Dividends in the near future? The beginning of 2014 was the last time gold was at the 1200 level. Around this time Kinross share price was more than 25% higher than it is today. Is Kinross really that worse off today than it was nine months ago? I think not.
- Returns to profitability;
- Topping out expectations - high end of production guidelines and low end of cost guidelines;
- Credit rating confirmed as solid;
- Kinross' assets in Russia were never at risk and Russia operations have surpassed all expectations;
- Tasiast feasability study was wildly successful - concluding an additional billion dollars in net present value;
- Ecuador recently grants approval to divest Fruta del Norte, Kinross courting four purchasers - value for a written off asset;
- Massive amount of retained earnings;
- Finalizing financial terms/interests for Tasiast expansion; ... and so on.
Kinross' continued focus on cost control will pay out in dividends soon, one way or the other:
If gold prices rise we can expect Kinross to takeoff. Undervalued, conservatively estimated reserves, and a leader in low cost operations - a fabulous ride we can all enjoy. Furthermore, with cash reserves now at the levels needed to achieve the desired funding formula for Tasiast - managment would be wise to reinstate a regular dividend to shareholders.
If gold prices remain at current levels (or sink further) it is unlikely Kinross will green light the Tasiast expansion. More over, the industry may start to scale back high cost operations or even consolidate. Kinross - plumb full of cash, low cost reserves, and shovel ready projects - is a clear takeover target. Kinross management may be wise in distributing a special dividend to disgorge the large cash reserves.