Kinross Gold Corp. reported an enormous fourth quarter loss on Wednesday because of writedowns, but the company beat its production and price guidance and offered up a solid outlook for 2016.
Toronto-based Kinross was the first senior Canadian gold miner to report earnings this quarter, and also the results set a relatively upbeat tone throughout the sector. Gold equities, including Kinross, have performed perfectly 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 a net lack of US$841.9 million in the fourth quarter, or US73 cents a share, as it recorded writedowns that were largely because of lower assumed gold prices. Once those were stripped out, the numbers were within 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 organization is guiding for better leads to 2016, with production of 2.7 to two.9 million ounces at all-in sustaining costs of US$890 to US$990.
“We’re in very good shape entering 2016,” chief executive Paul Rollinson said in an interview.
Rollinson had become the CEO in 2012. 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 improving the operations, which helped restore investor confidence to the company.
“For four years consecutively, we’ve nailed our guidance,” he explained.
Kinross acquired the Tasiast project in Mauritania as part of the Red Back acquisition, and that is a big black cloud within the company because it has struggled to produce a viable expansion arrange for the operation. However, Rollinson believes Kinross is starting to show a corner at Tasiast. The company is focusing on a two-stage expansion strategy, and he said he is very pleased with how it is going. More details are required the following month.
For now, he is just happy that gold costs are moving north again. They briefly topped US$1,200 an ounce now for the first time since last June. Gold is among the very few commodities to do now this year, as investors have looked for a safe haven amid heightened concerns concerning the global economy.
Rollinson said he believes large generalist investors are starting to take an interest in this sector again the very first time in years. He noted that Kinross has traded at high volumes recently and believes newer and more effective institutions have come into the stock.
pkoven@nationalpost.com
Twitter.com/peterkoven
