RE:RE:Dividends in the near future?Curvature ... help me understand your position - I must be missing something.
I'll concede that I may be optimistic in a near term dividend but the root of my optimism remains - Kindross' operations, balance sheet, reserves, etc. are much better today than earlier in the year. For the reasons that follow - Kinross operates at a cash positive position at gold levels above $1,023/oz.
First, however, I do not think it is accurate to conclude Kinross is a 'high cost producer'. One should not loose site of the significance of the Russian operations which are a model of extremely low cost production. If Kinross' major assets are low cost production - I do not see how one concludes Kinross as an enterprise is somehow the opposite.
Perhaps your reference point is all-in-sustained-costs? If so you are in good company - however this commonly referenced yard stick is not reliable. AISC is dependant on so many variables determined by the management of each gold producer. While it seems like a convenient yard stick - the reality is a dollar of AISC means one thing to company A and an entirely different thing to compancy B. One simply cannot rely on such a measurable to compare gold producers.
I very much agree with your suggestion of looking at the cash. Cashflow statements are more consistently comparable between gold producers (I note there are differenced in accounting standards). Kinross' Q22014 cash flow statement (page 63 -
https://www.kinross.com/media/256749/kinross%20q2%202014%20report.pdf) and identifies Cash Flow Provided From Operating Activities of approximately $210 million.
Here is how I see Kinross from a cash position per gold oz:
Step One: (average gold price realized)(oz produced + additional inventory sold) = Cash Flow Provided From Operating Activities + costs to produce
($1,285)(686,000 + 14,000) = $210,000,000 + costs to produce
costs to produce = $702,350,000
Step Two: Kinross produced 686,000 oz of gold at a cost of $702,350,000 for Q22014. In other words, Kinross' cash based cost of production was $1,023 per onze.
I note that Kinross' cash based cost of production of $1,023 is higher than the published AISC
of $976 for the quater. What it means for Kinross is that its operations are cash positive as long as gold is above $1,023. Cash costs being higher than AISC is a common trend when one runs this analysis amongst the major gold producers. However, pronounced with Kinross is its depressed share value - providing an exceptional value for a low cost producer whose operations are cash positive.