Kinross Gold Corp. (KGC, Financial) reported its financial results for first-quarter 2017 on May 2.
The Canadian gold producer reported net adjusted earnings per share of two cents, flat from the same quarter of the previous year.
Revenue came in at $796.1 million, a 1.7% increase from the same quarter in 2016. The total volume of 652,516 ounces of gold equivalent sold during the first quarter, however, was lower than the 664,165 ounces sold in the comparable period of 2016.
The volumes of gold sold include Kinross' 10% non-controlling interest in Chirano.
The revenue increase is attributed to a higher average price of $1,220 for the sale of one ounce of gold compared to the prior-year quarter. In the first quarter of 2016, the average realized price for the sale of one ounce of gold was $1,179.
Kinross produced 671,956 ounces of gold during the quarter, down from 687,463 ounces in the same quarter a year ago, at a cost of $701 for one ounce of gold equivalent sold (up 2% on a year-over-year basis), an all-in sustaining cost (AISC) of $953 for the sale of one ounce of equivalent gold (down 0.3% year over year) and an AISC of $945 per ounce of gold sold on a byproduct basis (down 0.5% year over year).
Improved operating performance at the Fort Knox, Round Mountain, Bald Mountain and Tasiast mines, due to higher mill grades and tonnes of ore placed on the pads, only partially offset poor operating performance at Paracatu, Maricunga and Kupol.
Operating cash flow generated during the quarter was $250.9 million, an increase from $207.6 million in first-quarter 2016.
The miner closed the quarter with $819.0 million in cash and equivalents. Kinross also has a $1.433 billion line of credit, bringing the total liquidity to $2.3 billion. Total long-term debt is $1.73 billion as of March 31. Kinross’ long-term debt will mature after 2020, suggesting the company is well positioned to fund its growth.
In 2017, Kinross expects to produce between 2.5 million ounces and 2.7 million ounces of gold equivalent. The production cost of sales will range between $660 per ounce of gold equivalent and $720 per ounce. Â AISCs will range from $925 per ounce of gold equivalent to $1,025 per ounce.
Capital expenditures are expected to range between $855 million and $945 million.
Kinross Gold closed at $3.36 per share on Tuesday, down four cents or 1.18% from the previous trading day, with a volume of 14,719,830 shares traded on the New York Stock Exchange.
The gold stock is trading at 1.01 times the book value and at 5.25 times the EBITDA.
The recommendation rating is 2.9 out of 5. The rating ranges between 1.0 (Strong Buy) and 5.0 (Sell). The analysts’ average target price per share is $4.37, which represents a 30.1% upside from the current share price.
Disclosure: I have no positions in Kinross Gold Corp.
Start a free 7-day trial of Premium Membership to GuruFocus.
