Why Goldcorp's Shares Lost Their Shine


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of gold miner Goldcorp (NYS: GG) fell more than 10% today after the company reduced production guidance.

So what: In 2012, the company now expects to produce 2.35 million to 2.45 million ounces of gold, down from a previous estimate of 2.6 million ounces. The silver estimate was also reduced to a range of 30 million to 31 million ounces from a 34 million ounce estimate. Operational problems at two of the company's mines were blamed for the shortfall.

Now what: The reduced production will have a big impact on earnings in the second half, and it's unclear when production will resume at a higher rate. Seismic activity near Dryden, Ontario, and a water shortage in Mexico are causing the problems at the current time. I don't see a reason to buy the current dip and would be cautious about shares until we know when production will pick up again.

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At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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