Kinross trims production view, raises cost estimates

TORONTO (Reuters) - Canadian gold miner Kinross lowered its full-year 2009 production outlook and raised its average cost of sales estimate, as the company's production ramp-up at its Paracatu mine in Brazil is progressing more slowly than expected.

Kinross made progress in the third quarter in increasing availability, efficiency and recovery at the Paracatu mine, but continues to face challenges in achieving the originally anticipated levels of efficiency and output, the company said late on Monday.

Toronto, Ontario-based Kinross now expects to produce 2.2 million gold equivalent ounces at an average cost of sales per ounce of $435 to $450 for full-year 2009.

In August, Kinross had already trimmed its production expectations to 2.3 million to 2.4 million gold equivalent ounces from as much as 2.5 million, due to the slower than expected ramp-up at Paracatu. At the time, the company forecast cost of sales per ounce at the higher-end of a $390 to $420 range.

Kinross expects average cost of sales per ounce of $700 to $735 at Paracatu, which will produce about 340,000 to 360,000 ounces of gold in 2009, accounting for roughly 16 percent of the company's overall production this year.

UBS analyst Brian MacArthur lowered his 2009 earnings forecast for Kinross to 45 cents a share, from 51 cents a share to reflect the lower production and higher cost assumptions.

"We have also reduced our 2010 and 2011 production estimates as we believe recovery and throughput rates will be lower then originally planned at Paracatu until additional grinding capacity is added," he said in a note to clients.

The company said it is evaluating options to add additional grinding capacity, while it continues to work on improving mill performance through various initiatives.

Kinross shares were down almost 1 percent at $20.15 in premarket trade in the United States.

($1 = $1.06 Canadian)

(Reporting by Euan Rocha, editing by Dave Zimmerman)