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Gold miner Kinross Gold Corporation (KGC - Free Report) reported net earnings of $2.5 million or breakeven per share for third-quarter 2016, as against a net loss of $52.7 million or 5 cents per share in the year-ago quarter. The earnings included a non-cash impairment charge related to the property, plant and equipment of $68.3 million, and an inventory write-down at Maricunga of $71.3 million.
Adjusted earnings (excluding one-time items) were $128.7 million or 10 cents per share, as against an adjusted loss of $23.9 million or 2 cents per share recorded in the year-ago quarter. Adjusted earnings per share topped the Zacks Consensus Estimate of 5 cents.
Revenues of $910.2 million in the quarter rose around 12.5% from $809.4 million in the year-ago quarter mainly due to increases in average realized gold price. Revenues also surpassed the Zacks Consensus Estimate of $901 million.
Operational Performance
Attributable gold production was 684,129 ounces for the quarter, up around 0.5% year over year. The increase was primarily driven by the buyout of Bald Mountain and 50% of Round Mountain, offset by temporary mining suspension at Tasiast, mining suspension at Maricunga as well as lower production at Paracatu.
Production cost per gold equivalent ounce rose to $719 in the quarter from $668 in the prior-year quarter, primarily due to higher costs at Chirano and Fort Knox, temporary suspension at Tasiast and a decrease in high-margin ounces from Kupol-Dvoinoye. Margin per gold equivalent ounce sold was $617 in the third quarter, up 35.9% year over year.
Average realized gold prices rose to $1,336 per ounce in the quarter from $1,122 per ounce a year ago.
Financial Review
Adjusted operating cash flow was $320.3 million, up 55% from $206.6 million in the prior-year quarter. Cash and cash equivalents were $756.4 million as of Sep 30, 2016, down from $1,024.8 million as of Sep 30, 2015.
Long-term debt declined around 12.5% year over year to $1,732.5 million. Capital expenditures fell to $153.8 million in the quarter from $171.3 million in the prior-year quarter owing to reduced spending at Fort Knox and Tasiast.
Development Updates
Kinross has been progressing as planned with the Phase One expansion of the Tasiast mine. The Phase Two feasibility study is expected to conclude by the third quarter of 2017.
The company has received a new permit at Bald Mountain that provides flexibility for future growth and expansion. The pre-feasibility study for the Vantage Complex is expected to conclude by the second quarter of 2017.
Two of Kinross’ projects in Russia, Moroshka and September Northeast, are progressing per schedule. Mining at the sites is expected to begin in the first half of 2018 and first-quarter 2017, respectively.
A pre-feasibility study for Phase W of the Round Mountain is expected to be completed by the third quarter of 2017. The company has also received approval on the project Declaration of Impact to Environment (“DIA”) permit for La Coipa Phase 7, and is now awaiting other permits, which are expected in late 2017.
2016 Outlook
For 2016, Kinross now expects to produce in the lower half of its guidance range of 2.7–2.9 million gold equivalent ounces. The overall production cost of sales is expected to be in the upper half of 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 to be in the range of $650−$675 million, lower than the previous projection of $755 million. The lower guidance is primarily due to certain expenditure at the Tasiast mine being shifted to 2017 from 2016.
Other operating costs are estimated to be over $110 million, up from the previous expectation of $95 million, owing to the temporary suspension of mining at Tasiast and suspension at Maricunga.
Depreciation, depletion and amortization is anticipated to be about $325 per gold equivalent ounce, compared with the prior forecast of $350 per gold equivalent ounce.
Other well-ranked stocks in the gold mining space include Acacia Mining plc , Newmont Mining Corporation (NEM - Free Report) and Pershing Gold Corporation , all carrying a Zacks Rank #2.
Newmont Mining has posted an average positive earnings surprise of 11.90% over the trailing four quarters.
Pershing Gold posted a positive earnings surprise of 20% in the last reported quarter.
