A chart comparing the valuations of the top five gold producers. Gold price in U. The Marlin mine, a combination underground and open pit operation, produced about , ounces of gold last year, or about 11 per cent of Goldcorp's output, along with 4. That underperformance, however, drove Goldcorp to work on an ambitious strategy to create value for investors by making targeted investments to boost profitability and, hopefully, its stock price.
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In addition to those operating mines, Goldcorp has several in development. The proposed Chilean mine is still in a pre-feasibility study and, therefore, several years away from development. While Goldcorp was the world's fifth largest producer in , it didn't get there overnight. The company started out in by operating two mines: Wharf in the U.
Goldcorp would go on to acquire more mines and mining companies in the years that followed, as well as invest heavily in developing new gold mines. While this expansion grew Goldcorp's gold production up to nearly 3. Gold price in U. Goldcorp has been working to trim its debt in recent years by selling non-core assets. The company would go on to sell several more mines and other assets as part of a major restructuring through to refocus on its best properties. The plan would see the company:.
Driving Goldcorp's strategy are targeted investments aimed at increasing output and reducing costs at its core mines. Meanwhile, the company is developing new mines within existing complexes to increase production. These investments will help drive down costs, while also expanding its gold reserves. Furthermore, Goldcorp's plan would see the company generate increasing free cash flow, enabling it to steadily reduce net debt, with the aim of driving it toward zero within five years.
That will give the company the financial flexibility to invest in its next stage of expansion projects, including the two JVs in Chile. However, if gold cooperates, this plan to grow profitability should make Goldcorp a more valuable company going forward.
That potential to create value for investors in the coming years makes Goldcorp a compelling gold stock to consider buying in Though it's worth noting that even with the company's abysmal stock performance over the past several years, shares trade at a more expensive relative valuation versus the four gold miners ahead of it on the production leaderboard:.
Chart by the author. Given that trade-off, investors should first take a closer look at the miner's cheaper rivals before making any decisions. More From The Motley Fool. Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Motley Fool April 14, Building a gold mining giant one deal at a time While Goldcorp was the world's fifth largest producer in , it didn't get there overnight. A chart comparing the valuations of the top five gold producers. Recently Viewed Your list is empty. What to Read Next. Open this photo in gallery: Published June 7, Updated May 2, Story continues below advertisement.
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