Gold miner
Kinross Gold Corporation
(
KGC
) has completed the sale of its 50% interest in Brazil's Crixas
gold mine to
AngloGold Ashanti Ltd.
(
AU
) in an all cash deal worth $220 million. Kinross announced its
intention of divesting the Crixas asset late last month, and the
deal was expected to close in the ongoing quarter itself.
The divestment of Crixas is in line with Kinross' philosophy of
focusing on its core assets in a bid to improve its production
profile by turning its attention towards more important assets.
Kinross' share of Crixas' proven and probable gold reserves was
about 375,000 ounces as of December 31, 2011. The mine was expected
to produce about 70,000 gold equivalent ounces in 2012.
According to Kinross, the sale of Crixas will not have a major
effect on its production targets for the year. The company remains
on track to produce 2.6-2.8 million attributable gold equivalent
ounces in 2012.
Moreover, the sale is also in conjunction with Kinross' strategy of
optimizing its capital expenditure program. It is focused on
spending cash on development moves only out of its available
capital. Hence, the proceeds from the deal will help Kinross in
developing its primary growth projects at Tasiast and Dvoinoye.
Kinross has performed inconsistently over the past year, missing
the Zacks Consensus Estimate twice by a wide margin, while beating
it quite handsomely on two occasions. Its growth profile has been
threatened by bottlenecks at the Fruta del Norte mine and delays at
Tasiast.
The company's first-quarter 2012 adjusted earnings (excluding one
time items) of 18 cents a share missed the Zacks Consensus Estimate
of 21 cents. It also saw its gold production drop by 6% during the
quarter due to declining grades and lower production. But Kinross
is trying to get its act together by focusing on assets that would
help it deliver better value to shareholders and the latest move of
selling Crixas is a step in that direction.
We currently have a long-term Neutral recommendation on Kinross.
The company, which competes with
Barrick Gold Corporation
(
ABX
) and
Newmont Mining Corp.
(
NEM
), maintains a Zacks #3 Rank, which translates into a short-term (1
to 3 months) Hold rating.
BARRICK GOLD CP (ABX): Free Stock Analysis
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ANGLOGOLD LTD (AU): Free Stock Analysis Report
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis
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