Losses persist at Kinross
Shares of Toronto's Kinross Gold Corporation (TSE:K) pulled back slightly in after hours trade on Wednesday after its second quarter results showed earnings coming in below estimates.
By the close of regular trading in New York Kinross was up 3.5% on a stronger gold price affording the company a market value of $6.4 billion. The stock is up 175% year to date.
But the counter ticked lower after hours after the company reporting an adjusted net loss of $0.01 per share or $9.8 million against forecasts of a modest profit.
Revenues of $876 million were better than expected after gold production rose a shade over 10,000 ounces to 671,267 ounces during the quarter. All-in sustaining cost came in at $988 per ounce of gold equivalent compared with $1,011 in Q2 2015. Its Average realized gold price was $1,266 per ounce, compared with $1,194 per ounce in Q2 2015.
Kinross said it is on track to produce a record 2.7 – 2.9 million ounces of gold in 2016 at an all-in cost of $890–$990 an ounce from mines in Ghana, Russia, the US, Brazil and Chile. Based on ounces mined Kinross is the world's fifth largest gold producer.
Kinross generated free cash flow of more than $200 million from its operations and ended the second quarter with roughly $970 million in cash and cash equivalents according to Paul Rollinson, President and CEO:
"We remain on track to be within our full-year guidance range for both production and cost of sales as strong production from Russia and North America offset temporary production curtailments at Tasiast and Maricunga.
"Maricunga resumed operations in early July, subject to ongoing regulatory proceedings, while at Tasiast, we expect to resume normal operations in August. We have resolved the expatriate work permit issue with the Government of Mauritania as part of an agreed 'Mauritanization' plan to increase the number of skilled local workers at Tasiast. The required plan is an important milestone for the country and is a positive example of the ongoing partnership between the Government and Kinross."
Kinross announced a reduced expansion project at the Tasiast in March. Phase one of the $300 million project envisages 409,000 ounces of gold per year by the first quarter of 2018. Last year, the Tasiast open pit operation produced 219,000 ounces.
Kinross paid $7.1 billion for Red Back Mining, owner of the mine in 2010, but has since written off most of that investment.
The miner expanded its portfolio last year by acquiring two Nevada properties – the Bald Mountain mine and 50% of the Round Mountain mine – from Barrick Gold (TSX, NYSE:ABX).