Kinross
Gold
Corporation
(
KGC
) declared preliminary operating results for full-year 2011 while
providing guidance for 2012.
Kinross expects 2011 production to be approximately 2.6 million
gold equivalent ounces and cost of sales to be approximately $600
per gold equivalent ounce, both of these are equivalent to the the
company's previous guidance range.
2012 Outlook
In 2012, Kinross expects to produce approximately 2.6-2.8
million gold equivalent ounces from its current operations.
Production cost of sales per gold equivalent ounce is expected to
be in the range of $670-715 for 2012. On a by-product basis, gold
production is expected to be in the range of 2.5-2.6 million ounces
and silver production is forecast to be in the range of 7.5-8.0
million ounces. Average production cost of sales per gold ounce on
a by product basis is guided in the range of $620-$665.
The company expects production in 2012 to be positively impacted
by the ongoing projects at Fort Knox, Paracatu, and at Tasiast.
These expected gains are anticipated to be partially offset by a
planned decline in grades, particularly at Kupol and Kettle
River-Buckhorn.
The 2012 production cost of sales per gold equivalent ounce is
expected to increase driven by anticipated higher consumable and
labor costs and an expected decline in grades at certain existing
mines.
In South America, production is estimated to be in the range of
930,000-1,030,000 gold equivalent ounces at cost of sales per gold
equivalent ounce of $780-$850.
In North America, production is estimated to be in the range of
620,000-660,000 gold equivalent ounces at cost of sales per gold
equivalent ounce of $620-$660.
In West Africa, production is estimated to be in the range of
500,000-560,000 gold equivalent ounces at cost of sales per gold
equivalent ounce of $740-$800.
In Russia, production is estimated to be in the range of
525,000-565,000 gold equivalent ounces at cost of sales per gold
equivalent ounce of $470-$495.
The company expects capital expenditures related to growth
projects of approximately $1.3 billion in 2012. The company's three
major growth projects at Tasiast, Fruta del Norte (
FDN
) and Lobo-Marte will require significant capital expenditures over
the next several years.
The 2012 forecast for exploration and business development
expenses is approximately $255 million, of which $185 million is
forecast for exploration. Capitalized exploration is forecast to be
$35 million, for total 2012 exploration expenditures of $220
million.
Other operating costs are forecast to be $70 million, of which
$35 million Tasiast expansion costs that cannot be capitalized.
General and administrative expense is anticipated to be
approximately $180 million. Included in the expenses is
approximately $50 million related to equity-based compensation. The
company's tax rate in 2012 is forecast to be in the range of
31%-37% and depreciation, depletion and amortization is forecast to
be approximately $200 per gold equivalent ounce.
Kinross also announced a project optimization process. The
purpose of the project optimization process is to efficiently
advance development of its three projects - Tasiast, Fruta del
Norte (
FDN
), and Lobo-Marte, generate enhanced returns on capital, and
maximize shareholder value, while maintaining a strong balance
sheet and investment grade ratings.
As part of the optimization process, Kinross will explore
project development alternatives to those included in the original
Tasiast scoping study, with the objective of improving project
economics while reducing overall project execution risk.
At Fruta del Norte, discussions with the Ecuadorian government
are ongoing in order to advance negotiation of the definitive
exploitation and investment protection agreements. Kinross
continues to explore options to optimize capital allocation and
improve overall project economics prior to finalizing the project
feasibility study and completing the exploitation and investment
protection agreements.
Kinross competes with
Barrick Gold Corporation
(
ABX
) and
Newmont Gold Mining
(
NEM
). 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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