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KGC vs. ETF Alternatives
Wednesday, Apr 26:40 PM
Wednesday, Apr 26:40 PM| 4 Comments
- Yamana Gold (AUY) looks to have captured a huge prize in the Malartic gold mine via the acquisition of a 50% stake in Osisko Mining's (OSKFF) mining and exploration assets, but analysts are skeptical about AUY effectively paying a premium without gaining a controlling interest in the mine itself.
- Cowen analyst Adam Graff approves of the deal as it would help generate some tax savings for AUY in Canada, but he doubts the savings will offset the negative impact of the purchase premium.
- Investor Adrian Day says the implied price AUY would pay doesn't look grossly high, but the deal structure, where Yamana will not get control, is unusual; if hostile takeover bidder Goldcorp (GG) comes back with a better offer, he thinks many shareholders will find it easier to wrap their heads around than AUY's deal.
- Analysts had not expected another mining company to challenge Goldcorp, and some see a higher bid coming: "They have been chasing this asset for five years and there is no reason they would let it slip through their fingers."
- AUY shares -2.2% on the day, but most gold miners gained: OSKFF +7.7%, GG +2%, NGD +4.4%, ABX +4%, AGI +4%, NEM +3.3%, ANV +3.3%, NG +3%, GFI +2.7%, KGC +2.6%.
Monday, Mar 316:10 PM
Monday, Mar 316:10 PM| 2 Comments
- Kinross Gold (KGC) +2.2% AH after releasing a feasibility study for its Tasiast expansion with a much lower estimated capital cost than previous, but says it does not plan to make a final decision on the project until 2015 at the earliest.
- KGC says the initial capital cost to expand the mine in Mauritania would total $1.6B, compared with its pre-feasibility estimate of $2.7B.
- The study forecasts average annual production of 848K gold oz. with an internal rate of return of ~17% during the first five years (2018-22).
Friday, Mar 289:58 AM
Friday, Mar 289:58 AM| 2 Comments
- Kinross Gold (KGC +1.5%) is bouncing back a bit in early trading, but that's after sliding 20% since March 14 as KGC has much to lose if Russia seizes assets in what appears to be a tit-for-tat sanctions battle with Canada's government.
- KGC is one of Canada's biggest investors in Russia: According to Canaccord Genuity estimates, 24% of KGC’s NAV is composed of its ownership and operatorship of the Kupol mine and Dvoinoye project in the Russian Far East.
- Citing the recent pullback. Goldman Sachs upgrades KGC to Neutral from Sell while maintaining its C$4.20 share price.
Wednesday, Mar 269:53 AM
Wednesday, Mar 269:53 AM| Comment!
- Kinross Gold (KGC -0.4%) says it will release on Monday the results of a feasibility study on the proposed expansion of the Tasiast gold mine in Mauritania; it is considering a new, 38K metric tons/day mill at the site.
- KGC announced the full study a year ago after a pre-feasibility study showed encouraging findings.
Monday, Mar 243:48 PM
Monday, Mar 243:48 PM| 24 Comments
- Gold prices tumbled nearly 2% to settle at five-week lows as investors continued to take profits against the metal's YTD surge with an eye toward an improving U.S. economy and the possibility of an interest rate hike as soon as early next year.
- So Credit Suisse's move today to lift stock price targets for Barrick Gold (ABX -4.1%) and Newmont Mining (NEM -2.1%) was ill-timed as gold miners (GDX -4%) fall sharply across the board.
- On ABX, the firm raises its target to $21 to reflect the company's relatively conservative $1,100/oz. gold price assumption for reserves, exploration upside potential within its asset base (demonstrated by its 15M oz. Goldrush discovery) and strong base of low cost assets.
- On NEM, the firm ups its target to $26 on higher forecast operating cash flow and a higher NAV target multiple, but a resolution of the ore export ban in Indonesia is necessary to become more constructive.
