-- Posted Monday, 6 October 2003 | Digg This Article
Home page: http://www.kinross.com/
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KINROSS GOLD CORP: RETURN ON US$10,000 INVESTMENT | | |
Purchase Date | No. of Shares | Purchase Price | Cost ($) | Price Today | Value Today |
March 24, 2003 | 1'900 | 5.29 | 10'051.00 | | |
Total | 1'900 | 5.29 | 10'051.00 | 7.19 | 13'661.00 |
Profit | | | | | 3’610.00 |
Profit (in %) | | | | | 36% |
THE FOURTH LARGEST NORTH AMERICAN BASED GOLD PRODUCER
Business Summary
The merger of Kinross Gold Corporation with Amax Gold Inc. that became effective June 1, 1998 has brought Kinross to a new status as the fourth largest North American based gold producer, with annualized gold production estimated at more than one million ounces.
The combination of Kinross' mines and strong balance sheet with Amax Gold's efficient new open-pit mines has created a well-financed senior gold producer with estimated cash costs in the lowest quartile of world production. The combined company will provide the elevated platform from which Kinross will continue to pursue an aggressive growth strategy.
Going forward, management will continue to give scope to the entrepreneurial vision and adhere to the principles whereby Kinross has grown to its present size and status. Shareholders can expect nothing less.
Recent News: Kinross Closes 23 Million Common Share Offering for Gross Proceeds of
CAD 213 Million
Kinross Gold Corporation has recently announced that it has closed the 20 million common share offering at a price of CAD 9.26 per share.
In addition, the underwriters syndicate, comprised of CIBC World Markets Inc., Scotia Capital Inc. and RBC Dominion Securities Inc., have exercised their option to purchase an additional 3 million common shares, resulting in a total share issuance of 23 million common shares for gross proceeds of CAD 213 million. After giving effect to the closing of the offering, the total number of common shares outstanding is approximately 338.1 million.
The net proceeds from the offering will be used to redeem Kinross’ outstanding 5.5% convertible unsecured subordinated debentures. The principal amount of the convertible debentures is CAD 195.6 million.
Fundamental Considerations: Exploration and Development
Exploration activities form an integral component of Kinross’ growth strategy as the company attains its annual production profile of approximately two million gold equivalent ounces.
The company is focused not only on replacing reserves consumed by annual production, but also on expanding its reserve base at its existing operations.
In light of the recent merger, Kinross plans to increase exploration spending to $ 21 million including capitalized exploration, up substantially from the $ 12 million spent in 2002. Approximately $ 14.5 million of the total 2003 exploration budget is planned to be spent on mine exploration activities with the remainder of the funds earmarked for greenfields exploration.
The following details some of the advanced exploration and development projects acquired as part of the merger.
Round Mountain
The Round Mountain mine in Nevada, USA, a 50:50 joint venture between Kinross, operator, and Barrick Gold Corporation, has been in continuous operation since 1977 and has produced over seven million ounces of gold. A large, low-grade disseminated gold deposit, the mine is noted for spectacular high-grade gold occurrences located in fractures and veins. A number of these high-grade targets were the focus of drilling activities during 2002, including the Deep Northwest, Northwest Pit and South Pit Wall targets. Drilling results from 2002 include six meters grading 73.0 grams per tonne from the Deep Northwest target, some 330 meters west and 100 meters below the planned pit bottom. To date, the goal has been to define the extent of the mineralization, and as such, hole spacing has been inadequate for defining an underground reserve. During 2003, exploration will continue outlining these targets, with the goal of identifying a high-grade underground reserve.
Elsewhere, approximately eight kilometers north of the Round Mountain mine, exploration drilling has discovered a large area of gold mineralization, known as the Gold Hill deposit.The limits of the deposit have not been fully defined and there is potential for higher grade mineralization along the caldera margin. Approximately 27,100 meters of drilling is planned for 2003, with the goal of converting as much of the more than two-million-ounce inferred resource into the measured and indicated resource categories. Metallurgical test work is currently in progress and additional metallurgical testing is planned for 2003. Environmental baseline studies and hydrologic studies have been initiated.
Technical Considerations
The gold price is firmly entrenched on its way towards $ 450.
In May of last year, the share price of Kinross touched CAD 13.32 and has since been consolidating the sharp advance which occurred during the first half of 2002.
As soon as the gold price starts firming again, we expect this high to be taken out, opening the way for a move towards the $ 20 level.
Our recommendation: Buy!
Peter Zihlmann
www.pzim.com
investment@pzim.com
October 6, 2003
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Disclosure: The author has not been paid to write this article nor has he
received any other inducement to do so. The author is a shareholder in the
company and will benefit from any increase in the company’s share price.
Disclaimer: The author’s objective in writing this article is to invoke an
interest on the part of potential investors in this stock to the point where
they are encouraged to conduct their own further diligent research. Neither
the information nor the opinions expressed should be construed as a
solicitation to buy or sell this stock. Investors are recommended to obtain
the advice of a qualified investment advisor before entering into any transactions in the stock.
GoldSeek.com did not receive any compensation for publishing this report. GoldSeek.com does hold a large
long position in Kinross Gold at the time of this publication.
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-- Posted Monday, 6 October 2003 | Digg This Article
