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Kinross posts $90.2M in adjusted earnings

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Round Mountain, Nov. 11, 2021

Kinross Gold Corp. posted adjusted net earnings of $90.2 million, or 7 cents per share, for the third quarter, down from $310.2 million, or 25 cents per share, in the 2020 quarter, and the company attributed the drop to lower revenue.

Revenue was $862.5 million in the 2021 quarter, down from $1.131 billion in the 2020 quarter, primarily because of lower gold prices and a decrease in gold ounces sold, according to the report. The average realized gold price was $1,790 in the third quarter, compared with $1,908 in the 2020 quarter.

The Toronto-based company also said there was a net loss attributable to shareholders of $44.9 million, or 4 cents per share, because of loss of production due to the fire damage to the mill at the Tasiast Mine in Mauritania.

“We are pleased to announce that the Tasiast mill has now re-started at costs below original estimates and is ramping back up,” said J. Paul Rollinson, president and chief executive officer. “We expect that, in December, the mill will achieve sustained throughput levels comparable to the first half of the year.”

The company has estimated a $35 million price tag to restart the mill, but the costs were roughly $20 million.

Kinross also is seeing the affects of inflation on costs for fuel, explosives, lubricants, chemicals, steel, power, oil and natural gas and labor, according to the Nov. 11 earnings presentation.

Executive Vice President and Chief Financial Officer Andrea Freeborough said in the earnings call that “inflation is impacting our results,” estimating the current impact at 3% to 3.5% but looking ahead she said Kinross is expecting inflation to have a 5% to 7% impact.

Kinross also reported a 3-cent dividend for the quarter and that the company had repurchased and canceled 8.6 million common shares for $50 million as part of its share buyback program.

Rollinson stated that Kinross is on track to meet its revised production figures for this year, and “Kinross remains on track to grow its production to 2.7 million ounces next year, and then 2.9 million ounces in 2023, and is in an excellent position to continue delivering value to its shareholders.”

The guidance for this year is 2.1 million ounces of gold, and Kinross stated that gold production in the third quarter totaled 483,060 ounces, down from 603,312 ounces in the third quarter of last year, with the drop attributed mainly to the mill fire in June.

In Nevada, gold production at the Round Mountain Mine in Nye County totaled 62,242 ounces, down from 76,039 ounces in the 2020 quarter. Kinross attributed the lower production to deferred mining activities in the north wall of the Phase W area after pit wall instability was detected in the first quarter of this year.

Kinross stated that the movement of waste material at the top of the pit to stabilize the wall was completed in the third quarter and resulted in gold recoveries that hadn’t been planned.

The company also is continuing to study the Phase S project at Round Mountain and reported the study should be completed in the second quarter of next year.

The study hasn’t presented any “significant surprises,” Paul Tomory, executive vice president and chief financial officer, said in the earnings call.

At Bald Mountain in White Pine County, gold production totaled 55,559 ounces in the third quarter, up from 49,339 ounces in the 2020 quarter, and the company stated that production compared with the third quarter of last year increased due to higher recoveries from the site’s heap leach pads.

Mining activities were completed in August of the third quarter at the Vantage open pit, and mining activities became focused in the North Area of Bald Mountain by the end of the quarter, according to the earnings report.

Gold production at Fort Knox in Alaska was at 71,336 ounces, slightly down from 72,705 ounces in the 2020 quarter, and Kinross reported mining activities at the Gil satellite pits started in September, with first production expected before year’s end. Studies continue at the nearby Manh Choh project that is 70% owned by Kinross.

Paracatu in Brazil produced 134,425 ounces, up from 131,000 ounces in last year’s quarter. Kupol operations in Russia produced 120,822 ounces, down from 128,144 ounces in the 2020 quarter and Chirano in Ghana produced 37,588 ounces, down from 44,320 ounces.

The Tasiast Mine produced 3,847 gold ounces, compared with 103,065 ounces last year due to the mill fire.

All-in sustaining costs in the quarter were $1,225 per ounce, compared with $958 per ounce in the 2020 quarter because of the lower number of ounces produced and sold.

At La Coipa in Chile, the restart project continues to advance in the quarter.

“Our development projects made good progress during the quarter, with La Coipa on track to start production in mid-2022 and Tasiast 24k on schedule to be completed in mid-2023,” Rollinson said. “We also completed studies for our Udinsk project in Russia and Lobo-Marte in Chile, which reaffirmed our views of both projects’ strong potential to be significant value generators as large, low-cost producers with attractive returns.”

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