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Kinross Gold Beats 1st-Quarter Profit Forecasts

- By Alberto Abaterusso

Kinross Gold Corp. (KGC) posted first-quarter results after the closing bell on Tuesday.

The Canadian gold producer recorded non-GAAP earnings of 7 cents per share, beating estimates by 5 cents. It also beat GAAP earnings per share projections by 2 cents. Revenue of $786.2 million missed expectations by $17.4 million.

Shares of Kinross Gold jumped 3.92% to $3.18 in after-hours trading.

The company said revenue declined 12.4% year over year due to a 10.6% drop to 603,057 ounces of equivalent gold sold and 1.95% depreciation in the average realized gold price to $1,304 per ounce. In addition, GAAP earnings fell 44.4% to $64.7 million.

The achievement of record quarterly output and considerable costs abatement in Brazil and Mauritania wasn't enough to offset a 7.4% reduction in total equivalent gold production to 611,263 ounces and a 3.6% jump in the production cost of sales to $682 per ounce sold.

Production was impacted by several operating challenges in North America, consisting of reduced throughput and head grades as well as timing of the metal recovered from heap leaching and other geotechnical issues.

The all-in sustaining cost per ounce of equivalent gold sold also increased 9.3% to $925.

As a result of lower gold prices and higher production costs, the attributable margin was $622 per gold equivalent ounce sold, about 7.4% lower year over year. The adjusted operating cash flow fell 36.5% to $230.8 million.

Kinross Gold said it is on track to meet production and cost guidance for full-year 2019. The miner expects to produce between 2.375 million and 2.625 million ounces of equivalent gold at a production cost of sales of $693.5 to $766.5 per ounce and all-in sustaining costs of $945.25 to $1,044.75 per ounce.

As of March 31, the balance sheet had $1.8 billion in total liquidity, of which 22.6% is cash on hand and cash equivalents. The company doesn't have to repay debt until 2021.

On Tuesday, the bullion closed at $1,281.20 per troy ounce on the London market. From the beginning of the second quarter through May 7, it averaged $1,285.14 an ounce, down 1.5% from the average price Kinross Gold realized in the first quarter.

The closing share price was $3.1 on Tuesday. The stock has declined 17% over the past year to below the 200-, 100- and 50-day simple moving average lines. The market capitalization is $3.78 billion.

The 52-week range is $2.38 to $3.98.

The 14-day relative strength index of 35 suggests the stock is not far from oversold levels.

Wall Street issued an overweight recommendation rating with an average target price of $3.89 per share. Thus, the stock is expected to outperform either the industry or the overall market within 52 weeks.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.