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Will Higher Expected Costs Put a Dent in Kinross Gold's Margins?
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Key Takeaways
Kinross' Q1 cost of sales rose 6% to $1,043 per ounce, with AISC increasing 3% to $1,355 per ounce.
Full-year 2025 AISC is forecast at $1,500 per ounce, with production cash costs at $1,120 per ounce.
Higher sustaining capital spending and inflationary impacts will add to KGC's unit cost increases.
Kinross Gold Corporation (KGC - Free Report) saw a roughly 6% year-over-year rise in production costs of sales per ounce to $1,043 in the first quarter. All-in-sustaining costs (AISC), a key indicator of cost efficiency in mining, rose nearly 3% year over year to $1,355 per gold equivalent ounce sold. While KGC’s margins benefited from a 9% rise in average realized gold prices to $2,857 per ounce in the quarter, the rise in unit costs underscores a spike in inflation.
KGC’s guidance indicates cost pressures to intensify throughout 2025, with the company expecting full-year AISC per gold equivalent ounce to reach $1,500 and production cash costs to be around $1,120 per ounce. Costs are expected to rise in the remaining quarters of 2025 due to weaker expected production and inflationary impacts. Also, higher sustaining capital spending and accounting changes to reflect stripping costs at Round Mountain Phase S and Fort Knox Phase X as operating costs are expected to push up unit costs.
Among its peers, Barrick Mining Corporation (B - Free Report) faced cost pressure in the March quarter. Barrick saw a 22% sequential increase in AISC, reaching $1,775 per ounce. This upside was influenced by operational challenges, higher total cash costs per ounce and an uptick in minesite sustaining capital expenditures. Lower production, partly due to the suspension of operations at Barrick’s Loulo-Gounkoto mine, also contributed to the rise. For 2025, Barrick projects AISC in the range of $1,460-$1,560 per ounce, indicating a year-over-year increase at the midpoint.
Newmont Corporation’s (NEM - Free Report) first-quarter 2025 results also showed increases in unit costs. Newmont’s gold costs applicable to sales (CAS) rose 16% year over year to $1,227 per ounce. AISC was $1,651 per ounce for the same period, reflecting a roughly 13% sequential and 15% year-over-year increase. The rise was attributed to a decline in production due to non-core asset divestments as Newmont shifts its focus to Tier 1 assets.
Kinross' modest cost uptick in the first quarter reflects early signs of inflation-driven pressure. While KGC’s AISC remained lower in absolute terms compared with Barrick and Newmont in the first quarter, higher expected costs in the remainder of 2025 signal margin compression risks.
The Zacks Rundown for KGC
Kinross Gold’s shares have shot up 73.6% year to date against the Zacks Mining – Gold industry’s rise of 58.7%, largely driven by the gold price rally.
Image Source: Zacks Investment Research
From a valuation standpoint, KGC is currently trading at a forward 12-month earnings multiple of 11.72, a 7.9% discount to the industry average of 12.73X. It carries a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for KGC’s 2025 and 2026 earnings implies a year-over-year rise of 94.1% and 7.5%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.
Image Source: Zacks Investment Research
KGC stock currently carries a Zacks Rank #1 (Strong Buy).
Image: Bigstock
Will Higher Expected Costs Put a Dent in Kinross Gold's Margins?
Key Takeaways
Kinross Gold Corporation (KGC - Free Report) saw a roughly 6% year-over-year rise in production costs of sales per ounce to $1,043 in the first quarter. All-in-sustaining costs (AISC), a key indicator of cost efficiency in mining, rose nearly 3% year over year to $1,355 per gold equivalent ounce sold. While KGC’s margins benefited from a 9% rise in average realized gold prices to $2,857 per ounce in the quarter, the rise in unit costs underscores a spike in inflation.
KGC’s guidance indicates cost pressures to intensify throughout 2025, with the company expecting full-year AISC per gold equivalent ounce to reach $1,500 and production cash costs to be around $1,120 per ounce. Costs are expected to rise in the remaining quarters of 2025 due to weaker expected production and inflationary impacts. Also, higher sustaining capital spending and accounting changes to reflect stripping costs at Round Mountain Phase S and Fort Knox Phase X as operating costs are expected to push up unit costs.
Among its peers, Barrick Mining Corporation (B - Free Report) faced cost pressure in the March quarter. Barrick saw a 22% sequential increase in AISC, reaching $1,775 per ounce. This upside was influenced by operational challenges, higher total cash costs per ounce and an uptick in minesite sustaining capital expenditures. Lower production, partly due to the suspension of operations at Barrick’s Loulo-Gounkoto mine, also contributed to the rise. For 2025, Barrick projects AISC in the range of $1,460-$1,560 per ounce, indicating a year-over-year increase at the midpoint.
Newmont Corporation’s (NEM - Free Report) first-quarter 2025 results also showed increases in unit costs. Newmont’s gold costs applicable to sales (CAS) rose 16% year over year to $1,227 per ounce. AISC was $1,651 per ounce for the same period, reflecting a roughly 13% sequential and 15% year-over-year increase. The rise was attributed to a decline in production due to non-core asset divestments as Newmont shifts its focus to Tier 1 assets.
Kinross' modest cost uptick in the first quarter reflects early signs of inflation-driven pressure. While KGC’s AISC remained lower in absolute terms compared with Barrick and Newmont in the first quarter, higher expected costs in the remainder of 2025 signal margin compression risks.
The Zacks Rundown for KGC
Kinross Gold’s shares have shot up 73.6% year to date against the Zacks Mining – Gold industry’s rise of 58.7%, largely driven by the gold price rally.
From a valuation standpoint, KGC is currently trading at a forward 12-month earnings multiple of 11.72, a 7.9% discount to the industry average of 12.73X. It carries a Value Score of A.
The Zacks Consensus Estimate for KGC’s 2025 and 2026 earnings implies a year-over-year rise of 94.1% and 7.5%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.
KGC stock currently carries a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.