TORONTO (CP) -- Kinross Gold Corp. [NYSE:KCG; TSX:K] is forecasting its gold output will rise 60% by 2009, with 40% produced for less than US$200 an ounce. CEO Tye Burt, a former Barrick executive, says it will be much lower than most industry competitors.
Kinross has seen its share value increase steadily over the past two years - a turnaround seen since the installation of Burt. Shares in Kinross were last trading up 65 cents to C$15.19 on the Toronto Stock Exchange Wednesday afternoon, a rise of over 125% from two years ago at C$6.70.
Burt told shareholders at the Kinross annual general meeting Wednesday that the company's recent C$2.8-billion all-stock deal to take over Bema Gold Corp. - which brought with it the open-pit Kupol gold project in northeastern Russia - is powering up its cash flow and will help Kinross with its strategy of increasing low-cost production.
The Kupol mine will represent about 8% of the company's gold reserves.
Kinross, the fourth-largest primary gold producer in North America, expects to produce 1.7 million ounces in 2007, but expects to boost that to about 2.1 or 2.1 million ounces next year, and to about 2.6 or 2.7 million in 2009.
''We are in the sweet spot of our industry,'' Burt said, adding he feels the company is in a unique position, compared with its rivals.
Burt said the company is seeing its costs declining, while others in the industry are seeing costs increase.
He also said Kinross stock has outperformed gold prices, unlike companies such as Barrick.
Kinross, which reports in U.S. dollars, said its earnings amounted to 11 cents per share for the three months ended Dec. 31, compared with a year-earlier net loss of $154.3 million or 45 cents per share.
Kinross, with eight mines and 4,000 employees, reported full-year 2006 net income of $165.8 million, 47 cents per share, up from a 2005 net loss of $216 million. Revenue was $905.6 million, up from $725.5 million.
''It's a year we're very proud of,'' Burt said.
Thom Boehlert, chief financial officer, said Kinross's financial performance last year was above expectations. Gold prices were 35% higher in 2006, from the year before, but costs were only 16% higher, resulting in a significant increase in profit margins.
The company is planning $450 million in capital spending this year - not including the Kupol project in Russia - of which $260 million relates to the Paracatu expansion, $60 million to the Buckhorn project and $100 million to sustaining capital.
''The goal of these expenditures is to grow our production while reducing our costs,'' he said. The company said gold production costs at the Russian project are in the range of US$130 per ounce.
Kinross will also focus on Bema's Cerro Casale site in Chile, described as one of the world's largest undeveloped gold and cooper deposits.
Kinross is to release its first quarter results on May 7.
(c) The Canadian Press 2007
