Kinross Gold makes more cost cuts as earnings fall

Reuters

Nov 13 (Reuters) - Kinross Gold Corp said onWednesday it will make further cuts to its employee numbers andcapital spending as the Toronto-based gold miner reported asteep drop in third-quarter earnings hurt by weaker gold prices.

The company, which is one of the world's 10 biggest goldproducers, said it has identified around $20 million in expectedannual cash savings, primarily from laying off an unspecifiednumber of employees.

Kinross and other gold miners have promised to slash costsas they grapple with tumbling profits caused by a steep declinein the gold price over the past year, as well as soaring minedevelopment costs. Gold prices, trading at $1,272 onWednesday, have fallen 24 percent this year.

As part of its cost-cutting drive, Kinross will chop around1,000 jobs overall at operations around the world, companyspokesman Steve Mitchell said. Some of those cuts have alreadybeen announced, including a reduction of 300 jobs in Mauritaniaand in Spain. Kinross employs around 9,000people.

To save money, Kinross will merge its North and SouthAmerican regions into a new Americas region, close its Reno,Nevada office and "downsize" its administrative offices in Chileand Brazil.

"We continue our focus on reducing capital and other costsin a lower gold price environment," Kinross Paul Rollinson saidin a statement.

The miner has also identified a further $50 million incapital savings for 2013, on top of the $150 million itannounced previously. The company now expects its 2013 capitalspending to be about $1.4 billion.

Kinross said it expects its 2014 capital expenditures to besharply lower - in the range of $800 million to 900 million.

Earnings at Kinross fell to $46.9 million, or 4 cents ashare, in the three months to end-September on the back ofweaker gold prices compared with earnings of $226.2 million, or20 cents a share, in the same quarter a year earlier.

Adjusted net earnings from continuing operations was 5 centsa share, down from 22 cents a year ago.

Analysts, on average, expected earnings of 4 cents a share,according to Thomson Reuters I/B/E/S.

Kinross increased its 2013 production forecast slightly to arange of 2.6 to 2.65 million gold equivalent ounces from aprevious forecast of 2.4 to 2.6 million gold equivalent ounces.

Kinross' total attributable gold equivalent production inthe quarter edged higher to 680,580 ounces from 672,173 ounces ayear ago.

The miner's average realized gold price at continuingoperations fell to $1,331 per ounce from $1,649 a year earlier.

Kinross' all-in sustaining costs on a by-product rose to$1,069 an ounce from $1,021 a year ago, partly due to lowersilver revenue and increased production costs.

Kinross said it expects to be at the lower end of its 2013all-in sustaining cost forecast of $1,100 to $1,200 per ouncesold.

Last quarter, Kinross took a $2.29 billion after-tax,non-cash impairment charge which it said was largely due to thelower gold price, including a $1.33 billion charge linked to thecarrying value of its Tasiast gold mine in Mauritania.

Kinross' stock is down 50 percent this year, in line withother large gold producers.

Rates

View Comments (0)