BLBG:Kinross Gold Takes $3.1 Billion Writedown on Tasiast Mine
Kinross Gold Corp., Canada’s third- largest producer of the metal, took a $3.09 billion writedown on its Tasiast mine in Mauritania after it revised an expansion plan and industry capital and operating costs increased.
The company reported the impairment charge in its fourth- quarter earnings statement yesterday after the close of trading. Kinross took a $2.49 billion writedown on the same project in the year-earlier period. It acquired the mine as part of its C$8 billion ($7.99 billion) purchase of Red Back Mining Inc. in 2010.
“The impairment is a snapshot in time, it doesn’t necessarily reflect our view of the long-term potential of what this asset can be,” Chief Executive Officer J. Paul Rollinson said in an interview. “We believe this asset will be a core long-term asset for the company going forward.”
The company’s fourth-quarter net loss widened to $2.99 billion, or $2.62 a share, from $2.79 billion, or $2.45, a year earlier. Earnings excluding the Tasiast writedown and other one- time items were 24 cents, beating the 21-cent average of 21 analysts’ estimates compiled by Bloomberg.
Sales rose to $1.19 billion from $919.8 billion, beating the $1.17 billion average of eight estimates. Output increased 16 percent to 724,510 so-called gold-equivalent ounces, which includes silver production. The average of six estimates was for 635,900 equivalent ounces.
Kinross was up 1 cent at $7.90 at 6:23 p.m. in after-hours trading in New York yesterday.
Spending Cut
Rollinson, who was replaced Tye Burt as CEO Aug. 1, is seeking to lower production costs. They rose 8 percent in the fourth quarter to an average of $686 per ounce of gold from $635 a year earlier. The company forecast 2013 capital spending of $1.6 billion, compared with $1.92 billion last year.
“When I took over in August our capex for the year was advertised at $2.2 billion,” Rollinson said. “We’ve come into the 2013 budget with a very disciplined eye on our spending.”
Barrick Gold Corp. and Goldcorp Inc., Canada’s two biggest gold producers ranked by market capitalization and sales, are scheduled to report fourth-quarter earnings today.
To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net
To contact the editor responsible for this story: Liezel Hill at lhill30@bloomberg.net
