Make Kitco Your Homepage
News Bites

Kinross Gold Reports Loss In 2Q, Considering More Cost Cuts At Tasiast

Editor's Note:Updating earlier story to include potential for more cost-cutting at Tasiast mine in Mauritania

(Kitco News) - Kinross Gold Corp. (TSX:K; NYSE:KGC) reported a loss in the second quarter and said it is once against considering job cuts at the Tasiast gold mine in Mauritania.

The company late Wednesday listed a second-quarter net loss of $83.2 million, or 7 cents per share, compared with earnings of $46 million, or 4 cents, in the same period a year ago.

After adjustments for special items, the company listed a loss of $13.6 million, or a penny per share, compared with adjusted earnings of $32.9 million, or 3 cents, in the second quarter of 2014.

"Kinross continued to deliver on its targets, with production in the first half of 2015 tracking at the high-end of guidance for the year, and all-in sustaining cost tracking at the low-end of the full-year forecast,” said J. Paul Rollinson, Kinross president and chief executive officer.

“The company achieved these results despite a temporary suspension of operations at Maricunga and fewer ounces sold due to timing of some gold sales, which, together with a decline in the gold price, impacted earnings. Kinross nonetheless continued to generate free cash flow in Q2, in large part as a result of its strong operational performance, benefits from foreign exchange and lower oil prices, and a company-wide effort to drive down procurement costs and reduce working capital," the company said. 

Output at Maricunga was impacted by heavy rains in March.

Production was 660,898 gold-equivalent ounces, compared with 679,831 in the second quarter of 2014. Revenue was $755.2 million, compared with $911.9 million.

The cost of sales was $724 per gold-equivalent ounce, down from $742 in the year-ago quarter. The all-in sustaining cost was $1,011 per gold-equivalent ounce, compared with $976 a year ago. The all-in sustaining cost per ounce of gold sold on a by-product basis was $1,006, compared to $967 in the second quarter of 2014.
The average realized gold price fell to $1,194 per ounce from $1,285 in the year-ago period.

Kinross said it is tracking at the high end of 2015 guidance for production, listed at 2.4 million to 2.6 million gold-equivalent ounces. The company said it is at the low end of guidance for production cost of sales ($720 - $780 per gold-equivalent ounce) and all-in sustaining costs ($1,000 - $1,100), and also below total capital expenditure guidance of $725 million.

The company said it increased cash and cash equivalents to $1.03 billion and decreased net debt to $960.2 million, with $250 million in senior notes due in 2016  with only significant debt maturity until 2019.

Meanwhile, Kinross said it continues to focus on optimizing the Tasiast operation after the first-quarter decision to defer a mill expansion, in order to preserve balance-sheet strength. The company is looking to optimize mill throughput to address the hardness of the higher ore grade.

The company purchased Tasiast from Red Back Mining in 2010 for $7.1 billion. Proven and probable reserves are estimated at more than 9 million ounces of gold.

“In July, Kinross also initiated discussions with the government of Mauritania and employee representatives regarding cost-saving measures; one option under consideration includes a potential workforce reduction,” said the company’s earnings news release. “Tasiast remains an attractive brownfield growth opportunity with a significant mineral resource base. In order to leverage Tasiast’s future potential, the company will continue to look for ways to reduce costs and advance growth opportunities in a financially disciplined way.”

By Allen Sykora of Kitco News;


Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
kitco news