Update Kinross Gold (KGC)
A good second quarter from Kinross Gold (KGC)–considering the uncertainties of the mining business where anything from an ore body running a lower grade than expected to floods to civil war can disrupt production.
Earnings of 12 cents a share for the second quarter were a penny below Wall Street projections but revenue climbed 100.2% from the second quarter of 2008. At $598 million revenue easily beat projections at $543 milion. Most importantly, despite a slowdown in getting the Paracatu mine expansion up to full production the company kept its production estimates at 2.3 million to 2.4 million ounces of gold for 2009.
When I lpicked this stock in April, I noted that gold production was expected to hit 2.4 million ounces in 2009, a huge increase in production from the 1.5 million ounces produced in 2006. My preference at this point, when near-term inflation remains subduded thanks to a global economic slowdown, is for shares of gold miners (as long-term inflation hedges) that are increasing production (so investors get some growth while they wait for inflation to tick up.) Kinross fits that bill perfectly.
As of August 17, I’m raising my target price on these shares to $24 a share from my earlier $21 a share target by December 2009. (Full disclosure: I own shares of Kinross Gold in my personal portfolio.
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um, DEC 2009 is fast approaching, are you saying you expect it to be 24 a share even though you have been expecting a big correction before the end of the year?
I also have some doubts … KGC saw $24 last time 1.5 years ago. With beta 0.6, it is more than unlikely it will go up 30% in 4 months.
Jim,
I do not want to be too pushy, but is there any chance you can update on your views on commodity prices. It seems to me that all the excitement in China is gone (their stock market is seeing 20% correction in August), and it should signal that oil and metals should go down even more. But this is just my opinion.
Jim,
I would also like to here your outlook on commodity prices and in particular TC since it is one of the stocks your 50 stocks.
Jim, I am curious why you prefer Kinross over other producers, like Barrick for example. You have been consistent in this view for quite a while. ABX pays a decent dividend while you wait for gold price inflation.