* Q2 EPS $0.18 vs yr-ago $0.34
* Adjusted EPS $0.13 vs yr-ago $0.21
* Proven and probable reserves up 23 pct in 2010
* Sees 2011 gold output up 10 pct over 2010 levels
* Forecasts higher costs due to decline in grades (Adds details on outlook; in U.S. dollars unless noted)
TORONTO, Feb 16 (Reuters) - Kinross Gold K.TO said on Wednesday its fourth-quarter profit fell nearly 11 percent, largely because of higher production costs.
The Toronto-based gold miner, however forecast a 10 percent increase in gold output in 2011, driven largely by acquisition related production gains. That also helped Kinross increase its proven and probable gold reserves by 23 percent in 2010.
Last year, Kinross acquired Africa-focused miner Red Back in a deal worth $7.1 billion, which transformed the Canadian miner from an intermediate player into one of the world’s top five gold producers.
The company cautioned that production costs in 2011 are expected to rise, due to a decline in grades at its existing mines, along with higher energy and labor costs.
Kinross said it expects 2011 production of between 2.5 million and 2.6 million ounces, while the cost of sales on a gold equivalent basis is projected to be in the range of $565 to $610 an ounce.
The company said proven and probable gold reserves at year-end 2010 had increased by 11.5 million ounces to 62.4 million ounces.
Net income in the quarter fell 10.7 percent to $210.3 million, or 18 cents a share, from $235.6 million, or 34 cents a share, a year earlier.
Earnings excluding one-time items slipped to $144.7 million, or 13 cents a share, from a profit of $148.6 million, or 21 cents a share.
$1=$0.99 Canadian Reporting by Euan Rocha; editing by Rob Wilson