the culprit was a 2nd-quarter foreign exchange loss of $57.5 million; otherwise mining operations went very well:

Kinross Gold reports record GEO production, decline in net earnings

Kinross has cut its 2009 production guidance to between 2.3 million and 2.4 million GEO, due to delays on the expansion of the Paracatu gold mine in Brazil.

Author: Dorothy Kosich
Posted: Thursday , 13 Aug 2009

STRAP HEADLINE:

HEADLINE: Kinross reports record GEO production, decline in net earnings

Dorothy Kosich

Kinross has cut its 2009 production guidance to between 2.3 million and 2.4 million GEO, due to delays on the expansion of the Paracatu gold mine in Brazil.

RENO, NV

Kinross Gold reported record production of 560,479 gold equivalent ounces (GEO) in the second quarter of 2009, an increase of 38% of the 406,032 GEO for the same period of 2008.

However, second-quarter net earnings dropped from US$26 million or 4-cents per share a year ago to $19.3 million or 3-cents/sh this year. For the first half of the year, Kinross reported net earnings of $95.8 million or 14-cents per share, down slightly from $96.9 million in net income (16-cents/sh) reported for the first six months of 2008.

For the second quarter of this year, foreign exchange losses were $57.5 million, compared with losses of $12.5m for the second-quarter 2008. The company also recorded an income and mining tax expense of $21.6 million, compared with $21.3m in the comparable period of last year. Interest expense increased to $16 million, compared with $9.2 million during the second-quarter 2008.

Meanwhile, Kinross has slightly reduced its production guidance this year, stating it expects to produce 2.3 million to 2.4 million GEO, down from the original forecast of 2.5 million GEO due to a longer than planned ramp-up at its Paracatu mine expansion in Brazil.

Costs of sales per GEO for the full year are expected to be $390 to $420/oz. "Based on year-to-date results, the company expects cost of sales to be at the higher end of this range," Kinross said.

"We're proud to have reduced costs by $32 per gold equivalent ounce year-over-year and to have increased margins to a new record of $481 per ounce, especially given that we do not benefit from higher base metal prices and by-product credits," Kinross CEO Tye Burt said in a news release.

"Our costs were higher than anticipated at Paracatu during the quarter as we ramped up throughout to targeted levels, but with the mill now running well, we expect costs to come down as we improve recovery and increase production," he added.

For the first six months of this year, Kinross reported attributable production of 1,087,367 GEO, up from 737,816 GEO for the first half of last year.

The company expects its capital expenditures to increase by $25 million over the original forecast of $475 million, primarily as a result of additional costs for the Paracatu tailings dam expansion.

Kinross reported $645.5 million in cash and cash equivalents as of June 30, 2009. The board of directors has declared a dividend of five-cents per common share, a 25% increase over the first quarter dividend, which reflects "higher gold prices, strong cash flow and a positive outlook for the company's performance going forward."

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