More cash for Kinross on second quarter earnings

Kinross Gold (K-T, KGC-N) continues its resurgence with the announcement of second quarter earnings that saw its cash flow increase 210% from the same period last year.

Cash flow from operating activities in the second quarter was US$94.9 million, compared to just US$30.6 million in the second quarter of 2005.

The company’s cash position rose to US$149 million as of June 30, 2006 compared with $84.1 million at March 31, 2006.

The news sent the Toronto-based company’s shares up roughly 2.8% or 37 to $13.59 on nearly 4 million shares traded in Toronto on Aug. 4.

Kinross, the fourth largest gold producer in North America and the eighth largest in the world, produced 385,514 gold equivalent oz. in the second quarter of 2006.

In a release the company says it is on track to produce roughly 1.4 million gold equivalent oz. for the year.

Revenue of US$252.3 million in the second quarter was up 45% over the same period last year in large part thanks to the company getting US$625 per oz. for gold sold a 48% over the same period last year.

Kinross saw net earnings of US$65.6 million, or 19 per share, compared with a net loss of US$16.4 million in the same period last year.

Kinross’s president and chief executive, Tye Burt, credits Kinross’s policy against gold hedging with giving it the full benefit of a robust gold price.

“Our cash balances are growing,” Burt says in the statement, “giving us a strong balance sheet in support of our capital program.”

The company will invest roughly US$470 million in its wholly owned Brazilian subsidiary’s Paracatu expansion project in Brazil, which is expected to start up in 2008.

Burt dubbed Paracatu’s expansion a “key element” in the company’s plan to grow from its core operations.

From 2009 to 2013 the project is expected to produce roughly 557,000 oz. of gold at an average cost of roughly US$230 per oz. Those ounces will feed into the company’s total production for 2009 which is anticipated to be nearly 1.9 million oz. of gold.

Paracatu’s mine life is said to be 30 years, based on 15.2 million oz. of current proven and probable mineral reserves.

On the acquisition side of things, Kinross’s attempt to acquire Crown Resources (CRCE-O) was declared effective as of July 28. Crown shareholders will vote on the takeover on Aug. 31 of this year.

But the quarter was defined more by divestments than it was by acquisitions. Following a corporate strategy which called for the divestiture of non-core assets, Kinross sold off its George and Goose Lake property, the Aquarius project, the Lupin site and its Blanket mine in Zimbabwe.