Kinross Gold Corporation (TSX: K) reported strong third-quarter financial results for 2024, demonstrating improved revenue and record free cash flow. However, while Kinross benefited from higher gold prices and effective cost management, production numbers dipped compared to last year, and certain operational and cost figures raise questions about sustainability.
For the quarter ending September 30, Kinross generated $1.43 billion in revenue, a 30% increase from the $1.1 billion posted in Q3 2023. This jump largely resulted from a substantial 28% increase in the average realized gold price, which rose to $2,477 per ounce compared to $1,929 in the previous year. While Kinross capitalized on this favorable market, production declined 4% production decline from 585,449 to 564,106 gold equivalent ounces.
This production reduction stemmed primarily from scheduled lower output at Paracatu and reduced recoveries at Round Mountain’s heap leach operation, though these were somewhat balanced by new production from the Manh Choh project.
The production cost of sales rose to $976 per Au eq. oz. sold, an increase from $911 in Q3 2023. Additionally, Kinross’s all-in sustaining cost per Au eq. oz. increased to $1,350 from $1,296 year-over-year.
The firm also reported a margin increase of 47% per ounce sold, reaching $1,501 for the quarter—well above the $1,018 margin achieved in Q3 2023, outpacing the rise in gold prices.
Operating cash flow for the quarter was robust, totaling $733.5 million, nearly doubling the $406.8 million from the same period in 2023. Kinross’s attributable free cash flow reached a record $414.6 million, three times the $137.7 million posted in Q3 last year. This sharp rise in cash flow has allowed Kinross to further reduce its debt, repaying $350 million on its term loan in Q3 and an additional $100 million after quarter-end.
While debt reduction strengthens the balance sheet, Kinross has so far repaid only 65% of its $1 billion term loan in 2024.
Net earnings for the quarter showed impressive gains, with Kinross reporting $355.3 million or $0.29 per share, up from $109.7 million, or $0.09 per share, in Q3 2023. After adjusting for one-time items, including a $74.1 million reversal of impairment charges, adjusted net earnings were $298.7 million or $0.24 per share, more than doubling from the $144.6 million or $0.12 per share recorded last year.
The company’s balance sheet has certainly strengthened, supported by Kinross’s $472.8 million cash reserve as of September 30, an increase from $352.4 million at year-end 2023. Total liquidity stands at approximately $2.1 billion, underpinned by $1.65 billion in available credit.
Kinross’s current dividend policy, which saw a $0.03 per share quarterly dividend declared, reflects its strategy to return cash to shareholders, yet its total payout remains modest, potentially indicating management’s caution in light of possible market fluctuations.
The company recently released a Preliminary Economic Assessment for Great Bear projects annual production over 500,000 ounces at an all-in sustaining cost of $800 per ounce during the first eight years.
Kinross Gold last traded at $13.90 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
