TORONTO (miningweekly.com) – Gold major Goldcorp on Thursday reported a significant drop in net earnings, as it felt the impact of lower gold prices and the retroactive effects of the Pueblo Viejo special lease agreement (SLA) amendments with the Dominican Republic government.

Net earnings in the quarter ended September 30, totalled $5-million, or $0.01 a share, compared with net earnings of $498-million, or $0.61 a share, in the third quarter of 2012.

Adjusted net earnings in the period fell 57% year-on-year to $190-million, or $0.23 a share, compared with $441-million, or $0.54 a share. Analysts had on average expected adjusted earnings of $0.20 a share on revenues of $1.11-billion.

The company said the adjusted earnings mainly excluded the retroactive impacts of the Pueblo Viejo SLA amendments, losses from the foreign exchange translation of deferred income tax liabilities, and foreign exchange losses on capital projects, but included the impact of noncash stock-based compensation expenses, which amounted to about $24-million, or $0.03 a share, for the quarter.

The Pueblo Viejo mine is operated by Pueblo Viejo Dominicana Corporation (PVDC), which is jointly owned by Barrick (60%) and Goldcorp (40%).

Among the main points the parties could agree to in amending the SLA were the elimination of a 10% return embedded in the initial capital investment for the purposes of the net profits tax of 28.75%; an extension to the period over which PVDC would recover its $3.8-billion capital investment; a delay of application of net profits interest (NPI) deductions; and a reduction in depreciation rates.

Revenues slumped 27.5% year-on-year to $929-million, compared with $1.28-billion, despite increased sales of 652 100 oz of gold, compared with 617 800 oz sold in the comparable period a year earlier.

The average realised gold price declined 20.5% to $1 339/oz, compared with $1 685/oz. The average realised price for silver fell 33% to $18.17/oz.

Gold output rose 7.5% year-on-year to 637 100 oz, while silver output fell 9% to 7.7-million ounces.

Goldcorp president and CEO Chuck Jeannes said operations throughout the group’s portfolio performed as planned, placing the company on track to achieve its full-year production and cost guidance.

"Most importantly, our focus on operational discipline and cost containment delivered positive results. Most of our mines saw meaningful reductions in costs compared to the previous quarter, with particularly impressive improvement at some of our higher-cost operations such as Porcupine, in Ontario,” he said.

Jeannes added that two of the three current development projects were set to begin contributing to the company’s low-cost production profile in 2014, and given its strong balance sheet and low debt levels, Goldcorp would enter the new growth phase an efficient, well-capitalised organisation, with its peak year of capital spending behind it.

The miner narrowed its 2013 guidance to between 2.6-million and 2.7-million ounces at an all-in sustaining cost of between $1 050/oz and $1 100/oz; between $550/oz and $575/oz on a by-product basis; and $700/oz to $725/oz on a co-product basis.

Capital spending remained on track to total $2.6-billion, despite being less than the original guidance of $2.8-billion for the year.

Goldcorp expects 2014 gold output to total between 3.2-million and 3.5-million ounces, including about 400 000 oz of gold from Cerro Negro, in Argentina.

However, it had suspended further exploration at Cerro Negro, and had also deferred some development there. First production would be delayed by at least three months, to midyear 2014, and the company said the project's capital costs were expected to rise.

Factors in Argentina, including permitting delays, an "unsustainable" foreign exchange rate and uncertainty regarding provincial taxation demands, continued to present significant challenges to the project, Goldcorp said.

The company had increased its capital cost estimate for the project to between $1.6-billion and $1.8-billion, up from $1.35-billion, and said it now expected production of between 130 000 oz and 180 000 oz of gold from the project in 2014. It expected to announce its revised 2014 guidance in January.

On Thursday morning, the company’s stock rose 2.77% to $26.31 soon after the morning bell.