The company had a second-quarter net loss of $3.2 billion, or $2.81 a share, compared with net income of $153.6 million, or 13 cents, a year earlier, Toronto-based Kinross said yesterday in a statement. Profit excluding impairments and other one-time items was 10 cents a share, beating the 6-cent average of 18 analysts’ estimates compiled by Bloomberg. Sales fell to $968 million from $1.01 billion a year earlier.
Gold-mining companies have announced at least $17 billion of writedowns in the past two months after the metal’s steepest quarterly drop in London trading in more than nine decades. Kinross said the impairment was largely related to lower short-term and long-term gold price assumptions.
The company has also reduced capital and exploration budgets, closed an office in Vancouver and reduced its staff in Toronto by 7 percent this year. That’s about 22 people, Steve Mitchell, a spokesman for Kinross, said by e-mail. Kinross said it’s evaluating other ways to reduce spending, which may include more job cuts.
“The speed at which the gold price has dropped has triggered other discussions and decisions,” Chief Executive Officer J. Paul Rollinson said yesterday in a telephone interview.
“We’ve taken $750 million out of the capital in the last 12 months,” Rollinson said. “I expect in a sustained gold price environment we will have some significant reductions for the 2014 spend as well.”
The company doesn’t expect to make a decision on whether to proceed with an expansion at its Tasiast mine in Mauritania until at least 2015.
Kinross, which had been paying a semi-annual dividend of 8 cents a share, decided to suspend the payments because of volatility in the gold price and to protect its liquidity, Rollinson said.
“We have a strong balance sheet and we wanted to keep it that way, that’s the bottom line,” Rollinson said. The decision will be revisited next year, he said.
The company also recorded a charge of $720 million, related to its decision to stop developing the Fruta del Norte mine in Ecuador. The company announced its decision on the project in June.
Kinross fell 1.1 percent to C$5.34 at the close yesterday in Toronto. The shares have dropped 45 percent this year.
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