The Canadian Mining company, Kinross Gold Corporation (KGC) made changes to its unsecured revolving credit facility signed with Scotia Capital and Merrill Lynch, Pierce, Fenner & Smith Incorporated. The changes include an increase of available credit from $600 million to $1.2 billion, consistent with the growth of the company over the past year. The new credit facility will mature on March 31, 2015.
Recently, Kinross also announced plans to invest $1.1 billion in its Fruita Del Norte project in Ecuador until 2016. The project is likely to produce 410,000 gold equivalent ounces each year on an average during its life. The life expectancy of the mine is about 16 years. According to Kinross, the project possesses proven and probable mineral reserves of estimated 6.8 million ounces of gold and 9.1 million ounces of silver.
The company enjoys a good financial position at present. In the fourth quarter of 2010, Kinross’ 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 producing 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 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.
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
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
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