With gold prices burning straight through the roof of, what I believe to be, a fiat currency house of cards, investors hold understandably high expectations for the performance of gold mining equities.
Much to their chagrin, several well-respected miners have not delivered bottom line results that reflect any measure of the dramatic 47% surge in the gold price from year-ago levels. The fact that Kinross Gold
While Agnico-Eagle Mines'
Given the gap I identified in Kinross' development pipeline several months ago, this detour from previously forecast 2009 production of 2.4 million ounces to a revised 2.2 million ounces comes at a particularly difficult time. From the Lobo-Marte project purchased from Teck Resources
As mining investors have learned all too well in recent quarters, operational snags are not the only danger to a miner's bottom line. Kinross recorded a $35 million foreign exchange loss in the third quarter, compared to a $30.6 million gain a year earlier. One not-so-special item that may have a silver lining, however, is the $58.6 million future income tax expense resulting from the debt-lowering impact of the U.S. dollar's decline. Long-term debt has shrunk by $171.4 million through the first three quarters, and Kinross holds some $530 million in cash with which to fill-in that near-term pipeline through acquisitions.
Kinross Gold may be down, but I don't believe it's out. I have reduced my own exposure to Kinross in recent months to reflect a more cautionary stance, but continue to view the company as an attractive vehicle for riding the gold bull. Granting the company just three stars out of five, Motley Fool CAPS members appear less convinced, but please share your own views by taking our Motley Poll.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines and Kinross Gold. The Motley Fool has a gilded disclosure policy.