Kinross Beats Estimates in 1Q - Analyst Blog
May 09 2013 - 8:50AM
Zacks
Gold miner Kinross Gold
Corporation (KGC) reported adjusted (excluding one-time
items) earnings of 15 cents per share in the first quarter of 2013,
beating the Zacks Consensus Estimate of 12 cents but falling behind
the year-ago earnings of 17 cents a share.
On a reported basis, the company
posted a net profit of $160.5 million (or 14 cents per share) in
the reported quarter, up 61% from net earnings of $99.6 million (9
cents a share) recorded in the year-ago quarter.
Revenues increased 5.3% year over
year to $1,058.1 million due to higher gold equivalent ounces sold.
Sales came ahead of the Zacks Consensus Estimate of $1,033
million.
Operational
Performance
Gold production was 648,897
equivalent ounces from continuing operations for the quarter, a
7.4% year-over-year increase, mainly due to a spurt in production
at Tasiast and Fort Knox. Average realized gold price was $1,624
per ounce, down 1.2% from the year-ago quarter.
Production cost per gold equivalent
ounce was $729 in the quarter versus $738 in the prior-year
quarter. The results witnessed a declining trend, driven by
continued focus on cost management and increase in gold ounces
sold. Margin per gold equivalent ounce sold was $895 in the
quarter, down 1% from the prior-year quarter.
Financial
Review
Adjusted operating cash flow was
$411.8 million in the quarter compared with $319.3 million a year
ago. Cash and cash equivalents were $1,420.8 million as of Mar 31,
2013, compared with $1,982.5 million as of Mar 31, 2012.
Capital expenditures were $317.8
million in the reported quarter versus $529.3 million reported in
the same period last year. The decrease was due to the timing of
expenditures at Tasiast and the completion of the fourth ball mill
at Paracatu and SART plant at Maricunga in 2012.
Growth
Projects
Kinross is proceeding to a full
feasibility study on the Tasiast expansion project based on the
recently announced pre-feasibility results. The feasibility study
is expected to complete in the first quarter of 2014. After the
feasibility study is complete, Kinross will make a decision on
whether to complete engineering work and proceed with
construction.
At Dvoinoye, construction is progressing ahead of plan with
underground development completing 1,567 meters. Kupol mill’s
expansion is proceeding well and is expected to be complete by
third-quarter 2013. The project is in line with the budget and is
expected to start production at its full capacity in the second
half of the year.
The negotiation between the Fruta Del Norte (FDN) project and
Ecuadorian government regarding exploitation and investment
protection agreements is underway, however, due to some key
economic and legal matters the parties have not been able to come
to an agreement.
Outlook
Kinross, which is among the
prominent players in the gold-mining industry along with
Barrick Gold Corporation (ABX), Goldcorp
Inc. (GG) and Newmont Mining Corporation
(NEM), expects to produce about 2.4–2.6 million gold equivalent
ounces from its current operations in 2013 and forecasts cost of
sales of $740-$790 per gold equivalent ounce for the year.
Kinross forecasts roughly $1.6 billion in capital expenditures in
2013. Kinross expects its all-in sustaining costs to be in the
range of $1,100-$1,200 per gold ounce sold on a by-product basis in
2013.
Kinross currently carries a Zacks
Rank #4 (Sell).
BARRICK GOLD CP (ABX): Free Stock Analysis Report
GOLDCORP INC (GG): Free Stock Analysis Report
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
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