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Thursday, May 24, 2012

Are Goldcorp (GG)'s Problems Temporal?

The weak performance in the last quarter had analysts berating Goldcorp (NYSE:GG), making the company to appear to be facing a major disaster, rather than a probable minor blip that they are dealing with at this time.

Production issues at its Red Lake mine resulted in a drop in gold production of about 70,000 ounces from the same quarter in 2011. Another negative was the boost in production costs from $188 an ounce to $251 an ounce.

That isn't as important, as most gold miners experienced similar boosts in costs.

Goldcorp CEO Chuck Jeannes said this about the quarter, "Solid operating results throughout most of our mine portfolio were offset by a challenging first quarter at Red Lake."

Assuming this is an accurate assessment of the performance of the company, the problems at Goldcorp appear very solvable, and not as challenging as they have been portrayed to be.

That means the company could have been oversold, making the current price a good entry point for investors.

It is highly likely the shares of the company are poised to rebound, especially if the performance of the rest of the company remains in tact and Red Lake begins to add to production.

Goldcorp has been bouncing off its recent 52-week low of $32.16, as traders pushed down the price of the stock.

As of 11:51 AM EDT, it was trading at $37.32, down $0.17, or 0.46 percent.

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