Kinross Gold Corp

Key Reasons for Buy

Kinross Delivers Strong Q1 2025 Performance with Margin Expansion: Kinross Gold Corporation began 2025 with robust results, reporting attributable production of 512,088 gold equivalent ounces (Au eq. oz.) for Q1. While this reflects a slight decrease from 527,399 ounces in Q1 2024, the company benefitted from strong operational execution at sites like Paracatu, Tasiast, and Fort Knox. Notably, margins improved significantly—rising 67% to USD 1,814 per ounce sold—driven by a 38% increase in the average realized gold price to USD 2,857 per ounce. Despite planned production declines at Round Mountain and Tasiast, Kinross remains on track to meet its 2025 guidance of 2.0 million attributable Au eq. oz. (+/- 5%).

Substantial Cash Flow Growth and Earnings Surge: The quarter demonstrated Kinross’ capacity to convert higher metal prices into improved financial results. Operating cash flow surged to USD 597.1 million, up from USD 374.4 million in Q1 2024, while attributable free cash flow more than doubled to USD 370.8 million. Net earnings attributable to common shareholders more than tripled year-over-year, reaching USD 368.0 million or USD 0.30 per share, compared to USD 107.0 million or USD 0.09 per share in the prior-year period. Adjusted net earnings were similarly strong at USD 364.0 million, or USD 0.30 per share, reinforcing the impact of enhanced operating leverage.

Cost Management and Capital Allocation Discipline: Although production costs rose slightly, Kinross continued to manage expenditures effectively. Attributable production cost of sales per Au eq. oz. sold rose to USD 1,038 from USD 982 a year earlier, and all-in sustaining costs increased to USD 1,355 from USD 1,310. Capital expenditures for the quarter decreased to USD 204.1 million from USD 232.1 million, consistent with timing-related variations. This disciplined capital management supports Kinross’ forecast of USD 1,150 million (+/- 5%) in annual capital spending. The company also emphasized its commitment to shareholder returns by reactivating its share buyback program, with USD 60 million repurchased year-to-date and a full-year target of USD 500 million.

Strengthened Balance Sheet and Credit Upgrade: Kinross enhanced its financial stability by repaying the final USD 200 million of its outstanding term loan, ending the quarter with cash and cash equivalents of USD 694.6 million and net debt of approximately USD 540 million. With available credit of USD 1.65 billion, total liquidity stood at approximately USD 2.3 billion as of March 31, 2025. This solid financial position was recognized by Moody’s, which upgraded Kinross’ outlook to positive from stable and reaffirmed its Baa3 investment-grade rating, citing low leverage and prudent financial policies.

Progress Across Development and Exploration Projects: Kinross advanced its project pipeline, with meaningful developments across Great Bear, Round Mountain Phase X, and Curlew. At Great Bear, earthworks are underway for the Advanced Exploration (AEX) program, while regional exploration drilling targeting over 50,000 metres is planned for 2025. The Round Mountain Phase X project continued to deliver positive infill drilling results, with over 3,900 metres of underground development completed. Kinross also reported promising drill results at Curlew and maintained permitting progress at Lobo-Marte, highlighting a sustained focus on long-term value creation.

Operational Highlights and Site-Specific Developments: At Paracatu, production increased on both quarterly and annual comparisons due to higher grades and improved recoveries. Tasiast resumed milling operations after a brief suspension due to a fire in April, with no anticipated impact on annual guidance. Fort Knox benefitted from contributions from Manh Choh, resulting in higher output and lower costs. Meanwhile, production at Round Mountain and La Coipa declined due to mine sequencing and throughput timing, while Bald Mountain experienced lower grades but stable costs. These site-level updates reflect Kinross’ strategic flexibility across its diversified asset base.

Commitment to Sustainability and Shareholder Value: Kinross reiterated its commitment to sustainability, with its 17th annual report expected later this month. The company continues to engage Indigenous communities and regulatory agencies as part of permitting processes for its major projects. Additionally, Kinross remains focused on shareholder returns through dividends and share repurchases, leveraging its operational momentum and strong gold price environment. A quarterly dividend of USD 0.03 per share was declared, reinforcing management’s confidence in ongoing performance.

Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Kinross Gold Corporation (TSX: K) at the closing market price of CAD 21.52, as on June 02, 2025.