Why Kinross Gold’s Production Growth Could Remain Muted for Years


Mar. 13 2019, Published 11:01 a.m. ET

Production growth

Kinross Gold (KGC) produced 610,152 gold equivalent ounces in the fourth quarter, a decline of 6.5% YoY (year-over-year). 

The major reason for the company’s lower fourth-quarter production was lower production at its Fort Knox and Bald Mountain mines partially offset by record production at its Tasiast and Paracatu mines.

Kinross’s full-year production also declined 8% YoY to 2.45 million ounces in 2018. Many detractors were responsible for the decline. These detractors included a decline in grades at Kupol, a pit wall slide in the first quarter and higher-than-average rainfall in the second half of 2018 at Fort Knox, and the completion of mining activities at Kettle River-Buckhorn.

What’s more disappointing is that Kinross’s production profile has been on a declining trend, as we can see in the graph above.

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Kinross Gold’s 2018 production came within its guidance of 2.5 million ounces with a 5% variance on either side. In line with these data, the company expects to produce 2.5 million ounces plus or minus 5% in 2019 as well. The company is guiding for lower production in the first quarter of 2019 compared to the rest of the year mainly due to the expected ramp-up of its Bald Mountain Vantage Complex and lower production at Fort Knox due to the operation’s mining and milling strategy.

Kinross is trying to replace maturing production through new growth projects. Its Tasiast expansion has been a major step in this direction. However, there aren’t many projects in the pipeline right now.

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


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