Kinross narrows Q4 loss as margins rise

VANCOUVER (miningweekly.com) – Canadian miner Kinross Gold has reported a smaller headline loss for the fourth quarter ended December 31, as margins expanded on the back of higher gold sales and prices.

The Toronto-based company reported an adjusted net loss of $50.9-million, or $0.04 a share, for the three-month period, compared with an adjusted net loss of $68.8-million, or $0.06 a share, in the three months to December 31, 2015.

Further, the company reported a net loss of $116.5-million, or $0.09 a share, for the quarter under review, compared with a loss of $841.9-million, or $0.73 a share, in the fourth quarter of 2015. The substantially lower loss was owing to lower impairment charges.

Revenue from metal sales was $902.8-million in the fourth quarter, compared with $706.2-million in the same period in 2015, owing to higher gold sales and a higher average realised gold price. Kinross's attributable margin for each gold equivalent ounce sold was $505 in the quarter, up 20% year-on-year.

The average realised gold price in the fourth quarter increased to $1 217/oz, compared with $1 108/oz in the prior comparable period.

All-in sustaining costs (AISC) were $1 012/oz in the fourth quarter, compared with $991/oz a year earlier, mainly owing to higher production cost of sales.

Kinross generated operating cash flow of $1.1-billion for the full 2016, a 32% increase over the previous year.

It recorded net earnings of $93-million, or $0.08 a share, for the full year, compared with an adjusted net loss of $91-million, or $0.08 a share, in 2015. Its net loss for the full year also narrowed to $104-million from a loss of $984.5-million in 2015.

As at December 31, Kinross had cash and cash equivalents of $827-million. The company had year-end available credit of $1.43-billion, for total liquidity of about $2.3-billion.

In 2017, Kinross expects to produce 2.5-million to 2.7-million gold-equivalent ounces from its operations. The expected decrease, compared with full-year 2016 output, is mainly as a result of the suspension of mining activities at Maricunga, after Chile’s environmental regulators shut down the mine’s water system in March, lower expected grades at Kinross’s Russian operations owing to mine sequencing, and the expected closure of the Kettle River-Buckhorn mine, in Washington state, in the US, in the current quarter.

The company has forecast AISC of $925/oz to $1 025/oz for this year.

Kinross reported total estimated proven and probable gold reserves of about 31-million ounces as at December 31. The decrease of 2.2-million ounces in estimated gold reserves was mainly the result of depletion across the company’s portfolio and reclassification of reserves to resources at Maricunga, offset by reserve increases at Bald Mountain, in Nevada, in the US.

Proven and probable silver reserves stood at about 37.4-million ounces, a net decrease of 3.6-million ounces over year-end 2015, mainly owing to depletion offset by increases at the Round Mountain operation, in Nevada, in the US, and the Kupol mine, in Russia. Proven and probable copper reserves at Kinross's 25%-owned Cerro Casale project, in Chile, were estimated at about 1.4-billion pounds, unchanged from year-end 2015.

Kinross reported “excellent” progress advancing its development projects at Tasiast, in Mauritania, and Bald Mountain.