Canadian mining company, Kinross Gold Corporation (KGC) announced that it has subscribed for 2.35 million units of White Bear Resources Inc. pursuant to a private placement. The company stated that it is acquiring the White Bear units for investment purposes.
Assuming the exercise of all warrants held by Kinross, it would hold 4.7 million common shares, constituting 18.1% of White Bear Resources’ outstanding common shares. The subscription price for the units is C$0.10 per unit for an aggregate purchase price of C$235,000. The private placement is subject to approval by the TSX Venture Exchange.
White Bear Resources, a mineral exploration and development company, is in the process of acquiring JSC Everest Capital for its exploration properties in the Kemerovo Region of the Russian Federation.
Upon completion of its pending acquisition of JSC Everest Capital, Kinross will hold the rights to explore and develop the Kundat Property and the Tsentralniy Property, located in the Kundat-Kundusuyulskaya ore zone in Tisulskiy and Krapivinskiy Districts of the Kemerovo Region of the Russian Federation, respectively.
In August 2011, Kinross released its second quarter 2011 results. The company reported record adjusted net income of $226.5 million or $0.20 per share in the second quarter of 2011, above last year’s $111.4 million or $0.16 per share, outpacing the Zacks Consensus Estimate of $0.16.
GAAP net earnings were $247.4 million or $0.22 per share in the second quarter of 2011 compared with $110.4 million, or $0.16 per share in the prior-year quarter.
Quarterly revenues leaped 42% to $987.8 million, driven by strong performance at all operations, notably Kupol, Maricunga, and Fort Knox amid continuing strong gold prices.
Gold production increased 26% year over year to 676,245 ounces in the second quarter of 2011 with an average realized gold price of $1,449 per ounce sold compared with $1,158 per ounce sold in the prior-year quarter. The increase was mainly attributable to the addition of production from the Kupol and the West Africa operations. Production cost per gold equivalent ounce was $576 versus $494 in the prior-year quarter. Production costs per ounce increased mainly due to a rise in labor costs, diesel and power costs, and royalties.
Kinross margin per ounce sold was a record $873 during the quarter, up 31% year over year.
Kinross remains on track to produce 2.6 – 2.7 million attributable gold equivalent ounces in 2011. The average cost of sales per gold equivalent ounce is expected to be toward the lower end of the previously-stated guidance range of $565 – $610.
Kinross expects its capital expenditures for the full year to be within the previously stated guidance of $1.5 billion. The company also expects to make approximately $190 million in advance payments to suppliers, compared with the previous guidance of $130 million, primarily as a result of accelerated purchases for the Tasiast expansion project.
The company plans to increase its total aggregate exploration expenditure by approximately $10 to $20 million for the remainder of 2011, above the previously stated forecast of $175 million in total expensed and capitalized 2011 exploration expenditures.
By 2015, Kinross expects production to grow to 4.5-4.9 million ounces, as new projects start up in 2013 and 2014. With new studies completed at Tasiast, FDN, Lobo-Marte, and Dvoinoye, Kinross is making significant and steady progress in advancing the projects that give the company the best growth profile among senior gold producers.
Kinross Gold Corporation, like other gold producers, Barrick Gold Corporation (ABX) and Newmont Gold Mining (NEM), benefits from rising gold prices.
Currently, Kinross Gold has a short-term (1 to 3 months) Zacks #2 Rank (Buy) and a long-term Neutral recommendation.
