May 4, 2010 / 9:42 PM / in 7 years

UPDATE 2-Kinross Gold profit jumps, buys Red Back stake

* Q1 adj EPS $0.14 vs est $0.14

* Revenue rises 23 pct on strong gold prices

* Takes 9.4 pct stake in Red Back Mining (Adds details; in U.S. dollars unless noted)

TORONTO, May 4 (Reuters) - Kinross Gold’s K.TO net profit jumped 45 percent in the first quarter on stronger gold prices, the miner said on Tuesday, as it announced it was taking a 9.4 percent stake in Africa-focused Red Back Mining RBI.TO.

Kinross, which operates in the Americas and Russia, said it has subscribed for 24 million shares of gold miner Red Back in a private placement, at a total cost of C$600 million ($588 million).

At C$25 a share, the price is just above Red Back’s closing price of C$24.46 on the Toronto Stock Exchange.

The Red Back investment “enhances our leverage to the gold price and gives us a strategic stake in a fast-growing producer with great exploration potential, a first-class management team, and assets in one of the world’s most prolific gold regions,” Kinross Chief Executive Tye Burt said in a statement.

The move follows Kinross’s takeover during the quarter of explorer Underworld Resources for about C$140 million, and its purchase of the Dvoinoye project in Russia for $368 million.

Kinross also sold half of its 50 percent stake in the massive Cerro Casale gold project in Chile to Barrick Gold (ABX.TO).

The miner earned $110.6 million, or 16 cents a share, in the three months ended March 31. That compares with a profit of $76.5 million, or 11 cents a share, in the year-before period.

Adjusted earnings were 14 cents a share.

Analysts polled by Thomson Reuters I/B/E/S had expected, on average, a profit of 14 cents a share, before exceptional items.

Revenue rose 23 percent to $657.6 million, as realized gold prices climbed to $1,065 an ounce from $897, while gold production rose 3 percent to 544,134 ounces.

Cash costs per ounce rose about 10 percent year-over-year to $461.

Kinross maintained its 2010 production guidance of about 2.2 million ounces at costs of $460 to $490 an ounce.

Shares of the company closed up 0.9 percent at C$19.05 on the Toronto Stock Exchange. The results were released after markets closed.

$1=$1.02 Canadian Reporting by Cameron French, additional reporting by Abhiram Nandakumar in Bangalore; editing by Rob Wilson

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