Gold miner Kinross Gold Corporation (KGC - Analyst Report) posted adjusted earnings of $70.1 million or 6 cents per share in the third quarter of 2014, up nearly 29% from adjusted earnings of $54.4 million or 5 cents per share in the year-ago quarter, aided by an increase in gold sales. Earnings per share surpassed the Zacks Consensus Estimate of 3 cents.

n a reported basis, Kinross posted net loss of $4.3 million, or a breakeven in the quarter, compared to net earnings of $46.9 million, or 4 cents per share posted in the prior-year quarter. Net loss in the third quarter of 2014 resulted from higher delayed non-cash income tax expense in Chile, partly offset by higher revenues.

Revenues increased roughly 8% year over year to $945.7 million in the reported quarter due to higher gold equivalent ounces sold from Russia. Sales came ahead of the Zacks Consensus Estimate of $840 million.

Operational Performance

Gold production was 693,818 equivalent ounces for the quarter, up around 2% year over year, mainly due to a rise in production at Maricunga, backed by processing of higher grade ore from the Dvoinoye mine, offset by the suspension of mining operations at La Coipa in Oct 2013. Average realized gold price was $1,268 per ounce, down 4.7% from the year-ago quarter.

Production cost per gold equivalent ounces fell 5.7% to $698 in the third quarter from $740 in the prior-year quarter due to sales of lower-cost gold ounces from Russia and cost-reduction measures taken by the company. All-in sustaining cost per gold equivalent ounces sold decreased 15% to $919 in the quarter from $1,082 in the year-ago quarter, mainly due to the decline in sustaining capital and exploration and business development costs, backed by higher sales of gold equivalent ounces.

Margin per gold equivalent ounce sold was $570 in the third quarter, down 3.6% from the year-ago quarter.

Financial Review

Adjusted operating cash flow was $312 million, up 21.7% from $256.4 million in the prior-year quarter. Cash and cash equivalents came in at $835.9 million as of Sep 30, 2014, down 10.3% year over year. Total long-term debt declined 3% year over year to $1,997.1 million.

Capital expenditures fell to $153.5 million for the reported quarter from $300.8 million in the comparable period last year. The decrease was due to lower spending at Tasiast and Fort Knox.

Growth Projects

Kinross, in Mar 2014, announced the Tasiast expansion feasibility study results. The study, which is based on an optimal mill size of 38,000 tons per day (t/d), produced promising results, indicating Kinross’ potential to generate significant additional cash flow per share and production at overall lower costs. The optimization of the project’s construction scope was mostly completed in the third quarter with no material changes. The project is under progress for securing financing. The company is expected to make a decision on the Tasiast mill expansion in 2015.

Kinross, on Oct 21, 2014, announced that it will ink an agreement with Fortress Minerals Corp. to divest all of its interests in Aurelian Resources Inc. and the Fruta del Norte (“FDN”) project in Ecuador for $240 million in cash and shares.

Kinross expects to receive of $100–$190 million in cash depending on the net proceeds from Fortress' announced equity financing. The deal is anticipated to be completed by mid-Dec 2014, subject to Fortress’ shareholder and stock exchange approval, and that of the Ecuadorian Government.

Outlook

Kinross expects production for 2014 to be at the top end of its narrowed guidance range of 2.6–2.7 million from the previous outlook of 2.5–2.7 million gold equivalent ounces. The company lowered its production cost of sales guidance for 2014 to $720–$750 from $730–$780 per gold equivalent ounce and its all-in sustaining costs guidance to $950–$990 from the previous outlook of $950–$1,050 per gold ounce sold for 2014.

The company also lowered its capital expenditure forecast for 2014 from $675 million to a range of $630–$650 million.

Kinross currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the mining industry include Pretium Resources Inc. (PVG - Snapshot Report), Lake Shore Gold Corp. (LSG) and Silver Standard Resources Inc. (SSRI - Snapshot Report). While Pretium Resources sports a Zacks Rank #1 (Strong Buy), both Lake Shore Gold and Silver Standard Resources carry a Zacks Rank #2 (Buy).