Canadian mining giant Kinross Gold made an 85 per cent loss at its Ghanaian Chirano mines  in the first quarter of 2014 compared to the same period last year.

This huge dip in loss comes despite the company’s ability to reduce cost of production by 20 per cent. The company attributes the huge loss of profit to the reduction in global price of the precious metal.

In a statement after releasing 2014 first quarter results, CEO of the company Paul Rollinson said “While lower gold prices affected earnings, Kinross is making steady progress to reduce costs.”

Rollinson also touted the company’s ability to reduce production costs of gold at the mines. Despite reducing costs, Kinross also produced 12 per cent more gold in the first quarter of 2014 than 2013. “Capital expenditures for the quarter were approximately half of what they were a year ago, while our all-in sustaining cost continued to decline” he said. Rollinson added “in addition, we’ve been able to reduce production cost of sales on a per ounce basis by 16% at Chirano.” The company’s first quarter financial statement it made made $3.10 million in 2014 compared to $24 million. Analysts say this is a true reflection of how companies are feeling the pinch of the price fall. Frank Ametefe, an analyst and a lecturer at University of Ghana’s Business School said Chirano is not the only mine that is affected. He said as a result of the falling prices of gold on the world market, companies are cutting costs as much as possible. “From the results posted, you can see the company is trying very hard to reduce costs just to make up for some of the losses,” he said. The report saw Kinross’ other mines in Russia, U.S.A, Chile, Brazil and Mauritania reduce production costs. As a result, the company which is listed on the Toronto stock Exchange and the New York Stock Exchange has not declared any dividend since March 2013.

Ametefe fears the reduction in cost production might result in the company laying off workers. “Already we have seen Newmont Ghana and Anglogold Ashanti lay off almost 5,000 workers, I’ll not be surprised if Chirano announces it is going to fire workers,” he said. Kinross plans to reduce production in its Obra open pit mines and later close it. Ametefe fears this could result in worker layoffs. With gold prices predicted to fall further, and the company predicting to further cut costs, it is unclear what the fate of local workers would be. Emails to Kinross to make comments on this issue were not responded to. Emails to the Ghana Chamber of Mines to ascertain whether Kinross has sacked workers also were not answered. Rollinson hopes the company could break even or make profit with the measures of cost reduction. “We continue to deliver on our strategy, which is focused on capital discipline, operational excellence, quality over quantity and balance sheet strength,” he said.

Kinross Shares closing 30th January 2015 by EddieAmeh on TradingView.com

Already, the shares of Kinross which have plummeted over the past months is beginning to see a steady rise.