Kinross Gold Corporation (TSX-K; NYSE-KGC) has just issued a news release covering the corporations first quarter results which we find very encouraging and have listed the highlights below. Kinross Gold Corporation forms part of our core position and we expect it to do very well as gold continues to challenge its old highs.
• Gold equivalent production1 was 526,888 gold equivalent ounces in the first quarter of 2009, compared with 331,784 ounces for the same period last year, an increase of 59%. Consistent with previously stated guidance, the Company remains on track to produce 2.4 - 2.5 million gold equivalent ounces in 2009.
• Revenue was $532.7 million in the first quarter, an increase of 61% over the same period last year. The average realized gold price was $897 per ounce sold compared with $929 per ounce sold in the first quarter of 2008.
• Cost of sales per gold equivalent ounce2 was $419 in the first quarter, a decrease of 11% compared with cost of sales per gold equivalent ounce of $472 for the same period last year. Cost of sales per gold equivalent ounce is expected to be approximately $390 - $420 for the full year 2009, consistent with previously stated guidance.
• Kinross’ attributable margin per ounce sold3 was a record $478 in the first quarter of 2009, an increase of 5% over the first quarter of 2008 and an increase of 14% over the fourth quarter of 2008.
• Net earnings for the first quarter were $76.5 million, or $0.11 per share, compared with net earnings of $70.9 million, or $0.12 per share, for the first quarter of 2008. Net earnings included a gain of $5.6 million, or $0.01 per share, due to a favourable net foreign exchange impact. Excluding this gain, earnings would have been $70.9 million, or $0.10 per share.
• Cash flow from operating activities before changes in working capital4 was $214.9 million in the first quarter, or $0.32 per share, double the cash flow per share before changes in working capital in the same period last year. Cash and short-term investment balances were $746.5 million at March 31, 2009 compared with $525.1 million at December 31, 2008.
• The ramp-up in production at the Paracatu expansion is progressing, with continuous improvements in throughput and recovery as the process stabilizes at planned throughput levels. Production is expected to be at design capacity by thesecond quarter of 2009.
• At Lobo-Marte in Chile, a project scoping study is expected to be completed by mid-year, with a pre-feasibility study scheduled for completion by year-end.
At the Fruta del Norte project in Ecuador, the Company expects to receive the
necessary permits by mid-year to proceed with a three-month infill drilling campaign, intended to upgrade mineral resources and support a pre-feasibility study. A feasibility study of the Cerro Casale project is expected to be completed by the third quarter of 2009. At Maricunga, a pre-feasibility study is commencing this year to explore options to increase production.
• On March 31, 2009, Kinross completed its investment in the Diavik Diamond Mine and Harry Winston Diamond Corporation, representing a 22.5% interest in Harry Winston’s 40% joint venture interest in the mine (therefore, a 9% indirect interest in the mine), and a 19.9% equity interest in Harry Winston Diamond Corporation.
• Kinross filed a preliminary shelf prospectus in Canada and a shelf registration statement in the United States (which has not yet become effective) qualifying up to $1 billion of common shares and debt securities. The Company has no current plans to issue securities.
Cost of sales per gold equivalent ounce was $419 in the first quarter compared with $472 per ounce for the first quarter of 2008, a decrease of 11%.
Tye Burt, Kinross President and CEO, had the following to say about the first quarter 2009 results.
“We continue to advance the gold projects that will provide Kinross’ next wave of high-quality growth, including expansions at two of our existing operations and new development projects at Lobo-Marte, Fruta del Norte, and Cerro Casale.
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 $11.33 billion, with average turnover of 6.73 million shares and closed today at $16.32.
Have a good one.
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