contrast iconcontrast icon search icon

Kinross announces 2006 first quarter revenue growth and earnings of $8.9 million

May 04, 2006

Paracatu project scope expanding

Toronto, Ontario - Kinross Gold Corporation (TSX-K; NYSE-KGC) ("Kinross" or the "Company"), announced today its unaudited results for the first quarter ended March 31, 2006.

(All dollar amounts in this press release are expressed in U.S. dollars, unless otherwise noted)

First Quarter Highlights

• Kinross sold 371,818 gold equivalent ounces in the first quarter of 2006. The Company remains on track to produce approximately 1.44 million gold equivalent ounces in 2006.

• Revenue was $198.3 million in the first quarter, a 10% increase over the same period last year. The increase was mainly due to the quarter-over-quarter increase in the average realized price of gold, partially offset by fewer ounces sold.

• The Company realized $532 per ounce of gold sold, an increase of 24% over the same period last year, at a cost of sales(1) of $327 per ounce, an increase of 20% over the first quarter of 2005, primarily as a result of higher costs at Porcupine and Musselwhite, the high cost of producing the final low-grade stockpiles at Kubaka as well as industry-wide cost pressures and the strengthening Canadian dollar and Brazilian real relative to the U.S. dollar. Kinross now expects cost per ounce of gold equivalent sold to be in the range of $305 - $315 for 2006.

• Net earnings of $8.9 million, or $0.03 per share, compared with a net loss of $0.9 million in the same period last year. Earnings include an expense of $9.4 million relating primarily to non-cash foreign currency translation losses on deferred tax liabilities.

• Cash flow from operating activities was $20.1 million in the first quarter.

• Capital expenditures were $34.7 million for the first quarter 2006 and the cash position was $84.1 million as at March 31, 2006 compared with $97.6 million at year end 2005.

• The Paracatu engineering study is currently being optimized and the scope of the project is increasing with higher production and lower operating costs than originally expected. Capital costs are expected to be at the high end of the previously announced range of $400 - $500 million. Details are expected to be released in mid-June subsequent to a Board meeting to review the project and optimization study.

• The Company moved forward with the Crown Resources transaction by filing a registration statement with the SEC.

• Kinross added to its management team with Tim Baker joining as Executive Vice President and Chief Operating Officer, Thomas Boehlert joining as Executive Vice President & Chief Financial Officer and Geoffrey Gold joining as Senior Vice President & Chief Legal Officer.

(1) Cost of sales per ounce is calculated by dividing cost of sales as per the financial statements by the number of gold equivalent ounces sold.

"Kinross is making substantial progress toward realizing our potential," said Tye Burt, President and Chief Executive Officer of Kinross. "Our revenue has risen more than our costs this quarter, leading to a higher cash margin. We have seen increased costs at two of our non-operated joint ventures, but expect that these costs will improve through the end of the year. Costs are also higher at the Kubaka mine as it is winding down operations. We have also experienced industry-wide cost pressures and the strengthening of the Canadian and Brazilian currencies. We will continue to focus efforts on our continuous improvement program in order to control costs. We are extremely pleased that the scope of the Paracatu expansion is expanding beyond our original expectations."

Pleasedownload the PDF for the full version of this newsrelease.

Click here to download the Q1 2006 report (PDF).

Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference in this press release, including any information as to our future financial or operating performance, constitutes "forward-looking statements". All statements, other than statements of historical fact, are forward-looking statements. The words "believe", "expect", "anticipate", "plan", "intends", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls, regulations and political or economic developments in Canada, the United States, Chile, Brazil or other countries in which we do or may carry on business in the future; business opportunities that may be presented to, or pursued by, us; operating or technical difficulties in connection with mining or development activities; the speculative nature of gold exploration and development, including the risks of obtaining necessary licenses and permits; and diminishing quantities or grades of reserves. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this press release are qualified by these cautionary statements. We refer the readers to our most recent annual information form, management discussion and analysis and other filings with the securities regulators of Canada and the United States for more details of the risks affecting Kinross. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable laws.

The technical information about the Company’s material mineral properties contained in this press release has been prepared under the supervision of Mr. Wes Hanson an officer of the Company who is a “qualified person” within the meaning of National Instrument 43-101.

Logo