Eldorado hikes dividend, Goldcorp output steady

Eldorado Gold said it will raise its dividend by 50 percent this year due to higher gold prices, while larger Canadian rival Goldcorp reported steady gold output and gave the green light to a key copper-gold project in Chile.

Vancouver-based Eldorado, which last month agreed to buy European Goldfields for about C$2.5 billion ($2.44 billion), said it would raise its semi-annual payout to 9 Canadian cents a share from 6 Canadian cents a share.

Last year, the company realigned its dividend policy so that the payout is determined by the price of gold. The metal hit a record $1,920.30 an ounce in September, but finished the year well below that level. All told, gold rose 10 percent on the year.

Gold production at Eldorado rose 4.3 percent last year to 659,134 ounces, and is expected to rise another 17.6 percent in 2012 as the company’s Eastern Dragon mine in China begins to produce in the second half of the year, the company said.

The mine was originally expected to come on line in 2011, but construction was delayed by the early onset of winter in northern China, Eldorado said in October.

Goldcorp, the country’s second-largest gold miner, produced 2.5 million ounces of gold in 2011, little changed from a year earlier, and expects output to rise to 2.6 million ounces this year.

The 2011 production was in line with the company’s forecast, which was revised lower in July as unexpected difficulties arose in ramping up its Penasquito mine in Mexico.

“Penasquito for me is an nongoing problem for Goldcorp,” said John Ing, president of Maison Placements in Toronto. “That was supposed to be the big flagship and they’re suffering from teething problems… It’s something that everyone is watching.”

Goldcorp has also seen delays at the Pueblo Viejo project in the Dominican Republic, a joint venture with Barrick Gold.

But the miner extended its five-year production forecast. Goldcorp expects output of 4.2 million ounces in 2016, which would represent a 68 percent increase from 2011.

Beyond that, production is expected to get a boost from the company’s El Morro project in Chile, following Goldcorp’s announcement on Monday that it will go ahead with construction. Initial production is expected in 2017.

Ing said the timing of the move was in line with expectations.

The project, which holds reserves of 6.1 million pounds of copper and 8.4 million ounces of gold, is expected to cost $3.9 billion to develop, Goldcorp said.

Once in full production, the El Morro is expected to produce an average of at least 200 million pounds of copper and 210,000 ounces of gold over a 17-year mine life.
Goldcorp owns 70 percent of El Morro, and the remainder is owned by New Gold.

© Thomson Reuters

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