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Kinross more than doubles Q2 earnings on higher gold price and lower costs

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(Kitco News) - A higher gold price and lower costs helped Kinross Gold Corporation (NYSE: KGC, TSX: K) more than double its earnings in the second quarter of 2020, compared to the same quarter last year, the company said.

In its earnings report released after the bell Wednesdays, the mid-tier gold producer said that net earnings in the second quarter totaled $195.7 million, or $0.16 per share. Meanwhile, the company said that adjusted net earnings totaled $194.0 million, or $0.15 per share. The company managed to hit the high-end of analyst expectations.

"We have been able to effectively manage COVID-19 impacts on our portfolio of mines during the first half of the year, as our comprehensive pandemic response plan continued to help protect the health of our employees and communities while supporting the successful continuation of our business," said J. Paul Rollinson, President and CEO of Kinross. "Although we prudently withdrew our full-year guidance given the potential impacts of the pandemic on our operations, we continue to work towards the safe delivery of our annual targets."

Along with strong earnings, the company said that operating cash flow in the second quarter increased to $432.8 million, up 30% from the second quarter of 2019. Adjusted operating cash flow totaled $416.9 million, a 45% increase from last year.

"Kinross had a strong second quarter, as we generated robust free cash flow, more than doubled earnings year-over-year, and continued to strengthen our investment-grade balance sheet," said Rollinson. "Our margins increased 53% year-over-year, well above the 31% increase in the average realized gold price. Our portfolio of mines performed well and continued production during the quarter, with our three largest producing mines – Paracatu, Kupol and Tasiast – delivering the lowest costs.

Although the company saw an increase in earnings and cash flow, it did report a drop in production. The company said that it produced 575,846 gold equivalent ounces in the second quarter, down 11% from last year.

"The decrease was mainly due to lower production at Paracatu, Round Mountain and Chirano, partially offset by higher production at Bald Mountain and Kupol," the company said.

Looking at costs, the company reported production cost of sales of $725 per gold equivalent ounce and all-in sustaining cost of $984 per gold equivalent ounce sold. Both cost estimates are within the original annual 2020 guidance range, the company said.

Kinross said that it had cash and cash equivalents of $1,527.1 million as of the end of June.

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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