Kinross Closes Term Loan - Analyst Blog

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The Canadian mining company, Kinross Gold Corporation ( KGC ) announced that it closed its $200 million term loan to fund increase in Kupol ownership. The loan was a non-recourse loan taken from a group of international financial institutions. The non-recourse loan carries a term of five years, with annual interest of LIBOR plus 2.5%.

In April 2011, Kinross increased its stake to 100% from 75% in Chukotka Mining and Geological Company ( CMGC ), which holds both the Kupol mine and mining licence and the Kupol East-West exploration licences in the Chukotka region of the Russian Federation.

Recently, the company reported an adjusted net income of $273.4 million or 24 cents per share in the third quarter of 2011, above last year's $116.8 million or 15 cents per share, outpacing the Zacks Consensus Estimate 21 cents per share.

GAAP net earnings were $212.6 million or 19 cents per share in the third quarter of 2011 compared with $540.9 million, or 71 cents per share in the prior-year quarter.

Quarterly revenues leaped 45% to $1,069.2 million, due to an increase in total ounces produced and a higher average realized gold price.

Gold production spliked 13% year over year to 647,983 ounces in the third quarter of 2011 with an average realized gold price of $1,646 per ounce sold compared with $1,190 per ounce in the prior-year quarter.

The increase was mainly attributable to the addition of production from the Kupol and the West Africa operations. Production cost per gold equivalent ounce was $634 versus $517 in the prior-year quarter. Production costs per ounce increased mainly due to a rise in labor costs, diesel and power costs, and royalties.

Kinross margin per ounce sold was $1,012 during the quarter, up 50% year over year mainly due to higher realized gold price.

Kinross remains on track to produce 2.6 - 2.7 million attributable gold equivalent ounces in 2011.  The average cost of sales per gold equivalent ounce is expected within the previous guidance range of $565 - $610.

Kinross Gold Corporation, like other gold producers, Barrick Gold Corporation ( ABX ) and Newmont Gold Mining ( NEM ), benefits from rising gold prices. We expect Kinross' exploration projects and acquisitions to boost its top line going forward.

Currently, Kinross Gold has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long-term Neutral recommendation.


 
BARRICK GOLD CP ( ABX ): Free Stock Analysis Report
 
KINROSS GOLD ( KGC ): Free Stock Analysis Report
 
NEWMONT MINING ( NEM ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ABX , CMGC , KGC , NEM

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