Kinross Gold stock jumps as company promises to increase share buybacks
Shares of Kinross Gold Corp. rose on Monday after the Toronto-based company announced it would repurchase $300 million worth of shares by the end of this year as it seeks to boost its stock.
Kinross added that it will also allocate two-thirds of its excess cash to share buybacks in 2023 and 2024. Buybacks after this year, however, will depend on Kinross’ ability to maintain its net leverage ratio, a measure of health. finance that compares debt to earnings. Kinross also said buybacks could be suspended in the event of a ratings downgrade, an operational issue or a drop in gold prices.
“Our shares offer a very attractive investment opportunity…a larger share buyback program is a very attractive use of excess cash,” J. Paul Rollinson, managing director of Kinross Gold, said in a statement. Press release. “This enhanced buyback program is affordable, allows us to maintain our dividend and is a responsible allocation of capital.”
Kinross has sought to rebalance its portfolio over the past year by focusing more on the Americas. Last month he completed the sale of its Chirano mine in Ghana for $225 million. In June, the company sold its Russian assets for US$340 million after being forced to to suspend wartime operations.
While the company reported higher production and sales in its second-quarter results in July, its adjusted earnings per share fell to three cents US, from five cents US in the same quarter last year, due to higher costs. It added in its quarterly results that it had “strong liquidity” of US$2.1 billion.
The company is currently focused on developing its Great Bear project in Ontario, which it acquired in February. Kinross believes the project has the potential to become a premier deposit that could support a large, long-life mine.
Kinross said it decided to launch the buyback program after “constructive discussions” with Elliott Investment Management LP and some of its other shareholders.
“Kinross today has a high-quality Americas-focused portfolio with strong future growth potential through Great Bear, but it is trading at a significant discount to both its peers and the value of its assets. “, Mark Cicirelli, portfolio manager of Elliott, said. “Kinross is taking a big step to close this gap and realize its stock’s upside potential.”
In April, Elliot, which owns a 3.4% stake in Suncor Energy Inc., critical the big Canadian oil company for its “slow and too bureaucratic corporate culture”. About three months later, Suncor CEO Mark Little resignedafter which the company entered into an agreement with the activist investor to appoint three new independent directors.
Kinross currently operates three mines in the United States and one in Brazil, Chile and Mauritania.
As of 11 a.m., Kinross shares were trading at $4.73, up 39 cents or 8.9%, in a 52-week trading period of $3.90 and $8.90. The company has a market capitalization of $6.1 billion.