Kinross Gold Corporation (KGC) has closed the previously-announced offering of unsecured 10-year debt securities. The offering comprised $500 million principal amount of 5.95% Senior Notes due 2024.
Net proceeds from the notes will be utilized to repay a portion of Kinross’ term loan, which is due Aug 2017.
The senior notes offered are unsecured and hold senior obligations of Kinross. The notes are also wholly and unconditionally guaranteed by some of Kinross' fully-owned subsidiaries that are also guarantors under the company’s senior, unsecured credit agreement.
Last month, Kinross reported fourth-quarter and full-year 2013 results. The company logged net loss of $740 million (or 65 cents per share) on a reported basis in the quarter, lower than the net loss of $2,984.9 million (or $2.62 a share) recorded in the year-ago quarter. The company had narrowed losses in the fourth quarter on lower impairment charges.
Adjusted (excluding one-time items) loss was 2 cents per share in the fourth quarter as against adjusted earnings of 25 cents earned in the year-ago quarter. The earnings missed the Zacks Consensus Estimate of 3 cents per share. 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.
Cash and cash equivalents of the company also decreased in 2013. As of Dec 31, 2013, cash and cash equivalents were at $734.5 million, down roughly 63% year over year, mainly due to debt repayment and capital spending. Total long-term debt also declined roughly 3% y/y to $2,059.6 million.
Kinross is committed to maintain its financial discipline and solid operational performance by generating enough funds, allowing it to service its debt uninterruptedly.
Kinross expects a solid year of production in 2014 with Dvoinoye, a new low cost, high-grade mine, coming fully on-stream. For 2014, Kinross expects to produce roughly 2.5–2.7 million gold equivalent ounces. The company expects production cost of sales in the range 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 expenditure is expected to be around $675 million, down roughly $585 million from 2013.
Kinross currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the mining industry are AngloGold Ashanti Ltd. (AU), Lake Shore Gold Corp. (LSG) and NovaGold Resources Inc. (NG). While AngloGold carries a Zacks Rank #1 (Strong Buy), both Lake Shore Gold and NovaGold hold a Zacks Rank #2 (Buy).
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