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« When a Gold Necklace Isn’t Jewelry | Main | Yamana Gold Inc Good Results, But! »

Kinrosss Gold Corporation: Revenues Up, However…

KGC Chart 05 May 2011.JPG

The first quarter figures are out and look good however the performance of the stock price for Kinross Gold Corporation (KGC) over the last three years has been dismal as this stock drifts lower and lower. The share price is somewhat of a puzzle to us as Kinross has made some interesting acquisitions over the years and our expectations were maybe a tad too high.

On November 11th, 2010 we sold our shares in Kinross Gold writing the following :

This is a brief history of our how we traded Kinross in the past:

Kinross Gold (KGC) we originally acquired Kinross at $10.08, Kinross then went through a bit of a pull back so we signaled to our readers to “Add To Holdings” at those discounted levels of around $11.66. We also gave another ‘Kinross Gold BUY’ signal when we purchased more of this stock on the 20th August 2007 for $11.48. On 31st January 2008 we reduced our exposure to this stock when we sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%. On the 24th July 2008 we doubled our holding with a purchase at $18.28 giving us a new average purchase price of $14.50.

We sold Kinross Gold today for $18.69 today, for a profit of 26%.

Today the share price is sitting at $15.51 at a time when gold prices are much higher, so we have no regrets about our disposal of this stock. Maybe we are missing something, but we would certainly need to see some signs of recovery before we would think about buying into this gold play. If you are fan please let us just what it is that we are missing and you can see.

Without more ado here are the highlights of the first quarter results:

Revenue increases by 42%; adjusted net earnings increase by 81%

Production(2) in the first quarter of 2011 was 642,857 gold equivalent ounces, an 18% increase over Q1 2010. The Company has increased its full-year production forecast from 2.5-2.6 million to 2.6-2.7 million attributable gold equivalent ounces as a result of increasing its ownership in the Kupol mine to 100%.

Revenue for the quarter was a record $937.0 million, compared with $657.6 million in the first quarter of 2010, an increase of 42%, with an average realized gold price of $1,327 per ounce sold compared with $1,065 per ounce sold in Q1 2010.

Production cost per gold equivalent ounce(3) was $543 for Q1, compared with $456 for Q1 2010.  The full-year production cost per ounce forecast remains consistent with previously-stated guidance, despite industry-wide pressure on input costs. Production cost per gold equivalent ounce on a by-product basis was $471 in Q1, compared with $412 in Q1 2010.
Kinross' attributable margin per ounce sold(4) was a record $784 in Q1, compared with $609 in Q1 2010, a year-over-year increase of 29%.

Adjusted operating cash flow(5) for Q1 was $397.6 million, a 67% increase over Q1 2010.

Adjusted operating cash flow per share was $0.35 in Q1, versus $0.34 for Q1 2010.

Adjusted net earnings(1,5) were $180.3 million, compared with $99.7 million in Q1 2010, an increase of 81%. Adjusted net earnings per share were $0.16 in Q1, versus $0.14 per share for Q1 2010. Reported net earnings1 were $255.5 million, or $0.23 per share in Q1, compared with $181.3 million, or $0.26 per share, for Q1 2010.

The Tasiast feasibility study is 62% complete and remains on schedule for completion in mid-2011. A total of 135,000 metres have been drilled since the beginning of the year and results continue to meet or exceed expectations. Reconnaissance drilling has yielded encouraging results at two different targets along the Tasiast trend outside of the main Tasiast deposit.

Kinross' growth projects remain on schedule. At Fruta del Norte, construction of the portal high wall for the underground exploration decline has commenced, and negotiations with the Ecuadorian government on an exploitation agreement are proceeding. At Lobo-Marte, exploration on the Valy prospect has produced encouraging new results, including discovery of two new mineralized zones. At Dvoinoye, construction of the mine portal is complete, and development of the exploration decline advanced 100 metres in Q1. At Paracatu, the third ball mill is 98% complete, with commissioning continuing through the second quarter.

On April 27, 2011, Kinross' 75%-owned subsidiary, Chukotka Mining and Geological Company (CMGC), completed the purchase of the 25% of CMGC that Kinross did not already own for a total gross consideration of approximately $350 million, giving Kinross 100% ownership of the Kupol mine and the Kupol East-West exploration licences.

On March 23, 2011, Kinross completed the sale of its approximate 8.5% equity interest in Harry Winston Diamond Corporation for net proceeds of $100.6 million.

On March 31, 2011, Kinross announced that it had amended its unsecured revolving credit facility, increasing the available credit from $600 million to $1.2 billion. Kinross' cash and cash equivalents were $1,560.8 million as at March 31, 2011.

Kinross has appointed Paul H. Barry as Executive Vice-President and Chief Financial Officer, effective April 4, 2011. Mr. Barry replaces Thom Boehlert, whose departure as CFO was announced earlier this year.

To read the results in full please click here.

So there you have it.

Yesterday we reported that had closed another two trades for profits of 108.52% and 116.67% respectively, well today we closed two more profitable trades and have updated the chart and stats accordingly.

Over in the Options pit, our model portfolio has achieved an average return of 41.92% per trade, 78 closed trades, 76 closed at a profit, or a 97.43% success rate. Average trade open for 46.45 days.

sk chart 04 May 2011.JPG

The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

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