Can Kinross Gold's Profits Keep Shining Amid Higher Costs?

Kinross Gold Corporation KGC saw a roughly 17% year-over-year rise in attributable production cost of sales per ounce to $1,145 in the third quarter, impacted by higher royalty costs stemming from increased gold prices. All-in-sustaining costs (AISC), a key indicator of cost efficiency in mining, rose nearly 20% year over year to $1,622 per gold equivalent ounce sold and were also up from $1,493 in the prior quarter. While a 40% increase in average realized gold prices led to a surge in third-quarter profits, the rise in unit costs underscores a spike in inflation.

KGC’s guidance indicates cost pressures through 2025, with the company expecting full-year AISC per gold equivalent ounce to reach $1,500 (+/- 5%) and production cash costs to be around $1,120 (+/- 5%) per ounce. KGC, on its third-quarter call, said that it is tracking toward the top end of its ASIC guidance as a result of a higher proportion of sustaining capital, with fourth-quarter AISC expected to be higher sequentially. 

The AISC guidance indicates a significant year-over-year rise due to a rise in the production cost of sales. Costs are expected to rise due to weaker expected overall production and inflationary impacts. Higher expected costs in the final quarter of 2025 signal margin compression risks.

The consensus estimate calls for an attributable AISC of roughly $1,823 per gold equivalent ounce sold in the fourth quarter, indicating around a 12% sequential and 21% year-over-year rise.  

Among its peers, Barrick Mining Corporation B faced cost pressure in the third quarter. Barrick’s cash costs per ounce of gold and AISC increased around 3% and 2% year over year, respectively, in the third quarter, although declining from the previous quarter. AISC of $1,538 increased from the year-ago quarter due to higher total cash costs per ounce. For 2025, Barrick continues to see total cash costs per ounce of $1,050-$1,130 and AISC in the range of $1,460-$1,560 per ounce. 
 
Newmont Corporation NEM lowered its third-quarter AISC to $1,566 per ounce, marking a 3% decrease from the prior-year quarter and a decline from $1,593 in the prior quarter. This improvement was primarily due to a decrease in costs applicable to sales and lower general and administrative expenses, as Newmont is enjoying the benefits from its cost-saving actions. Newmont expects gold AISC for the total portfolio to be $1,630 per ounce in 2025, reflecting a rise from $1,516 per ounce in 2024.

The Zacks Rundown for KGC

Kinross Gold’s shares have shot up 141.9% in the past six months against the Mining – Gold industry’s rise of 95.8%, largely driven by the gold price rally.

From a valuation standpoint, KGC is currently trading at a forward 12-month earnings multiple of 16.18, a modest 1.2% discount to the industry average of 16.38X. It carries a Value Score of C.

The Zacks Consensus Estimate for KGC’s 2025 and 2026 earnings implies a year-over-year rise of 154.4% and 36.1%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.

KGC stock currently carries a Zacks Rank #3 (Hold). 

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This article originally published on Zacks Investment Research (zacks.com).

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