Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe

TICKERS: K; KGC

Senior Gold Producer Boasts 'Solid End to 2018'
Research Report

Share on Stocktwits

Source:

A BMO Capital Markets report reviewed Q4/18 numbers, 2019 guidance and possible near-term catalysts.

In a Feb. 13 research note, BMO Capital Markets Andrew Kaip reported that strong production and sales led Kinross Gold Corp. (K:TSX; KGC:NYSE) to achieve an earnings beat in Q4/18.

Kaip presented Kinross' Q4/18 results and 2019 projections and indicated how they compare to BMO's estimates.

The company's reported earnings per share (EPS) of $0.02 and adjusted EPS of $0.01 were above BMO's forecast of $0.00.

As for Q4/18 production, Kinross achieved 610,100 ounces (610.1 Koz) of gold equivalent (Au eq), well above BMO's projection of 591.9 Koz Au eq. This was attributed to better-than-expected output at Tasiast, Paracatu and Fort Knox. Q4/18 sales were 636.2 Koz Au eq.

Operating cash flow was $183.5 million, greater than BMO's expected $167 million, due to positive working capital adjustments of $96 million.

In terms of guidance, Kinross' 2019 figures for the year are generally in line with BMO's. The company targets production of 2.5 million ounces (2.5 Moz) Au eq plus or minus 5%, which is above BMO's 2.35 Moz Au eq forecast.

Kinross guided to $445 million of sustaining capital, $540 million of project capital and $65 million of capitalized interest, a total of $1.05 billion. This compares to BMO's projection of $977 million.

All-in sustaining cost guidance for 2019 is $995 per ounce plus or minus 5%, on par with BMO's estimate of $990 ounce.

Kaip provided an update on total reserves. They declined "marginally" to 25.5 million ounces (25.5 Moz) after "accounting for depletion and additions with no material change in grade." Specifically, Measured and Indicated resources decreased by 1.8 Moz whereas Inferred resources stayed the same.

Finally, Kaip noted potential upcoming catalysts for Kinross. In late Q1/19, commissioning of Bald Mountain Vantage is anticipated, for which the company remains on schedule. In Q2/19, commissioning is scheduled for Round Mountain's phase W, also currently on track.

BMO has a Market Perform rating and a US$3.25 per share target price on Kinross, whose stock is currently trading at around US$3.49 per share.

[NLINSERT]

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from BMO Capital Markets, Kinross Gold, Feb. 13, 2019

IMPORTANT DISCLOSURES

Analyst's Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Kinross Gold.
Disclosure 6C: Kinross Gold is a clients (or were clients) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 9B: BMO Capital Markets makes a market in Kinross Gold in United States.
Disclosure 16: A research analyst has extensively viewed the material operations of Kinross Gold.v Disclosure 17: Kinross Gold has paid or reimbursed some or all of the research analyst's travel expenses.

For Important Disclosures on the stocks discussed in this report, please click here.





Want to read more about Gold investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe