Stagnant gold prices have forced
Net losses for the first three months of 2000 totalled US$7.8 million (or 3 per share) on revenue of US$70 million, compared with US$10 million (4 per share) on US$75.2 million in the corresponding period of 1999. The improvement essentially reflects gains at the corporate level.
Cash flow between the periods dipped to US$12 million from US$17.3 million.
Kinross pulled 231,427 oz. gold, or 233,492 equivalent ounces when silver is included, from its various mines in the recent period. This represents a 9% drop from a year ago, the chief cause of which was the shutdown last summer of the Macassa mine in Kirkland Lake; the mine had succumbed to production problems arising from a series of rock bursts in April 1997. However, the lost production was almost entirely offset by lower accounting charges against assets.
Cumulative total cash costs averaged US$216 per oz. gold-equivalent; total production costs, US$316 per oz. Both figures, though higher than a year ago, were offset by slightly higher realized gold price of US$299 per oz.
The Fort Knox mine, in Alaska, cranked out 77,551 oz. gold-equivalent at a total cash cost of US$238 per oz. Output was little-changed from a year ago, but costs were 13% higher, owing to unplanned maintenance and the need for higher throughput to offset the lower grade of ore mined. Higher grades are in store for the remainder of the year, and the year’s production target remains 350,000 oz. Annual production thereafter is pegged at 500,000 oz. at lower cash costs, as satellite deposits are to be mined as well.
Hoyle Pond
A brighter picture emerged at the Hoyle Pond mine, in Timmins, Ont., where 37,714 oz. gold-equivalent were produced at US$222 per oz. Although both figures are better than in the year-ago period, Kinross says costs are still too high. To correct this, it is reviewing its entire Timmins division, which may see mining resume at the adjacent Pamour mine (formerly owned and run by now-bankrupt Royal Oak Mines). Also, the company is reviewing its reliance on contractors and is assessing procurement of materials through the internet.
Production at the Blanket tailings operation, in Zimbabwe, topped 8,270 oz., which was below budget. Higher exchange rates and local inflation resulted in a 73% rise in total cash costs to US$233 per oz. Production is expected to return to scheduled levels by July.
Kinross’s share of output from the Kubaka mine in Russia, the Refugio mine in Chile, and the Denton-Rawhide mine in Nevada topped 102,757 oz. gold-equivalent. Total cash costs were US$196 per oz., or 7% higher than in the first quarter of 1999. This increase was caused four factors: a 5% export royalty at Kubaka; a drop in production at Refugio; and longer haulage distances to the leach pad and higher maintenance costs at Denton-Rawhide. Kubaka continues to be the company’s lowest-cost producer, and Kinross notes that its Chilean partner at Refugio placed a record 2.5 million tonnes on the leach pad and continued to improve operations.
On March 31, Kinross had US$111.7 million in working capital. During the quarter, US$8.4 million was expended at its various mines, more than half it on underground development at Hoyle Pond.
Also, Kinross has arranged a new US$110-million line-of-credit with a syndicate of commercial banks. The facility will replace an existing one that serves as security against certain bonds and removes Cyprus Amax Minerals (now merged with Phelps Dodge) as their guarantor.
For 2000, Kinross has 275,000 oz. gold hedged at an average price of US$305 per oz.
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