Gold miner Kinross Gold Corporation KGC reported a net loss of $841.9 million (or 73 cents per share) for the fourth quarter of 2015, narrower than a net loss of $1,473.5 million (or $1.29 per share) in the year-ago quarter. The reported net loss includes a non-cash, after-tax impairment charge of $430.2 million and $235 million of write down of inventory and other assets.

Adjusted loss (excluding one-time items) was 6 cents per share compared with adjusted loss of a penny incurred in the year-ago quarter. The loss was wider than the Zacks Consensus Estimate of a loss of 5 cents.

For full-year 2015, net loss came in at $984.5 million or 86 cents per share compared with a loss of $1,400 million or $1.22 per share in 2014.

djusted net loss was $91 million in 2015, or 8 cents per share. In 2014, the company posted adjusted earnings of $131.1 million or 11 cents per share.

Revenues decreased roughly 10.8% year over year to $706.2 million in the reported quarter due to reduced gold sales and lower average realized gold prices. Revenues, however, beat the Zacks Consensus Estimate of $650 million.

For 2015, revenues came in at $3,052.2 million compared with $3,466.3 million in 2014.

Operational Performance

Attributable gold production was 623,716 equivalent ounces for the quarter, down around 7.2% year over year. The decline was primarily due to temporary curtailment of milling operations at Paracatu and lower mill grades at Chirano.

Production cost per gold equivalent ounce fell to $688 in the quarter from $714 in the prior-year quarter, mainly due to lower cost per ounce across Kupol, Round Mountain and Maricunga mines. Margin per gold equivalent ounce sold was $420 in the fourth quarter, down 13.8% year over year.

Financial Review

Adjusted operating cash flow was $203.8 million, down 6.2% from $217.2 million in the prior-year quarter. Cash and cash equivalents were $1,043.9 million as of Dec 31, 2015, up from $983.5 million as of Dec 31, 2014.

Long-term debt declined around 13.3% year over year to $1,731.3 million.
Capital expenditures fell to $160.7 million in the quarter from $189.4 million in the prior year quarter because of reduced spending at Paracatu and Tasiast.

Growth Projects

Kinross stated that it is finalizing studies on a two-phase expansion plan to realize significant growth potential of the Tasiast mine amid the prevailing gold price environment. The company has completed a pre-feasibility study and is moving ahead with the Moroshka project.

Acquisition of Nevada assets

On Jan 11, 2016, Kinross concluded the acquisition of 100% of the Bald Mountain gold mine from Barrick Gold Corporation ABX for $610 million in cash. The deal includes one of the biggest land packages in Nevada, and 50% of Round Mountain that Kinross did not already own. The purchase price is subject to a typical working capital adjustment.

Bald Mountain, a high-quality brownfield opportunity, will be a key part of Kinross' exploration program for 2016, with roughly $6 million of the exploration budget allocated for the site.

2016 Outlook

For 2016, Kinross expects to produce a record 2.7–2.9 million gold equivalent ounce from its operations versus 2.59 million gold equivalent ounce produced in 2015. The expected increase is primarily due to the acquisition of Bald Mountain and the 50% of Round Mountain. The guidance also takes into account the potential for a temporary curtailment of mill operations at Paracatu due to a lack of rainfall in south central Brazil.

Production in the second half of 2016 is expected to be higher than the first primarily because of mine sequencing at Tasiast and the seasonal impact on the heap leach across Fort Knox, Bald Mountain and Round Mountain.

Production cost of sales per gold equivalent ounce is expected in the range of $675–$735 for 2016, mainly as a result of favorable currency and oil price movements. The company anticipates all-in sustaining cost of $890–$990 per gold equivalent ounce sold, and per ounce sold on a by-product basis, which is below 2015 full-year guidance.

Kinross currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked mining companies are AngloGold Ashanti Ltd. AU and Golden Star Resources, Ltd. GSS, both carrying a Zacks Rank #2 (Buy).

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