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TheStreet Open House

Will Inflation Kill Gold Miners?

Stock quotes in this article: ABX, KGC, AEM, AU, EGO, GBG, NEM, GG, AUY, IAG

(Gold inflation article updated with earnings results.)

NEW YORK ( TheStreet ) -- Dividends continue to add to the appeal of the gold miners this earnings season as companies rake in the cash despite higher input costs.

Heavyweights, from Kinross Gold (KGC), Agnico-Eagle (AEM), to Barrick Gold (ABX), AngloGold Ashanti (AU) and Newmont Mining (NEM) have all reported solid results. Despite some production wobbles and inflation worries, the companies turned nice profits as gold prices soared to a 2010 intraday high of $1,432.50 an ounce.



I will be interviewing a dozen CEOs of major gold companies at the BMO Capital Markets Global Metals & Mining Conference next week to see if they expect their flush cash days to continue with inflation on the rise. Here is a quick snapshot of gold miners' earnings and worry spots to watch.

Barrick was the clear winner. The company got ahead of the game by declaring its regular quarterly dividend of 12 cents a share on Feb. 16, a day before it reported earnings. Barrick made 95 cents a share in the fourth quarter, up 55% from the same period a year earlier, and blew past estimates of 84 cents a share.

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Revenue also topped $2.95 billion and gold production reached 1.7 million ounces at cash costs of $486 an ounce, or $326 an ounce if you factor in sales of byproduct metals. Barrick expects to produce 7.6 million to 8 million ounces of gold in 2011 at cash costs of $450 to $480 per ounce. Cash costs will be higher in 2011 due to rising raw material costs and lower grade gold at some of its mines.

The big takeaway from Barrick is that it had "no" problems, no production snags, no currency issues, even rising cash costs were manageable.

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Goldcorp (GG) was also a big winner. The behemoth blew past estimates and jumped on the dividend bandwagon increasing its annual dividend by 11% to 40 cents a share.

The gold miner earned 57 cents a share in the fourth quarter by producing 689,600 ounces of gold at total cash cost of $164 an ounce. Excluding bi-products, Goldcorp's cash costs were $461 an ounce. Goldcorp saw record production from three of its mines, as well as the first full quarter of production at its newer Penasquito mine.

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