November 14, 2013 / 2:52 AM / 5 years ago

Kinross Gold makes more cost cuts as earnings fall

(Reuters) - Kinross Gold Corp (K.TO) said on Wednesday it is making further cuts to its employee numbers and capital spending as the Toronto-based gold miner reported a steep drop in third-quarter earnings, hurt by weaker gold prices.

People look on during the Kinross Gold Corporation annual general meeting for shareholders in Toronto, May 9, 2012. REUTERS/Mark Blinch

The company, one of the world’s 10 biggest gold producers, said it had identified around $20 million in expected annual cash savings, primarily from laying off workers.

Kinross and other gold miners have promised to slash costs as they grapple with tumbling profits caused by a steep decline in the gold price over the past year, as well as soaring mine development costs. Gold prices, trading at $1,272 on Wednesday, have fallen 24 percent this year.

Kinross is chopping around 1,000 jobs overall this year, many of them as part of already announced cost-cutting initiatives, said company spokesman Steve Mitchell. Most of the job cuts have already been implemented.

Kinross, which employs around 9,000 people, last month said it was cutting 300 jobs in Spain and Africa’s Mauritania.

To save money, Kinross will merge its North and South American regions into a new Americas region, close its Reno, Nevada office and “downsize” its administrative offices in Chile and Brazil.

“We continue our focus on reducing capital and other costs in a lower gold price environment,” Kinross chief executive Paul Rollinson said in a statement.

The miner has also identified a further $50 million in capital savings for 2013, on top of the $150 million it announced previously. The company now expects its 2013 capital spending to be about $1.4 billion.

Kinross said it expects its 2014 capital expenditures to be sharply lower - in the range of $800 million to 900 million.

Earnings at Kinross fell to $46.9 million, or 4 cents a share, in the three months to end-September on the back of weaker gold prices compared with earnings of $226.2 million, or 20 cents a share, in the same quarter a year earlier.

Adjusted net earnings from continuing operations was 5 cents a share, down from 22 cents a year ago.

Analysts, on average, expected earnings of 4 cents a share, according to Thomson Reuters I/B/E/S.

Kinross increased its 2013 production forecast slightly to a range of 2.6 to 2.65 million gold equivalent ounces from a previous forecast of 2.4 to 2.6 million gold equivalent ounces.

Kinross’ total attributable gold equivalent production in the quarter edged higher to 680,580 ounces from 672,173 ounces a year ago.

The miner’s average realized gold price at continuing operations fell to $1,331 per ounce from $1,649 a year earlier.

Kinross’ all-in sustaining costs on a by-product basis rose to $1,069 an ounce from $1,021 a year ago, partly due to lower silver revenue and increased production costs.

Kinross said it expects to be at the lower end of its 2013 all-in sustaining cost forecast of $1,100 to $1,200 per ounce sold.

Last quarter, Kinross took a $2.29 billion after-tax, non-cash impairment charge which it said was largely due to the lower gold price, including a $1.33 billion charge linked to the carrying value of its Tasiast gold mine in Mauritania.

Kinross’ stock is down 50 percent this year, in line with other large gold producers.

Reporting by Nicole Mordant in Vancouver; Editing by Bernard Orr

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