WRAPUP 1-Market cheers as Canada gold miners boost divs, reserves

Thu Feb 16, 2012 5:36pm EST

* Dividend increases drive gains in Kinross, Agnico shares

* Market applauds exploration successes at Barrick, Goldcorp

* Barrick shares close up 1 pct, Goldcorp shares rise 4.5 pct

By Euan Rocha

TORONTO, Feb 16 (Reuters) - Canada's big gold miners reported uneven results this week but two dividend increases and successful exploration programs helped spur gains in their shares on Thursday.

Sharp dividend increases drove big gains in shares of Kinross Gold and Agnico-Eagle, even though both gold miners booked massive asset impairment charges in their quarterly results late on Wednesday.

Shares of the country's two biggest gold miners, Barrick Gold and Goldcorp, also rose but by a smaller margin, as both reported solid quarterly results and continued success in adding to their gold reserves through exploration.

Kinross and Agnico were among the top gainers on the Toronto Stock Exchange, with Kinross ending the day up 7 percent at C$11.07, and its smaller rival Agnico closing 7.2 percent higher at C$36.57.

The stocks of both Kinross and Agnico have been under pressure for months, largely due to operational problems and cost overruns. Shares of Kinross had fallen 36 percent over the last six months, while those of Agnico slid 46 percent in the same period.

As it signaled in January, Kinross booked a huge $2.94 billion noncash goodwill impairment charge related to its acquisition of the Tasiast and Chirano mines in West Africa. It acquired the gold mines in its $7.1 billion takeover of Red Back Mining in 2010.

However, the company announced a 33 percent increase in its semi-annual dividend payout. The new dividend will be 8 cents a share, payable to shareholders on March 31.

Agnico, which has similarly been plagued by operational woes at its Meadowbank mine in the Canadian Arctic, booked a partial writedown on the value of the asset.

The writedown capped a tough year for Agnico, which last October was forced to write off its investment in its Goldex mine in Quebec after the mine was shut down due to water inflow and ground stability concerns that made operating there unsafe.

Still, Agnico said its board signed off on a 25 percent increase in its quarterly dividend, lifting the payout to 20 cents a share.

The dividend increases were one of the factors that drove the big gains in Agnico and Kinross shares, said Morningstar analyst Joung Park.

"Agnico also took this opportunity to empty all the skeletons out of the closet because they knew it was going to be a bad quarter and a bad year, so they took the writedown and lowered guidance," he said. "It decreases the uncertainty and it removes the overhang of negative surprises going forward, as their intermediate-term guidance looks very reasonable now."

MAJORS STAY THE COURSE

Shares of Barrick, the world's largest gold miner, ended the day up 1 percent at C$48, while those of Goldcorp closed 4.5 percent higher at C$47.25 a share.

Vancouver-based Goldcorp said its proven and probable gold reserves increased 8 percent to 64.7 million ounces in 2011, while its measured and indicated gold resources rose 10 percent to 28.2 million ounces.

"We see continued opportunity for growth in the existing reserve base and I believe we have the opportunity to more than replace reserves when we calculate them at the end of 2012," Chief Executive Chuck Jeannes said in an interview.

Goldcorp reported a 23 percent increase in operating profit on Wednesday, topping expectations, as sharp gains in the price of bullion drove quarterly earnings growth.

Although Barrick's fourth-quarter profit failed to meet Wall Street's expectations, analysts were pleased with the company's continued success in its exploration program.

The Toronto-based gold miner said it was able to replace proven and probable reserves in 2011, keeping them just shy of the 140 million ounce mark, the largest gold reserve base in the world.

Barrick said it is continuing to enlarge its resources through new discoveries in Nevada: Goldrush and Red Hill. It has confirmed that the two deposits - now named the Goldrush complex - are a part of one large deposit with mineralization stretching over five kilometers (3 miles).

"Our growing high grade gold discovery in Nevada, Red Hill-Goldrush, clearly demonstrates the value that a focused and disciplined exploration program can create" said Chief Executive Aaron Regent.

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