Goldcorp could take $2.7 billion write down on mine in Argentina

Goldcorp announced that it could take a fourth-quarter impairment charge of up to $2.7 billion on its Cerro Negro gold mine in Argentina and that its 2014 output was lower than its own forecast.

The company listed a host of issues in Argentina, including restrictions on importing goods and services into Argentina and converting Argentine pesos into U.S. dollars, as well as high inflation in the country as reasons for the write down on its Cerro Negro mine which will diminish in value by between $2.3-billion and $2.7-billion after tax, The Wall Street Journal reported.

Cerro Negro is one of Goldcorp’s two new mines and produced its first gold in July 2014. Goldcorp is expected to release its fourth quarter and full-year results on February 19.

In a statement Goldcorp said the company produced 24.7 t (886,000 oz) of gold in the fourth quarter, bringing full-year output to a record 80 t (2.87-million oz). That was below Goldcorp’s own forecast of between 82.5 and 86 t (2.95-million and 3.1-million oz).

“The financial consequences of these programs as well as the continuing inflationary environment in the country are negatively impacting operations at the Cerro Negro Mine,” the company said in a statement. The market value of future exploration potential has also declined, it said.

The company also reported that it was having production challenges at its Los Filos Mine in Mexico and startup issues at its Eleanore Mine in Quebec, where it expects commercial production to start in the first quarter.

Goldcorp also slashed its capital-spending plans for the coming year, putting its 2015 estimate at between $1.2 billion and $1.4 billion. That is down 40 percent from 2014.

The report takes into account the sale of the Marigold Mine in Nevada, closed in April, and the sale of the Wharf Mine in South Dakota. Goldcorp agreed to sell Wharf to Coeur Mining Inc. for $105 million.