DOING SOME DIGGING – Kinross on comeback trail

Toronto-based KINROSS GOLD looks to be on the comeback trail after three rough years. Early in 2003 when Kinross sw...
Toronto-based KINROSS GOLD looks to be on the comeback trail after three rough years. Early in 2003 when Kinross swallowed Echo Bay Mines and TVX Gold, the company's fortunes looked like they had no way to go but up. Then changes to Canadian accounting practices required the company to re-examine the way it treated the "good will" acquired with the two companies. Watching the string of press releases last year announcing updated and delayed financial statements, reissued results and postponed meetings was painful.

Through all the embarrassing delays, the assets underpinning Kinross have provided a sound foundation. The company is now the third largest primary gold producer in North America (1.44 million oz gold equivalent projected for 2006) and the seventh largest in the world. It has a stake in the Musselwhite mine and Porcupine joint venture in Ontario, the Fort Knox mine in Alaska, the Round Mountain mine in Nevada, the La Coipa and Refugio mines in Chile, the Paracatu and Crixas mines in Brazil, and the Kubaka mine in Russia.

Kinross has embarked on a growth strategy through expansion of its existing operations and acquisitions. By 2009 it plans to produce as much as 1.75 million oz gold equivalent. It has made an offer to acquire CROWN RESOURCES in Nevada, which the company says will allow it to restart its Kettle River mine in Washington. It also wants to proceed with the development of Crown's Buckhorn Mountain project in Nevada.

The company is also shedding two projects. It has sold the Aquarius project near Timmins, Ont., to ST ANDREW GOLDFIELDS of Toronto (CMJ Net News Jan. 4, 2006). And it is selling the suspended Lupin mine in Nunavut to WOLFDEN RESOURCES of Thunder Bay, Ont. (see below).

Kinross announced that 2005 was the fifth consecutive year it has increased its proven and probable reserves. They stood at 24.7 million oz at Dec. 31, 2005, up 27% over a year earlier. New reserves delineated in 2005 contain an estimated 9.1 million oz of gold, three times the number of ounces lost to depletion, sale of properties or reclassification. Contained silver in reserves stood at 24.4 million oz at the end of last year.

The company appears to have almost caught up with filing its financial statements. The unaudited figures for the first nine months of 2005 were made available in the middle of February. Kinross has revenues of US$535.5 million through the end of September 2005 (compared with a restated US$487.6 million for the same period in 2004). There was a net earnings loss of US$61.7 million for the first three quarters of 2005 (compared with restated earnings of US$24.9 million for the first nine months of 2004). Let us hope figures for the last three months of 2005 reverse the losing trend.

Kinross has been under a cloud during the time it has taken to sort out its financial reports, but the cloud is lifting. Perhaps 2006 will be the year it regains the respect it deserves.


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