Gold giant Kinross Gold (TSX:K) announced financial results last month for its fourth-quarter and year-end 2020. Investors are pleased with the company’s net earnings of $783.3 million (62 cents a share) in 2020. The Toronto-based company nearly doubled its net adjusted earnings in 4Q2020 with a boost from higher gold prices to $335.1 million (27 cents a share), compared with $156 million (13 cents a share) in 4Q2019.
Kinross was able to capitalize on a strong gold price despite 2020 being a unique and challenging year for everyone in the industry. In the middle of one of the most challenging years for the mining industry, Kinross had a free cash flow of more than $1 billion.
While balancing the restrictions and complications in operations, the company still met its original guidance for the ninth consecutive year and was able to declare a quarterly dividend of 3 cents per share for 4Q. While the company saw lower production for the quarter with 624,032 ounces down from 645,344 ounces in the 2019 quarter, the results were not hit significantly and investors responded well to the news. 2020 production hit nearly 2.37 million attributable gold equivalent ounces compared with 205 million ounces in 2019. The company has excelled at maximizing operations and surpassing guidance even with consistently lower production in 2020.
Management clearly has its eye on the ball and implemented operational and financial support to manage COVID-19 risks. The company implemented “…rigorous measures to keep our employees safe, maintain business continuity and support local communities,” Kinross President and Chief Executive Officer J. Paul Rollinson said in the earnings teleconference. He went on to thank employees worldwide for meeting the challenges.
With strong leadership during the challenging year, Kinross put together a comprehensive and efficient plan for managing the risks of the pandemic while continuing to maintain productivity and earnings. The company provided roughly $6 million in 2020 toward community efforts geared toward combating COVID-19 in areas where they operate mines. Some of the loss in revenues was a result of the extra costs and investments related to operations during the pandemic, but being able to balance those costs with successful mining operations puts Kinross in the lead for the industry for 2020.
The company made it clear that they are looking ahead to 2021 and beyond with optimism and forward-thinking production plans. In its exploration update, the company planned to spend $6.5 million on Bald Mountain Mine for exploration. The company will focus on drill testing targets identified in 2020 to look for deposits that may be converted to mineral resources later, turning some of the seeded work from last year into gains for the company in 2021.
$6 million in additional funds set aside for exploration at Round Mountain Mine, the first gold ounces produced at the Gilmore Project in January of this year, completed construction on the project on time and on budget, and spending of $120 million for all projects in 2021 is sure to build on last year’s performance.
The stock trades at $8.38 as of writing and has climbed steadily over the last 12 months. While the gains have been attractive, it is the consistent dividend and profitable performance of the company that still makes this an attractive investment. With even bigger plans for the company looking ahead to the bright side of 2021, Kinross Gold has its finger on the pulse of the operations and is in fantastic health.
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|Lincoln Minerals Limited