Kinross Gold Corp. (KGC, K.TO), Monday reported a net loss for the third quarter, hurt essentially by higher costs related to the Paracatu mine expansion. Quarterly revenues, however, grew 16%, helped by higher realized gold prices. Looking ahead, the company lowered its production outlook for fiscal 2009, due to lower than expected production at the Paracatu expansion.
The Canadian gold mining company posted a net loss of US$21.5 million or US$0.03 per share for the third quarter, compared to net earnings of US$64.7 million or US$0.10 per share in the prior year quarter.
Excluding items, adjusted net earnings plunged to US$1.7 million or US$0.00 per share from US$83.4 million or US$0.13 per share in the year-ago quarter. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of US$0.12 per share in the third quarter. Analysts' estimates typically exclude special items.
Both adjusted net earnings and reported net loss include a future income tax expense of US$58.6 million on foreign exchange gains related to Paracatu's U.S. dollar debt.
Third quarter revenue increased 16% to US$582.3 million from US$503.7 million in the third quarter of 2008. Three analysts had a consensus revenue estimate of US$577.78 million for the third quarter.
Tye Burt, President and CEO of Kinross, said, "While revenue and cash flow before changes in working capital were higher than the previous year, we are disappointed by other aspects of our results for the third quarter, as they are below our expectations."
Gold equivalent production declined 3% to 537,440 gold equivalent ounces. The average realized gold price rose to US$956 per ounce sold from US$857 per ounce sold in the previous year quarter. Kinross' attributable margin per ounce sold grew 9% year-over-year to US$492.
Cost of sales per gold equivalent ounce was US$464, an increase of 14% over a year ago.
At the Paracatu expansion plant, production increased slightly over the second quarter of 2009 but was lower than expected, while costs were higher than expected, due to ongoing challenges in achieving targeted recovery levels while maintaining targeted throughput levels.
Burt said, "Challenges at our Paracatu expansion project had a significant impact on our overall production and cost per ounce in the quarter, and we have reduced our overall 2009 production guidance by approximately 6%."
For the nine-month period of 2009, Kinross reported net earnings of US$74.3 million or US$0.11 per share, compared to US$161.6 million or US$0.26 per share in the previous year period.
Adjusted net earnings fell to US$156.3 million or US$0.23 per share from US$187.0 million or US$0.30 per share in the prior year period.
Revenue for the period increased 51% to US$1.7 billion from US$1.1 billion in the year-ago period.
For fiscal year 2009, Kinross revised its production guidance slightly and now expects to produce about 2.2 million gold equivalent ounces, compared to earlier issued forecast of 2.3 - 2.4 million gold equivalent ounces, primarily due to a longer than expected ramp-up at the Paracatu expansion.
KGC closed Monday's regular trading session at US$18.29, down 29 cents or 1.56%, on a volume of 12.16 million shares. In after-hours, the share further lost 24 cents or 1.31%.
K.TO ended Monday's regular trading session at C$19.76, down 34 cents or 1.69% on a volume of 4.91 million shares.
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