Paul H. Barry is expected to join Kinross Gold Corporation (KGC) as Executive Vice-President and Chief Financial Officer, effective March 31, 2011. Mr. Barry replaces Thomas M. Boehlert, who played an important role in making Kinross one of the world’s fastest growing gold producers.
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.
In the quarter, Kinross reported adjusted net income of $144.7 million or $0.13 per share, below last year’s $148.6 million or $0.21 per share, surpassing the Zacks Consensus Estimate of $0.15.
However, the results were negatively impacted by additional exploration expenditures of approximately $23 million at Tasiast, and by the timing of year-end metal shipments, which deferred sales of approximately 30,000 ounces of gold production from the fourth quarter of 2010 to the first quarter of 2011.
Quarterly revenues leaped 32% year over year to $920.4 million due to an increase of 21.8% in average realized gold price to $1,333 per ounce. About 11,000 ounces of Red Back assets were also sold.
For 2011, Kinross anticipates production 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 as a result of 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.
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.
In December 2010, the company completed the sale of its 1.8% interest in Osisko Mining Corporation, consisting of 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.
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
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