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 Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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