Goldcorp Inc. was downgraded to neutral from buy at Citi Research following disappointing fourth quarter earnings plus a weak production outlook.
Analyst Brian Yu noted that Goldcorp has faced several obstacles in recent quarters, the newest setback to become the reclassification of the Cochenour project in Red Lake, Ont.
This late-stage project is once more within the advanced exploration stage after recent drill results indicated that the mineralization is different from anticipated.
Yu also noted that Goldcorp’s lonore project is ramping inside a slower-than-anticipated pace that is core Pe?asquito mine is approaching years of low-grade production.
As an impact, the analyst expects Goldcorp’s valuation premium versus both Barrick Gold Corp. and Newmont Mining Corp. will narrow.
On a much more positive note, he noticed that Goldcorp retains a powerful balance sheet with US$3.5 billion of liquidity and should generate positive free cash flow.
