Kinross releaseJust reading through Kinross' release yesterday, noting an interesting comment: "Compared with other large gold producers, Kinross has the poorest gold reserves position. To improve its unmined stash, Canada's third largest producer is constantly scouring for acquisitions but Buchan said the firm would not be rushed"
Long on CLG.
Kinross Back in Profit, to Shut New Britannia Mine
18:37 EDT Monday, May 10, 2004
VANCOUVER, British Columbia (Reuters) - Kinross Gold Corp. met market expectations on Monday with a return to profit in the first quarter, aided by an 18 percent rise in the bullion price and higher output after a three-way merger....
Alongside the good news, the world's seventh biggest gold producer announced it would close one of its smaller mines this year -- the New Britannia mine in Manitoba -- and that its financial chief was retiring because of poor health.
Chief financial officer, Brian Penny, will be replaced by Lars-Eric Johansson, who stepped down last November as CFO of Noranda Inc. after 14 years at the Toronto firm.
Kinross reported earnings of $13.2 million, or 4 cents a share, for the three months ended March 31. That compared with analyst expectations for a profit of 5 cents a share, and a loss of $12 million, or 6 cents a share, in the year-earlier period.
The Toronto-based company produced 397,011 gold equivalent ounces in the quarter at a total cash cost of $241 an ounce.
That compared with 326,812 ounces of output, costing $237 an ounce, in the first quarter of 2003 when production from TVX Gold and Echo Bay, which Kinross merged with early last year, was only included for two months out of three.
Gold equivalent ounces include Kinross's silver output, which the company "converts" to gold production using a ratio of the commodities' spot prices.
Kinross was able to sell each ounce of gold for $408 compared with the $352 an ounce it got a year earlier.
Chief executive Robert Buchan said a decision was taken on May 4 to close the 50 percent-owned New Britannia mine as ore grades fell and cash costs soared 55 percent to $422 an ounce.
Kinross's partner at the site, High River Gold Mines Ltd. , warned in November of problems at the mine, which is 700 km (440 miles) north of Winnipeg.
"Clearly, the increased costs and declining grades make it illogical to carry on," Buchan told the firm's annual meeting.
Operations will be wound down over the next four months and the mine then shut down. Kinross slashed its share of the mine's 2004 output forecast in half to 16,500 ounces.
Compared with other large gold producers, Kinross has the poorest gold reserves position. To improve its unmined stash, Canada's third largest producer is constantly scouring for acquisitions but Buchan said the firm would not be rushed.
"It is very important that we remain patient in this endeavor since, currently, assets are being exchanged at higher than value prices," he said.