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Kinross Reiterates Scaled-Down Views

Kinross Gold surpasses Wall Street targets with its fourth quarter and reiterates its view of 2010 as it deals with a contentious mine in Brazil.
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TORONTO (TheStreet) - Kinross Gold (KGC) - Get Kinross Gold Corporation Report, hurt much of last year by problems at its Paracatu mine in Brazil, nevertheless topped Wall Street expectations for its fourth quarter.

Like all gold miners, the company has benefited from the record-high values reached by the metal during the last part of 2009, as investors rushed to take part in a new gold craze -- one that hedge fund billionaire George Soros, a huge gold investor, recently (and now famously) called the "ultimate asset bubble."

Kinross's adjusted earnings for the fourth period came to nearly $149 million, or 21 cents a share, surpassing the 16 cents that analyst were expecting, according to Thomson Reuters' survey of the sell side. A year ago, the company posted adjusted profit of about $57 million, or 9 cents a share.

Fourth-quarter Revenue surged 44% to $700 million, Kinross said.


kicked off gold-miner earnings season

when it reported its results Wednesday evening. Its larger rival



followed closely on its heels Thursday morning with

better-than-expected results that were nevertheless clouded by an ongoing legal clash over a controversial mine in Nevada


Shares of Kinross jumped more than 4.4% to $19.32 in late morning trading Wednesday. Volume reached 3.8 million shares; daily average turnover is about 7 million. Barrick shares, meanwhile, gained 4% to $39.39.

In the fourth period, Kinross's cost of sales amounted to $437 per gold equivalent ounce, up 17% from a year ago. (Figures such as cash costs and cost of sales are sometimes criticized as measures of profitability, since their definitions vary from company to company.)

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Kinross's fourth-quarter gold output totaled 614,000 ounces. Overall in 2009, it produced 2.2 million ounces of gold, also with a cost of sales of $437 an ounce.

Looking ahead, Kinross reiterated the guidance it issued a month ago -- guidance that disappointed investors yet again. The scaled-back forecast stemmed from continued production snags at the company's Paracatu mine in Brazil, which has bedeviled Kinross for at least the last year, forcing it to reduce guidance several times in 2009.

Though the property has one of the worst ore grades in the world -- a few grams of gold per ton of rock -- Kinross has pinned much of its growth hopes on this mine.

Kinross, however, in its press release, appeared to say that all is well at Paracatu: "Operational performance at the expansion plant was considerably improved over the previous quarter," the company said. "Upgrades to the plant have eliminated minor unplanned stoppages, contributing to plant stability and recoveries."

Kinross added that it plans to install an additional grinder at the mine, so that it can churn through more rock faster, in search of those few grams of precious metal.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.