Kinross narrows loss (November 09, 2001)

Kinross Gold (K-T) narrowed its losses on lower costs and improved gold production during the three months ended September 30.

During the quarter, the company’s loss tallied to US$8.7 million (or 3 per share), compared with a year-ago loss of US$14.3 million (6 per share). Revenues slipped to US$63.7 million, from US$66.5 million. Similarly, cash flow from operations fell US$8.2 million to US$$12.6 million.

For the first nine months of 2001, losses piled up to US$19.6 million (8 per share), an improvement on the US$32.9-million (13 per share) lost during the corresponding period of 2000. Cash flow from operations improved to US$58.7 million from US$35.4 million a year earlier.

Attributable gold production during the third quarter improved to 233,485 oz. from the year-ago 227,594 oz. Total cash costs fell US$11 per oz. to US$190 per oz. Production for the nine-month period increased by 3% to 706,559 oz. Total cash costs fell to US$191 per oz. from US$210 per oz.

Kinross sold its third-quarter production at US$304 per oz., up from US$297 per oz. the previous year. For the first three quarters of the year, the company averaged US$292 per oz. for its production, compared to US$302 per oz. in the same period of 2000.

The bulk of third-quarter production came from the Fort Knox mine in Alaska, which poured 101,610 oz. at a total cash cost of US$212 per oz., compared to the year-ago 88,838 oz. produced at US$206 per oz. So far this year, the mine churned out 306,700 oz. at US$197 apiece, compared with the year-ago 250,214 oz. at US$219 per oz. Expectations for the year have been lowered to about 415,000 gold equivalent oz. at slightly more than US$200 per oz. Planned production for 2002 is pegged at 450,000 oz.

A crown pillar recovery program on the 1060 zone was begun at the Hoyle Pond operations during the recent three-month period. The small-scale program is designed to provide supplemental production feed for the Bell Creek mill over the next six months. Hoyle Pond chipped in 37,967 oz. at US$175 per oz. during the quarter, up from 35,298 at US$187 per oz. the previous year. Next year the mine’s production is pegged at 143,000 oz.

Meanwhile at the 50%-owned Refugio mine in Chile, Kinross’ share of production fell to 8,455 oz, at US$304 per oz., down from the year-ago 16,469 oz. at US$320 per oz. Open pit mining at Refugio was suspended on June 1, and the mine is running in leach-only mode. All of the operation’s leased mining equipment has been disposed of.

Early in September, Kinross, which held 15.8% of Echo Bay‘s (ECO-T) outstanding capital securities, entered into lock-up agreements with Echo Bay to convert the debt into debt into common shares. Under the deal, Echo Bay would issue about 57.1 million to Kinross, giving Kinross an 11.4% stake in the company. A similar deal would see Franco-Nevada Mining gain a 49.5% stake in Echo Bay. Echo Bay’s current shareholders would retain about 28% of the company.

In late-September, Kinross inked a letter of intent to purchase Wheaton River Minerals‘ (WRM-T) George Lake project, near Bathurst Inlet in Nunavut, for 4 million shares, equivalent to about $6 million. Under a 1999 option deal, Kinross has been working toward earning a 70% stake in the project by spending $20 million before December 2004. About $6 million has been spent, mainly on outlining an indicated and inferred resource of 3.9 million tonnes grading 12.5 grams gold per tonne, or 1.6 million contained ounces at the Goose Lake deposit, the largest of six deposits at George Lake.

At the end of September, the company had US$72 million in cash and equivalents; long-term debt stood at US$39.6 million.

“For the first time since mid-1999 Kinross’ cash balance exceeds its long- term debt,” said Bob Buchan, Kinross’ CEO. “This is truly a result of the hard work of everyone at Kinross particularly considering the low market price of gold during this time period.”