TSX-listed senior gold miner Kinross Gold has reported a 20% increase in its second quarter revenue to $1-billion, compared with the $837.8-million during the same period in 2019.
Kinross, which owns mines in the US, Brazil, Chile, Ghana, Mauritania and Russia, produced 571 978 oz during the quarter, compared with 648 251 oz in the June quarter of 2019.
The decrease was attributed to lower production at Paracatu, in Brazil, Round Mountain, in the US, and Chirano, in Ghana, partially offset by higher production at Bald Mountain, in the US, and Kupol in Russia.
The miner’s net operating cash flow for the quarter increased 30%, to $432.8-million, compared with $333-million for the corresponding period in 2019.
Adjusted operating cash flow for the quarter increased significantly by 45%, to $416.9-million, compared with $287.7-million from the same period in 2019, primarily a result of an increase in margins.
Attributable margins increased 53%, to $987/oz, during the second quarter, compared to the 2019 second quarter margin of $644/oz sold.
Second quarter adjusted net earnings more than doubled, to $194-million, or $0.15c apiece – primarily owing to the increase in margins. This compares to adjusted net earnings of $79.6-million, or $0.06 apiece, for the corresponding period in 2019.
Reported net earnings also more than doubled to $195.7-million, or $0.16c apiece, during the second quarter, compared with net earnings of $71.5-million, or $0.06c apiece, during the corresponding period in 2019. The increase was mainly owing to higher operating earnings and a non-cash impairment reversal of $48.3-million at Lobo-Marte as a result of the addition of mineral reserves at the project in conjunction with the recently completed prefeasibility study, partially offset by the increase in income tax expense in the second quarter.
In terms of production cost of sales, Kinross recorded higher second quarter costs of $725/oz, compared with $663/oz for the corresponding period in 2019. Production cost of sales on a by-product basis also rose to $707/oz in the period, compared with $650/oz in 2019. These figures are based on second quarter attributable gold sales of 574 299 oz and attributable silver sales of 1 063 572 oz.
All-in sustaining costs (AISC) per gold equivalent ounce in the second quarter were $984/oz for gold, compared with $925/oz for the corresponding period in 2019. On a by-product basis, Kinross’ AISC for the quarter was $971/oz, compared with the $918/oz in the same period of 2019.
The average realized gold price in the second quarter increased 31%, to $1 712/oz, from the $1 307/oz achieved in the corresponding period of 2019.
Capital expenditure for the quarter was $214.3-million, compared with $275.8-million for the same period in 2019, owing to a decrease in spending at Tasiast, in Mauritania, as a result of the impacts of the pandemic on stripping rates, and decreases at Bald Mountain and Round Mountain.
In terms of its balance sheet, as of June 30, Kinross had cash and cash equivalents of $1.52-billion, which increased from $1.13-billion in the first quarter of the year. This quarter-over-quarter increase was the result of free cash flow generated during the second quarter and the $200-million drawdown from the Tasiast project financing.
The company has additional available credit of $811.2-million as of June 30, and total liquidity of about $2.3-billion, with no scheduled debt repayments until September 2021. The company has total debt of about $2.7-billion, which includes the $750-million drawdown from the revolving credit facility in the first quarter and the $200-million in Tasiast project financing, and net debt of about $1.1-billion. Kinross has further improved its debt metrics, including its net debt to earnings before interest, taxes, depreciation and amortisation ratio.
Further, Kinross drew down from its revolving credit facility in March as a precautionary measure to protect against economic and business uncertainties caused by the Covid-19 pandemic. The company repaid $250-million of the drawn amount on July 24, given the increase in the company’s cash and cash equivalents and its strong financial position, and does not plan to deploy the remaining funds.