TORONTO – Kinross Gold Corp. (TSX:K) reported a first-quarter profit of US$105.7 million, down from $250.1 million a year ago, as production slipped, but CEO Tye Burt said output was expected to pick up.
The Toronto-based gold miner, which keeps its books in U.S. dollars, said Tuesday it earned nine cents per share in its latest quarter down from 22 cents per share a year ago.
Sales totalled $1.04 billion, up from $937 million.
After adjusting for one-time items, the company said it earned 18 cents per share for the quarter, up from 15 cents per share a year ago.
The average analyst estimate had been for a profit of 22 cents per share, according to those polled by Thomson Reuters.
Production for the quarter amounted to 604,247 gold equivalent ounces, down from 642,857 a year ago, while production costs rose 22 per cent due to lower grade ore, as well as higher power, labour and contractor costs across the company.
Production cost $742 per gold equivalent ounce, compared with $545 a year ago. The company saw an average realized price of $1,644 per ounce of gold, up from $1,327.
Burt said while production was lower and costs were higher than the fourth quarter of 2011, production for the remainder of 2012 was expected to increase.
“We expect to be within our previously-stated full-year guidance for production and costs,” Burt said in a statement.
“Kinross remains in a strong operating and financial position. We are committed to maintaining our financial strength and liquidity as we advance our growth projects in the framework of our capital and project optimization process.”
Kinross has said it expects to produce between 2.6 million and 2.8 million gold-equivalent ounces from its current operations this year. The 2012 production estimate includes between 7.5 million to 8.0 million ounces of silver and between 2.5 million and 2.6 million ounces of gold.
The company has also estimated its 2012 production cost will be in a range of US$670 to $715 an ounce, up from an estimated $600 per gold-equivalent ounce in 2011.
Kinross is a Canadian-based gold producer with mines and projects in Canada, the United States, Brazil, Chile, Ecuador, Russia, Ghana, and Mauritania.
Shares in the company were hit earlier this year after it slowed the development of its three major projects including its Tasiast mine in Africa.
The gold miner also said feasibility studies at its Fruta del Norte project in Ecuador and Lobo-Marte project in Chile would also be delayed in order to optimize capital costs.
At Tasiast, Kinross said it would take an additional six to nine months of analysis and planning to determine the optimal processing mix to reduce operating costs.
The review at Tasiast will include a possible change in the ore processing options at the project because of a halo of low-grade ore surrounding the higher grade ore at the deposit.
Construction at Lobo-Marte was expected to start in the fourth quarter of 2012 with commissioning in 2014, while Kinross had hoped to start up Fruta del Norte in late 2014.