- Also: AU -4.3%, NG -4.9%, GG -3.6%, KGC -4%, NGD -4%, IAG -3.8%, GFI -1.9%, HMY -3.2%, SLW -6.5%, ANV -6.7%, BTG -4.9%.
Thursday, Mar 68:30 AM
Thursday, Mar 68:30 AM| 2 Comments
- Kinross Gold (KGC) says it is suspending operations at its Maricunga mine in Chile after unionized employees went on strike following the failure to agree on a new collective agreement at the mine.
- KGC says it cannot not predict when the employees would return to work or the impact on production.
- Although mining operations have been suspended, the heap leach facility and processing plant remain in operation.
- Maricunga produced ~188K gold equivalent oz. in 2013.
- KGC -2.2% premarket.
Monday, Mar 39:55 AM
Monday, Mar 39:55 AM| 10 Comments
- Gold futures are surging in the wake of the crisis in Ukraine, and that's giving precious metals miners a big boost in early trading.
- AU +5.2%, GOLD +5%, GFI +4.6%, MUX +4.1%, BVN +3.9%, MVG +3.6%, SSRI +3.3%, IAG +3.2%, BTG +3.1%, HMY +3.1%, EXK +3.1%, ABX +2.8%, AUY +2.8%, SA +2.8%, SLW +2.7%, GG +2.7%, NEM +2.6%, HL +2.6%, KGC +2.3%, AGI +2.2%, AG +1.9%, NG +1.9%, PPP +1.8%, AUQ +1.6%, PAAS +1.2%, NGD +1%.
- ETFs: GDX, GDXJ, NUGT, DUST, SIL, GLDX, JNUG, SLVP, RING, SILJ, GGGG, JDST, PSAU
Thursday, Feb 139:19 AM
Thursday, Feb 139:19 AM| 1 Comment
- Kinross Gold (KGC) -2.9% premarket after surprising investors yesterday in slashing its year-end 2013 gold reserves by 33% to 39.7M oz. - a massive decline, particularly since KGC used the same $1,200/oz. gold price in both years to calculate reserves.
- KGC wants to stick to high-margin ounces, so it calculated reserves uses a "fully-loaded costing methodology" that factors in costs for sustaining capital, waste management, and other work; the result is that millions of marginal ounces were dropped out of reserves.
- The irony is that KGC was the one senior gold company that was not expected to cut its year-end reserves, since it had used the conservative $1,200/oz. price to calculate reserves even before gold prices sank.
Wednesday, Feb 125:09 PM|Wednesday, Feb 125:09 PM| Comment!
Wednesday, Feb 1212:10 AM|Wednesday, Feb 1212:10 AM| Comment!
Tuesday, Feb 115:35 PM|Tuesday, Feb 115:35 PM| 1 Comment
Tuesday, Feb 1110:44 AM
Tuesday, Feb 1110:44 AM| 24 Comments
- Gold mining (GDX) CEOs may be wishing they had followed the lead of Kinross Gold (KGC) in reducing its gold reserves last year after most of the big North American miners report year-end results this week; thanks in part to the reserve issue, they could be a huge mess, FP's Peter Koven writes.
- The miners didn't see last year's 27% price plunge coming: With the exception of KGC, their reserves are calculated based on prices far above the current ~$1,250/oz., as Barrick Gold's (ABX) reserves are calculated at $1,500/oz., Goldcorp (GG) uses $1,350 and Newmont Mining (NEM) $1,400 - those numbers will come way down when year-end results are reported.
- "You would think after the tens of billions of writedowns that the industry suffered that we would be done," says Deutsche Bank's Jorge Beristain, "but no, it is going to be another kick in the pants for the fourth quarter."
- The miners at greatest risk for reserve reductions are those with high costs and low grades, such as Golden Star Resources (GSS), Iamgold (IAG) and Gold Fields (GFI).
