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How Kinross Gold’s Recent Operational Updates Affect Its Future

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Aug. 29 2016, Published 9:15 p.m. ET

Kinross’s operational update

On August 26, 2016, Kinross Gold (KGC) gave operational updates on its Bald Mountain mine in Nevada, its Tasiast mine in Mauritania, and its Maricunga mine in Chile. The updates were a modest positive, as the Tasiast expansion is back on the table while the operations at Maricunga were suspended. In addition, the company received regulatory approvals for the expansion of mine facilities and increased exploration activities at Bald Mountain. While the announcements on Tasiast and Bald Mountain are positive, the suspension of Maricunga operations is a slight negative for the company.

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Kinross’s operational update

In its 2Q16 results, the company delivered worse-than-expected earnings per share. Higher-than-anticipated costs and lower-than-expected volumes led to the miss. The Tasiast and Maricunga suspensions fueled both factors.

Year-to-date performance

While Kinross Gold has outperformed its peers from the start of the year until April, the relative advantage has somehow vanished since then. One of the probable reasons is the company’s operational issues at its Tasiast and Maricunga mines. It has risen 127% year-to-date as of August 26, 2016. The VanEck Vectors Gold Miners ETF (GDX), on the other hand, has recorded a gain of 93% in the same time period.

By comparison, Barrick Gold (ABX), Agnico-Eagle Mines (AEM), Newmont Mining (NEM), and AngloGold Ashanti (AU) rose by 135%, 95%, 116%, and 138%, respectively.

In this series, we’ll discuss Kinross’s recent operational updates in detail as well as their implications for the company’s future.

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