Kinross Updates DD&A Guidance - Analyst Blog

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Gold miner Kinross Gold Corporation ( KGC ) updated its guidance for depreciation, depletion and amortization in 2011 to approximately $600 million versus its previous forecast of $651million.

Kinross remains on track to produce about 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.

Recently, Kinross 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 of 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 increased 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 sold in the prior-year quarter.

The increase was mainly attributable to increased production from the Kupol and the West African operations. Production cost per gold equivalent ounce was $634 versus $517 in the prior-year quarter. Production costs per ounce escalated 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 due mainly to higher realized gold price.

In third-quarter 2011, adjusted operating cash flow was $421.6 million, up 82.1% year over year. Adjusted operating cash flow per share was 37 cents during the quarter versus 30 cents in the prior-year quarter.

Cash and cash equivalents were $1,874.6 million as of September 30, 2011 compared with $1,466.6 million as of December 31, 2010.

Capital expenditures were $395.0 million during the quarter compared with $150.7 million for the same period last year.

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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