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Kinross Gold's Costs to Rise Ahead: Can Profits Keep Shining?
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Key Takeaways
Kinross' Q2 production costs rose 4% to $1,074 per ounce, with AISC up 8% to $1,493 per ounce.
The company expects 2025 AISC of $1,500 and cash costs of $1,120 per ounce amid inflation and lower output.
KGC's AISC remains below Barrick and Newmont, though rising costs point to margin compression risks ahead.
Kinross Gold Corporation (KGC - Free Report) saw a roughly 4% year-over-year rise in production costs of sales per ounce to $1,074 in the second quarter. All-in-sustaining costs (AISC), a key indicator of cost efficiency in mining, rose nearly 8% year over year to $1,493 per gold equivalent ounce sold. While a 40% increase in average realized gold prices led to a surge in second-quarter profits, the rise in unit costs underscores a spike in inflation.
KGC’s guidance indicates cost pressures through the back of 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, accounting changes to recharacterize stripping costs at certain sites as operating costs are expected to push up unit costs.
Among its peers, Barrick Mining Corporation (B - Free Report) faced cost pressure in the June quarter. Barrick’s cash costs per ounce of gold and AISC increased around 17% and 12% year over year, respectively, in the second quarter. AISC of $1,684 increased from the year-ago quarter due to higher total cash costs per ounce. 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) second-quarter 2025 results also showed increases in unit costs on a year-over-year basis. Newmont’s gold costs applicable to sales (CAS) rose around 6% year over year to $1,215 per ounce. AISC for gold was up around 2% year over year to $1,593 per ounce. The rise was attributed to a decline in production due to non-core asset divestments as Newmont shifts its focus to Tier 1 assets.
KGC’s AISC remained lower in absolute terms compared with Barrick and Newmont in the second quarter. However, higher expected costs in the remainder of 2025 signal margin compression risks.
The Zacks Rundown for KGC
Kinross Gold’s shares have shot up 112.9% year to date against the Mining – Gold industry’s rise of 78.6%, 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 13.97, in line with the industry average of 13.97X. 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 92.7% and 9.5%, 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
Kinross Gold's Costs to Rise Ahead: Can Profits Keep Shining?
Key Takeaways
Kinross Gold Corporation (KGC - Free Report) saw a roughly 4% year-over-year rise in production costs of sales per ounce to $1,074 in the second quarter. All-in-sustaining costs (AISC), a key indicator of cost efficiency in mining, rose nearly 8% year over year to $1,493 per gold equivalent ounce sold. While a 40% increase in average realized gold prices led to a surge in second-quarter profits, the rise in unit costs underscores a spike in inflation.
KGC’s guidance indicates cost pressures through the back of 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, accounting changes to recharacterize stripping costs at certain sites as operating costs are expected to push up unit costs.
Among its peers, Barrick Mining Corporation (B - Free Report) faced cost pressure in the June quarter. Barrick’s cash costs per ounce of gold and AISC increased around 17% and 12% year over year, respectively, in the second quarter. AISC of $1,684 increased from the year-ago quarter due to higher total cash costs per ounce. 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) second-quarter 2025 results also showed increases in unit costs on a year-over-year basis. Newmont’s gold costs applicable to sales (CAS) rose around 6% year over year to $1,215 per ounce. AISC for gold was up around 2% year over year to $1,593 per ounce. The rise was attributed to a decline in production due to non-core asset divestments as Newmont shifts its focus to Tier 1 assets.
KGC’s AISC remained lower in absolute terms compared with Barrick and Newmont in the second quarter. However, higher expected costs in the remainder of 2025 signal margin compression risks.
The Zacks Rundown for KGC
Kinross Gold’s shares have shot up 112.9% year to date against the Mining – Gold industry’s rise of 78.6%, largely driven by the gold price rally.
From a valuation standpoint, KGC is currently trading at a forward 12-month earnings multiple of 13.97, in line with the industry average of 13.97X. 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 92.7% and 9.5%, 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.