After successful Q2, Kinross on track to meet 2017 production, sales guidance

JOHANNESBURG (miningweekly.com) – After a strong second quarter with consistent operating results, Canadian gold major Kinross Gold remains on track to meet its yearly production guidance of between 2.5-million and 2.7-million gold equivalent ounces and a production cost of sales guidance of between $660 and $720 per gold equivalent ounce.

The company also expects to remain within its all-in sustaining cost (AISC) target of $925/oz to $1 025/oz of gold equivalent and within its capital expenditure guidance of $900-million (about 5%).

According to Kinross president and CEO J. Paul Rollinson, the company’s strengthened balance sheet – with a liquidity position of about $2.5-million – can be attributed to the group’s portfolio of mines achieving production targets, lowering costs and generating strong cash flows.

Rollinson noted that Kinross’s organic development projects were advancing well, with Tasiast Phase One expansion, in Mauritania, advancing on time and on budget. This project is expected to reach full commercial production in the second quarter of 2018, with plant construction now 55% complete.

The company also expects to complete feasibility studies and make a development decision on the Tasiast Phase Two and Round Mountain Phase W expansion projects in September.

“Our projects in Russia have [also] progressed well, with ore from the September Northeast deposit now being processed at the Kupol mill,” said Rollinson, adding that, at the Moroshka project, decline development was on schedule, with construction of surface infrastructure now complete.

“We [also] continue to advance Bald Mountain expansion opportunities and expect production to double this year compared with 2016,” he added, highlighting that engineering work at the Nevada-based Bald Mountain’s Vantage Complex in the South area was progressing on schedule.

Kinross produced 694 874 gold equivalent ounces in the period under review, compared with 671 267 gold equivalent ounces produced in the same period in 2016.

The company also achieved adjusted net earnings for the quarter of $54.9-million, or $0.04 a share, compared with an adjusted net loss of $9.8-million, or $0.01 a share, in the previous year’s comparable quarter.

Reported net earnings increased to $33.1-million, or $0.03 per share, compared with a net loss of $25-million, or $0.02 a share, in the second quarter of 2016, mainly owing to a decrease in production cost of sales.

Production cost of sales for the quarter was $660/oz of gold equivalent – compared with $731/oz in the second quarter of 2016 – while AISC for the quarter was $910/oz of gold equivalent, compared with $988/oz in the second quarter of 2016.

AISC per gold ounce sold on a by-product basis was $901 in the period under review, compared with $976 in the previous year’s comparable quarter.

Revenue was, however, down 0.89% from $876.4-million in the second quarter of 2016 to $868.8-million in the second quarter of 2017.

Operating cash flow for the period amounted to $179.7-million, compared with $315.9-million in the previous year’s comparable quarter, while the group’s adjusted operating cash flow amounted to $230.8-million for the quarter – an increase of 23% compared with $187.2-million in operating cash flow recorded in the second quarter of 2016.