February 18, 2009 / 11:40 PM / 9 years ago

WRAPUP 1-Kinross, Agnico raise gold output but results mixed

* Kinross falls to steep loss on $1 bln charge * Agnico profit sags on higher costs, lower prices * Results kick off fourth-quarter reporting season (In U.S. dollars, unless noted)

By Cameron French

TORONTO, Feb 18 (Reuters) - Kinross Gold (K.TO) and Agnico-Eagle Mines (AEM.TO) reported mixed results on Wednesday, as gold production soared but profits were eroded or erased by writedowns and the impact of plunging base metal prices.

The results for the two Canadian miners kick off a fourth-quarter gold reporting season that is expected to show results squeezed by plunging prices of byproduct base metals, even as gold now pushes back toward the $1,000 level.

Kinross posted a $968.8 million loss in the quarter as it took a $1 billion charge largely to write down assets acquired in its 2007 acquisition of Bema Gold. Kinross acquired the Kupol mine in Russia and a stake in the Cerro Casale deposit in Chile with the takeover.

It lost $1.47 a share, compared with a profit of 29 cents a share in the year-before period.

Stripping out the writedown, which Kinross warned of in January, as well as other small items, it earned 9 cents a share, just shy of expectations of 10 cents a share profit.

Revenue climbed 72 percent to $484.4 million, as gold equivalent production rose 43 percent to 550,221 ounces, while costs per ounces retreated 11 percent to $375.

Realized gold prices were virtually flat at $794 an ounce, compared with $796. The metal XAU= has surged into the new year, and was around $985 an ounce on Wednesday.

Both Kinross and Agnico have been steadily raising their annual production and have also gone to equity markets lately to raise funds.

Kinross, which recently acquired the Fruta del Norte property in Ecuador and the Lobo-Marte site in Chile, has said it plans to continue to use acquisitions for growth, although Chief Executive Tye Burt acknowledged the pace of takeovers of late has not been as brisk as some had predicted.

“I think it’s important to retain discipline on these things,” he said on a conference call, noting that the wide valuation gap between large and small miners has of late begun to narrow somewhat.

Agnico, whose current production profile looks to plateau in 2010, plans to focus its efforts on exploring for more resources on its current properties, Agnico CEO Sean Boyd said on a separate call.

“We don’t have to make a major acquisition to grow the company,” he said.


Agnico earned $21.9 million in the latest quarter, a drop of two-thirds from the year-before period, due to higher mining costs, lower realized gold prices, and the impact of plunging copper and zinc prices, which Agnico uses to offset its gold mining costs.

Stripping out charges, the company earned nil per share.

Gold production rose 49 percent to 89,630 ounces, while cash costs soared to $463 an ounce from $184, due to the lower copper and zinc offsets.

Taking out the impact of the lower base metal prices, including downward revisions to sales recorded in the third quarter, but finalized in the fourth quarter at lower prices, cash costs would have been below $300 an ounce.

Also hurting results was a retreat in realized gold prices to $789 an ounce from $895.

Agnico shares have more than doubled since the end of October, and closed at C$67.30 on Wednesday. Kinross, which has risen at about the same pace, closed at C$24.43. Results for both companies were released after markets closed.

$1=$1.26 Canadian Reporting by Cameron French; editing by Rob Wilson

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