Goldcorp produced a record fourth quarter gold output of 692,000 oz in 2008 and production for the year exceeded 2.3 Moz, meeting previously issued guidance. Its year-end unaudited financial statements are expected to be released on February 19, 2009. The calculation of operating costs for 2008 has not yet been completed, but total cash costs are expected to meet previous 2008 guidance of some $300/oz of gold on a by-product basis.

“Goldcorp completed 2008 with production momentum, financial strength and a strong, well-funded growth pipeline in safe jurisdictions,” said Chuck Jeannes, President and Chief Executive Officer.  “Our top priorities in the year ahead are meeting or exceeding operational targets, preserving our strong balance sheet amid a challenging metals price environment and continuing the development of an asset portfolio that is expected to deliver 50% growth in gold production over the next five years. We are particularly focused on start-up of the Peñasquito mill during 2009, as the expected commencement of commercial production at year-end will be the primary driver of our gold production growth in 2010 and beyond.”

Goldcorp also provided production and cash cost guidance for the 2009 year.  The company expects to produce approximately 2.3 Moz of gold at a total cash cost of approximately $365/oz on a by-product basis and $400/oz on a co-product basis.  Forecast production increases at most of Goldcorp’s mines are expected to be offset by significant planned declines at Alumbrera and El Sauzal.

Strong cash flows, debt-free balance sheet and an undrawn $1.5 billion credit facility will fund key near-term growth projects including start-up of the first sulphide mill circuit at Peñasquito, construction of the large Pueblo Viejo project and completion of the Red Lake underground development program.  Spending at certain longer-term growth projects will be temporarily deferred while these key projects are developed, including shaft construction projects at Éléonore in Quebec and Cochenour at Red Lake.  At Porcupine, plans for an open pit and potential underground operation at Hollinger will also be deferred. Sufficient resources have been allocated to these projects in 2009 to maintain continuity of exploration, engineering and permitting programs, while maintaining the ability to accelerate development when market conditions improve. 

Assumptions used to forecast total cash costs for 2009 include a by-product silver price of $10/oz; a by-product copper price of $1.75/lb; an oil price of $65/barrel and the Canadian dollar and Mexican peso at $1.20 and $12.50 respectively to the US dollar. The company is currently evaluating opportunities to contain input costs and minimize foreign exchange risk through the hedging of both oil and currencies. 

Gold production levels on a quarterly basis are expected to be generally consistent throughout 2009.  Mine-by-mine actual 2008 gold production statistics and estimated 2009 gold production are as follows:

In Canada, an emphasis on underground mine development and enhanced underground exploration at Red Lake will result in similar 2009 gold production levels compared to 2008. The completion in 2009 of a major multi-year infrastructure investment will restore shorter-term operational flexibility and provide the platform for longer-term production increases. Opportunities to enhance Red Lake’s core production, including an open pit and redevelopment of the Cochenour mine, will be studied and advanced according to the company’s capital spending program.

At Musselwhite, exploration success over the last several years has identified higher grade ore in the PQ Deeps area, which will begin to be reflected in increased gold production and decreased total cash costs in 2009 and beyond.  Engineering work has commenced on underground infrastructure upgrades to support increased ventilation and higher underground mining rates, resulting in expected performance improvement at the mine in future years.

Total cash costs at Porcupine mine are also expected to decline as Goldcorp has taken several steps to optimise operations. Stripping of waste rock for the next phase of the Pamour pit has been deferred, and the surface operations will move to mining of ore stockpiles by mid-2009, resulting in lower operating costs during the year.

On December 8, 2008, Goldcorp provided a detailed update of its Peñasquito project in Zacatecas state, Mexico.  As reported, the project remains on schedule for mid-year mechanical completion of the sulphide mill (SAG Line 1) and production of initial concentrates in the fourth quarter of 2009, with commencement of commercial production scheduled for January 1, 2010.  Construction of the second SAG line will continue throughout the year.

Improved operations at Los Filos are expected to lead to increased gold production in 2009.  A substantial production decrease is forecast at El Sauzal as the mine nears the end of its life.  The priority at El Sauzal over its remaining four-year mine life will focus on maintaining low costs and optimizing operations for eventual mine closure.

In Central and South America, another solid year is expected at Marlin in Guatemala.  Improvements in underground mining experienced in 2008 are expected to contribute to continued production strength in 2009.  At the company’s 37.5%-owned Alumbrera mine in Argentina, expected decreases in copper and gold production in 2009 are consistent with a general downward trend in metals production over the mine’s remaining nine-year life. 

Capital expenditures for 2009 are forecast at approximately $1.4 billion, including $530 million for Peñasquito and $430 million for Pueblo Viejo.  Exploration expenditures in 2009 are expected to amount to approximately $95 million, of which approximately one-third will be expensed, with efforts focused on replacing reserves mined throughout the year.  General and administrative expense is forecast at $74 million for the year. Depreciation, depletion and amortization expense is expected to be approximately $205 per ounce of gold produced, and the company expects an overall effective tax rate of 40% for 2009.

Peñasquito remains the primary driver of the company’s 50% gold production growth expected in the next five years, with significant contributions from Red Lake and Pueblo Viejo.  Year-by-year gold production is forecast as follows:

At $10 silver, $1.75 copper, $0.50 zinc and $0.50 lead, by-product cash costs are expected to trend below $300/oz over the five-year plan, positioning Goldcorp for strong sustained margins and cash flows over the long term.