50% chance Kinross CEO to exit: analyst

Tye Burt's future as the head of embattled miner Kinross Gold  (K-T) is looking increasingly uncertain, one analyst tells BNN.

Barry Allan, senior mining analyst at Mackie Research, says there is a 50-percent chance that Burt won't be sitting in the corner office at this time next year.

"This goes back to a legacy of acquisitions that we've seen executed by the current management group, which sit there on the shelf and have not demonstrated bottom line performance," he says. "I go back to the acquisition of Aurelian and the property in Ecuador, which sits there in debate with the Ecuadoran government and more recently it's the benefits the market is seeing from the Red Back acquisition in West Africa -- both have not delivered the goods."

In 2008, Kinross Gold bought Aurelian Resources for about $1.2 billion, taking control of the Fruta del Norte deposit in Ecuador, which is expected to hold around 6.8 million ounces of gold and 9.1 million ounces of silver. Many analysts questioned the move at the time, citing the country's volatile political landscape.

Recently the Ecuadorian government has been negotiating royalty payments with Kinross over its mines in the country.

And in January, Kinross announced a delay of six to nine months at its Tasiast mine in the west African country of Mauritania. Kinross acquired the mine in August of 2010 when it bought Red Back Mining for $7.1 billion. At the time, many observers said the deal was "fraught with uncertainty" and expensive.

Burt adamantly defended the acquisition.

"From our perspective with the technical work we're standing on -- which is boots on the ground for six months, geologists, technical people, engineers, outside engineering consultants -- we have a different view than the Street," Burt told BNN at the time. "We have a more informed view of value in this thing."

With the company's stock down more than 34 percent this year, many analysts are betting that the Kinross is ripe for a takeover. But Allan says there are still too many uncertainties surrounding the company.

"I know that just because the stock is down it does look cheap, but we have that other shoe to drop: How capital intensive is Tasiast going to be," he says.

FIRST QUARTER RESULTS MISS EXPECTATIONS

Kinross Gold said on Tuesday its first-quarter profit fell 57 percent, as the gold miner's revenues were hit by one-time, tax-related charges.

The Toronto-based miner said its profit in the quarter ended March 31, 2012 was $105.7 million US, or 9 cents a share, down from a year-earlier profit of $250.1 million, or 22 cents a share.

Earnings in the quarter were affected by tax liabilities and a $110.3 million non-cash item related to an income tax rate change in Ghana.

Excluding one-time items, the company reported a profit of $203.1 million, or 18 cents a share, up from $175.3 million, or 15 cents a share, in the first quarter of 2011.

Analysts, on average, had expected earnings of 20 cents a share, according to Thomson Reuters I/B/E/S.

Gold output fell 6 percent in the quarter, while costs per ounce were 36 percent higher. Despite this, revenue rose 11 percent to $1 billion on higher realized gold prices.

The gold miner produced 611,838 gold equivalent ounces in the quarter, compared with 700,479 in the year-earlier period, as output fell across nearly all regions where Kinross operates.

Costs per ounce rose to $742, compared with $545 in the first quarter of 2011. The average realized sales price rose 24 percent to $1,644 per ounce.

Kinross, which owns mines in North and South America, Russia and Africa, maintained its forecast

With files from Reuters.