Chart courtesy of Stockcharts
Its nice to read about a company thats not on its knees and begging for a handout. Revenue grows 48%, margins increase 33% year-over-year and cost of sales continues downward trend in fourth quarter. This is the headline of a missive that we have just received from Kinross Gold, the highlights are listed in bullet point format below and are well worth a slow read.
Gold equivalent production1 was 550,221 gold equivalent ounces in the fourth quarter 2008, an increase of 43% over the fourth quarter 2007. For full-year 2008, gold equivalent production was in line with previously-announced guidance at 1,838,038 gold equivalent ounces, an increase of 16% over 2007.
• Revenue was $484.4 million in the fourth quarter, an increase of 72% over the same period last year, with an average realized gold price of $794 per ounce sold compared to $796 per ounce sold in the fourth quarter of 2007. Full-year 2008 revenue was a record $1,617.0 million, a 48% increase over full-year 2007 revenue. The average realized gold price for the full year was $857 per ounce sold.
• Cost of sales per gold equivalent ounce2 was $375 in the fourth quarter, a decrease of 11% compared to the same period last year, on sales of 534,945 gold equivalent ounces. Cost of sales per ounce for full-year2008 was slightly below previously stated guidance at $421, on sales of 1,756,056 gold equivalent ounces. Fourth quarter cost of sales per gold equivalent ounce decreased 8% over the third quarter of 2008.
• Kinross’ attributable margin per ounce sold was $419 in the fourth quarter, an increase of 11% year-overyear. For full-year 2008, the attributable margin per ounce sold was $436, an increase of 33% over full year 2007.
• Kinross recorded a net loss of $968.8 million, or $1.47 per share, for the fourth quarter 2008, and a net loss of $807.2 million, or $1.28 per share, for full-year 2008. Net earnings for the fourth quarter and full-year were reduced by a net $1,025.6 million ($1.56 per share) and $1,056.0 million ($1.68 per share) respectively, by a goodwill impairment accounting charge of $994.1 million primarily related to goodwill recorded in the 2007 Bema acquisition, plus additional items detailed on page three of this news release. Excluding these items, fourth quarter earnings would have been $56.8 million, or $0.09 per share, and full-year earnings would have been $248.8 million, or $0.40 per share.
• Cash flow from operating activities before changes in working capital4 was $222.4 million in the fourth quarter, or $0.34 per share, an increase of 240% per share over the same period last year, and $634.6 million for the full year, or $1.01 per share, an increase of 80% per share over full-year 2007. Cash and short-term investment balances were $525.1 million at December 31, 2008 compared with $561.2 million at December 31, 2007.
• On February 5, 2009 Kinross completed an offering of common shares at a price of US$17.25 per share. The underwriters chose to exercise their over-allotment option in full, resulting in a total of approximately 24 million shares being issued for gross proceeds of approximately $415 million.
• The Paracatu expansion and Kettle River-Buckhorn commenced production in the fourth quarter of 2008.
• On January 8, 2009 Kinross completed its acquisition of the Lobo-Marte project in Chile. The Company will undertake a drilling, design, engineering, and metallurgical testing program with the expectation of upgrading the resource base to an NI 43-101 compliant reserve.
• On January 29, 2009 a new mining law officially came into effect in Ecuador, allowing Kinross to begin the permitting process to recommence advanced exploration work on its Fruta del Norte (FDN) project.
• The Board of Directors declared a dividend of $0.04 per share payable on March 31, 2009 to shareholders of record on March 24, 2009.
From the above chart we can see that the 50dma has crossed over the 200dma in an upward motion which is positive for Kinross Gold, also watch for the 200dma turning upwards in the coming weeks.
Gold is currently trading at $983/oz in Hong Kong as we write, so it is holding up well. Also note that gold is starting to get a little more coverage by the mainstream media which is encouraging. As always expect volatility then you wont be shaken out of your positions. If you are inclined to do some short-term trading at this level then please let us how get on. We intend to hold onto our core holding and ride out the bumps. If one particular stock looks extremely oversold then we will post an article asap.
Have a good one.
Kinross Gold Corporation trades on the Toronto stock Exchange under the symbol of ‘K’ and on the New York Exchange under the symbol of ‘KGC’ Kinross has a market capitalization of $12.84 billion, a P/E ratio of 36.76 with average turnover of 12.50 million shares and closed today at $19.48.
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