Kinross Gold: Canaccord Lowers Target To $10.50

On February 16th, Kinross Gold Corp (TSX: K) put out a number of news releases, the first being the fourth quarter dividend amount, which will be US$0.03 per common share. The second release gives details about their climate change strategy, which includes incorporating energy-efficient and renewable energy projects into their operations, to take climate change into consideration when making business decisions.

They have set a target for themselves, which is to achieve a 30% reduction in intensity per ounce produced emissions by 2030. They say, “Kinross recognizes the global importance of climate change and the Company’s responsibility to contribute positively to mitigating its impacts, as well as its significance as a strategic matter to the business.”

Then the company announced its 2021 exploration results and fourth quarter and full-year financial results. The company reported that Udinsk and Manh Choh’s feasibility tests should be completed by the third quarter and year-end respectively. While the La Coipa restart is on time and on budget.

Kinross reported fourth quarter results in-line with their own guidance. Gold production came in at 2.07 million ounces, slightly below their 2.1 million guidance, while the all-in sustaining costs were $1,138 versus their $1,110 guidance. The company saw its revenue decrease 11.5% year over year to $3.73 billion, while gross profits decreased almost 30% to $1.16 billion. Net income came in at $221.2 million, down from $1.34 billion last year, putting the company’s earnings per share at $0.17.

Kinross Gold currently has 13 analysts covering the stock with an average 12-month price target of C$11.69, or a 67% upside to the current stock price. Out of the 13 analysts, 3 have strong buy ratings, 9 have buy ratings and 1 analyst has a hold rating. The street high sits at C$15.30 which represents a 120% upside to the current stock price.

In Canaccord’s fourth quarter review, they reiterate their buy rating but slightly lower their 12-month price target from C$11.50 to C$10.50, saying that the company’s growth profile remains intact, writing “Overall the updated guidance reaffirms the company’s growth profile, albeit at higher costs than we were modeling.”

For the results, the company reported fourth quarter results above Canaccord’s estimates. Canaccord expected adjusted earnings per share of $0.05, while Kinross reported $0.08. EBITDA came in lower than Canaccord’s $324 million estimates, while production came in below their 510,000 ounce estimate.

For the 2022 guidance, Canaccord says that the 28% increase in yearly production to 2.65 million ounces is good, and primarily driven by the startup at La Coipa and higher production at Tasiast. The company guiding that cash costs will be flat year over year at $830 per ounce is also solid.

Canaccord notes that the Russia Ukraine political issue puts in an overhang on the stock. They note that during the 2014 Russian annexation of Crimea, Kinross’ shares underperformed the gold indices by 15% while the Kupol mine remained unaffected throughout that incident and continued to bring in and out supplies and gold out of the country.

Below you can see Canaccord’s updated 2022 and 2023 estimates.

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.

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