What Could Lead to a Further Upside for Kinross Gold in 4Q17?



KGC: Significant outperformance

Kinross Gold (KGC) stock has risen 42.4% year-to-date (or YTD) until October 13, 2017. The gain recorded by the VanEck Vectors Gold Miners ETF (GDX) is 14.0% in comparison. In 3Q17, the stock has almost equaled the performance of GDX by rising 4.2%.

In contrast to KGC, its peers (GDX) (SGDM) Goldcorp (GG), Yamana Gold (AUY), and Eldorado Gold (EGO) experienced stock returns of -1.5%, -5.7%, and -29.8%, respectively, YTD.

Kinross depicted solid operational performance by reporting a 2Q17 earnings beat following a 1Q17 earnings beat. Also, many analysts upgraded Kinross Gold in 2Q17, triggering positive momentum among investors.

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Advancing projects

On September 18, 2107, Kinross Gold (KGC) announced that it would proceed with the Tasiast Phase Two and Round Mountain Phases W after the feasibility studies if these projects were concluded.

These projects would entail a combined cost of ~$1.0 billion. These are extremely important projects for the company in terms of production growth as well as cost reduction.

While Tasiast Phase Two would increase the mill capacity to 30,000 tons per day (or tpd) from the current 12,000 tpd, Round Mountain Phase W is expected to extend the mine life by five years and increase the life-of-mine production by 1.5 million ounces.

Funding projects

Kinross Gold (KGC) has made it clear that it would be able to fund the projects through its strong balance sheet, existing liquidity, and operating cash flows. The management also noted during the September 18, 2017, conference call that the company would be able to go through the funding of both of projects regardless of gold prices.

Next, let’s look at Yamana Gold’s (AUY) key expectations for its 3Q17 results.


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