capital spending in the first half, he added, including a large purchase of new trucks at Peñasquito and the advance of the northern well field project, which will secure long-term water supply at the Zacatecas state mine, coupled with spending at the Hollinger project in Canada.

"A lot of sustaining capital will be reported in H2, but it is as planned. And we continue to be very comfortable with the overall guidance we provided at the beginning of the year," Jeannes told the event. "Going forward with the addition of new production, we expect to see this number go down considerably in 2015 and beyond."