Kinross Gold Earnings: Production Likely To Increase Over Remainder of 2023

No-moat Kinross Gold’s K 2023 first-quarter earnings were solid and in line with our expectations. Adjusted net profit rose 27% compared with the first quarter of 2022, to about USD 88 million, or USD 0.07—around CAD 0.09—per share. Adjusted EBITDA of around USD 360 million was roughly one-third higher than last year, driven by increased sales. Sales rose 27% to roughly 490,000 gold equivalent ounces, or GEO, compared with the same quarter of 2022, largely reflecting higher production. Kinross’s La Coipa gold and silver mine in Chile only restarted in the first quarter of 2022, but is now close to full capacity while output increased at the Paracatu mine in Brazil. Kinross’s average realized gold price of about USD 1,900 per ounce and unit cash costs of around USD 990 per GEO were both similar to the first quarter of 2022.

We retain our fair value estimate for no-moat Kinross of USD 5.20 per share. The company’s solid first-quarter production was nevertheless affected by planned shutdowns at its Tasiast and La Coipa mines. With full production from these mines as well as likely higher production at Kinross’s other mines due to seasonal factors over the remainder of the year, we continue to forecast attributable production of about 2.1 million GEO in 2023. The Tasiast and Paracatu mines account for just over half of our forecast. We also continue to forecast unit cash costs of roughly USD 980 per GEO in 2023. The company’s balance sheet is solid, but modestly more leveraged than its peers, with net debt of about USD 2.2 billion or 1.6 times trailing 12 months EBITDA. Kinross will pay a USD 0.03—or CAD 0.04—dividend in June and we forecast total 2023 dividends of USD 0.12—CAD 0.16—for a 2.3% yield. Kinross also intends to repurchase shares under its share buyback program through 2023. With its shares trading close to fair value, we think repurchases are likely to be value-neutral.