Kinross Gold: A Leading Precious Metal Mining Company Review
Kinross Gold (NYSE: KGC) Corporation is one of Canada’s largest precious metal mining companies. The company engages in the exploration, mining, and production of gold and silver. It was founded in 1993 with the participation of three companies.
These companies are Plexus Resources Corporation, CMP Resources, and QR Mines.
Kinross Gold is headquartered in Toronto, Canada, and operates in 8 active gold mines. These mines are located in Ghana, Brazil, Chile, Mauritania, Ecuador, the United States, and Russia.
The company has different segments namely Fort Knox, Round Mountain, Paracatu, Kupol, Maricunga, Tasiast, Chirano, Kettle River-Buckhorn, La Coipa, Maricunga, Crixas, and many more. However, the largest share of production is located in the United States.
The first project Kinross invested in was the Fort Knox gold mine. It is located in Alaska and started mining operations in 1996. From then on, Kinross expanded into other gold exploration and mining projects.
Let's get started to understand if Kinross gold stocks can be a viable investment option.
Before we start our review, this post is for educational purposes only and not an investment advice.
My goal is to offer an overview of the company, rather than suggesting if you should or should not invest with the company.
Why Invest in Gold with Kinross?
A lot of investors are looking to diversify their portfolios. Gold mining stocks like Kinross can be an interesting option for this goal.
Investing in gold mining stocks is a hybrid that combines stocks & gold investment in one place.
Usually, stocks and precious metals move in different directions. By buying gold mining stocks, you invest in a company's growth depends on its mining operations and the gold's market price.
A lot of investors thinking too much if they should invest in physical gold or paper gold. Buying Kinross stocks investors don't need to physically own the gold which saves them from a lot of problems.
Gold stocks and gold are different investment tools. They are regulated and traded differently.
When you buy gold you invest in the actual precious yellow metal. However, when you buy a gold stock you invest in the growth potential of a gold mining company. Therefore, gold and gold-stock prices are not affected by the same market forces.
Kinross Gold's stock reached its all-time high price by September 2020. The company made substantial profits from the high productivity of its three largest mines, accounting for 60% of the company's total gold production.
Kinross achieved record-high production levels, especially in the Fort Knox mine in the fourth quarter of last year.
Also, the Gold price reached an all-time high of $2,000 per ounce by August 2020. This trend means a continued earnings curve for gold investors in the midst of market volatility and economic uncertainties.
There may be a more profitable in the next years. Because the company's production is expected to even bigger in coming years.
If a high volume of production combined with the high gold prices then Kinross investors can be very profitable.
As a new investor, finding a stock that is seeing more than the average financial growth is quite difficult as it is important. This is because; a stock’s growth equals high returns on investments for investors.
However, one may not easily be able to spot stocks that are truly growing or just showing the traditional growth features. Most company’s growth cannot be vouched for as it is either over or about to end, and investing in it could be a step in the wrong direction.
There are quite a few factors to consider before making a choice on which company’s gold stock to invest in. It is normal that most investors have their strategies and preferences when it comes to making this choice, but if you are a new investor, I recommend this platform to you.
Not only because it ranks #2 according to Zacks, a stock ranking company, but also because of the numerous good reviews and relative ease of investment, low commission, and high returns prospects it possesses.
Here are a few other reasons why you should consider investing in Kinross Gold Corporation;
Earnings Growth: This is the main factor that attracts investors, of course. Investors feel more confident investing in a company with at least double-digit earnings growth and perceived great prospects.
Kinross offers all that along with stock price gains. With an EPS growth rate of 63.9%, it is an awesome choice for you, and it meets all the standards of what a profitable company should be.
The projected growth rate is another factor about Kinross that is eye-catching. With an expected EPS growth of 107.6% in 2021, above the industry average, Kinross is certainly a recommended broker choice for gold investments and trading.
Asset Utilization Ratio:The asset utilization ratio is the sale-to-total assets (S/TA) ratio of a company’s stock. This feature is often overlooked by investors, but it is a very important and reliable indicator in growth investing.
This metric shows the level of efficiency of a company to utilize its assets in sales generation.
Kinross Gold currently boasts a S/TA ratio of 0.4. This indicates that the company makes $0.4 in sales for every dollar in assets. When you compare this figure to that of the industry’s 0.27 on average, it only translates to the efficiency of Kinross.
Sales Growth: Sales growth is another factor to be considered. It plays just as important a role as sale generation; it is not enough to just generate sales without any actual growth.
Kinross Gold sales are expected to grow 19.3%, as against the industry average of 17.4%. This makes Kinross more attractive to investors, especially the new ones, and a viable investment option.
Huge Prospects from its Projects: The company has different mine locations in America that are doing tremendously and have more productivity span than other mines. Kinross looks set to benefit from organic development plans and projects in their mines.
One of them is Paracatu, one of their largest producing mines. It is a low-cost production location that provides strong output.
The Gilmore project at Fort Knox, Alaska, is another impressive project with lots of promises. It is a low-cost Brownfield expansion that is projected to keep running and yielding gold till 2030.
Other projects like Tasiast and the others are expected to keep delivering on high production rates and increase capacity to about 21,000 tons per day by the end of the year.
Investing in Kinross seems very viable as there is no risk of them running out of gold or having low production rates anytime soon.
