Kinross Gold Corporation
KGC
recently completed the acquisition of Great Bear Resources Ltd. Per the deal, Kinross bought Great Bear’s flagship Dixie project located in the popular Red Lake mining district in Ontario, Canada. The Dixie project is one of the most exciting recent gold discoveries worldwide and the extensive drilling results have shown the characteristics of a top-tier deposit.
Per the terms, Great Bear shareholders were given the right to receive C$29 in cash for each Great Bear share or 3.8564 Kinross shares per Great Bear share. These both were subject to pro-ration to a maximum cash consideration of roughly $1.1 billion (C$1.4 billion) and a maximum of 80,773,353 Kinross shares.
The Great Bear shareholders who chose to receive cash were subject to pro-ration and will receive roughly C$25.80 in cash and around 0.4257 Kinross Shares per Great Bear Share. Shareholders of Great Bear who elected to receive the shares were not subject to pro-ration.
It also includes a payment of contingent consideration in the form of one contingent value right (CVR) per Great Bear Share, which may be exchanged for 0.1330 of a Kinross Share per Great Bear Share. The contingent consideration will be payable in relation to Kinross’ public announcement of commercial production at the Dixie project, provided that a cumulative total of at least 8.5 million gold ounces of mineral reserves and measured and indicated mineral resources are disclosed. The CVRs are transferable and have a term of 10 years.
Kinross will pay roughly C$1.35 billion in cash and issue about 49.3 million of its shares and around 59.3 million CVRs to Great Bear shareholders under the agreement. Subsequent to Dec 31, 2021, Kinross drew down $1.1 billion from its $1.5 billion revolving credit facility to fund the cash portion of the arrangement.
Shares of KGC have declined 18.7% in the past year compared with a 13.7% increase of the
industry
.
Image Source: Zacks Investment Research
The company, in its last earnings call, stated that it expects to produce 2.65 million (+/- 5%) gold equivalent ounces for 2022. It expects a production cost of sales of $830 per gold equivalent ounce.
All-in sustaining cost per ounce for 2022 is projected at $1,130. Capital expenditures are predicted at around $1,050 million (+/- 5%) for this year.
In 2023 and 2024, the company expects capital expenditures to be $1 billion, in line with 2022 levels.
Kinross Gold Corporation Price and Consensus
Kinross Gold Corporation price-consensus-chart
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Kinross Gold Corporation Quote
Zacks Rank & Key Picks
Kinross currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are
Allegheny Technologies Incorporated
ATI
,
Nutrien Ltd.
NTR
and
AdvanSix Inc.
ASIX
.
Allegheny, currently sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 661.5% for the current year. The Zacks Consensus Estimate for ATI’s earnings for the current year has been revised 45.6% upward in the past 60 days. You can see
the complete list of today’s Zacks #1 Rank stocks here.
Allegheny beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 127.2%. ATI has rallied around 21.2% over a year.
Nutrien, sporting a Zacks Rank #1, has a projected earnings growth rate of 70.1% for the current year. The Zacks Consensus Estimate for NTR’s current-year earnings has been revised 16.9% upward in the past 60 days.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 60.3%, on average. NTR has rallied around 54.9% in a year.
AdvanSix has a projected earnings growth rate of 14.6% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 9.8% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 23.6%. ASIX has surged 38.9% in a year. The company sports a Zacks Rank #1.
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