Kinross beats Q1 earnings expectations despite lower prices, operating earnings

TORONTO (miningweekly.com) – Canadian gold producer Kinross Gold has reported adjusted net earnings attributable to common shareholders in the first quarter of $1.4-million, or nil per share, compared with adjusted net earnings of $15.3-million, or $0.01 a share, for the comparable period in 2015.

The financial performance during the three months ended March 31, beat Wall Street analyst expectations that the miner would post a loss of $0.01 a share, off $808.09-million in revenue.

Revenue increased slightly to $782.6-million on total gold-equivalent sales of 664 165 oz during the first quarter, compared with $781.4-million on sales of 641 752 oz gold equivalent during the first quarter of 2015.

"Kinross is off to a strong start this year, generating solid free cash flow as our portfolio of mines continued to deliver consistent operational results in the first quarter,” said president and CEO Paul Rollinson on Tuesday.

The average realised gold price fell to $1 179/oz, compared with $1 218/oz in the same period of 2015.

Kinross reported that operating earnings were lower by 44% year-on-year, mainly owing to the decrease in realised metal prices, as well as transaction costs regarding the Nevada asset acquisition. These changes were partially offset by lower exploration costs, the company advised.

During the quarter, the net loss attributable to common shareholders was $13.9-million, or $0.01 a share, compared with $6.7-million, or $0.01 a share, in the same period of 2015.

Company-wide output totalled 687 463 gold equivalent ounces, up 9% from the 629 360 gold equivalent ounces achieved a year earlier.

"We also significantly clarified our path to the future on two major fronts, Rollinson commented, advising that at Tasiast, in Mauritania, Kinross was moving ahead with the Phase 1 expansion, which was expected to nearly double production, while reducing cost of sales significantly, at a manageable capital cost.

“At the same time, we completed a prefeasibility study for a potential Phase 2 expansion that would transform the operation into our largest mine, with one of the lowest costs. With the acquisition of our Nevada-based assets now complete, we are more confident in Bald Mountain's clear upside potential and expect to convert a substantial amount of the site's estimated mineral resources into mineral reserves,” he noted.

Kinross planned to produce about 2.7-million to 2.9-million gold-equivalent ounces in 2016, with all-in sustaining costs expected to range between $890/oz to $990/oz of gold equivalent. The company also expected to meet its revised 2016 capital expenditure forecast of about $755-million.

The Toronto-based company’s TSX-listed stock on Tuesday climbed as much as 6.8% to C$7.15 apiece, with the stock having risen 159% since the start of the year.