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Kinross (KGC) Q1 Earnings and Revenues Surpass Estimates

Gold miner Kinross Gold CorporationKGC reported net profit of $134.6 million or 11 cents per share for first-quarter 2017, compared with a net profit of $35 million or 3 cents in the year-ago quarter.

Adjusted earnings (excluding one-time items) was $23.4 million or 2 cents per share, compared with the year-ago recorded figure of $21.2 million or 2 cents. The results beat the Zacks Consensus Estimate of a penny.

Revenues of $796.1 million in the quarter rose around 1.7% from $782.6 million in the year-ago quarter on the back of higher average realized gold prices . Revenues also surpassed the Zacks Consensus Estimate of $781 million.

Kinross Gold Corporation Price, Consensus and EPS Surprise

Kinross Gold Corporation Price, Consensus and EPS Surprise | Kinross Gold Corporation Quote

Operational Performance

Attributable gold production was 671,956 ounces for the quarter, down 2.3% year over year. Production cost per gold equivalent ounce rose to $701 from $687 from the prior-year quarter, primarily due to higher per ounce cost at Round Mountain, Kupol and Paracatu. Margin per gold equivalent ounce sold was $519 in the first quarter, up 5.5% year over year.

Average realized gold prices rose to $1,220 per ounce in the quarter from $1,179 per ounce a year ago.

Financial Review

Adjusted operating cash flow was $250.9 million, up 20.9% from $207.6 million in the prior-year quarter. Cash and cash equivalents were $819 million as of Mar 31, 2017, up from $750.4 million as of Mar 31, 2016.

Long-term debt inched up 0.04% year over year to $1,733.8 million. Capital expenditures rose to $178.9 million in the quarter from $139.5 million in the prior-year quarter due to Tasiast Phase One expansion project costs and higher spending at Paracatu and Bald Mountain.

Development Updates

Kinross continues to progress as planned with the Phase One expansion of the Tasiast mine and remains on track with its commercial production which is expected to begin in second-quarter 2018. The company expects Phase One to increase plant throughput to 12,000 t/d, and increase production to around 400,000 gold equivalent ounces per year at an all-in sustaining (AISC) cost of $760 per gold ounce. The company is also making a good progress with the Tasiast Phase Two expansion feasibility study which is on schedule to complete in third-quarter 2017.

Kinross also continues to develop the Bald Mountain mine's potential after doubling the mine's proven and probable mineral reserve estimates at the end of 2016.

Kinross' Russian development projects are also progressing per schedule. The company has completed portal construction at the Moroshka project with construction of surface infrastructure is now 50% complete. Development of September Northeast project has been completed on time and on budget. Processing of September Northeast ore at the Kupol mill is expected to start in Jun 2017.

Outlook

For 2017, Kinross reaffirmed its previous gold production guidance range of 2.5-2.7 million gold equivalent ounces. The overall production cost of sales is expected in the range of $660-$720 per gold equivalent ounce, while all-in sustaining cost is estimated to be $925-$1,025.

Kinross projects its capital expenditure to be roughly $900 million.

Price Performance

Kinross has outperformed the Zacks categorized Mining-Gold industry year to date. The company's shares returned around 8% over this period, compared with roughly 3.9% gain recorded by the industry.

Zacks Rank

Kinross currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the basic material space include Univar Inc. UNVR , The Chemours Company CC and Kronos Worldwide Inc KRO . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Univar has expected long-term growth of 9.4%.

Chemours has expected long-term growth of 15.5%.

Kronos has expected long-term growth of 5%.

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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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