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Day: July 30, 2015

Kinross Gold Corp, Agnico Eagle Mines Ltd report lower Q2 earnings but maintain financial strength – by Peter Koven (National Post – July 30, 2015)

The National Post is Canada’s second largest national paper.

Falling gold prices took a big bite of out of second quarter earnings at Kinross Gold Corp. and Agnico Eagle Mines Ltd., but both miners generated solid cash flow and maintained strong balance sheets.

Those two factors are crucial right now. The gold price has taken a nosedive this month, falling below US$1,100 an ounce for the first time since early 2010. Investors want evidence that companies can maintain strong liquidity in case gold remains at these levels for a prolonged period, or goes even lower.

Toronto-based Kinross said it has slightly more than US$1 billion of cash and equivalents on its balance sheet. The company has relatively high costs compared to its rivals, with all-in sustaining costs of US$1,011 an ounce in the second quarter.

But chief executive Paul Rollinson said the firm is well positioned to withstand market volatility, with plenty of options on the table to reduce spending. Kinross announced on Wednesday afternoon that it is in the midst of a “comprehensive spending review” to reduce costs.

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Lonmin: victim of price falls and management wobbles – by Silvia Antonioli and Ed Stoddard (Reuters U.S. – July 30, 2015)

http://www.reuters.com/

LONDON/JOHANNESBURG, July 30 (Reuters) – Platinum producer Lonmin is facing its deepest crisis to date, hurt by a downturn in the metal and haunted by a mixture of bad luck and debatable management choices that are putting its survival at risk.

Times are tough for everyone in the platinum sector. Producers are squeezed between soaring costs and a rout in platinum prices to lows not seen since the 2008 financial crash.

But Lonmin is bleeding more quickly than the others and its apparently inexorable decline has become evident this year. Its shares dropped this week to their lowest since Jan. 1979. Pre-tax losses last year were $326 million.

Glencore’s decision to sell its 23.9 percent stake earlier this year was the latest blow to Lonmin, whose name is tied to the tragic 2012 Marikana mining strike.

“Glencore’s exit was clearly a no confidence vote on the sector but foremost on a company that is disadvantaged versus the other big players,” said Ingo Hofmaier, director at London-based merchant bank Hannam & Partners.

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