Basically, the company has enjoyed strong productivity rates from its major mines, and they account for 60% of the total production of gold in the last quarter of 2020.
Ranking: Kinross is ranked highly by Zacks (Zacks Style Score system) and also has a very growth score. This combination – a Growth Score of A and a Zacks #2 rank – means that Kinross’s returns are higher and better and consistently beat the market.
The Zacks Consensus Estimate for Kinross’s fourth-quarter gold equivalent production currently stands at 629,000 ounces, indicating a rise of 3.5%. Kinross also has a VGM Score of B. When this score is considered along with its Zacks ratings, Kinross is a reliable investment option for investors.
Kinross Gold operates mines in America, Russia, and West Africa. It records 60% of its gold production from the United States and Brazil, while Russia records 20% and West Africa 20% too.
Its major mines are in the USA, and we will look into them briefly;
Fort Knox: The Fort Knox mine is an open-pit mine located in Alaska. It is the center of Kinross’s gold production. Productions in this location began in 2009, and it has a 45,000 tonnes per day capacity. In 2015 alone, it produced about 401,500 ounces of gold.
Though it is expected to be out of ore soon, the mine life of this location has been projected to reach 2027 with the $100 million expansion investment which the company announced in 2018.
Fort Knox, by all indications, is staying a very long time and is an integral part of the success story of Kinross Corporation.
Its safety mining performance was recognized in 2019 by the US National Mining Association as they won the coveted “Sentinels of Safety Awards” for achieving 1.5 million hours without a lost-time injury.
With the announcement of the Gilmore expansion project on Fort Knox, its mine life has been projected to last till 2030. Things are looking good.
Round Mountain: Located in Nevada, this mine is also an open-pit mine and one of the best mining jurisdictions in the world. Named so because of its physical round mining site shape, it practices conventional open-pit mining methods.
Round mountains process ore by mill and heap leach. It has been in operations since 2003 and is a joint venture between Kinross Gold and Barrick Gold.
Kinross announced its expansion in 2017, naming it the Phase W expansion project. It produced its first gold bar from the new vertical carbon-in-column plant in 2019.
This expansion will increase the mine life of Round Mountain by at least 5 years and production by 1.5 million Au oz through 2024. This mine is one of Kinross’s largest and yielding mines, increasing productivity rates yearly and consistently too.
Bald Mountain: Kinross acquired this site from Barrick Gold in 2016. Located in Nevada, the mine produced about 160,000 ounces of gold in 2015 and yielded tremendous returns that year.
It has been authorized by the US Bureau of Land Management to increase its explorations on the site, and this is good news for Kinross. The site has a proven 2.1 million ounces in it and reserves of 0.63 g/ton, making it a gold fertile site, and production levels and output are expected to increase.
Paracatu: This mine is located in Minas Gerais, Brazil, and is one of Kinross’s largest outside the USA. It is an open-pit gold mine and the largest employer of labor in that region of Brazil.
Fully acquired in 2004 from Rio Tinto for $255 million, Kinross operated the site as Kinross Brasil Mineracao S.A. It churned out 477,662 equivalent gold ounces in 2015 and has since produced an increasing amount of gold for the company.
Paracatu has moved into higher-grade ore, and productivity levels have been projected to drastically increase by the third quarter of the year.
Other mines like Tasiast, Chirano, and many more are located around the world in different locations, and they all produce a good number of gold equivalent ounces daily, making Kinross a very sustainable company and a sure investment option when you think of gold.
With a host of other non-operating and divested mines scattered all over the world like the La Coipa and Lobo-Marte in Chile and Crixas in Brazil, the company is by no means running out of mines or showing any signs of slowing down on acquiring more.
Gold prices, like other commodities, rise and fall, and as an investor, you need to be aware of this fact.
The mines where gold is generated also have their own risks, which can range from a host of many economic and physical issues, including increasing costs and decline of ore grades in the mines.
Companies that operate mines in less politically stable countries also face jurisdictional risks, as productions could be interrupted or halted at any time.
The future of gold looks bright, but investors should be wary of these risk factors laden in every gold exploration company before making investments. Always lookout for the risk levels of these companies to be able to invest in those less risky ones.
For instance, companies that have their mine locations in countries and areas that are politically stable and geographically safe to run productions are less risky than those that are located in countries with political tensions.
How to Buy Kinross Gold Shares?
Kinross Gold stock can be bought in three easy steps
Download your preferred trading platform: The first thing you should do if you are a beginner is to compare different trading platforms.
Look out for the one with low commissions and fees, high ratings, and easy-to-use investment tools to track your portfolio. After this, you can now fill out the application with your details as required.
Fund your account by making a bank transfer or by using your credit or debit card.
Search for Kinross Gold Corporation: After the registration and funding of your account, search for Kinross Gold by name or ticker symbol (KGC).
Start investing: You can start making purchases and monitoring your stock.
Kinross Gold is a viable and reliable gold-stock investment option. It has earned a Growth Score of B and ranks #2 on Zacks ranking systems.
But if this is not enough reason, their operations are vast and spread out in America, Russia, and Africa, with its major sites yielding large productivity rates consistently. These sites all have extensive mine lives and no signs of dropping the bar or reducing productivity.
Finally, you are recommended to take a look at these stock investing books if you want to build a solid investor fundament.
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