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Why Kinross Gold Stock Plunged despite In-Line Earnings

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Kinross Gold’s Q2 2018 earnings

Kinross Gold (KGC) released its Q2 2018 results after the market closed on August 1 and held the conference call the next day. It reported EPS of $0.03, which was in line with the consensus estimate. Its revenues of $775 million, however, missed analysts’ expectations by 6%.

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Peer results

Most of Kinross’s peers have already reported their Q2 2018 results. Barrick Gold (ABX)Goldcorp (GG), and Agnico Eagle Mines (AEM) missed their earnings estimates. Agnico Eagle Mines missed its earnings estimate by a wide margin and reported EPS of $0.01. The consensus estimate was $0.08. Goldcorp and Barrick Gold reported EPS of $0.02 and $0.07, respectively, and missed the estimates by $0.06 and $0.04, respectively. They released their results on July 25 after the market closed. Newmont Mining (NEM), on the other hand, reported an earnings beat.

Negative stock momentum

Kinross stock closed 4.2% lower after the conference call on August 2. Despite in-line earnings, investors were disappointed with lower revenues due to lower production. Its costs were also higher than expected. It announced a temporary halt to expansion work at its Tasiast mine in Mauritania following a request from the government to talk about improving the country’s economic benefits from KGC’s activities.

As of August 2, KGC has fallen 20.8% YTD (year-to-date) compared to a 9.9% fall for the VanEck Vectors Gold Miners ETF (GDX). Among its closest peers, Goldcorp and Newmont Mining have reported returns of -4.7% and -3.4%, respectively. Barrick Gold (ABX) has returned -24.4% in the same period.

Series overview

In this series, we’ll look at Kinross Gold’s Q2 2018 results. We’ll also look at its production and cost performances. We’ll cover recent developments for some of its projects, especially the halt at its Tasiast Phase Two expansion and what these developments could mean for investors.

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