Keep This Miner Close Like Kin

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If you've ever paid the food bill that feeds a growing teen, then you know that growth requires substantial investment.

Kinross Gold (NYSE: KGC) has felt some growing pains in the form of elevated costs per ounce of gold, but with an anticipated production growth spurt of 32% in 2009, Fools might not want to miss this miner's transition into adulthood.

Kinross reported adjusted net earnings of $55.8 million for the second quarter, for a 17% increase over the 2007 period. Revenue was up even as production declined thanks to a 39% increase in Kinross' margin per ounce ($437, for the curious).

Oil prices, currency conversions, and growing pains caused production costs to rise 34%, from $348 per ounce a year earlier to $466 per ounce. Kinross raised 2008 cost guidance to about $435 per ounce, but it looks to the ramp-up of three new projects to provide some relief in 2009.

Fools take note: When using cost metrics to compare gold mining companies, take care to ensure costs are calculated the same way. The $466 reported by Kinross and the $440 reported by Newmont Mining (NYSE: NEM) are apples to apples. However, some companies -- like Yamana Gold (NYSE: AUY) and Agnico-Eagle (NYSE: AEM) -- employ a by-product method of accounting, where the revenues from sales of other metals are used to bring down the gold cost metric. Using the by-product method, Kinross expects 2008 production costs of about $375 per ounce of gold thanks to 9.9 million ounces of projected silver production. Further, the company forecasts 2009 gold production of at least 2.4 million gold equivalent ounces.

For the Fool willing to see this miner through some growing pains, I believe Kinross has been eating its spinach.

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