Insiders Are Buying Kinross Gold

Oct.18.13 | About: Kinross Gold (KGC)

In this article, I will feature one gold miner that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.

  2. The stock is sold by no insiders in the month of intensive purchasing.

  3. At least two purchasers increase their holdings by more than 10%.

Kinross (NYSE:KGC) is a Canadian-based gold mining company with mines and projects in Brazil, Chile, Ghana, Mauritania, Russia and the United States, employing approximately 9,000 people worldwide.

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Insider buying during the last 30 days

Here is a table of Kinross's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Ownership Plan Current Ownership Increase In Shares
Rick Baker SVP Oct 3 2,186 Yes 40,923 shares +5.6%
Thomas Elliott Officer Oct 3 2,254 Yes 36,892 shares +6.5%
Gregory Etter Officer Oct 3 2,754 Yes 12,474 shares +28.3%
James Fowler Officer Oct 3 1,218 Yes 8,093 shares +17.7%
Patrick Hickey Officer Oct 3 2,118 Yes 20,453 shares +11.6%
Glen Masterman Officer Oct 3 2,728 Yes 35,068 shares +8.4%
Warwick Morley-Jepson Officer Oct 3 2,150 Yes 42,480 shares +5.3%
Paul Rollinson CEO Oct 3 8,859 Yes 155,082 shares +6.1%
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There have been 24,267 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Kinross's insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
October 2013 24,267 0
September 2013 0 0
August 2013 0 4,102
July 2013 0 0
June 2013 21,227 0
May 2013 40,000 0
April 2013 0 0
March 2013 12,300 0
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There have been 97,794 shares purchased and there have been 4,102 shares sold by insiders since March.

Financials

Kinross reported the second-quarter financial results on July 31, with the following highlights:

Revenue $968.0 million
Adjusted net earnings $119.5 million
Reported net loss $2.5 billion
Cash $1.5 billion
Debt $2.1 billion
Gold production 655,381 gold equivalent ounces
Production cost of sales $737 per gold equivalent ounce
All-in sustaining cost $1,072 per gold equivalent ounce
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Reported net loss was $2,481.9 million, or $2.17 per share, for Q2 2013, compared with earnings of $113.9 million, or $0.10 per share, in Q2 2012. Reported net loss included an after-tax non-cash impairment charge of $2,289.3 million.

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Outlook

Kinross expects to be within its 2013 forecast guidance for production (2.4-2.6 million attributable Au eq. oz.), production cost of sales ($740-$790 per Au eq. oz.), and all-in sustaining cost ($1,100-$1,200 per Au oz. sold). The company has reduced its 2013 capital expenditure forecast to approximately $1.45 billion from $1.6 billion.

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Competition

Kinross's competitors include Agnico-Eagle Mines (NYSE:AEM), Goldcorp (NYSE:GG), Yamana Gold (NYSE:AUY), Newmont Mining (NYSE:NEM), and Barrick Gold (NYSE:ABX).

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Kinross has the lowest EV/EBITDA ratio among these six companies.

Here is a table of these competitors' insider-trading activities during the last six months.

Company Insider buying / shares Insider selling / shares
ABX 375,487 103,399
AEM 24,445 0
NEM 3,000 2,026
GG 50 62,546
AUY 0 460,713
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Agnico-Eagle Mines has also seen intensive insider buying during the past 30 days.

Conclusion

There have been eight different insiders buying Kinross and there have not been any insiders selling Kinross during the last 30 days. Three of these eight insiders increased their holdings by more than 10%.

There are 10 analyst buy ratings, nine neutral ratings and three sell ratings with an average price target of $6.84. The stock is trading at a forward P/E ratio of 18.07.

Kinross's gold reserves are 59.6 million ounces and the company has a book value of $5.86 per share. I believe the stock could be a good pick below the book value based on the intensive insider buying.

Disclosure: I am long NUGT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.