Can Kinross Gold’s Balance Sheet Support Future Growth?
Kinross Gold’s (KGC) liquidity position didn’t change much at the end of 3Q17 compared to the end of the second quarter. Its cash and cash equivalents fell $69.2 million in 3Q17 to $992.1 million. In addition to cash, the company had $1.4 billion in available credit, taking its total liquidity to ~$2.5 billion.
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What makes this liquidity position even more positive is that the company doesn’t have any debt due until 2021. That should help it invest in future development opportunities.
Financially flexible to advance growth projects
In its 3Q17 earnings conference call, Kinross Gold’s management sounded upbeat about the company’s strong financial position. Its chief executive officer, Paul Rollinson, said the company has a strong balance sheet and all of its organic development projects are advancing according to plan.
The company also said it’s in talks with lending institutions with respect to its long-term capital expenditure funding requirements. It also pointed to the sale of non-core assets as another possible source of capital. These capital sources along with operating cash flow could help the company pursue development opportunities and maintain an appropriate liquidity position.
Peers (RING) (GDXJ) Newmont Mining (NEM) and Barrick Gold (ABX) have reduced their debts considerably over the past few years. Goldcorp (GG) and Agnico Eagle Mines (AEM) still have lower financial leverages than their senior gold peers (GDX).
In the next part, we’ll look at Kinross Gold’s analyst recommendations.