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Goldcorp (GG) Completes Formation of 50/50 JV with Barrick


Goldcorp Inc. GG announced that it has completed the transactions to form a 50/50 joint venture (JV) with Barrick Gold Corporation ABX, for the gold projects in the Maricunga District in Chile.

Per the terms of JV agreement, both Goldcorp and Barrick will jointly control over 20,000 hectares of mining properties in Maricunga District with the Caspiche and Cerro Casale deposits. Goldcorp will spend at least $60 million within the next two years and an additional $80 million in each successive two-year period, unless the deferred payment obligation worth $260 million is satisfied.

Further, if Goldcorp does not spend the specified amount in any two-year period, it will have to make payments equal to 50% of the deficit amount to Barrick, which will be corresponding to the reduction in deferred payment obligation.

On Mar 28, Goldcorp formally declared that it has entered into an agreement to form a 50/50 JV with Barrick, for leveraging prospective synergies within Maricunga Gold Belt. The deal allows both companies to jointly advance the Caspiche and Cerro Casale gold deposits, by consolidating infrastructure. It will also help both companies to reduce operating costs and capital. The JV will also reduce environmental footprint and improve returns, versus two standalone projects.

Both companies expect to increase the net asset value per share from these projects by combining financial and technical capabilities and deliver value to all stakeholders and partners.

Goldcorp’s shares have lost around 9.6% in the last three months, underperforming the Zacks categorized Mining–Gold industry’s 4.4% gain.

Goldcorp expects gold production to be 2.5 million ounces (+/- 5%) at an AISC of around $850 per ounce in 2017. The company remains focused on execution, cost reduction and optimization of asset portfolio.

Goldcorp Inc. Price and Consensus

Goldcorp Inc. Price and Consensus | Goldcorp Inc. Quote

Goldcorp currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies in the basic materials space include The Sherwin-Williams Company SHW and Huntsman Corporation HUN, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Sherwin-Williams has expected long-term earnings growth rate of 11.4%.

Huntsman has expected long-term earnings growth rate of 7%.

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