Kinross Stock: Strong Operational Performance Lately (NYSE:KGC)

Kinross Stock: Strong Operational Performance Lately (NYSE:KGC)
Investment Thesis
Kinross (NYSE:KGC) is a mid-size gold producer, with most of its operation in the Americas. It is a stock I have owned in the past and covered a few times on Seeking Alpha, those articles can be found here.

Kinross has so far held up relatively well in 2023, which is most likely due to the strong operational performance and a good capital allocation strategy. The stock has outperformed the GDX and most of the larger gold producers so far this year.

Last year, Kinross implemented a new capital allocation framework, and the stock price has since that time performed well on an absolute and relative basis. The company has committed to using 75% of excess cash in buybacks, where excess cash is defined as free cash flow minus interest and dividends.

Operational Performance

Since Kinross divested some of its assets in higher risk countries last year, the company has primarily been focused on the Americas. With that said, the low-cost Tasiast mine in Mauritania is a very important source of cash flow for the company, which is not without geopolitical risk.

The producing assets in the United States; Fort Know, Round Mountain, and Bald Mountain have continued to deliver consistent production. Even if we have seen more cost pressure in those assets over the last few quarters.

That cost pressure has to a large degree been offset by higher production volumes and lower costs in Tasiast and Paracatu in Brazil. The ramp up of La Coipa in Chile means that mine has started to have more of a material impact lately as well.


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