Kinross Gold (KGC) Q1 Earnings & Revenues Beat Estimates

Gold miner Kinross Gold Corporation (KGC - Analyst Report) reported a net loss of $6.7 million (or a penny per share) for the first quarter of 2015, in contrast to net earnings of $31.8 million, (or 3 cents per share) in the year-ago quarter. 

The loss in the reported quarter resulted from foreign exchange losses of $18.7 million, mainly related to deferred income taxes.

Adjusted (excluding one-time items) earnings were a penny per share in the first quarter as against adjusted earnings of 3 cents recorded in the year-ago quarter. The results came ahead of the Zacks Consensus Estimate of break-even results.

Revenues decreased roughly 4.4% year over year to $781.4 million in the reported quarter due to lower gold prices, partly offset by higher gold equivalent ounces sold. However, revenues came ahead of the Zacks Consensus Estimate of $754 million.

Operational Performance

Attributable gold production was 629,360 equivalent ounces from continuing operations for the quarter, down around 5.3% year over year, primarily due to lower production at Tasiast and Chirano mines. Average realized gold price was $1,218 per ounce, down 6.2% from the year-ago quarter.

Production cost per gold equivalent ounce decreased to $709 in the quarter from $727 in the prior-year quarter, primarily due to lower fuel costs, favorable foreign exchange rates and higher attributable gold equivalent ounces sold. Margin per gold equivalent ounce sold was $509 in the first quarter, down 11% from the year-ago quarter.

Financial Review

Adjusted operating cash flow was $214.8 million, down 11.3% from $242.2 million in the prior-year quarter. Cash and cash equivalents were $1,010.5 million as of Mar 31, 2015, up from $704 million as of Mar 31, 2014. Long-term debt declined roughly 1.9% year over year to $1,986.1 million.

Capital expenditures were $149.5 million for the reported quarter versus $168.9 million in the comparable period last year. The decrease was due to lower spending at Tasiast and Dvoinoye.

Growth Projects

Kinross stated that a pre-feasibility study to explore potential re-start options at La Coipa, remains on track to be completed during the third quarter of 2015. A new tailings reprocessing project at Paracatu, is set to launch in the fourth quarter of 2015. The company expects the project to produce an additional 34,000 gold ounces per year at a production cost of sales of $400 per ounce for a minimum of nine years.

Kinross also intends to extend Chirano's estimated mine life by one year to 2020, which will offer additional time to pursue exploration potential in this highly prospective and low-cost area.

Outlook

For 2015, Kinross expects to produce roughly 2.4—2.6 million gold equivalent ounces from its current operations.

The company expects to be within its regional production guidance ranges and also its cost of sales guidance ranges. Kinross expects production cost of sales guidance range of $720—$780 per gold equivalent ounce. All-in sustaining cost is expected to be in the range of $1,000—$1,100 per gold equivalent ounce sold in 2015. Kinross also expects to meet its 2015 capital expenditure forecast of around $725 million.

Kinross currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the gold mining industry are AngloGold Ashanti Ltd. (AU - Snapshot Report), AuRico Gold Inc. (AUQ - Snapshot Report) and Banro Corporation (BAA - Snapshot Report). All of these carry a Zacks Rank #2 (Buy).

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