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Kinross Is on Its Way to Achieve Its 2015 Production Guidance



Kinross’s production

In the uncertain gold price (GLD) (IAU) environment, gold miners are trying to increase their production levels at minimal additional costs through productivity and operational enhancements. Kinross Gold (KGC) is also trying to achieve higher production every quarter. It produced 681,000 ounces of gold in 3Q15.

Although Kinross Gold’s (KGC) 3Q15 production was slightly higher than market expectations, it declined by 2% as compared to 3Q14 due to lower production at several of its mines. While production at the Maricunga mine was impacted by lower ore placed on heap leach pads, production at Chirano and Kettle River–Buckhorn also declined due to lower grades. This lower production was offset to an extent by the increase in production at the Kupol–Dvoinoye, Round Mountain, and Fort Knox mines.

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Maintains full-year guidance

Kinross Gold maintained its annual guidance of 2.5 million–2.6 million ounces of gold production. Kinross’ midpoint of production guidance for 2015 implies a production level of 579,000 ounces in 4Q15. This is quite conservative given the company’s production for the first nine months of the year.

Kinross temporarily suspended the Paracatu’s Santo Antonio tailings reprocessing project due to water scarcity in south-central Brazil. Management estimated that the suspension would reduce production by a minimum of 22,000 ounces in 2015. During the call, management said that drought-like conditions in Paracatu could lead to a production loss of as much as 83,000 ounces if it doesn’t rain within the next week or two and if the curtailment continues through the end of the year.

Strong production by peers

Kinross’s peers, including Barrick Gold Corporation (ABX), Goldcorp (GG), Newmont Mining (NEM), and Agnico-Eagle Mines (AEM), also reported strong production growth in their latest quarterly reports. Newmont Mining (NEM) makes up 6.1% of the holdings of the VanEck Vectors Gold Miners ETF (GDX).


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