Gold miners are getting a boost today from solid earnings from the likes of Barrick Gold (ABX), Goldcorp (GG) and Agnico Eagle Mines (AEM). The exception: Kinross Gold (KGC), which missed earnings forecasts and cut its reserves.
Reuters How well are gold miners performing? The Market Vectors Gold Miners ETF (GDX) has gained 4.2% today, while Barrick has jumped 5.5%, Goldcorp has climbed 3.2% and Agnico Eagle has risen 1.4%. Kinross Gold has ticked up 0.1% to $5.16.
Barrick Gold reported a profit of 37 cents, lower than forecasts for 41 cents, but beat revenue and said it was still looking to cut costs. “Similar to other gold producers, [Barrick Gold] is writing down assets and reserves, and cutting capex,” says Citigroup’s Brian Yu. “The greater capex reduction should enable ABX to reach free cash breakeven at $1,200/oz.”
Agnico Eagle, meanwhile, has gained despite slashing its dividend, after reporting a profit of 25 cents a share, above forecasts for 19 cents. Cowen’s Adam Graf and Misha Levental explain:
The company finished 2013 with production ahead of guidance and costs below guidance. The company’s three-year plan envisions continued increases in production, at reduction in costs. With growth projects well underway at several operations, [Agnico Eagle] is able to reduce its capital spend while maintaining growth.
Goldcorp’s earnings missed their mark–it reported a profit of 9 cents a share, below forecasts for 23 cents –but predicted production would rise despite lower costs. Graf and Levental explain:
[Goldcorp] finished the year with an 11% increase in gold production, but fell short with respect to earnings versus consensus and our numbers. The company sees continued growth at operations in 2014, guiding for a 10-15% increase in production, as well as similar levels of capex as was seen in 2013.
Kinross, however, said it lost 2 cents a share, below forecasts for a profit of 3 cents a share. UBS’s Brian MacArthur and team explain:
Despite achieving record full-year production (2.63Mozs vs. guidance of 2.6-2.65Mozs) at a lower than expected all-in cost ($1,063/oz vs. guidance of $1,100-$1,200/oz), adjusted earnings missed both UBS and consensus estimates largely due to below the line items…[We] believe investors will focus on the significant reduction in reserves. Despite maintaining its gold price assumption at $1,200/oz, KGC has materially lowered its proven and probable reserves by 19.9Mozs.
Despite today’s muted performance, shares of Kinross have gained 18% this year, while Barrick has risen 13%, Goldcorp has advanced 24% and Agnico Eagle is up 18%. The Market Vectors Gold Miners ETF has gained 22% in 2014.
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