Kinross Gold Corp (KGC) reported earnings after the close last night meeting expectations with EPS of $0.16 (excluding one-time charges) on net income of $113.1 million. During the same period last year, the company earned $19.3 million. A 27% higher realized price of gold offset slightly lower gold volumes to raise quarterly revenues 16% to $696.6 million.
Volumes were hurt, in part, by a 14 day work stoppage in Chile due to severe weather impacting operations. Better than expected performance at the Kupol, Russia site helped offset some of those losses, but on the lighter side – a completed feasibility study for the Maricunga, Chile expansion indicates an additional 90,000 to 100,000 oz at production costs between $540 and $560/oz.
The firm reiterates its position with its unchanged guidance for the year at 2.2 million gold oz , but due to Chilean weather problems, average cost is expected to be in the higher end of the of $460- $490/oz range previously guided.
Going forward, KGC has initiated a stock deal with Red Back Mining that will give it access to highly attractive gold mines in West Africa’s gold belt. The deal is worth $7.1 billion, and if approved will give Kinross a 67% stake in the newly formed company.
This deal will give access to the Chirano Gold Project in Ghana and the Tasiast Gold Mine in Mauritania. In the next few months we will get exploration results from the Tasiast deposit to gauge operational performance and accretive shareholder value.
The MCP Team
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