KGC’s underperformance

After underperforming its peers (GDX) (NUGT) in 2018, Kinross Gold (KGC) has continued that underperformance this year. Its stock had returned 1.3% YTD (year-to-date) as of February 12.

KGC’s YTD return is lower than those of its peers Barrick Gold (GOLD), Goldcorp (GG), and Yamana Gold (AUY), which have returned 1.9%, 12.3%, and 12.5%, respectively. The VanEck Vectors Gold Miners ETF (GDX) has returned 7% in the same period.

Investors Are Awaiting This Update from Kinross Gold’s Q4 Results

Kinross’s earning results

Kinross is scheduled to release its fourth-quarter earnings results on February 13 after the market closes. The company is expected to report revenue of $757 million and EBITDA of $218 million.

Kinross Gold’s third-quarter earnings results were a significant miss on market expectations. It reported EPS of -$0.04, a $0.04 miss on analysts’ consensus estimate. Its revenue of $754 million also missed analysts’ expectation by 4.3%.

Its costs were also higher than expected in the quarter, and it increased its guidance for its 2018 operating costs from $100 million to $130 million mainly due to tax-related items at its Tasiast mine and costs associated with the pit wall slide at Fort Knox.

Kinross Gold has maintained its AISC (all-in sustaining costs) guidance of $975 per ounce with a plus or minus 5% variance for 2018, which is largely in line with its 2017 AISC per ounce.

Update regarding Tasiast expansion

KGC announced a temporary halt to expansion work at its Tasiast Phase Two mine in Mauritania following a request from the country’s government to talk about improving its economic benefits from KGC’s activities. These geopolitical uncertainties are keeping analysts and investors on the sidelines.

KGC is also exploring alternative approaches to expanding its Tasiast mine to maintain functionality. The second phase was expected to boost its daily processing to 30,000 tons per day. Investors hope for a speedy negotiation process because this is Kinross’s main project—not only to replace its maturing production but also for future production growth.

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