Kinross Gold Corporation (KGC) sold its 8.5% equity interest in Harry Winston Diamond Corporation (HWD). The equity interest consisted of approximately 7.1 million Harry Winston common shares, on an underwritten block trade basis, for gross proceeds of CDN$100 (US$D102 million) million.
Kinross acquired the additional shares of Harry Winston in August 2010 as part of an exchange for Kinross selling its 22.5% interest in the partnership that owns 40% of the Diavik Diamond Mine for US$50 million cash, 7.1 million Harry Winston common shares, and a note payable in the amount of US$70 million maturing 12 months from the date of the sale.
In December 2010, the company also completed the sale of its 1.8% interest in Osisko Mining Corporation, comprising approximately 6.8 million Osisko common shares, on an underwritten block trade basis, at a gross price of CDN$14.70 per share, for net proceeds of CDN$97.5 million. The transaction resulted in a gain of CDN$74.1 million.
The company is presently in a good financial position. In the fourth quarter of 2010, Kinross’s gold production increased 10% year over year to 676,635 ounces, mainly attributable to improved performance at the Paracatu expansion plant and the addition of new production from Tasiast and Chirano.
For 2011, Kinross anticipates production in the range of 2.5–2.6 million gold ounces at an average cost of sales per gold equivalent ounce of $565 – $610. Kinross also expects higher costs resulting from increased energy and labor costs, and lower average grades.
By 2015, Kinross expects production to grow in the range of 4.5–4.9 million ounces, as new projects start up in 2013 and 2014.
A few days back, Kinross announced the appointment of Paul H. Barry as Executive Vice-President and Chief Financial Officer, effective March 31, 2011.
Kinross like other gold producers, Barrick Gold Corporation (ABX) and Newmont Gold Mining (NEM), benefits from rising gold prices. We expect Kinross’ exploration projects and acquisitions to boost its top line going forward.
Currently, Kinross Gold has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long-term Neutral recommendation.
BARRICK GOLD CP (ABX): Free Stock Analysis Report
HARRY WINSTON (HWD): Free Stock Analysis Report
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
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