Buy Kinross Gold (TSX:K) Today and Profit in 2020

Cash in on higher gold and buy Kinross Gold Corp. (TSX:K)(NYSE:KGC) today.

| More on:
Gold bars

Image source: Getty Images

Gold has firmed once again as uncertainty regarding the health of the global economy grows once again. The yellow metal has soared to over US$1,511 an ounce to be up by 18% since the start of 2019.

There are signs that gold will firm further and could break through US$1,600 per ounce before the end of 2020. If that occurs, it will be a boon for gold miners, with beaten-down Kinross Gold (TSX:K)(NYSE:KGC) poised to deliver further value for investors after gaining 42% since the start of 2019.

Improved outlook

Kinross operates a globally diverse portfolio of gold mines in North America, Brazil, Russia and West Africa. It has proven and probable gold reserves of 25.5 million ounces as well as measured and indicated gold resources of almost 28 million ounces.

Even after reporting a disappointing third quarter 2019 in which Kinross missed on revenue and earnings, it’s on track to meet its full-year guidance, including annual production of 2.5 million gold ounces and all-in sustaining costs of US$995 per ounce sold.

Kinross has a solid pipeline of projects under development, including the Tasiast mine in Mauritania, which on completion is expected to lift the operation’s production to 563,000 gold ounces annually with industry low AISCs of US$560 per ounce.

The miner announced in mid-December that it had secured a US$300 million loan for the project, which is expected to extend the mine’s life until 2033, providing Kinross with a long-life, low-cost operational asset.

Notably, Kinross possesses considerable financial flexibility, ending the third quarter with US$1.8 billion in liquidity and US$358 million in accessible cash and equivalents.

The miner also finished the period with US$1.9 billion in long-term debt and leases, less than two times projected 2019 operating cash flow, meaning that it’s quite manageable, particularly amid an operating environment where gold is rising in value.

Kinross has no debt maturities until September 2021, giving it ample time to benefit from higher gold and amass the required funds to meet its near-term financial obligations.

Since the end of the third quarter, Kinross has completed two asset sales, selling its remaining shares in Lundin Gold for $150 million and a US$74 million deal for the divestment of a royalty portfolio to Maverix Metals.

That has seen the miner raise around US$139 million in cash, which it intends to use to strengthen its balance sheet and fund projects under development.

There’s every indication that gold will firm during 2020. However, considerable uncertainty still surrounds the global economic outlook and geopolitical risk remains high.

Coupled with fears of an economic downturn, this makes it imperative for investors to weather-proof their portfolios.

The best way to do this is by adding gold to your portfolio because it’s perceived to be the ultimate safe-haven asset, which performs strongly during times of economic and political turmoil.

Foolish takeaway

Kinross is an attractively valued gold miner that’s finally starting to unlock value for shareholders.

It’s attractively valued after making solid gains during 2019, with further upside to be driven by higher gold and improvements to its operations, making now the time to buy Kinross.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Matt Smith has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

Nuclear power station cooling tower
Metals and Mining Stocks

Dividends From the Deep: Can Cameco’s Uranium Resurgence Boost Payouts?

Cameco (TSX:CCO) stock pays a dividend. Could the recent rise in uranium prices take it higher?

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Wednesday, December 6

Falling commodity prices could weigh on TSX stocks today, as investors await the Bank of Canada’s interest rate decision.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: Why Canadian Stocks Could Fall on Monday, December 4

The commodity market’s heavy losses in early trading could drive the main TSX index downward at the open today.

Read more »

A miner down a mine shaft
Metals and Mining Stocks

2 Top TSX Mining and Materials Stocks to Buy for December 2023

You can buy these two TSX mining stocks in December 2023 to expect market-beating returns in the long run.

Read more »

Watch for the Warning Signs Stock Market Prices Trends 3d Illustration
Dividend Stocks

Where Smart Money is Going as Canadian Interest Rates Climb

The interest rate climb is nearing its end. Smart investors are using this trend to invest in stocks with an…

Read more »

stock market
Metals and Mining Stocks

Time to Invest in Gold? 2 Shining Miners to Watch in 2024

Agnico Eagle Mines (TSX:AEM) and another TSX gold miner that could rise sharply into the new year and beyond!

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

Cameco Stock Is up 92% This Year: Is it Still a Buy?

Cameco (TSX:CCO) stock could have more room to run, as nuclear power experiences a massive comeback.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Thursday, November 30

The main TSX index remains on track to end November on a strong bullish note, as it has already risen…

Read more »