Canadian gold miners posted solid second-quarter profits driven by increasing efficiency at their operations rather than any stellar increase in the price of gold. Toronto-based miners Barrick Gold Corp. and Agnico Eagle Mines Ltd. and Vancouver-based Goldcorp Inc. all surprised analysts with earnings that beat expectations as they continue to drive down their cost of sales.
Historically, the performance of gold companies tends to move in tandem with bullion prices, but the miners better-than-expected year-over-year results came even as the price of gold during the quarter remained virtually flat — up just three per cent over the year before.
Gold companies have been focused on driving down cash costs and paring their portfolios to deal with a years-long decline in the commodities market and those moves during bust times appear to be paying off as the cycle begins to make a more positive shift.
Goldcorp swung to a profit of $135 million in the second quarter ended June 30 from a loss of $78 million in the year earlier, when its biggest mine, Penasquito in Mexico faced a shutdown and slow restart.
The company produced 635,000 ounces of gold in the second quarter — an increase of four per cent over the same quarter last year — at $800 an ounce. It also further reduced its cash cost estimates for the remainder of the year, estimating all-in sustaining costs of $825, down from $850 per ounce.