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Kinross Lists 4Q Profit, Acquires Power Plants For Brazilian Mine

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Kinross Lists 4Q Profit, Acquires Power Plants For Brazilian Mine

(Kitco News) - Kinross Gold Corp. (TSX: K, NYSE: KGC) reported late Wednesday that the company posted a profit in the fourth quarter and acquired two hydroelectric power plants in Brazil to provide electricity to its Paracatu mine.

Net earnings in the October-November period were pegged at $217.6 million, or 17 cents per share, a turnaround from a net loss of $116.5 million, or 9 cents, in the fourth quarter of 2016. Adjusted earnings came in at $16.3 million, or a penny, also a turnaround from an adjusted loss of $50.9 million, or 4 cents, a year ago.

Fourth-quarter production was 652,710 gold-equivalent ounces, down from 746,291. Against this backdrop, revenue fell to $810.3 million from $902.8 million in the year-ago period.

All-in sustaining costs were $1,019 per gold-equivalent ounce sold, compared with $1,012. The average realized gold price climbed to $1,276 from $1,217.

Meanwhile, for full-year 2017, Kinross listed earnings of $445.4 million, or 36 cents per share, compared with a net loss of $104.0 million, or 8 cents, in 2016. Adjusted net earnings were $178.7 million, or 14 cents, per share, compared adjusted earnings of $93 million, or 8 cents per share, for 2016.

Production for 2017 was 2.67 million gold-equivalent ounces, a dip from 2.79 million in 2016 but at the upper end of the company’s guidance range. AISC fell to $954 from $984 in 2016.

“Our portfolio of mines performed well, notably Bald Mountain, which more than doubled its production in 2017 and Tasiast, which reduced cost of sales per ounce by approximately 30% year-over-year,” said J. Paul Rollinson, president and chief executive officer.

“We are forecasting another year of solid production of approximately 2.5 million gold-equivalent ounces, and we expect to be at or slightly above this level of production over the next three years. All-in sustaining cost for 2018 is expected to be at approximately the same level as 2017.”

For 2018, AISC are forecast to be $975 per gold-equivalent ounce.

The company’s Brazilian subsidiary purchased two power plants from a subsidiary of Gerdau SA for $257 million. This would secure a long-term supply of power for the Paracatu mine and lower production cost by approximately $80 per ounce over the life of mine, Kinross said.

Meanwhile, Kinross reported the addition of some 4 million ounces to proven and probable mineral reserves in 2017 to offset depletion of 3.2 million ounces. Additions to estimated reserves are expected to extend mining at Round Mountain by five years, Fort Knox by one year, mill production at Kupol by one year and Paracatu mine life to 2032.

The mineral reserve estimate at the end of 2017 was 25.9 million ounces, compared with 31 million at the end of 2016, as the sale of Cerro Casale and depletion was partially offset by mineral reserve additions.

Kinross also reported progress on a number of projects, saying the Tasiast Phase One expansion was on schedule and on budget, with full commercial production expected by the by the end of June. Plant construction is now 93% complete. Construction on Tasiast Phase Two is scheduled to begin as Phase One nears completion. Phase Two is expected to begin commercial production in the third quarter of 2020.

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 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.

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