Gold miner Kinross Gold Corporation (KGC) logged a net loss of $740 million (or 65 cents per share) on a reported basis in the fourth quarter of 2013, lower than a net loss of $2,984.9 million (or $2.62 a share) recorded in the year-ago quarter.
The loss in the reported quarter resulted from $544.8 million of after-tax non-cash impairment charge related to the property, plant and equipment at the Maricunga mine. The year-ago quarter’s results were dragged down by impairment charges of $3.2 billion.
Adjusted (excluding one-time items) loss was 2 cents per share in the fourth quarter compared with adjusted earnings of 25 cents earned in the year-ago quarter. The results missed the Zacks Consensus Estimate of earnings of 3 cents. The bottom line was hit by lower gold prices, higher production cost of sales and depreciation.
Revenues decreased roughly 26% year over year to $877.1 million in the quarter due to lower average realized gold price. However, it came ahead of the Zacks Consensus Estimate of $859 million.
For full-year 2013, adjusted earnings were 28 cents per share, down 64% from 78 cents per share recorded in 2012. The results missed the Zacks Consensus Estimate of 33 cents. Reported net loss totaled $3,012.6 million or $2.64 per share versus a loss of $2,546.2 million or $2.24 per share in 2012.
For full-year 2013, revenues decreased 12% to $3,779.5 million from $4,307.3 million in 2012, but were ahead of the Zacks Consensus Estimate of $3,719 million.
Operational Performance
Gold production was 646,234 equivalent ounces from continuing operations for the quarter, down around 11% year over year, driven by suspension of mining at La Coipa and scheduled maintenance at several other sites. Average realized gold price was $1,268 per ounce, down 26% from the year-ago quarter.
Production cost per gold equivalent ounce increased to $765 in the quarter from $686 in the prior-year quarter mainly as a result of lower production and increased maintenance costs. Margin per gold equivalent ounce sold was $503 in the fourth quarter, down 51 % from the year-ago quarter.
Financial Review
Adjusted operating cash flow was $222.8 million, down 56% from $505.3 million in the prior-year quarter. Cash and cash equivalents were $734.5 million as of Dec 31, 2013, down roughly 63% year over year, primarily due to debt repayment and capital spendings. Total long-term debt declined roughly 3% year over year to $2,059.6 million.
Capital expenditures were $331.1 million for the reported quarter versus $497.6 million in the comparable period last year. The decrease was due to lower spending at Tasiast.
Growth Projects
The Tasiast feasibility study on a mill expansion remains on track and is expected to complete in the first quarter of 2014 and Kinross has plans to provide highlights of the results in April.
Kinross delivered encouraging drill results from targets at its Tasiast, La Coipa, Chirano, Kupol and Dvoinoye mines under its 2013 exploration program.
Outlook
For 2014, Kinross expects to produce roughly 2.5-2.7 million gold equivalent ounces. The company expects production cost of sales of $730-$780 per gold equivalent ounce and also anticipates its all-in sustaining cost to be $950-$1,050 per gold equivalent ounce. Total capital expenditures are expected to be around $675 million, down roughly $585 million from 2013.
Exploration and business development expenses are expected to be roughly $125 million in 2014. General and administrative expenses are projected to be $165 million. Other operating costs are forecast to be roughly $50 million, out of which, $14 million are expected to be for care and maintenance costs at La Coipa.
Kinross currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the mining industry are Franco-Nevada Corporation (FNV), Lake Shore Gold Corp. (LSG) and Endeavour Silver Corp. (EXK), all of which carry a Zacks Rank #2 (Buy).
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