Tensions between the U.S. and Russia over attacks in Syria are affecting the stocks of mining companies in the gold and silver-rich nation.
The latest news is that the U.S. is getting ready to punish the regime of Assad, who is guilty of using chemical weapons against his own people, according to the White House. The U.S. announced sanctions against Russian bureaucrats and tycoons to punish Putin's closest group of collaborators for ongoing Russians aggressions and meddling in the 2016 presidential election.Ă‚
Such tensions are reverberating in the financial markets as shareholders are concerned for those companies that have production in Russia.
One of the affected stocks is Kinross Gold Corp. (KGC, Financial) as the Canadian gold mining company has two premium and low-cost underground mines, Kupol and Dvoinoye, in Russia. Both mines are located in the Chukotka region of the Russian Far East and are serviced by one mill.
At the beginning of the current week, the gold stock fell sharply on the heels of U.S. sanctions against Russia, which were perceived by the market as a threat to 20% of total production that Kinross Gold plans to derive from its Russian operations in 2018.
That equals approximately 490,000 ounces on a total production of equivalent gold, which has been guided by Kinross Gold at 2.5 million ounces.
Reassurances from the company that Russian operations remain unaltered by U.S. sanctions are continuing as planned. But the issue has dragged the share price a little bit to $3.78 from last Monday’s levels; however, the stock is still below the 50-SMA line:
There is now a new opportunity to increase the holding of Kinross Gold Corp. The stock is trading 43 cents higher than the 52-week low of $3.35 and is at 23% to the 52-week high of $4.91 per share.
But the last ratings may amplify opportunities for a buying approach.
The BMO Capital’s downgrade of the stock in Kinross Gold Corp to Outperform from a previous Market Perform rating may send market valuations one step lower. BMO Capital’s downgrade, the first in one-year time, was released on Tuesday, April 10.
Since the Deutsche Bank issued a new price target of $4.2 one day later, which drags the mean target price down to $5.21 from the previous $5.27, I would give the market some time to process BMO Capital’s negative rating in order to regain that 6 cents loss in the average.
Deutsche Bank’s new price target was issued on Wednesday, April 11.
The new mean, a result of 19 estimates ranging between $3.50 to $8.21 is a 38% growth from the current market valuation.
Deutsche Bank’s target price of $4.2 is the quantification of a rating which has been maintained by the German firm on a hold.
The recommendation rating on shares of Kinross Gold Corp is 2.4 out of 5. That is the mean of 19 ratings. As of April 2018, more than 40% of Wall Street suggests buying shares of Kinross Gold Corp. while the rest is on a hold approach.
Kinross Gold Corp has a market capitalization of $4.59 billion, a price-book ratio of 1.01 times towards an industry median of 2.06 and an EV-to-Ebitda ratio of 4.05 times versus an industry average of 9.90.
Kinross Gold is reporting about 1.249 billion shares outstanding, of which 56.7% is held by institutions.
Among the institutional holders of Kinross Gold Corp, the Van Eck Associates Corp. holds 5.94%, Smith & Company Inc. holds 4.45% and Renaissance Technologies holds 3.36%. They are the top shareholders. Holdings are as of Dec. 30, 2017.
During the last quarter of 2017, Pioneer Investments (Trades, Portfolio) initiated a position in Kinross Gold Corp and bought 4,793,133 shares. Jim Simons (Trades, Portfolio) added 7.90% to its holding to 41,846,099 shares.
Donald Smith (Trades, Portfolio) (-10.91% to 55,526,142 shares), Ray Dalio (Trades, Portfolio) (-21.80% to 397,255 shares) and Joel Greenblatt (Trades, Portfolio) (-91.75% to 100,550 shares) reduced their holdings.
(Disclosure: I have no positions in any stock mentioned in this article.)
