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Here's Why You Should Hold on to Kinross (KGC) Stock Now

Zacks Equity Research

Kinross Gold Corporation KGC is mainly involved in the exploration and operation of gold mines. It is making steady progress in the projects that provide it a strong growth profile among leading gold producers.

The company has a market capitalization of roughly $4 billion and currently carries a Zacks Rank #3 (Hold).

Price Performance

The stock has gained 10% in the past three months compared with the industry’s 3.2% rise.

Favorable Outlook

In November 2018, the company reaffirmed production and cost outlook for 2018. Kinross continues to expect gold production of 2.5 million (+/- 5%) gold equivalent ounces. Production cost of sales guidance for the year has been kept unchanged at $730 (+/- 5%) per gold equivalent ounce. All-in sustaining cost (AISC) is expected to be $975 (+/- 5%) per gold equivalent ounce.

Project Expansions to Drive Growth

Kinross is likely to gain from advancing key projects. It has a world class gold deposit under its jurisdiction in the form of Tasiast, which is its primary focus to attain growth targets. The Phase One expansion is likely to boost mill throughput capacity from 8,000 ton per day to 12,000 ton per day, and increase production to around 400,000 gold equivalent ounces per year at an AISC of $760 per gold ounce.

Moreover, the company’s Round Mountain Phase W project is progressing well and initial ore is expected in mid-2019. The Gilmore project at Fort Knox is a low-cost brownfield expansion with low-risk that is likely to extend mine life to 2030 at one of its top performing mines.

Cost Management to Boost Margins

Kinross is likely to gain from its focus on cost management. The company's attributable production cost of sales declined in the first half of 2018. Also, cost of sales per ounce for the Bald Mountain was record low in the third quarter due to less operating waste mined.

A Few Concerns

However, Kinross remains exposed to a volatile gold price environment. Also, the company’s proven and probable gold reserve fell to 1.245 million ounces in 2017 from 1.506 million ounces in 2016. As such, the company needs to improve gold reserve base.

Kinross Gold Corporation Price and Consensus

Kinross Gold Corporation Price and Consensus | Kinross Gold Corporation Quote

Stocks to Consider

A few better-ranked stocks in the basic materials space are Ingevity Corp. NGVT, Franco-Nevada Corp. FNV and Cameco Corp. CCJ. While Ingevity sports a Zacks Rank #1 (Strong Buy), Franco-Nevada and Cameco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected earnings growth rate of 21.5% for 2019. The company’s shares have gained 3.6% in the past three months.  

Franco-Nevada has an expected earnings growth rate of 6.7% for 2019. The company’s shares have moved up 5.3% in the past three months.

Cameco has an expected earnings growth rate of 20% for 2019. Its shares have moved up 4.8% in the past three months.

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