Lower costs, higher margins and new ounces from mines in Russia, the U.S. and Brazil all added up to record first-quarter revenue for Kinross Gold (K-T, KGC-N).
First-quarter production jumped 59% year-on-year while the cost of sales per oz. dropped by 11%, driving up revenues 61% year-on-year to US$532.7 million.
The average realized price of gold slipped from US$929 per oz. sold in the first quarter of 2008 to US$897 per oz. in the same quarter of 2009.
Net earnings reached US$76.5 million or US11¢ per share, compared with US$70.9 million or US12¢ per share in the year-earlier quarter (due to a higher share float). Net earnings included a US$5.6 million gain due to favorable net foreign exchange rates.
As of Mar. 31, cash, equivalents and short-term investments tallied US$746.5 million, up from US$525.1 million on Dec. 31, 2008.
Production of gold equivalent ounces – a measure that includes silver production counted as an equivalent value in gold – increased 59% to 526,888 oz. Cost of sales per gold equivalent oz. dropped to US$419 per oz. compared with US$472 per oz. in the year-ago quarter.
The strong production results were largely the result of two new mine openings last year; the Kupol mine in Russia and the Buckhorn mine in Washington state, and the expansion of the Paracatu mine in Brazil.
Tye Burt, the company’s president and chief executive, predicted cost of sales per oz. would fall further in the second half of the year as its expanded Paracatu mine reaches full production in the second quarter.
Kinross plans to open new mines in the not-too-distant future. A scoping study is expected to be completed for Lobo-Marte in Chile by the middle of the year and a pre-feasibility study by year-end.
In Ecuador at its Fruta del Norte project, Kinross expects to receive permits to move ahead with a three-month infill drilling program by the middle of the year. The drill program is intended to upgrade the resource estimate and support a pre-feasibility study. And in the third quarter of 2009, Kinross expects a feasibility study on its Cerro Casale project in Chile.
Kinross shares advanced 36¢, or 1.9%, to $19.56 per share with 2.78 million shares changing hands.
The company has a 52-week trading range of $8.96-$25.37 per share and has 694.45 million shares outstanding.
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