Kirkland Lake Gold Ltd. KL has announced the filing of two early warning reports related to the disposition of 748,700 common shares of Novo Resources and 32,627,632 common shares of Osisko Mining.
The company also stated that it has acquired an additional 863,500 common shares of Kirkland Lake Gold for cancellation under its normal course issuer bid (“NCIB”). As of Aug 13, 2020, it purchased total 11.9 million common shares for $388.4 million.
Further, on Aug 10, 2020, the company disposed of 32,627,632 common shares of Osisko. Subsequent to this transaction, Kirkland Lake Gold no longer holds any shares of Osisko. The company also disposed of 538,700 common shares of Novo between Aug 7 and Aug 12 for a total consideration of around $1.9 million. It now holds 29,081,568 Novo common shares or 15.41% of the issued and outstanding common stock on a non-diluted basis as well as 21.25% on a partially-diluted basis.
Shares of Osisko and Novo were sold for investment purposes. The transaction enhances Kirkland Lake Gold’s financial strength. The move will support its efforts to pursue key strategic priorities, which includes investing in its three cornerstone assets as well as returning capital to shareholders.
Notably, Detour Lake, Macassa and Fosterville are the three highly-profitable, cash-flow generating operations. All these projects have outstanding exploration upside. The company stated that there is significant value creation potential in each of these assets and unlocking that value is the company’s overriding priority. The company also doubled its quarterly dividend to 12.5 cents per share this year.
The stock has gained 11.6% in the past year compared with the industry’s 40.4% rally.
Kirkland Lake Gold’s adjusted earnings per share were 79 cents in the second quarter that beat the Zacks Consensus Estimate of 74 cents.
The company recorded revenues of $581 million, up 106.6% year over year. The figure also surpassed the Zacks Consensus Estimate of $566.1 million.
The company re-issued its 2020 guidance considering the progress achieved in ramping up business activities after the impact of the pandemic.
For 2020, total gold production is expected between 1,350,000 ounces and 1,400,000 ounces. AISC for gold is expected in the range $790-$810 per ounce. Operating cash costs per ounce for gold is projected at $410-$430.
Zacks Rank & Key Picks
Kirkland Lake Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Northern Dynasty Minerals, Ltd. NAK, Eldorado Gold Corporation EGO and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Northern Dynasty Minerals has an expected earnings growth rate of 35.7% for 2020. The company’s shares have surged 120.3% in the past year.
Eldorado Gold has an expected earnings growth rate of 2,225% for 2020. Its shares have returned 28.8% in the past year.
Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have surged 73.8% in the past year.
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