Kinross Q1: Production down but revenue up

Kinross Gold (TSX:K) took a drubbing in the markets today, along with other major gold producers, as the sector endured an aggressive selloff in the midst of more turmoil in Europe.

Gold closed down 1.98% from the previous trading session, its worst performance in four months. At one point the yellow metal slipped below the pyschologically significant $1600 mark before ending the day at $1605/oz.

Kinross and Goldcorp both slipped 4.2%, while no. 1 gold producer Barrick Gold was off 2.5%. Newmont slid 2.99% and AngloGold Ashanti dropped 2%. The S&P/TSX Global Gold Index took a major hit, dropping 10 points or 3.5%.

Investors were spooked by news coming out of Europe on the weekend, with the election in Greece and France of leftist parties likely to steer their economies away from necessary austerity measures- and thus re-visiting the possibility yet again of Greece yet defaulting on its debt.  It is feared that other countries, most ominously Spain, could follow the Greeks out of the eurozone as they try to find a way out of crushing debt loads.

Kinross, which has been bludgeoned in the markets after taking a $2.5 billion writedown in February, said today it produced 6% less gold this quarter compared to the same period last year. The lower numbers were a result of low ore grades at the Kupol and La Coipa mines, and lower production from Tasiast, Kinross said. The 604,247 ounces it did produce came at a higher cost, $742 per ounce compared to $545/oz in last year's first quarter.

Quarterly profit was down by more than half, to 9 cents a share from 22 cents a share a year ago. Despite this, revenue from metals sales came in at $1.03 billion for the quarter compared to $937 million last year, an increase of 11%, due mainly to higher gold prices.

The company more than doubled capital expenditures quarter to quarter, shelling out $534 million in Q1 on expenses related to Tasiast, Paracatu and Dvoinoye mines, Kinross said.

Link to the full news release