The Toronto Stock Exchange approved Kirkland Lake Gold Ltd.’s (KL) repurchase of a stake of its own stock.
The company can repurchase a maximum of 16,456,561 ordinary shares. That equals 10% of the public float as of Tuesday, May 15. The stock in Kirkland Lake Gold is made of 211,199,478 shares outstanding. It is at the company’s discretion to determine the acquisition timing and the volume of shares to be acquired for cancellation.
A move to purchase stock on the Toronto Stock Exchange or another Canadian stock exchange will end on May 21, 2019 unless the transaction is completed earlier or ended by the company. The transaction is known as a Normal Course Issuer Bid (NCIB) and will be subject to rules set by the Toronto Stock Exchange. The buy-back of its own shares will be made by Kirkland Lake Gold at market price.
Kirkland Lake Gold can purchase a maximum daily volume of 199,959 ordinary shares, according to the renewed NCIB. Under the prior NCIB, the company purchased 5,512,800 shares of its common stock during the period from May 17, 2017 to May 16, 2018. The average price was $17.98 a share.
According to the Kirkland Lake Gold’s board of directors, the repurchase of common shares under the NCIB is a convenient employment of financial resources. The transaction is also in the best interests of the shareholders, the company says.
Investopedia defines the normal course issuer bid (NCIB) and says that “this repurchasing strategy allows the company to buy only when its stock is favorably priced.”
Kirkland Lake Gold is trading at approximately $19.21 per share and has a market capitalization of $4 billion. The stock is up 23% this year and 140% for the 52-weeks through May 17.
The share price is above the 200, 100 and 50-SMA lines and about 50 cents below the 52-week high of $19.76 per share. The 52-week low is approximately $7.52 per share.
Kirkland Lake Gold has a price-book ratio of 4.35 times and an enterprise value to earnings before interest taxes amortization and a depreciation (EV-to-Ebitda) ratio of 12.77 times.
The miner has a 12-trailing months Ebitda margin of 50% versus an industry median of 25%.
The Van Eck Associates Corp., Royal Bank of Canada and FMR LLC. are the most prominent institutional holders of Kirkland Lake Gold with 11.44%, 3.62% and 2.41% of total shares outstanding. Holdings are as of Dec. 30. Institutions hold 46.81% of the stock, while insiders hold 0%.
As of May 18, the recommendation rating is 2 out of 5 and the average target price is $21.19 per share. As of April, seven analysts of 10 suggested a Buy in shares of Kirkland Lake Gold. A total of three analysts recommended a Hold on the stock. The average target price is a mean of 11 estimates ranging from $17.66 to $23.29 per share.
(Disclosure: I have no positions in any stock mentioned in this article.)
