Kinross Gold reports In-line Fiscal 1Q Results, Rains Likely To Impact Maricunga In Second Half

Kinross Gold Corporation (KGC: US) posted a loss of $0.01 and adj. EPS of $0.01. The adj EPS is in-line with consensus and our forecast. Operating margins were $0.01 better than our estimate, but this was negated by $0.01 higher interest expense. Kinross Gold Corporation (TSX:K)(KGC) today announced its results for the first quarter ended March 31, 2015.

2015 first quarter highlights:

Production: 629,360 gold equivalent ounces (Au eq. oz.), compared with 664,690 ounces in Q1 2014.

Revenue: $781.4 million, compared with $817.4 million in Q1 2014.

Production cost of sales2: $709 per Au eq. oz., compared with $727 in Q1 2014.

All-in sustaining cost2: $964 per Au eq. oz. sold, compared with $1,001 in Q1 2014. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $957 in Q1 2015, compared with $991 in Q1 2014.

Adjusted operating cash flow2: $214.8 million, or $0.19 per share, compared with $242.2 million, or $0.21 per share, in Q1 2014.

Adjusted net earnings2,3: $15.3 million, or $0.01 per share, compared with adjusted earnings of $34.1 million, or $0.03 per share, in Q1 2014.

Reported net earnings/loss3: Loss of $6.7 million, or $0.01 per share, compared with earnings of $31.8 million, or $0.03 per share, in Q1 2014.

Outlook: Kinross expects to be within its 2015 forecast guidance for production (2.4 – 2.6 million Au eq. oz.), production cost of sales ($720 – $780 per Au eq. oz.), all-in sustaining cost ($1,000 – $1,100 per Au eq. oz.) and total capital expenditures ($725 million).

Organic production initiatives: A pre-feasibility study to explore potential re-start options at La Coipa remains on track to be completed during Q3 2015. A new tailings reprocessing project at Paracatu, set to launch in Q4 2015, is expected to produce an additional 34,000 Au oz. per year at a production cost of sales of $400 per ounce for a minimum of nine years. The Company is also planning to extend Chirano’s estimated mine life by one year to 2020. This will provide additional time to pursue exploration potential in this highly prospective and low-cost area.

Maricunga update: Mining and crushing operations are expected to restart in June with the support of an additional backup power plant after operations were suspended in late March due to heavy rains in northern Chile. The loss in production is expected to be largely offset by improved production forecasts at Paracatu. As a result, Kinross expects no change to its regional guidance.


Roger Gillespie, MBA, is research analyst and focuses Services, Technology and Energy & Utilities sectors. Prior joining Equities Mogul, Roger Gillespie worked with Telsey Research. If you have a great story idea for Roger Gillespie, you can write at [ ].


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