TORONTO — Production guidance for 2018 remains unchanged for Kinross Gold Corp. despite declines in second-quarter profit and production, the company reported Aug. 1.
“Our portfolio of mines performed well during the quarter, contributing to a strong first half performance,” said J. Paul Rollison, Kinross president and CEO. “As a result, we remain on track to meet both our annual production and cost guidance. We achieved solid cash flow and maintained our strong balance sheet as we continued to advance our development projects across the company.”
Kinross produced 602,049 gold equivalent ounces compared to 694,874 for the same period last year. Revenue dipped to $775 million, down from $868.8 million in the second quarter of 2017, mainly because of a decrease in ounces sold; a higher gold price helped offset the difference.
Adjusted net earnings were $37.8 million, or 3 cents per share, for the second quarter of 2018, compared with adjusted net earnings of $54.9 million, or 4 cents per share, for last year. Reported net earnings were $2.4 million, zero per share, for 2018’s second quarter, compared with earnings of $33.1 million, 3 cents per share, last year. The decrease was mainly due to lower margins.
In a recap of production and operating results of Nevada mines, Kinross described progress at Round Mountain and Bald Mountain.
At Round Mountain, production was in line with the previous quarter but was down year-over-year mainly due to lower recoveries from the heap leach pads related to a decrease in metric tons of ore placed on the pads. Higher mill production, as a result of an increase in mill grade and recoveries, helped mitigate the year-over-year decline. Cost of sales per ounce sold was higher quarter-over-quarter and year-over-year primarily due to timing of ounces recovered from the pads. Increased fuel costs also contributed to the higher cost of sales per ounce sold year-over-year.
The company reported that the Round Mountain Phase W project is progressing well and is on budget, with initial Phase W ore expected to be encountered in mid-2019. Pre-stripping is proceeding, and a new dewatering pond is complete. Earthworks to prepare for the new infrastructure area and preparations for construction of the new heap leach are both largely complete. Initial construction activities for the vertical CIC (carbon-in-column) plant have commenced, and the remaining construction and procurement contracts are progressing. Detailed engineering is now 95 percent complete.
At Bald Mountain, production decreased compared with the previous quarter mainly due to timing of ounces recovered from the heap leach pad as fewer metric tons of ore were placed on the pads in the first quarter of 2018. Production was higher year-over-year largely as a result of an increase in ore mined and increased recoveries from the heap leach pads. Cost of sales per ounce sold was at its lowest level since Kinross acquired the mine and was largely in line quarter-over-quarter. Cost of sales per ounce sold decreased year-over-year primarily due to more ounces placed and recovered from the heap leach pads and lower operating waste mined.
The Bald Mountain Vantage Complex project is proceeding well and remains on schedule and on budget, the company reported, with commissioning for the heap leach pad and processing facilities expected to commence in the first quarter of 2019. Construction is underway and engineering is 95 percent complete. All major equipment and construction packages have now been awarded.
Also at Bald Mountain, initial results from the 2018 $10-million Bald Mountain drilling program have been encouraging, Kinross reported, with a total of approximately 18,300 meters now drilled mainly focusing on the north area of the property.