Look for This Catalyst to Drive Kinross Gold Shares
Kinross Gold (NYSE:KGC) has been a major disappointment in the gold mining sector. While the stock is up nearly 4-fold from its 2000 trough, it has performed terribly in the past few years. The company has failed to grow production, it has seen rising production costs, and it has made some poor investment decisions.
In 2012, the company started to turn itself around under the guidance of a new management team headed by CEO J. Paul Rollinson. So far, he and his team have done an excellent job. They have shed less valuable and high risk projects, they have refigured existing projects so that they are more efficient, and they have improved the company’s finances. While the process of righting this ship has been a long and laborious one, things seem to be headed in the right direction.
Nevertheless, the stock has continued to be a serial underperformer, with shares flat for the year versus the Market Vectors Gold Miner ETF (NYSEARCA:GDX), which is up 13 percent. Apparently investors are still waiting for the company to show positive bottom-line results before jumping on board Kinross shares.
Next week, however, the company is releasing a significant update on one of its largest mines — the Tasiast project in Mauritania. The company announced that on Monday it is going to release the results from its feasibility study for the Tasiast mine. This means that it is going to be providing investors with details pertaining to various characteristics of the mine such as how much gold it will produce and how much it will cost the company to produce this gold.
While the mine’s 247,000 ounces of production accounted for just under 10 percent of the company’s overall production in 2013 going forward the mine is expected to produce more than this — about 275,000 ounces per year. More importantly, however, it is going to produce for a long time given that it has over 6.5 million ounces of gold.