On April 5th, Kinross Gold (TSX: K) announced the sale of its Russian assets, with the firm revealing that it has entered into an agreement with a syndicate of mining companies to sell 100% of its Russian assets for a total consideration of $680 million.
Kinross says that the terms will see them get the total consideration of $680 million eventually. Consideration consists of $400 million for their Kupol Mine, with terms indicating that $100 million will be received upon the deal closing, $150 million is then to be received before the end of 2023, a further $100 million is to be paid before the end of 2024, and $50 million before the end of 2025. The remaining $280 million consists of consideration for the Udinsk project, for which they will receive $80 million before the end of 2025, $100 million before the end of 2026, and $100 million before the end of 2027.
Kinross says that the total deferred payments “are secured by an extensive security package that includes share pledges, financial guarantees, and an escrow account.”
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There are currently 13 analysts covering Kinross stock, the average 12-month price target sits at $10.64, which represents a 45% upside to the current stock price. Out of the 13 analysts, 3 have strong buy ratings, while another 8 analysts have buy ratings and 2 analysts have hold ratings on the stock. The street high sits at $14 from two analysts, the price target represents a 91% upside to the current stock price.
In BMO’s note on the sale. they reiterate their outperform rating and $10.00 12-month price target, saying that this is very positive news, “given the severity of the ongoing conflict with Ukraine and Kinross’s position as
essentially a forced seller.”
Though, Kinross accepting an all-cash offer with staggered payments “mutes the immediate benefits to Kinross.” BMO says that because they carried the firms Russian assets at a $0, the transaction had a “modest impact” on their estimates.
Lastly, BMO says that they are reiterating their outperform rating as they believe the shares are oversold on Russia risks. They write, “The sale of these assets alleviates much of the negative overhang the stock has faced since the start of the Russian conflict.”
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
