Kinross Gold Corp. - All You Need To Know About The Q4 2015 And Full 2015 Results

| About: Kinross Gold (KGC)

Summary

Kinross Gold released its 4Q'15 and full 2015 results on February 10. Production was 4.2% below 2014 with total revenues of $3.05 billion, down 11.95% year over year.

One positive, is that the company is forecasting a 2016 production back to the 2014 level, with a capital expenditure of $595 million 2.5% lower from 2015.

KGC is a good proxy for gold. However, I was suggesting an accumulation at or below $1.75 back in November 2015, and the PPS is 70% higher.

Kinross Gold (NYSE:KGC)

This article updates my preceding article on Kinross Gold, published on November 13, 2015.

Q4'15 and full 2015 - Balance sheet information:

Year

2015

Q4 2015 Q3 2015 Q2 2015

Q1 2015

Year

2014

Q4 2014

Production (Attrib.)

in Oz E.

2,594,652 623,716 680,679 660,897 629,360 2,710,390 672,051

Revenues in

$ Million

3,052.2 706.2 809.4 755.2 781.4 3,466.3 791.3

AISC in

$/Oz

975 991 941 1,011 964 973 1,006

Adjusted Operating Cash Flow

$ Million

786.6

203.8

206.6 161.4 214.8 1,023.8 197.6
Adjusted Operating Cash Flow $/share 0.69 0.18 0.18 0.14 0.19 0.89 0.17

Adjusted Net Earnings

$ Million

(91.0) (68.8) (23.9) (13.6) 15.3 131.1 (6.0)

Net Earnings

$ Million

(984.5) (841.9) (52.7) (83.2) (6.7) (1400.0) -

EPS

$/share

(0.86) (0.73) (0.05) (0.07) (0.01) (1.22) (0.01)

Impairment charge + Write down inventory

$ Million

699.0 674.5 0 24.5 0 1,251.4 1,251.4

Average realized gold price

$

1,159 1,108 1,122 1,194 1,218 1,263 1,201

Total Debt

$ Million

1,731.9 1,731.9 1,974.0 1,987.1 1,986.1 1,998.1 1,998.1

Total liabilities

$ Million

3,802.2 3,802.2 3,806.3 3,891.3 3,933.8 4,059.6 4,059.6
Capital expenditure $ Million 610.0 160.7 171.3 128.5 149.5 631.8 189.4

Cash and Cash equivalent

$ million

1,043.9 1,043.9 1,024.8 1,031.4 1,010.5 983.5 983.5

G & A in

$ Million

179.4 51.6 44.2 44.6 39.0 178.8 51.2

Finance expense

$ Million

96.0 26.4 21.9 23.7 24.0 80.1 29.4
Shares Outstanding in Million 1,146.54 1,146.54 1,146.3 1,146.3 1,145.1 1,144.58 1.145
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As of December 31, 2015, Kinross had cash and cash equivalents, excluding restricted cash, of $1,043.9 million, an increase of $60.4 million since December 31, 2014.The Company also had available credit of $1,506.0 million as of year-end 2015.

Kinross had cash and cash equivalents of approximately $600 million and available credit of approximately $1.3 billion after the close of the acquisition of the Nevada assets on January 11, 2016.

Kinross paid down debt by $80.0 million in 2015. Other than $250 million in senior notes, which are scheduled to be repaid by September 2016, Kinross has no debt maturities until 2019.

Outlook 2016 compared 2015 per region:

Total Americas West Africa (Attributable) Russia
2014 Production $ billion 2.739 1.441 0.547 0.751
2015 Production $ billion 2.595 1.3/1.4 0.39/0.46 0.71/0.76
2016 Production $ billion 2.7-2.9 1.67-1.77 0.36-0.42 0.67-0.71
% of total production (2015) 100% 61% 14% 25%
Capital expenditures $ Million 565-595 230 240 95
Production cost of sale $ 675/735 730/790 850/920 460/490
AISC $/ Au E. Oz $890 - $990 ($975 in 2015 - $973 in 2014)
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Production per mine per Quarter 2015 and Year over Year.

2015 4Q'15 3Q'15 2Q'15 1Q'15 2014
Fort Knox 401,553 87,561 115,258 116,061 82,673 379,453
Round Mountain 197,818 51,034 58,074 48,448 40,262 169,839
Kettle River - Buckhorn 97,368 19,301 24,222 29,580 24,265 123,382
Paracatu 477,662 113,547 129,064 110,366 124,685 521,026
Maricunga 212,155 54,948 52,672 47,713 56,822 247,216
Americas - 53.5% 1,386,556 326,391 379,290 352,168 328,707 1,440,916
Kupol 758,563 191,308 190,366 191,160 185,729 751,101
Russia - 29.2% 758,563 191,308 190,366 191,160 185,729 751,101
Tasiast 219,045 53,306 53,440 57,890 54,009 260,485
Chirano 90% 230,488 52,711 57,783 66,079 67,915 257,888
West Africa - 17.3% 449,533 106,017 111,223 110,570 121,924 518,373
Total 2,594,652 623,716 680,679 660,898 629,360 2,710,390
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Commentary:

Kinross Gold released its 4Q'15 and full 2015 results on February 10. Production was 4.2% below 2014 with total revenues of $3.05 billion, down 11.95% year over year. It was not a surprise due to the record low price of gold at $1,108/ Oz compared to $1,201/ Oz in 4Q'14.

The company released a 2016 production guidance between 2.7 to 2.9 M Oz AU Eq. Back to the 2014 level, which is a positive. 2015 AISC came at $975/ Oz, which is fair, however, the AISC was $991/ Oz in 4Q'15 which seems high. The company will have to monitor carefully why it cannot lower AISC to a level around $890-$910.

The company indicated an impairment charge and a write down of inventory of $674.5 million in 4Q'15.

One positive, is that the company is forecasting a 2016 production back to the 2014 level, with a capital expenditure of $595 million 2.5% lower from 2015.

This increase in production, year over year, will be even better if the gold price continues its recent recovery to now $1,198/ Oz with a fresh 8-month high.

Click to enlarge

However, many analysts are not totally convinced by this sudden rally and they do not expect it to continue much longer. It is not really my opinion so.

M. Rollinson, CEO, said in an interview, he's not completely relying on the recent rally in gold prices to continue, as investor's appetite for safe-haven assets are increased by a worrying sliding stock markets and global economic worries triggered by a collapse of oil.

The gold price has been great in the last couple of weeks, but it's a volatile world out there

The company has indicated it is advancing on the second development phase of the Tasiast mine in Mauritania. At Chirano mine, the company is targeting an extension of the open pit. Finally, at Kupol in Russia, A pre-feasibility study was completed at Moroshka.

The proven and probable reserves are staying constant from 2015 to 2016.

As 12/31/2015 Gold Silver Copper
Grade 0.7 g/t 4.1 g/t 0.22%
P1 + P2 reserve 33,955 Koz 40,982 Koz 1,444 Mlb
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Conclusion:

KGC is a very good proxy for gold, and depending on the overall situation, the price per share may still present a good opportunity, right now. However, I would wait until the PPS retreat a little. The market is quite shaky, due to the collapsing of the oil prices, now under $27 per barrel. Fear is spreading to the entire market, hence helping gold to shine again. The question is whether or not this rally can be strong enough to reverse the down trend?

However, I was suggesting an accumulation at or below $1.75 back in November 2015, and the PPS is now 70% higher.

Disclosure: I am/we are long KGC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I trade KGC also.