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Kinross Gold Corp. reported an enormous fourth quarter loss on Wednesday due to writedowns, however the company beat its production and price guidance and offered up a good outlook for 2016.
Toronto-based Kinross was the very first senior Canadian gold miner to report earnings this quarter, and also the results set a comparatively upbeat tone for the rest of the sector. Gold equities, including Kinross, have performed very well so far in 2016 amid a rally in prices. However the rally is fragile at best, and may easily stall if earnings disappoint the marketplace.
Overall, Kinross reported an internet loss of US$841.9 million within the fourth quarter, or US73 cents a share, because it recorded writedowns which were largely due to lower assumed gold prices. Once those were stripped out, the numbers were inside a penny of consensus analyst estimates.
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For the year, Kinross produced 2.Six million ounces of gold at all-in sustaining costs of US$975 per ounce. The company is guiding for better leads to 2016, with manufacture of 2.7 to 2.9 million ounces at all-in sustaining costs of US$890 to US$990.
“We’re in very good shape coming into 2016,” chief executive Paul Rollinson said within an interview.
Rollinson had become the CEO this year. Kinross was reeling at that time due to its troubled US$7.1-billion takeover of Red Back Mining Inc., one of the most overpriced deals in Canadian mining history. Rollinson place a focus on increasing the operations, which helped restore investor confidence towards the company.
“For 4 years consecutively, we’ve nailed our guidance,” he said.
Kinross acquired the Tasiast project in Mauritania as part of the Red Back acquisition, and that is a big black cloud over the company as it has struggled to produce a viable expansion plan for the operation. However, Rollinson believes Kinross is beginning to turn a corner at Tasiast. The company is working on a two-stage expansion strategy, and that he said he’s very pleased with how it’s going. More details are expected the following month.
For now, he is just happy that gold prices are moving north again. They briefly topped US$1,200 an oz now the very first time since last June. Gold is among the not many commodities to do now this year, as investors have looked for a secure haven amid heightened concerns concerning the global economy.
Rollinson said he believes large generalist investors are starting to take a desire for this sector again for the first time in years. He noted that Kinross has traded at very high volumes recently and believes newer and more effective institutions have come in to the stock.
pkoven@nationalpost.com
Twitter.com/peterkoven
