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Goldcorp (GG) Sells Interest in Cerro Blanco to Bluestone


Goldcorp Inc. GG has agreed to sell its 100% interest in the Cerro Blanco gold-silver project located in Guatemala, to Canadian exploration company, Bluestone Resources Inc. The transaction, which is subject to financing and other customary closing conditions, is expected to close in the first quarter of 2017.

Goldcorp will receive $18 million in cash, 1% Net Smelter Return royalty on production as well as common shares representing roughly 9.9% of Bluestone’s issued and outstanding common shares on the conclusion of the transaction. Moreover, the company will receive $15 million in cash once the commencement of commercial production is declared at Cerro Blanco.

Goldcorp has also provided Bluestone with a right of first refusal, regarding certain assets and equipment at the Marlin mine, also situated in Guatemala, in addition to the interest at Cerro Blanco. Over the next three years, the Marlin mine is expected to continue reclamation and revegetation activities. The company will also monitor and undertake maintenance activities thereafter. The last ore manufactured is projected to be processed in early 2017.

Goldcorp’s shares have lost 1.2% over the last three months while the Zacks categorized Mining-Gold industry lost about 3.2% over the same period.

In third-quarter 2016, Goldcorp’s adjusted earnings of 11 cents per share missed the Zacks Consensus Estimate by a penny. Goldcorp’s revenues also missed the estimate on lower gold as well as silver sales, year over year. For 2016, the company reiterated its gold production guidance range of 2.8-3.1 million ounces at AISC of $850–$925 per ounce. Production in the fourth quarter is expected to rise from the third quarter as Penasquito continues mining higher grades.

Some Stocks to Consider

Some well-placed companies in the mining space at present are Vale S.A. VALE, Pretium Resources Inc. PVG and Teck Resources Limited TECK.

Vale reported a positive earnings surprise of 35.71% in the last reported quarter and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Teck Resources, also carrying a Zacks Rank #1, has an expected long term growth rate of 10.65%.

Pretium Resources, holding a Zacks Rank #2 (Buy), has an average positive earnings surprise of 14.58% over the trailing four quarters.

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