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Can Kinross Gold Sustain Its Price Momentum after 3Q17 Results?

PART:
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Part 2
Can Kinross Gold Sustain Its Price Momentum after 3Q17 Results? PART 2 OF 7

Kinross Gold’s Production Fell in 3Q17: Could 4Q17 Be Better?

Production growth

Kinross Gold (KGC) produced 653,993 gold equivalent ounces (or GEOs) for 3Q17, which is 4% lower than 3Q16. Lower production could be mainly due to the following:

  • temporary curtailment at Paracatu
  • lower grades at Kupol
  • suspension of mining and crushing activities at Maricunga

Kinross Gold&#8217;s Production Fell in 3Q17: Could 4Q17 Be Better?

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Regional production

The Americas region contributed 59% to Kinross Gold’s GEO production in 3Q17. In that region, production fell 7% YoY (year-over-year). In the region, the Bald Mountain and Round Mountain mines were the main contributors to production growth, forming 52% of production. Production at Bald Mountain rose 147% YoY to 80,677 ounces in 3Q17. That was the mine’s record quarterly production. High grades and an increase in tons placed on the heap leach pads were the main reasons behind the record production. Bald Mountain seems to be on track to achieve double annual production in 2017 compared to 2016. Production at Round Mountain rose 30% YoY due to high mill grades and higher recoveries.

In Russia, production fell 18% YoY. Lower production was anticipated due to lower grades.

In the West African region, production rose 32% YoY in 3Q17, mainly due to Tasiast’s strong performance. Tasiast production rose 78.4% YoY. Higher mill grades and the temporary suspension of mining last year led to the significant increase YoY. Even at Chirano, production was higher due to better mill performance, a more stable supply of electricity, and higher grades.

Production guidance

While Kinross Gold maintained its production guidance of 2.5 million–2.7 million ounces for 2017, it said production is tracking toward the higher end of its guidance. The company’s outlook reflects the potential curtailment at Paracatu. Strong performances from Maricunga, Kettle River-Buckhorn, and Round Mountain year-to-date are helping strengthen the company’s portfolio.

Kinross’s peers (GDX) (GDXJ) are also trying to raise their production levels. Goldcorp (GG), Newmont Mining (NEM), Agnico-Eagle Mines (AEM), and Eldorado Gold (EGO) all have stable production profiles.

Now that we’ve looked at Kinross Gold’s production progression in the near term, let’s look at its production outlook in the medium to long term.

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