Kinross Gold Corporation
) recently announced that it has arranged for a new term loan and
amended its existing unsecured revolving credit facility. The
company has procured a three-year term loan worth $1 billion that
will mature in August 2015. The term loan does not have any
mandatory amortization payments.
In addition, Kinross has revamped its revolving credit facility
to $1.5 billion from $1.2 billion. Moreover, the term of the
facility has been extended to August 2017 from March 2015. Kinross
also points out that the improvement in terms and conditions
largely reflects its investment grade ratings that were attained
after it last refinanced the credit facility on March 31, 2011.
The improvement in credit terms comes at a crucial time for
Kinross as it is involved in the development of many projects. It
intends to use the proceeds from these financings for general
corporate purposes. The company is developing an army of new
projects, the most important of them being Tasiast in Mauritania
and Dvoinoye in Russia.
Also, Kinross has a few other projects in its portfolio. It is
currently carrying on negotiations with the Ecuadorean government
on an enhanced economic package at Fruta del Norte and is also
continuing construction on the fourth Paracatu ball mill. The
company's capital expenses spiked in the recently reported second
quarter due to project-related expenses incurred at Tasiast, Fort
Knox and Round Mountain.
Moreover, keeping in mind Kinross' rising production costs and
objective of returning cash to shareholders, the improved financial
terms will enable it to focus on its development projects while
keeping its own liquidity intact to some extent.
Kinross, like other gold producers such as
Barrick Gold Corporation
), benefits from rising gold prices. However, its results have been
constrained chiefly by rising costs and lower grades, as we find in
the case of its other counterparts in the industry.
Currently, we have a long-term (more than 6 months) Neutral
recommendation on Kinross. The company currently holds a Zacks #3
Rank, reflecting a short-term (1 to 3 months) Hold rating.
BARRICK GOLD CP (ABX): Free Stock Analysis
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis
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