Excess Cash at KL used for share buy backPut a chart together based on 2020 and the expected uses of cash in 2021..
Was able to reconcile close to the 2020 number the biggest unknow would be the tax liability but I used 2020 income tax as a base line and adjusted earnings solely on the increase or decrease in gold prices
Key assumption
- Tax rate 24%
- Tax cash payments will now be stable going forward
- Care and Maintenance will drop to $20M in 2021
- KL share price will be $35USD average in 2021
- Cost guidance will be met at the mid point of the range given
- Gold production will be at the mid point of Guidance
- Gold price can go up or down (up is preferred).
Observations:
- Gold at $1,431 per ounce will allow KL to meet, Growth capital; Exploration and dividend commitments with cash generated internally
- Gold $1,700 per ounce and above would allow KL to buy back an additional 10% of the share float and still maintain a healthy cash balance in excess of $200M
| | 2020 | 2021 |
| Average gold price | $ 1,772 | $ 1,800 | $ 1,700 | $ 1,600 | $ 1,500 | $ 1,431.7 |
| AISC | 800 | 800 | 800 | 800 | 800 | 800 |
| | $ 972 | $ 1,000 | $ 900 | $ 800 | $ 700 | $ 632 |
| Gold produced (000's) | 1,370 | 1,350 | 1,350 | 1,350 | 1,350 | 1,350 |
| Cash Before adjust (000's) | 1,331,640 | 1,350,000 | 1,215,000 | 1,080,000 | 945,000 | 852,782 |
| | | | | | | |
| Net Detour adjust | 8,358 | | | | | |
| Net investment benefit | 219,039 | | | | | |
| | | | | | | |
| Taxes paid* | (321,084) | (309,345) | (276,945) | (244,545) | (212,145) | (190,013) |
| Care and maintenance | (33,004) | (20,000) | (20,000) | (20,000) | (20,000) | (20,000) |
| Growth Capital | (92,500) | (262,500) | (262,500) | (262,500) | (262,500) | (262,500) |
| Exploration | (122,700) | (180,000) | (180,000) | (180,000) | (180,000) | (180,000) |
| Dividend | (115,942) | (200,267) | (200,267) | (200,267) | (200,267) | (200,267) |
| Share repurchase | (732,436) | | | | | |
| Cash Generated | 141,371 | 377,888 | 275,288 | 172,688 | 70,088 | 2 |
| opening | | 847,638 | 847,638 | 847,638 | 847,638 | 847,638 |
| Cash Closing | $ 847,638 | $ 1,225,526 | $ 1,122,926 | $ 1,020,326 | $ 917,726 | $ 847,640 |
| | | | | | | |
| Share price | | $ 35.00 | $ 35.00 | $ 35.00 | $ 35.00 | $ 35.00 |
| Share buy back cash held | | 35,015 | 32,084 | 29,152 | 26,221 | 24,218 |
| Dividend saved | 0.75 | 26,261 | 24,063 | 21,864 | 19,666 | 18,164 |
| Share buy back cash generated | 10,797 | 7,865 | 4,934 | 2,003 | 0 |
| Dividend saved | 0.75 | 8,098 | 5,899 | 3,700 | 1,502 | 0 |
| | | | | | | |
| * Tax rate 24% | | | | | | |
| 2020 taxes owing were $276,945 | | | | | |
| 2019 taxes owing were $189,572 | | | | | |