Kinross Gold (K-T, KGC-N) built its second quarter financial strength on a simple old formula: produce more gold, sell more gold and get more for the gold you sell.
The company managed record gold production and record revenues in the quarter with production of 560,479 gold equivalent oz. and revenues of US$598.1 million. For the same period last year the company produced 406,032 oz. of gold and brought in US$298.7 million in revenues.
Fuelling that surge in revenue was an average realized gold price of US$915 per oz. For the same period last year the company earned US$903 per oz and the increased production helped drive total gold ounces sold to 651,390 gold equivalent oz. from just 330,633 oz. for the same period last year.
On the cost side, the news was also good. Gold was produced at an average cost of US$434 per oz, down 7% from last years US$466 per oz. figure.
Unsurprisingly, all of those metrics led to a record margin per ounce sold of US$481 per oz.
But the news wasn’t all good as net earnings for the quarter were actually off a bit a 3¢ per share compared with 4¢ from the year previous. Adjusted net earnings however were up to 12¢ from 8¢ per share.
Production guidance was also lowered slightly to 2.3 to 2.4 million oz. for 2009, and Kinross blamed a longer than expected ramp-up at its Paracatu mine expansion.
One final note of good news for Kinross investors was the announcement of a 25% increase to the dividend. Kinross will now pay investors a dividend of 5¢ per common share, saying such an increase reflected higher gold prices, strong cash flow and a positive outlook for the Company’s performance going forward.
With gold trading lower Kinross’ shares finished the day down 16¢ at $21.10 on 2.1 million shares traded.
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