TD Analysis take on K
Kinross, Yamana profits up on soaring gold price (RTGAM)
Julie Gordon
Toronto — Kinross Gold Corp. and smaller rival Yamana Gold Inc.posted stronger quarterly profits on Tuesday, boosted by the rising price ofbullion.
The results were in line with those of other North American goldminers, which have recorded hefty profits this year, driven by the jump in goldprices.
Kinross beat analyst expectations as rising realized gold pricesand an 18 per cent boost in production sent its revenue to a record high.
The Toronto-based miner, which completed a $350-million (U.S.) deal in April to gain full ownership of the Kupol mine in Russia, said earnings rose to $255.5-million, or 23 cents a share.That compared with $181.3-million, or 26 cents a share, a year earlier.
Earnings per share fell as result of a higher number of sharesoutstanding this year.
Adjusted net earnings were $180.3-million, or 16 cents a share,compared with $99.7-million, or 14 cents a share, in the first quarter of 2010.
Analysts had expected earnings of 14 cents a share, according toThomson Reuters I/B/E/S.
Revenue for the quarter was a record $937-million, up 42 percent from $657.6-million, as the company’s average realized gold prices rose 25per cent to $1,327 an ounce.
Production for the quarter was 642,857 gold equivalent ounces,up 18 per cent from a year earlier.
The company also boosted its full-year production outlook to 2.6million-2.7 million ounces from 2.5 million-2.6 million ounces.
Kinross added that it is drilling “around the clock” to definethe Tasiast deposit in Mauritania, a project it acquired through its $7-billion deal to buy RedBack mining.
The company said a feasibility study due later this year is 62per cent complete.
“Results at the main deposit continue to fulfill ourexpectations,” chief executive officer Tye Burt said in a release.
“Encouraging results at other targets along the trend reinforceour belief that Tasiast has the potential to develop into a major goldproducing district,” he added.
Yamana also saw a strong first quarter, lifted by higherprecious metal prices and a boost in production, but it slightly missed analystexpectations.
The Toronto-based miner said earnings increased to $148-million,or 20 cents a share, in the three months to March 31, from $132-million, or 18cents a share, a year earlier.
Adjusted earnings were $152.2-million, or 21 cents a share, upfrom $75.9-million, or 10 cents a share, just below analyst expectations of 22cents a share, according to Thomson Reuters I/B/E/S.
Revenue was $476.1-million, up 37 per cent from $346.3-million.The company also announced a second-quarter dividend of 3 cents a share to bepaid in July.
Production for the quarter was up 11 per cent at 267,368 goldequivalent ounces. The company plans to boost production by 60 per cent withinthe next three years.
“The good news here is Yamana does have several smaller projectsthat probably won’t be as exposed to capex creep as the big companies with thebig capital intensive project,” said Wellington West mining analyst SteveParsons.
“So it’s better positioned to navigate inflationary pressuresthan many of its peers,” he added.
The mining industry has been hit by rising development and cashcosts, as inflation weighs on oil and metal prices.
Yamana owns producing mines in Chile, Argentina and Brazil, and has various exploration and development stage projects in Latin America.
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