Russian invasion dulls Kinross’s shine

When the price of gold is sky-high, you’d think a gold-mining company’s shares would also be on the rise.

But with gold hovering just below $2,000 (U.S.) per ounce lately after starting the year at $1799, shares of Toronto-based Kinross haven’t exactly been soaring.

Why? In a word, Russia. While Kinross has operations in five other countries, it had expected 13 per cent of its revenue this year to come from its mines in Russia’s Far East. March 2, amid a flood of sanctions against Russia after its invasion of Ukraine, Kinross announced it was putting its operations there on hold for the foreseeable future.

Before Kinross put its Russian operations on hold, some investors, including Purpose Investments, had already bailed on Kinross, both for ethical and business reasons. “Look at the sanctions that are going to have huge economic impacts on the Russian economy and therefore Russian businesses. So anyone who has assets in that region, one, they’re going to be very illiquid and two, they’ll become much less valuable,” Purpose founder Som Seif said in an interview with the Star.

But Kinross had already seen its shares falling even before Russia invaded its neighbour. In the fourth quarter, Kinross reported it had lost $2.7 million, compared with a $783.3 million profit in the same period a year earlier. The company blamed the loss on the temporary suspension of milling operations at its mine in Mauritania after a fire there. That suspension of operations in Russia? It’s going to be lasting a lot longer.