Kinros Gold Miner Reels From ‘Resource Nationalism’ in Ghana and
Kinross Gold is the latest miner to be hit by changing policies in Africa as governments seem increasingly willing to upend historic deals with foreign companies in their quest for more mining revenue.
Mauritania’s rejection of a key permit to expand a Kinross project, and a proposed mining code review in Ghana, dealt a double blow to the Toronto-based miner, sending its shares down the most intraday since 2014.
Ghana is benefiting little from its mineral wealth and needs to review its mining code and tax policies, VP Mahamudu Bawumia said Tuesday at a conference in the capital, Accra. Meanwhile, Mauritania’s rejection of the permit could impact Kinross’s Phase Two expansion of its Tasiast mine, Kinross said in its first-quarter earnings statement – and implied the country’s concerns go much further.
Its subsidiary received a letter from the Mauritanian government asking for discussions about “all of the company’s activities in Mauritania,” Kinross said, with the aim of creating greater overall economic benefits for the nation. “Kinross is currently assessing the situation, including the potential impact of the request on the Phase Two expansion.”
“It is very early days and I don’t want to speculate on outcomes in Mauritania, or hypotheticals regarding Ghana,” Louie Diaz, a spokesperson for Kinross, said by email. The company expects to move forward on discussions with the Mauritanian government. It is “continuing to monitor the situation closely” in Ghana, he said.
The Canadian miner is being affected by policies outside Africa as well. US sanctions against Russian billionaires sent Kinross shares tumbling last month. About 20% of Kinross’ production this year will come from Russia, according to the company website.
The drop in the stock came despite a better-than-expected profit for its most recent quarter.
After the close of markets Tuesday, Kinross, which keeps its books in U.S. dollars, reported a profit of US$106.1 million or eight cents per diluted share, down from $134.6 million or 11 cents per diluted share the year prior.
On an adjusted basis, Kinross said it earned 10 cents per share, up from two cents a year ago. Analysts on average had expected a profit of a nickel per share, according to Thomson Reuters Eikon.
Kinross produced 653,937 attributable ounces of gold in the quarter, down from 671,956 gold equivalent ounces a year ago.
Shares in the company were down 69 cents at Canadian $4.65 in trading on the Toronto Stock Exchange on Wednesday.
Kinross dropped 13% to C$4.66 at 1:41 pm in Toronto, after plunging as much as 15%. The shares have declined 14% this year