Kinross Gold Corporation
) reported an adjusted net income of $203.1 million or 18 cents per
share in the first quarter of 2012, above last year's earnings of
$175.3 million or 15 cents per share. The results missed the Zacks
Consensus Estimate of 21 cents.
Net earnings, as reported, went down almost 58% to $105.7
million (or 9 cents per share), from $250.1 million or 22 cents a
share in the year-ago period.
Revenues jumped 11% year-over-year to $1,036.6 million, but
missed the Zacks Consensus Estimate of $1,124 million. The growth
was due to higher average realized gold price, which increased
almost 24% to $1,644 ounce in the quarter from $1,327 per ounce in
the prior-year quarter.
Gold production decreased during the quarter by 6% to 604,247
gold equivalent ounces. The decrease in production was led by an
expected decline in grade at Kupol along with an increased output
of lower-grade stockpile ore at La Coipa, and low production at
Production cost per gold equivalent ounce was $742 in the
quarter versus $545 in the prior-year quarter. Margin per gold
equivalent ounce sold was $902 in the quarter, up 15% from the
prior-year quarter, mainly due to higher realized gold price.
In the first quarter, adjusted operating cash flow was $339.7
million compared with $396.7 million a year ago. Cash and cash
equivalents were $1.5 billion as of March 31, 2012, compared with
$1.6 billion as of March 31, 2011.
Capital expenditures were $534 million in the quarter compared
with $255.9 million reported in the same period last year. The
higher capital expenses were driven by project-related expenses
incurred at Tasiast, Paracatu and Dvoinoye.
Tasiast expansion project -
Development work is progressing well at Tasiast and Kinross is
preparing for the next two phases of expansion at the mine. The
company has submitted the Environment Impact Assessment (EIA) for
the phase 2 project and the approval is expected in the second half
of this year.
Kinross has expanded its mine fleet at the mine to 41 haul
trucks, resulting in increased activity. Moreover, the company
expects Tasiast to produce approximately 90 million tons this year,
up from 50 million tons produced in 2011.
Kinross completed the feasibility study at Dvoinoye as scheduled in
the first quarter and the company's board approved full
construction funding for the project. The study confirmed that the
mine would probably produce at a rate of around 1,000 tons of ore
per day. Kinross expects the mine to produce 215,000 to 250,000
gold equivalent ounces a year in its first three years of full
production. The mine's life is being put around seven years and
production is expected to begin in the second half of next
Paracatu Ball Mills -
Construction work on the fourth Paracatu ball mill is progressing
as per schedule and the project is expected to be operational in
the third quarter.
Maricunga SART plant -
Kinross commenced the pre-commissioning of the Maricunga SART
(Sulphidization, Acidification, Recycling and Thickening) plant and
the project is expected to be complete in the first half of
Fruta del Norte (FDN)
, Kinross continued negotiations with the Ecuadorean government on
an enhanced economic package.
, the company started drilling in January this year. The focus of
the drilling was mainly on the Valy prospect to follow up the
positive results from the drill programs carried out in the second
quarter of 2011.
Kinross remains on track to produce 2.6 - 2.8 million
attributable gold equivalent ounces in 2012. The average cost
of sales per gold equivalent ounce is expected to be in the range
of $670 - $715.
Kinross Gold Corporation, like other gold producers,
Barrick Gold Corporation
Newmont Gold Mining
), benefits from rising gold prices. We expect Kinross' exploration
projects and acquisitions to boost its top line going forward.
Currently, we have a long-term (more than 6 months) Neutral
recommendation on the stock. The company currently holds a Zacks #3
Rank, reflecting a short-term (1 to 3 months) Hold rating.
BARRICK GOLD CP (ABX): Free Stock Analysis
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis
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