Wednesday, June 29, 2022

Kinross Gold Corporation (USA)(NYSE:KGC) Back on the Rise After Positive Q1 Results

Kinross Gold Corporation (USA) (NYSE:KGC) started this year with an impressive rise up to $4.23 on four months ago. This proved to be fairly short lived as the bears began to rear their nasty heads in the following month and drive the price down to $3.15, erasing nearly all the gains made since the beginning of the year. The bulls showed up in the middle of March as can be seen by the increasing bullish volume, the next significant leg up began on May 3rd after better than expected Q1 results and has since remained steady closing at $4.24 today.

Despite a small decline of 15,500 gold equivalent ounces in Q1 production compared to 2016 (671,956 gold equivalent ounces (Au eq. oz.) versus 687,463), KGC revenue was up. The first quarter of this year saw a rise of $13.5 million, beating Wall street forecasts by $6 million resulting in $796.1 million compared to $782.6 million in Q1 2016. Undoubtedly the rise in the price of Gold assisted as the average price per ounce was $40 higher in Q1 of 2017 than Q1 of 2016.

Kinross Gold Corporation (USA) (NYSE:KGC) generated $250.9 million of adjusted operating cash flow, an increase of 17.2%  ($43 million) compared to Q1 2016.

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In terms of organic development projects, KGC have stated that the Tasiast Phase One expansion is progressing on time and on budget and is expected to reach full production in Q2 2018, with the Phase Two feasibility study on schedule to be completed in Q3 2017. The Bald mountain mine continues to expand, engineering work is 60% complete at the Vantage Complex project in the South area.

At Round Mountain, the Phase W feasibility study is on schedule to be completed in Q3 2017. In Russia, development of the September Northeast project near Dvoinoye is now complete, while at Moroshka, located near Kupol, portal construction is now complete and construction of surface infrastructure is 50% complete.

The projections for 2017 show that KGC expects to be within the 2.5 – 2.7 million Au eq. Oz. range for production guidance and also within its all-in sustaining cost ranging from $925 – $1,025 per Au eq. Oz. The company also projects to be within its capital expenditures guidance of $900 million (+/- 5%).

The balance sheet looks solid for KGC as they freed up more capital through the sale of its  25% interest in Cerro Casale and its 100% interest in Quebrada Seca in Chile for $260 million in cash.  As of March 31, 2017, Kinross had cash and cash equivalents of $819.0 million, and available credit of $1,433.1 million, for total liquidity of approximately $2.3 billion. Including the sales of Cerro Casale and Quebrada Seca divestment, this will leave the company with approximately $1.1 billion in cash and cash equivalents and a total liquidity position of approximately $2.5 billion.

With Gold continuing its bullish run, the organic development projects progressing nicely as well as having a strong balance sheet and revenue growth there is a lot to be optimistic about for Kinross Gold Corp (NYSE:KGC). This could be a very big year for Gold Miners and Kinross looks well placed to reap the rewards if this turns out to be the case. For continuing coverage on shares of Kinross Gold Corp stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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