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Kinross (KGC) Tops Q3 Earnings & Revenue Estimates
Gold miner Kinross Gold Corporation (KGC - Free Report) reported net earnings of $2.5 million or breakeven per share for third-quarter 2016, as against a net loss of $52.7 million or 5 cents per share in the year-ago quarter. The earnings included a non-cash impairment charge related to the property, plant and equipment of $68.3 million, and an inventory write-down at Maricunga of $71.3 million.
Adjusted earnings (excluding one-time items) were $128.7 million or 10 cents per share, as against an adjusted loss of $23.9 million or 2 cents per share recorded in the year-ago quarter. Adjusted earnings per share topped the Zacks Consensus Estimate of 5 cents.
Revenues of $910.2 million in the quarter rose around 12.5% from $809.4 million in the year-ago quarter mainly due to increases in average realized gold price. Revenues also surpassed the Zacks Consensus Estimate of $901 million.
Operational Performance
Attributable gold production was 684,129 ounces for the quarter, up around 0.5% year over year. The increase was primarily driven by the buyout of Bald Mountain and 50% of Round Mountain, offset by temporary mining suspension at Tasiast, mining suspension at Maricunga as well as lower production at Paracatu.
Production cost per gold equivalent ounce rose to $719 in the quarter from $668 in the prior-year quarter, primarily due to higher costs at Chirano and Fort Knox, temporary suspension at Tasiast and a decrease in high-margin ounces from Kupol-Dvoinoye. Margin per gold equivalent ounce sold was $617 in the third quarter, up 35.9% year over year.
Average realized gold prices rose to $1,336 per ounce in the quarter from $1,122 per ounce a year ago.
Financial Review
Adjusted operating cash flow was $320.3 million, up 55% from $206.6 million in the prior-year quarter. Cash and cash equivalents were $756.4 million as of Sep 30, 2016, down from $1,024.8 million as of Sep 30, 2015.
Long-term debt declined around 12.5% year over year to $1,732.5 million. Capital expenditures fell to $153.8 million in the quarter from $171.3 million in the prior-year quarter owing to reduced spending at Fort Knox and Tasiast.
Development Updates
Kinross has been progressing as planned with the Phase One expansion of the Tasiast mine. The Phase Two feasibility study is expected to conclude by the third quarter of 2017.
The company has received a new permit at Bald Mountain that provides flexibility for future growth and expansion. The pre-feasibility study for the Vantage Complex is expected to conclude by the second quarter of 2017.
Two of Kinross’ projects in Russia, Moroshka and September Northeast, are progressing per schedule. Mining at the sites is expected to begin in the first half of 2018 and first-quarter 2017, respectively.
A pre-feasibility study for Phase W of the Round Mountain is expected to be completed by the third quarter of 2017. The company has also received approval on the project Declaration of Impact to Environment (“DIA”) permit for La Coipa Phase 7, and is now awaiting other permits, which are expected in late 2017.
2016 Outlook
For 2016, Kinross now expects to produce in the lower half of its guidance range of 2.7–2.9 million gold equivalent ounces. The overall production cost of sales is expected to be in the upper half of 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 to be in the range of $650−$675 million, lower than the previous projection of $755 million. The lower guidance is primarily due to certain expenditure at the Tasiast mine being shifted to 2017 from 2016.
Other operating costs are estimated to be over $110 million, up from the previous expectation of $95 million, owing to the temporary suspension of mining at Tasiast and suspension at Maricunga.
Depreciation, depletion and amortization is anticipated to be about $325 per gold equivalent ounce, compared with the prior forecast of $350 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).
Other well-ranked stocks in the gold mining space include Acacia Mining plc , Newmont Mining Corporation (NEM - Free Report) and Pershing Gold Corporation , all carrying a Zacks Rank #2.
Acacia Mining posted a positive earnings surprise of 20% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Newmont Mining has posted an average positive earnings surprise of 11.90% over the trailing four quarters.
Pershing Gold posted a positive earnings surprise of 20% in the last reported quarter.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>