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Kinross Gold (KGC) Posts Loss in Q2, Revenues Beat

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Gold miner Kinross Gold Corporation (KGC - Free Report) reported a net loss of $25 million or 2 cents per share for second-quarter 2016, narrower than a net loss of $83.2 million or 7 cents per share in the year-ago quarter. The loss was mainly due to a $69.4 million tax expense.

Adjusted loss (excluding one-time items) was $9.8 million or a penny per share, compared with adjusted loss of $13.6 million or a penny per share recorded in the year-ago quarter. Analysts polled by Zacks were expecting earnings of a penny per share on an average.

Revenues of $876.4 million in the quarter rose around 16% from $755.2 million in the year-ago quarter mainly due to increases in gold equivalent ounces sold and the average realized gold price. Revenues also surpassed the Zacks Consensus Estimate of $862 million.

 

 

Operational Performance

Attributable gold production was 671,267 ounces for the quarter, up around 2% year over year. The increase was primarily driven by higher production at Paracatu and the buyout of Bald Mountain and 50% of Round Mountain.

Production cost per gold equivalent ounce rose to $731 in the quarter from $724 in the prior-year quarter, primarily due to higher costs at Tasiast, Chirano, and Fort Knox. Margin per gold equivalent ounce sold was $535 in the second quarter, up 13.8% year over year.

Average realized gold prices rose to $1,266 per ounce in the quarter from $1,194 per ounce a year ago.

Financial Review

Adjusted operating cash flow was $187.2 million, up 16% from $161.4 million in the prior-year quarter. Cash and cash equivalents were $968.2 million as of Jun 30, 2016, down from $1,031.4 million as of Jun 30, 2015.

Long-term debt declined around 12.8% year over year to $1,733.1 million. Capital expenditures fell to $114 million in the quarter from $128.5 million in the prior-year quarter because of reduced spending at Fort Knox and Paracatu.

Development Updates

Kinross has resolved the expatriate work-permit issue with the Government of Mauritania and expects to resume normal operations at Tasiast in Aug 2016.

The company has been evaluating Maricunga's mine plan with reference to capital priorities in its global portfolio. It now anticipates suspension of mining in fourth-quarter 2016 and begin rinsing the residual gold from the heap leach pads, subject to the ongoing regulatory proceedings.

2016 Outlook

For 2016, Kinross has reaffirmed its previously-outlined production guidance. The company expects to produce about 2.7–2.9 million gold equivalent ounces this year. The overall production cost of sales is expected to be in the range of $675–$735 per gold equivalent ounce while all-in sustaining cost (AISC) is estimated to be $890–$990 per gold equivalent ounce.

Kinross now projects its capital expenditure forecast to be below $755 million and is reviewing timing of its capital spend for second-half 2016.

Other operating costs are estimated to be about $95 million, compared with the earlier-stated forecast of $45 million, owing to the temporary suspension of mining at Tasiast and Maricunga during the quarter.

Depreciation, depletion and amortization is anticipated to be about $350 per gold equivalent ounce, compared with the prior forecast of $375 per gold equivalent ounce.

 

KINROSS GOLD Price, Consensus and EPS Surprise

KINROSS GOLD Price, Consensus and EPS Surprise | KINROSS GOLD Quote

Zacks Rank

Kinross currently carries a Zacks Rank #2 (Buy).

Some better-ranked mining companies are Alamos Gold Inc. (AU - Free Report) , B2Gold (BTG - Free Report) , and Franco-Nevada Corp. (FNV - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).

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