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Kinross Gold Jumps on 2nd-Quarter Earnings Beat

Kinross Gold Corp. (NYSE:KGC) issued second-quarter results after the market closed on Wednesday.

The Toronto-based miner recorded non-GAAP earnings of 6 cents per share, beating estimates by 3 cents.

Revenue grew 8.1% from the prior-year quarter to $837.2 million, topping expectations by $16.83 million.

Shares of Kinross Gold climbed 4.23% to $4.19 in after-hours trading.

The revenue growth was the result of an 8.3% increase in gold equivalent sold to 636,035 ounces since the commodity's price per ounce of $1,307 was flat.

During the quarter, the miner recorded higher volumes thanks to robust performance from the Paracatu mine in Brazil, the Kupol mine in Russia and the Tasiast mine in Mauritania. The three mines contributed 63% to total second-quarter attributable gold equivalent production of 648,251 ounces, representing 7.7% upside from the prior-year quarter.

Attributable production cost of sales decreased 13.6% to $663 per ounce of equivalent gold sold and the all-in sustaining cost declined 9.1% to $925 per ounce as fixed costs were distributed over larger throughput.

Higher sales volumes and lower costs allowed Kinross Gold to deliver 24.3% growth in total adjusted cash flow from operations to $287.7 million and a 19.5% increase in attributable margin to $644 per ounce of equivalent gold sold.

Thus, the balance sheet at the end of the second quarter was stronger than in the final quarter of 2018 as it added $127 million to cash, equivalents and restricted liquidity, totalling $489 million.

Inventories were worth $991.3 million, and the value of property, plant and equipment, which are located in the Americas, West Africa and Russia, rose 4.5% to nearly $5.8 billion.

The increase in the value of fixed assets was derived from the achievement of the first gold bars produced by Kinross at its development projects in Nevada and the good progress made at Tasiast, where the explorers are studying several possibilities to enhance the operation's profitability.

The balance sheet also had total debt of $1.9 billion, while the equity was worth approximately $4.7 billion.

For full 2019, Kinross Gold is guiding for production of 2.375 million to 2.625 million ounces of gold equivalent from its mineral resources at cost of sales of $693.5 to $766.5 per ounce and all-in sustaining cost of $945.3 to $1,044.8 per ounce.

The closing share price was $4.1 on Wednesday for a market cap of $5.08 billion. The price was within the 52-week range of $2.38 to $4.38 and substantially below the 200-, 100- and 50-day simple moving average lines.

The stock has gained 21% over the past year through July 31.

The results of the evaluation project at Tasiast may give an additional boost to the share price of Kinross Gold in mid-September, when they are expected to be announced.

The 14-day relative strength index of 57 suggests the stock is neither oversold nor overbought.

Wall Street issued an overweight recommendation rating for shares of Kinross Gold with an average target price of $4.61 per share.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.