Analysts Laud Kinross Gold's Q3 Results

Kinross Gold Corp.'s (KGC) big bet on Russia is certainly paying off so far. Analysts applauded the company's third quarter results, noting the high-grade Kupol mine in Russia was the key to its outperformance.

Kupol was in full operation in the quarter and produced 206,000 gold equivalent ounces at very strong grades of gold and silver. That helped the company report adjusted earnings of $0.13 a share, a penny better than analysts expected. The only bad news was a slight delay in the expansion of the Paracatu mine in Brazil, which will reach full production next year.

Of course, there is one other detail investors are curious about: Ecuador. Kinross has completed its acquisition of Aurelian Resources Inc. (AUREF.PK) and controls the prized Fruta del Norte deposit. The question now is what the future holds given the political uncertainty.

Catherine Gignac, an analyst at Wellington West Capital Markets, said that Canadian companies in the region believe that the new mining law in Ecuador could be approved by the end of the year, which would allow the government-imposed mining moratorium to be lifted early next year (though some work at the sites continues). In the meantime, the payback on the acquisition is "uncertain."

She wrote in a note to clients:

We believe Ecuador's new government wants foreign investment in their new metal mining industry and will work with the companies on a case-by-case basis.

She also said that a resource update at Fruta del Norte is expected at year-end.