Kinross Gold records strong second quarter results; production increases 14%
Thursday, August 2nd, 2007
Kinross Gold Corporation announce its unaudited results for the three and six months ended June 30, 2007.
Second Quarter Highlights
â€¢ Production was 439,783 gold equivalent ounces in the second quarter of 2007, 14% above the second quarter of 2006 and the Company is on track to meet full-year guidance for 2007 of approximately 1.65 million gold equivalent ounces.
â€¢ Revenue was $290.1 million in the second quarter, a 15% increase over the same period last year, and the average realized gold price was $662 per ounce sold.
â€¢ Cost of sales per ounce1 was $348 in the second quarter on sales of 438,549 gold equivalent ounces compared with cost of sales per ounce of $311 on sales of 403,507 gold equivalent ounces in the second quarter of 2006 and the Company is on track to meet its full-year guidance of $330 – $340 per ounce. Cost of sales per ounce would have been $332 before factoring in the impact of fair value accounting on the acquired bullion inventory of the Bema properties.
â€¢ Net earnings for the second quarter were $53.0 million, or $0.09 per share, compared with net earnings of $65.6 million, or $0.19 per share, in the same period last year.
â€¢ Cash flow from operating activities was $94.5 million in the second quarter of 2007 compared to $94.9 million for the corresponding period in 2006. The cash position was $244.4 million at June 30, 2007 compared to $154.1 million at December 31, 2006 and total debt was $460.1 million at June 30, 2007 compared to $89.9 million at December 31, 2006.
â€¢ Capital expenditures totaled $161.3 million in the second quarter, primarily at the Paracatu expansion, Kupol and Kettle River â€“ Buckhorn projects. Capital expenditures for 2007, including the assets acquired in the Bema transaction, are expected to be $660 million, an increase of $210 million from previous Kinross-only guidance of $450 million.
â€¢ Construction at the Kupol and Paracatu projects is on schedule to commence production in mid-2008, while Buckhorn is now expected to come into production in the second half of 2008. The Company remains on track to meet its previously announced production guidance of 2.1 to 2.2 million ounces in 2008 and 2.6 to 2.7 million ounces in 2009.
1. Cost of sales per ounce is defined as cost of sales as per the financial statements divided by the number of gold equivalent ounces sold.
Tye Burt, Kinross President and CEO, made the following comments in relation to the second quarter 2007 results:
â€œWe are pleased to record another excellent quarter, consistent with our previous guidance for 2007. We continue to get strong production from our operations, and with the Bema acquisition complete, we are firing on all cylinders and striving to maximize production and margins in a strong gold market.
â€œLike all producers we face pressures from the rising cost of energy, labour, freight and transportation, equipment and consumables, plus in some cases unfavourable exchange rates. However, we continue to focus strongly on cost control as a core part of the Kinross culture.
â€œKinross continues to have one of the best growth profiles in the gold industry with three major projects in development, which will increase our production by 60 per cent over the next two years, while reducing costs.
â€œWe have made excellent progress on our Paracatu, Kupol and Buckhorn construction projects. Paracatu and Kupol are expected to begin production mid-2008 as planned enabling Kinross to boost production to between 2.1 to 2.2 million ounces next year. Buckhorn production is expected to be delayed until the second half of next year as we work through issues related to permit appeals.
â€œWith a great portfolio of existing mines, one of the best short-term growth profiles of any major producer, and a growing reserve base with excellent prospects for future development, Kinross continues to occupy a unique position in the sweet spot of todayâ€™s gold industry.â€
For further information visit: www.kinross.com