Earnings are out for three large gold miners, and the reviews are mixed. Barrick Gold Corp. (NYSE: ABX), Kinross Gold Corp. (NYSE: KGC), and AngloGold Ashanti (NYSE: AU) have all reported fourth-quarter and full-year earnings since the markets closed last night. Two other miners, Newmont Mining Corp. (NYSE: NEM) and Goldcorp Inc. (NYSE: GG) are scheduled to release earnings next week.

Barrick reported fourth-quarter EPS of $0.90 on sales of $2.95 billion, compared with expectations of EPS of $0.84 on $2.74 billion in sales. Adjusted EPS equaled $0.95. Production totaled 7.77 million ounces of gold at a total cash cost of $457/ounce. For 2011, Barrick expects production of 7.6-8.0 million ounces of gold at a total cash cost of $450-$480/ounce.

Kinross posted adjusted fourth quarter EPS of $0.21 on revenue of $920.4 million. Analysts were expecting EPS of $0.15 on revenue of $924 million. Gold production totaled 2.33 million ounces for the full year at a cash cost $508/ounce. For 2011, Kinross projects production of 2.5-2.6 million ounces at an average cost of $565-$610.

AngloGold, based in South Africa, posted adjusted earnings for the fourth quarter of $294 million and for the full year of $787 million. The company was the last of the miners to close out its hedge book, and posted closeout costs for the year of $2.5 billion. The company now sells all its production at spot market prices. Total cash costs of production were $638/ounce, and the company produced 4.15 million ounces in 2010. For the full year 2011, the company expects to produce 4.55-4.75 million ounces at a total cash cost of $660-$685/ounce.

Much of the variation in cash costs for these producers results from the quality of the ore each is working with. For instance, Barrick’s Cortez Hills mine is very rich and the expected cash costs in 2011 are just $235-$265/ounce. Kinross noted an increase in proved and probable reserves at its Tasiast project in Mauritania where the average gold grade is two grams of gold for every metric ton of rock.

Along with rising cash costs, the gold miners are seeing the world’s largest gold-backed ETF, the SPDR Gold Trust (NYSE: GLD) sell off some of its bullion. In June the trust held about 1,320 metric tons, compared with about 1,224 metric tons today. The trust’s gold buying during much of 2009 and 2010 helped keep the price of gold high. If this trend continues, lower prices will put pressure on gold miners profits.

The Market Vectors Gold Miners ETF (NYSE: GDX) has actually outperformed the SPDR Gold Trust over the past 12 months, rising by about 30% compared with the Gold Trust’s rise of about 25%. The largest gains were made by the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) which rose more than 50% over the past 12 months.

For now, the gold miners are more in demand than the yellow metal they mine. That’s due to the other stuff they find when they dig for gold — stuff like copper and silver, which keep rising in price.

Paul Ausick

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