Kinross Gold Corp. (NYSE:KGC) informed the market through a news release published on its website yesterday, July 7, that the offering of a $500 million corporate loan made of 4.50% interest-bearing unsecured senior notes with maturity in 2027, expired.
The closing of the company’s notes offering was scheduled by Kinross Gold for July 6.
Kinross Gold Corporation has not yet reported the amount of cash that it has successfully collected through the issuance of this corporate loan, however, the Canadian gold producer will use it to extinguish a previous $500 million term loan with maturity in August 2020. If the placement of the aforementioned senior notes has not been enough to collect the funds needed by Kinross Gold to cancel the previous $500 million portion of its long-term debt with maturity in 2020, the company will use funds from its cash on hand and securities, which amount was $832.4 million as of the first quarter of fiscal 2017.
Thanks to this double transaction of corporate financing, Kinross Gold will see its autonomy in the management of the financial resources increasing, because operations will be less dependent on what the yellow metal will do on the bullion market.
Concerning the benefits that Kinross Gold's capital structure will have from this transaction of corporate refining structure in terms of homogeneity, flexibility, elasticity and certainty in the payment of interest expense, you can read in my previous article.
Kinross Gold Corporation closed week 27 at $3.84 per share, down 7 cents (U.S. Dollars) or minus 1.79% from the prior trading days with a volume of 12,680,454 shares traded on the New York Stock Exchange versus an average volume of 9.51 million shares traded over the last ten trading days and versus an average volume of 12.53 million shares traded over the last three trading months.
The Canadian gold stock has currently a market capitalization of $4.5 billion, a price to book (P/B) ratio of 1.11, a price to earnings (P/E) ratio of -960, a price to sales (P/S) ratio of 1.29 and an Enterprise Value to Ebitda (EV/Ebitda) ratio of 5.45.
As of today, analysts give a recommendation rating of 2.6 out of 5. The analysts’ average target price per share is $4.76 which represents a 23.3% upside from the current share price. The target price ranges between a low of $2.88 and a high of $6.00 per share.
When compared to its most direct peers, Barrick Gold Corporation (ABX), Goldcorp Inc. (GG) and Newmont Mining Corporation (NEM), shares of Kinross Gold are more convenient at the moment because the gold stock has an EVO (enterprise value per ounce of gold proven and probable resource) of $ 185.48, which is considerably lower than the one of its peers.
The picture above shows the total amount of mineral reserves and average gold grade at Dec. 31, 2016, the enterprise value and the EVO metric for each of the most important Canadian gold stocks that are traded on the U.S. stock markets. This list also includes the Australian miner Newcrest Mining, which – although traded on the Australian stock exchange – can rely on a consistent volume of mineral reserves. Newcrest’s EVO metric has been converted from AUD to USD according to the latest exchange rate 1AUD to 75923 cents of USD.
Disclosure: I have no positions in any stock mentioned in this article.
