KINROSS GOLD CORP (NYSE:KGC/TORONTO:K): FOLLOW-UP NO 3
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THE FOURTH LARGEST NORTH AMERICAN BASED GOLD PRODUCER
Business Summary
The merger of Kinross Gold Corporation with Amax Gold Inc. that became effective June 1, 1998 has brought Kinross to a new status as the fourth largest North American based gold producer, with annualized gold production estimated at more than one million ounces.
The combination of Kinross' mines and strong balance sheet with Amax Gold's efficient new open-pit mines has created a well-financed senior gold producer with estimated cash costs in the lowest quartile of world production.
The combined company will provide the elevated platform from which Kinross will continue to pursue an aggressive growth strategy.
Going forward, management will continue to give scope to its entrepreneurial vision and adhere to the principles through which Kinross has grown to its present size and status. Shareholders can expect nothing less.
Recent News: Kinross Returns to Profitability and Expands Reserves
Kinross Gold Corporation has announced the unaudited results for the three months and year ended December 31, 2003, as follows:
All results are expressed in United States dollars, unless otherwise stated, and are unaudited.
All per share information has been adjusted to give retroactive effect for the three for one consolidation of the common shares, which was completed on January 31, 2003. Accordingly, loss per share for the three months and year ended December 31, 2002, has been adjusted to give retroactive effect to the share consolidation. The combination with TVX Gold Inc. ("TVX") and Echo Bay Mines Ltd. ("Echo Bay") was accounted for as a purchase with an effective date of January 31, 2003. Accordingly, the financial statements and gold equivalent production statistics reflect operating results for the acquired properties for the months of February to December only.
Highlights
- Earnings per share of $ 0.09 for the fourth quarter and $ 0.06 for the full year in 2003
- Production of 1.62 million gold equivalent ounces at total cash costs of $ 222 per ounce
- Cash flow from operating activities of $ 106.4 million in 2003
- Increased proven and probable reserves by 7.5% to 14.1 million ounces of gold and by 19% to 38.6 million ounces of silver
- TVX and Echo Bay have been fully integrated into Kinross
- Growing pipeline of advanced exploration and development projects to sustain and grow future production
- Year-end cash balance of $ 245.8 million
- Long-term debt virtually eliminated
- Gold hedge book less than 2% of reserves, will be eliminated by early 2005
Bob Buchan, President & CEO, stated: "2003 was a very important transitional year for Kinross with the completion of the merger and subsequent integration of TVX and Echo Bay into Kinross. We have accomplished much in the last year, including: returning the company to a position of financial strength, growing our reserves, returning to profitability, achieving record annual production and being on the verge of eliminating our gold hedge book. We enter 2004 as a senior global gold producer with a strong North American platform. Approximately 50% of our expected 2004 production is based in the US and about 70% in North America. This platform has allowed us to pursue global opportunities to position the company for future growth. We have a robust pipeline of advanced exploration and development projects that will sustain our production and we are now very focused on those opportunities that will allow us to return to the growing production profile that has been the hallmark of Kinross since inception.
We are confident that 2004 will be an excellent year for Kinross and we look forward to our share price reflecting this reality."
Fundamental Considerations: A growing reserve base
and an exciting
should also draw institutional interest to this excellent company.
Technical Considerations
The gold price is firmly entrenched on its way towards $ 450 even though it may take some time to overcome the resistance zone around $ 400.
The share price of Kinross, after touching a recovering high of $ 9.29 at the end of last November, has been in a consolidation phase along with the gold price which, we believe, is slowly drawing to its end.
We think that the present weakness offers an excellent opportunity to accumulate shares of this company for those who like to invest in a senior North American gold producer.
Our recommendation: Buy!
Peter Zihlmann
www.pzim.com
investment@pzim.com
forex@pzim.com
March 22, 2004
Disclosure: The author has not been paid to write this article, nor has he
received any other inducement to do so. The author is a shareholder in the
company and will benefit from any increase in the company's share price.
Disclaimer: The author's objective in writing this article is to invoke an
interest on the part of potential investors in this stock to the point where
they are encouraged to conduct their own further diligent research. Neither
the information, nor the opinions expressed should be construed as a
solicitation to buy or sell this stock. Investors are recommended to obtain
the advice of a qualified investment advisor before entering into any transactions
in the stock.
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