Will Higher Expected Costs Put a Dent in Kinross Gold's Margins?

Core Insights - Kinross Gold Corporation (KGC) experienced a 6% year-over-year increase in production costs of sales per ounce, reaching $1,043 in Q1 2025, while all-in-sustaining costs (AISC) rose nearly 3% to $1,355 per gold equivalent ounce sold, indicating inflationary pressures [1][7] - The company anticipates further cost pressures in 2025, projecting full-year AISC to reach $1,500 and production cash costs around $1,120 per ounce, driven by weaker production expectations and inflation [2][7] - KGC's stock has increased by 73.6% year-to-date, outperforming the Zacks Mining – Gold industry, which rose by 58.7%, largely due to a rally in gold prices [6] Cost Analysis - KGC's AISC remains lower than peers such as Barrick Mining Corporation and Newmont Corporation, but the expected rise in costs for the remainder of 2025 suggests potential margin compression risks [5] - Barrick reported a 22% sequential increase in AISC to $1,775 per ounce, influenced by operational challenges and lower production [3] - Newmont's costs applicable to sales rose 16% year-over-year to $1,227 per ounce, with AISC at $1,651, reflecting a significant increase due to production declines [4] Earnings and Valuation - The Zacks Consensus Estimate indicates a year-over-year earnings rise of 94.1% for KGC in 2025 and 7.5% in 2026, with EPS estimates trending higher over the past 60 days [8] - KGC is currently trading at a forward 12-month earnings multiple of 11.72, which is a 7.9% discount to the industry average of 12.73X, and holds a Value Score of A [9]