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Goldcorp returns to profit in Q1

Goldcorp Inc.booked net earnings of US$80 million, or 10 cents per share, for the first quarter,improving its bottom line from the US$87 million, or 11-cent-per-share, loss itreported a year earlier.

The year-over-year improvement was due to lower CapEx with thecompletion of construction at the Eleonoregold mine in Quebec and the CerroNegro gold mine in Argentina, the Canadian producer said April 27.

Gold production increased during the quarter to 783,700 ounces,from 724,800 ounces in the first three months of 2015. However, gold sales slippedyear over year to 799,400 ounces from 827,500 ounces.

Adjusted operating cash flows were also lower at US$330 million,compared to US$366 million a year earlier, largely due to reduced cash flow fromthe Alumbrera copper-goldmine in Argentina and the PuebloViejo gold-silver mine in the Dominican Republic.

The first-quarter profit result was helped by reduced all-insustaining costs of US$836 per ounce, compared to US$885 per ounce in the same quarterof 2015, and byproduct cash costs of US$557 per ounce, which amounted to a US$28-per-ounceyear-over-year decrease.

Goldcorp said the lower all-in sustaining costs were primarilya result of reduced production costs from favorable foreign exchange impacts atthe Canadian, Mexican and Argentinian operations. 

While the company generated negative free cash flow of US$101million in the first quarter, compared to negative US$321 million in the year-agoperiod, Goldcorp expects to be substantially free cash flow positive for 2016. 

Similar to 2015, first-quarter free cash flow was impacted bya working capital increase, which is expected to reverse over the balance of theyear.

Goldcorp is maintaining its 2016 production guidance at between2.8 million ounces and 3.1 million ounces despite an expected 15% decline in second-quarteroutput compared to the first quarter.

Second-quarter gold production will be negatively impacted byplanned lower-grade mining sequences in most mines and a 10-day mill shutdown forpreventative maintenance at the Penasquitogold-silver mine in Mexico.