Sale of Kinross’ Russian assets ‘positive’ but below $1 billion valuation, analyst says (NYSE:KGC)


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Kinross Gold’s (NYSE: KGC) The sale of Russian assets was time-limited and although the price is positive, it is well below the valuation of around $1 billionRaymond James analyst Farooq Hamed said Thursday.

Kinross agreed earlier this week to sell its Russian assets to Highland Gold Mining for $680 million, fulfilling its promise to leave the country after the invasion of Ukraine, but Hamed notes that most of the money of the sale is deferred, with the company set to receive $100 million at closing and $150 million next year, with the remainder due by 2027.

The rush to sell the assets likely limited the buyer base Kinross could have engaged, Hamed said, and the deferred payment schedule is not optimal due to debt risk, and Kinross cannot use the proceeds. immediately to deal with the loss of production or to return. capital to shareholders.

The deal is subject to Russian government approval and the conclusion of side deals, which is “a potentially significant hurdle,” said National Bank financial analyst Mike Parkin, but the deal is “ of acceptable value for money in the circumstances”.

Separately, Kinross said Thursday it plans to declare an initial inferred mineral resource at its Great Bear project in Ontario as part of 2022 year-end results, and begin work on a pre-feasibility study in 2023.

The miner said it plans to carry out 200,000 meters of drilling this year using around 10 drill rigs, focusing on the LP fault zone, the project’s most significant discovery so far. day.

Kinross shares fell sharply at the start of the Russian invasion of Ukraine as the company was seen as vulnerable to the conflict, but have since more than recouped previous losses.


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