Wednesday, Jan 299:49 AM
Wednesday, Jan 299:49 AM| 12 Comments
- As equities open in a broad-based decline, precious metals miners show early strength: ABX +4.1%, NG +4.1%, EXK +3.7%, GG +3.7%, IAG +3.3%, SA +2.9%, AG +2.8%, SSRI +3.1%, AUY +2.7%, GOLD +2.5%, NEM +2.3%, MVG +2.3%, SLW +2.2%, PAAS +2.2%, AU +2.1%, KGC +2.2% (Briefing.com).
- ETFs: GLD, SLV, GDX, GDXJ, NUGT, IAU, AGQ, PHYS, DUST, SIL, SIVR, USLV, ZSL, SGOL, UGL, DGP, GLL, GLDX, DZZ, UGLD, DGL, DSLV, DBS, SLVP, GLTR, DGZ, AGOL, DBP, JNUG, DGLD, GLDI, RING, GGGG, SLVO, WITE, SILJ, PSAU, TBAR, JDST, USV, UBG, JJP, RGRP, BLNG.
Tuesday, Jan 283:04 PM
Tuesday, Jan 283:04 PM| 4 Comments
- The big question as gold miners earnings results begin to roll in next week - "Can miners cut costs fast enough to satisfy investors?"
- JPMorgan's John Bridges expects an average reduction in all-in costs of about $100 per ounce this year, and notes the mid-point of recent Goldcorp (GG) guidance was $90. However, he adds, while some of the savings are sustainable, deferring things like truck and equipment purchases can't go on forever. He notes Kinross (KGC -0.2%) announced a 40% reduction in capex this year, but suggested reinvestment would be required at some point.
- Ahead of results, the Gold Miners ETF (GDX +1.2%) continues its big 2014, now up 9.6% YTD.
- First up on the earnings front is New Gold (NGD) next Thursday, followed by Kinross six days later, and then Barrick Gold (ABX) the day after that.
- Miner ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, DGZ, AGOL, DGLD, GLDI, TBAR, UBG
Friday, Jan 103:49 PM
Friday, Jan 103:49 PM| 19 Comments
- Gold futures settle at a four-week high, rising 1.4% to $1,246.90, as the surprisingly weak jobs report reopens debate over the pace of bond buying at the Fed; precious metals miners are far outpacing the broader market, with the top gold miner ETF (GDX) surging 3%.
- Among the top miners: ABX +2.3%, GG +3.3%, NEM +2.4%, AU +3.8%, KGC +1.3%, GFI +4.3%, AUY +2.8%, RGLD +5.3%, AGI +2%, AEM +4.5%, SLW +4.4%, IAG +1.9%, FNV +1.5%, CDE +2.3%, EGO +3.8%, NGD +2.9%, NG +6.9%, HMY +2.7%.
- ETFs: GDXJ, NUGT, DUST, SIL, GLDX, SLVP, RING, GGGG, SILJ, JNUG, PSAU, JDST.
Wednesday, Jan 812:42 PM
Wednesday, Jan 812:42 PM| 36 Comments
- Moody’s is reducing its forward view for the average price of gold and silver in 2014 and beyond to $1,100/oz and $18/oz, respectively, dealing another blow to a precious metals sector already reeling from high costs and low investor confidence.
- The decision means Moody’s likely will take a harsher view of the prospects of the companies whose debt it rates, potentially leading to rating downgrades and higher borrowing costs for miners.
- Moody's rates most of the largest gold producers including Barrick Gold (ABX -1.8%), Newmont Mining (NEM -1.6%), AngloGold (AU -2.1%), Goldcorp (GG -1.5%) and Kinross (KGC -1.1%); ABX and AU already are on a negative outlook from the agency.
- Fundamentals "seem unfavorable over the next couple of years as the global economy maintains forward momentum, governments unwind various stimulus programs, and the threat of inflation remains subdued in most major economies," Moody's writes.
- ETFs: GDX, GDXJ, NUGT, DUST, GLDX, RING, GGGG, JNUG, PSAU, JDST, SIL, SLVP, SILJ.
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