Kinross takes US$400 million charge to earnings

Kinross Gold (K-T; KGC-N) has restated its 2003 earnings following an accounting cleanup that revalued its acquisition of TVX Gold and Echo Bay Mines.

The gold miner takes a US$416.7-million charge against earnings for the impairment of assets, of which US$400.1 million was in goodwill (the premium paid for assets in the takeover). The charges turn a US$19.7-million profit for the year into a US$406-million loss.

Kinross had suspended filing of its financial statements in February 2005 amid discussions with Canadian and U.S. securities regulators. The Ontario Securities Commission placed a cease-trade order in April preventing management from trading in the company’s shares while an outside review of the company’s accounting practices was done.

A revaluation of the mineral assets that Kinross acquired in the 2003 merger with TVX and Echo Bay reduced the original value of the goodwill premium, to US$742.5 million from US$918 million. The revaluation moved US$45.4 million that had been allocated to property, plant and equipment assets into the carrying value of mineral properties, and added US$259 million to the carrying value of the properties.

The US$400.1-million impairment charge brought the goodwill on Kinross’s balance sheet to US$342.4 million.

Kinross also released unaudited financial results for 2004, when it made a net loss of US$55.9 million, or US16 per share, on revenues of US$666.8 million. The restated 2003 loss, US$406 million or US$1.32 per share, came on revenues of US$571.9 million.