E Kinross Gold: Fundamental Analysis Of A Major Gold Stock

Kinross Gold Corporation (KGC) engages in the acquisition, exploration, and development and reclamation of gold properties as well as silver production and sales across a broadly diversified portfolio of assets. These assets are spread across the United States, Russia, Brazil, Chile, Ghana, and Mauritania. As of year-end 2018, its proven and probable mineral reserves included approximately 25.5 million ounces of gold and 53.9 million ounces of silver.

We believe it is one of the most attractive gold mining stocks in the market today due to its recent performance momentum, strong growth outlook, and solid balance sheet.

Earnings Review

At the beginning of August, Kinross reported strong second-quarter results which revealed that the company remains on track to meet 2019 guidance for production, cost of sales, all-in sustaining cost, and capital expenditures. These strong results are largely a product of the company’s operational strength.

Total revenues grew by 8.1% year-over-year and diluted earnings-per-share went from $0.00 to $0.06 from second quarter 2018 to second quarter 2019. The company was free cash flow negative in last year’s first half and is now heavily free cash flow positive. A big part of this growth was the 7.7% year-over-year rise in gold production alongside the rise in precious metals prices.

Additionally, the company’s operational strength continued to fire on all cylinders, highlighted by the company’s three largest operations which combined to generate over 60% of total production in Q2 at an average cost of sales of just $607 per ounce. The Paracatu mine in Brazil achieved its third consecutive quarter of record production and fifth consecutive quarter of lower cost of sales per ounce. The company’s Russian mine at Kupol/Dvoinoye also continued to generate stable and steady production and profit margins. Third, their mine at Tasiast Mauritania saw its third straight quarter of improved costs.

Attractive Growth Potential

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