Gold miner Kinross Gold Corporation KGC reported net loss of $116.5 million or 9 cents per share for fourth-quarter 2016, compared with a net loss of $841.9 million or 73 cents per share in the year-ago quarter.
Adjusted loss (excluding one-time items) was $50.9 million or 4 cents per share compared with adjusted loss of $68.8 million or 6 cents per share in the year-ago quarter. Analysts polled by Zacks were expecting earnings per share of 3 cents on average for the reported quarter.
Revenues of $902.8 million in the quarter rose around 28.6% from $706.2 million in the year-ago quarter due to an improvement in average realized gold prices and higher gold sales. Revenues also surpassed the Zacks Consensus Estimate of $866 million.
For full-year 2016, Kinross reported net loss of $104 million or 8 cents per share, significantly narrower than the loss of $984.5 million or 86 cents per share reported in 2015. The loss narrowed due to lower impairment charges.
Adjusted earnings for the year came in at $93 million or 8 cents a share against adjusted loss of $91 million or 8 cents per share incurred in 2015. Revenues recorded for the year were $3,472 million, higher than the $3,052.2 million in 2015. Revenues were driven by higher gold sales as well as average realized price.
Attributable gold production was 746,291 ounces for the quarter, up around 19.7% year over year. The increase was driven by the buyout of Bald Mountain and 50% of Round Mountain.
Production cost per gold equivalent ounce rose to $712 from $688 from the prior-year quarter, primarily due to higher per ounce cost at Round Mountain and Paracatu, as well as at Bald Mountain. Margin per gold equivalent ounce sold was $505 in the fourth quarter, up 20.2% year over year.
Average realized gold prices rose to $1,217 per ounce in the quarter from $1,108 per ounce a year ago.
Adjusted operating cash flow was $211.6 million, up 3.8% from $203.8 million in the prior-year quarter. Cash and cash equivalents were $827 million as of Dec 31, 2016, down from $1,043.9 million as of Dec 31, 2015.
Long-term debt increased almost 0.1% year over year to $1,733.2 million. Capital expenditures rose to $226.5 million in the quarter from $160.7 million in the prior-year quarter owing to higher spending at Bald Mountain and Tasiast.
Kinross has been progressing as planned with the Phase One expansion of the Tasiast mine and commercial production is expected to begin in the second-quarter 2018. The Phase Two feasibility study is progressing well and is expected to conclude by the third-quarter 2017.
The company received a new permit at Bald Mountain and has now doubled proven and probable mineral reserves before schedule.
Two of Kinross’ projects in Russia, Moroshka and September Northeast, are progressing per schedule. Stripping at September Northeast has started and mining at Moroshka is expected to begin in the first half of 2018.
A feasibility study for Phase W of the Round Mountain is expected to be completed by third-quarter 2017.
For 2017, Kinross expects to produce 2.5–2.7 million gold equivalent ounces. Production in the second half of 2017 is expected to be higher than that in the first half, primarily due to the impact of the heap leaches at Fort Knox and Round Mountain. The overall production cost of sales is expected in the range of $660–$720 per gold equivalent ounce, while all-in sustaining cost (AISC) is estimated to be $925–$1,025 per gold equivalent ounce.
Kinross projects its capital expenditure to be $900 million.
Other operating costs are estimated to be over $60 million, including $30 million of care and maintenance costs in Chile.
Depreciation, depletion and amortization is anticipated to be about $350 per gold equivalent ounce.
Kinross has underperformed the Zacks categorized Mining-Gold industry over the past six months. The company’s shares returned around 9.4% over this period, compared with roughly 15.6% gain recorded by the industry.
Kinross currently carries a Zacks Rank #5 (Strong Sell).
BHP Billiton has an expected long-term growth rate of 5.64% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hudbay Minerals, also sporting a Zacks Rank #1, has posted positive earnings surprise of 33.33% in the last reported quarter.
Teck Resources has an expected long-term growth rate of 10.65% and sports a Zacks Rank #2 (Buy).
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