UPDATE 2-Kinross reports net loss on mine writedown

Wed Feb 13, 2013 7:37pm EST

* Adjusted EPS $0.24 vs Street view $0.22

* Revenue up 29 pct

* Takes $3.21 billion charge on Tasiast, Chirano mines

By Julie Gordon

TORONTO, Feb 13 (Reuters) - Canada's Kinross Gold Corp reported on Wednesday a fourth-quarter net loss as an impairment charge related primarily to its Tasiast gold mine in West Africa outweighed a boost in revenue.

The gold miner took a $3.21 billion after-tax, non-cash impairment charge related to Tasiast in Mauritania and the Chirano gold mine in Ghana, both of which were acquired in the company's $7.1 billion takeover of Red Back Mining in 2010.

The writedown follows a $2.94 billion non-cash goodwill impairment charge in the fourth quarter of 2011, also related to the Red Back assets.

Chief executive J. Paul Rollinson, who took over the top job in August, played down the charge as an accounting requirement and noted the project remains a top priority for the company.

"This doesn't reflect our view of Tasiast's long-term potential," he said. "We see Tasiast as a very important asset for Kinross and something that should be a core asset and a big producer for a long period of time."

The West African mine produced 185,334 gold equivalent ounces in 2012, down from some 200,000 ounces in 2011. Kinross is reworking its expansion plan for the mine as it looks to clamp down on capital spending and risk.

The company forecast total capital expenditures in 2013 of about $1.6 billion, about $325 million less than in 2012. It plans to spend some $625 million of that on development work at Tasiast.

A prefeasibility study on the expansion project is due in the first quarter of 2013.

On the operating side, cash costs are set to climb in 2013, primarily due to higher consumable costs and lower grades at some of the company's mines.

"There are costs we can control and there are costs we can't control," said Rollinson. "And we're obviously very focused on what we can control."

The company is reviewing how it uses contractors and Rollinson said he would consider reducing output in order to focus on better quality ounces.

"The philosophy I'm trying to push here is quality over quantity," he said. "And quality might mean we produce less ounces, but our margins are better."

REVENUE SOARS

While the non-cash charge weighed on earnings, revenue soared in the fourth quarter as the company produced more gold and the price of the precious metal rose.

Gold output climbed 16 percent to 724,510 gold equivalent ounces in the quarter, while the realized gold price was up 7 percent at $1,707 an ounce.

Full year gold production rose 3 percent to 2.6 million ounces in 2012, up from 2.5 million ounces in 2011 and Kinross said it expects to produce 2.4 million to 2.6 million gold equivalent ounces in 2013.

Kinross reported a fourth quarter net loss of $2.99 billion, or $2.62 cents a share, in the quarter ended Dec 31. That compared with a year-ago loss of $2.79 billion, or $2.45 a share.

Excluding one-time items, the company reported a profit of $276.5 million, or 24 cents in the quarter, coming in ahead of analysts' average estimate of 22 cents a share, according to Thomson Reuters I/B/E/S.

Revenue for the quarter rose 29 percent to $1.19 billion, boosted by higher output and better gold prices.