Analysts at Stifel GMP have revised their guidance for Kinross Gold Corporation (TSX:K) after the precious metals producer highlighted higher-than-expected cash costs in its 2023 guidance, released alongside its fourth-quarter 2022 results.
The analysts noted Kinross’ total cash guidance for 2023 at $970 per ounce and its all-in sustaining cost (AISC) at $1,320 per ounce were well above their forecast for cash cost of $881 per ounce and forecast for AISC of $1,254 per ounce.
“On our first look, we estimate higher cash costs in 2023 will negatively impact our 2023 cash flow per share estimate by approximately 5% to 8% and lower our free cash flow by approximately $100 million,” the analysts wrote in a note.
They added that Kinross’s 1Q production outlook was largely as expected, with a forecast production of 2.1 million ounces.
Regarding Kinross’ fourth quarter results, the analysts wrote that more ounces produced and sold drove higher quarterly earnings results than forecast, with insurance proceedings of $77 million related to the 2021 Tasiast mill fire boosting 4Q free cash flow.
Headline adjusted earnings per share of $0.09 came in above the analyst’s estimate of $0.07, largely driven by a better top line with 34,000 ounces sold above the analysts' forecast.
Stifel's analysts noted that Kinross ended 2022 with production of 1.96 million ounces, just shy of revised guidance of about 2 million ounces after what they described as “another challenging year.”
Overall, the analysts noted that the impact of Kinross’ latest results and guidance was “negative.”
“Although 4Q came in better than our estimates and consensus with free cash flow boosted by higher ounces and insurance proceedings, we believe investors will focus on the 2023e higher cash cost/AISC guidance as well as year-over-year reserve depletion,” they concluded.
Kinross’ US-listed rose in pre-market trading on Thursday, up 2.8% at US$4.04. However, its Canadian-listed shares were down 5.1% at C$5.25 at the close yesterday.
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