Kinross Q3 revenue drops 15%, Denver office to be shut
Kinross said its Q3 revenue came in $80.4 million compared to $947.5 million in Q3 2014 mostly due to lower gold prices.
Production was down slightly, 680,679 gold equivalent ounces (Au eq. oz.) compared with 693,818 ounces in Q3 2014. Heavy rains at Maricunga hampered production, but the decrease was offset by increased production at Fort Knox.
During Q3 Kinross reduced corporate headcount costs by 23%. The company will close its Denver office. It also let go of 222 Tasiast employees in September. Kinross pegs the annual savings from the layoffs at about $30 million.
Kinross highlighted the following:
- Production: 680,679 gold equivalent ounces (Au eq. oz.), compared with 693,818 ounces in Q3 2014.
- All-in sustaining cost: $941 per Au eq. oz. sold, compared with $919 in Q3 2014. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $936 in Q3 2015, compared with $911 in Q3 2014.
- Adjusted operating cash flow: $206.6 million, or $0.18 per share, compared with $324.1 million, or $0.28 per share, in Q3 2014.
- Adjusted net earnings/loss: Loss of $23.9 million, or $0.02 per share, compared with adjusted earnings of $70.1 million, or $0.06 per share, in Q3 2014.
- Reported net earnings/loss: Loss of $52.7 million, or $0.05 per share, compared with a loss of $4.3 million, or $0.00 per share, in Q3 2014.
- Balance sheet strength: Reduced net debt4 to $949.2 million, repaid the remaining balance on the Kupol loan and ended the quarter with cash and cash equivalents of $1,024.8 million.
- Outlook: Kinross expects to be within its updated 2015 guidance range for production (2.5-2.6 million Au eq. oz.), all-in sustaining cost ($975-$1,025 per Au eq. oz.) and cost of sales ($690-$730 per Au eq. oz.). The Company expects to be below its updated capital expenditure guidance ($650 million) and below its overhead guidance ($205 million), which excludes one-time restructuring charges.
- Tasiast expansion update: Kinross is completing early-stage engineering work on a potential two-phased expansion that would add incremental grinding capacity to Tasiast’s existing comminution circuit. A feasibility study of the initial Phase One expansion, which would increase mill throughput capacity from the current 8,000 t/d to 12,000 t/d, is expected to be completed in Q1 2016. Phase Two could further increase throughput capacity up to as much as 38,000 t/d.
- La Coipa pre-feasibility study (PFS) update: Results of the La Coipa PFS study estimate production of approximately 1.03 million Au eq. oz., average cost of sales per Au eq. oz. of $674 and average all-in cost per Au eq. oz.5 of $767. The project is expected to generate a 20% IRR at a gold price of $1,200/oz