On Sept. 2, Kinross Gold Corporation  (KGC, Financial) announced the repayment of $250 million in senior notes that were due Sept.1.
A significant jump on the stock market is expected after the release of this news.
Yesterday, the stock closed at $4.18 per share from $3.99 per share of the day before, up 19 cents (or 4.76%) with 23,418,440 shares traded on the New York Stock Exchange.
Kinross gained 129.66% year to date versus VanEck Vectors Gold Miners (ARCA:GDX, Financial)Â ETF Â +92.56% and S&P 500 + 6.20%:
The analysts’ recommendation rate is 2.7. The rate ranges between 1 (Strong Buy) and 5 (Sell). The analysts’ average target price is 6.34, the low target price is 4.50 and the high target price is 8.00.
Source: Yahoo Finance
This is good news for long term investors of Kinross, since the company focuses on shareholder’s value accretion.
With the payment of the current portion that was due September 2016, the miner has no long term debt to pay until 2020. The company has extended the maturity dates of its $500 million term loan and $1,500 million revolving credit facility by one year, respectively, to Aug. 10, 2020 and Aug. 10, 2021. Therefore, the long-term debt due after 2020 amounted to $1.7 as of June 30.
Now Kinross has a total liquidity of approximately $2.25 billion, which is considered to be sufficient to proceed with the Tasiast Phase One expansion and fund the exploration activities. The expansion is focused on high-quality brownfield projects and the discovery of new resources within Kinross’ mines.
At Tasiast, Kinross expected to spend an additional $160 million, which increased the 2016 capex guidance to $755 million. But in the third quarter, the miner will provide an update. The first phase of the expansion is expected to increase mill throughput capacity and gold production to approximately 409,000 ounces at AISC of $760 per ounce. First gold production is expected to commence in 2018.
So the miner is not expensive when compared to its peers:
Source: data from Yahoo Finance
Kinross’ price/book (mrq) is 1.22 and EV/Ebitda is 7.90. With an average target price of $6.34, analysts forecast a 52% upside in the share price at current levels.
Disclosure: I have no positions in Kinross Gold Corporation.
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