Gold bars
Gold bars Reuters

(REUTERS) -- Canada's No.2 gold miner, Goldcorp, reported a 23 percent increase in its operating profit on Wednesday, topping expectations as sharp gains in the price of bullion drove earningsgrowth in the quarter.

The Vancouver, British Columbia-based miner also announced that its proven and probable gold reserves increased 8 percent to 64.7 million ounces in 2011, while its measured and indicated gold resources rose 10 percent to 28.2 million ounces, on the back of continued success in its exploration program.

We see continued opportunity for growth in the existing reserve base and I believe we have the opportunity to more than replace reserves when we calculate them at the end of 2012, chief executive Chuck Jeannes said in an interview. The primary mines we expect growth at would be Cerro Negro in Argentina and Éléonore in Quebec.

Jeannes remains confident that the company is well placed to grow its gold production by 70 percent to 4.2 million ounces in 2016.

Beginning later this year, Goldcorp is set to bring on-line four new mines that will help it achieve this goal. The company and its larger rival, Barrick Gold, are expected to begin production from their jointly-owned Pueblo Viejo project in the Dominican Republic later this year.

Gold production at its Cerro Negro project in Argentina is set to begin in 2013, while first gold from both Cochenour and Éléonore in Canada is expected in 2014.

QUARTERLY RESULTS

After excluding impairment charges related to equity investments, certain non-cash revisions in mine-closure costs and other one-time items, the company reported earnings of $531 million, or 66 cents a share, up from a year-earlier profit of $431 million, or 59 cents a share.

Revenue rose 15 percent to $1.52 billion as a 21 percent increase in average realized gold prices more than offset the impact of declines in the prices of byproducts such as copper and lead.

Analysts, on average, had forecast earnings of 60 cents a share on revenues of $1.51 billion, according to Thomson Reuters I/B/E/S.

Net income for the quarter ended Dec. 31 was $405 million, or 39 cents a share, down from $556 million, or 75 cents a share, when its results were boosted by a large gain from discontinued operations.

Gold sales in the quarter were 685,000 ounces on production of 687,900 ounces. This compares to sales of 678,600 ounces on production of 689,600 ounces in the fourth quarter of 2010.

The company, which owns mines and projects spread across the United States, Canada, Mexico, Guatemala, the Dominican Republic and Argentina, said it remains on track to reach its target of processing 130,000 tonnes a day of ore at its Peñasquito mine in Mexico by the end of the current quarter.

Goldcorp reiterated that it expects a 4 percent increase in 2012 gold production with output rising to 2.6 million ounces. Total cash costs are expected to be between $250 to $275 per ounce of gold on a byproduct basis and between $550 to $600 an ounce of gold on a co-product basis.

Shares in Goldcorp rose 2.2 percent to $46.25 in trading after closing bell in the United States on Wednesday.