Kinross Gold Corporation

KGC Details

Kinross Gold Corporation (NYSE: KGC) is a Canadian gold mining firm specializing in gold exploration and acquisition, extraction and processing, and mining property reclamation. The nations with mines are Canada, the United States, Russia, Brazil, Chile, Ghana, and Mauritania.

Latest News:

• Completed Sale of Russian Assets: On June 15, 2022, KGC announced the completion of the sale of all its Russian assets to the Highland Gold Mining group of companies for USD 340 million in cash.
• Sold Ghana Mine: On April 25, 2022, KGC announced that it had reached a deal with Asante Gold Corporation to sell its 90% interest in the Chirano mine in Ghana for USD 225 million in cash and shares.
• Announcement of Dividend: KGC stated on May 10, 2022, that the Board of the company had declared a dividend of USD 0.03 per common share for Q1 FY22, payable on June 16, 2022, to shareholders of record as of June 2, 2022.

Q1 FY22 Results:

• Moderate Topline Performance: KGC’s revenue from ongoing operations was USD 768.0 million in Q1 FY22 compared to USD 768.7 million in Q1 FY21.
• Production Figures: A total of 409,857 Au eq. oz. of gold equivalent was produced. Attributable production costs of USD 1,000 per Au eq Oz sold consolidated production costs of USD 1,003 per Au eq. Oz sold, and attributable all-in sustaining costs of USD 1,245 per Au eq. Oz sold.
• Growth in Net Income and EPS: KGC reported net income from continuing operations of USD 82.3 million, or USD 0.07 per share, in Q1 FY22, up from USD 76.2 million, or USD 0.06 per share, in Q1 FY21, due to a decrease in income tax expenditure, which was partially offset by an increase in manufacturing costs.
• Financial Strength and Flexibility: KGC has USD 1.7 billion in total liquidity, including USD 454 million in cash and cash equivalents. In addition, the company completed the acquisition of Great Bear and secured a new USD 1 billion term loan. Furthermore, the company plans to repatriate USD 300 million to shareholders at current gold prices, resulting in solid financials in the future.

Key Risks:

• Commodity Pricing Risk: KGC's operations are significantly impacted by the volatility and unpredictability of gold and copper prices on the global market. As a result, any pricing change that isn't favourable to them may hurt their bottom line.
• Compliance Risk: KGC is a gold mining firm governed by several federal and state regulations. As a result, the company's income may be harmed by stricter regulations or infractions of relevant legislation.

Outlook:

(Source: Company Filings)

Valuation Methodology: EV/Sales Multiple-based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

Given the firm underlying commodity prices an increase in gold production in the upcoming financial periods could further bolster the group’s financial performance and strengthen the overall financial health of the company. KGC achieved a new production record at Tasiast, and the project pipeline kept pace. The Tasiast 24k project remains on track. KGC's stock price has dropped 26.18% in the last three months, and stock's 52-week high and low range is USD 7.59 to USD 3.92, at the current trading level stock is mostly tilted towards its 52W low.

Considering the positive guidance for 2022, consistent revenue, robust cash flows, strong production with higher projection, related risks, and present value, we recommend a "Buy" rating on the stock at the current market price of USD 4.01 as of June 16, 2022, at 07:42 AM PDT.

 1-Year Technical Price Chart (as of June 16, 2022, at 07:42 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

Technical Summary Analysis

 Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.