Kinross Gold (K.TO)

A couple of years ago they bought a mine which was quite controversial. Lately things have been improving in that mine. Feasibility studies of building it out further have been getting better. The last feasibility study showed that it is possible to earn a 17% rate of return going forward. This is based on a lot of assumptions of course. Their latest quarter showed better operating costs with higher grades in some of the mines. Have some exposure to Russia which he feels has influenced investors and has held it back quite a bit.

Great company in a good business. Growing quickly. Stick with it.

(Top Pick Mar 25/13, Down 43.41%) He sold. Thought we were somewhere close to the bottom of the gold market. Liked the Russian mine. They had just fired the previous management team and he still likes the replacement management team. It was a good decision to get out and he does not hold any gold stocks now.

Does not think it is a takeover target. It has a low mine life. But he likes the company and have been delivering. Surprised it has not been re-rated here, but does not feel it will be a takeover target.

The mine they have in Russia is way off in the hinterlands and he doesn’t see any way that sanctions are going to affect export of gold. Still has its problems on its Tasiast mine in Mauritania. It seems to be still viable, but you still get different stories. However, you really have to like gold and right now gold only gives a little pop once in a while. Until we actually see some real inflation, he doesn’t think you will really see gold run.

(Top Pick May 13/13, Down 12.62%) Sold in the fall for tax purposes. The problems with the mines around the world still exist.

Considers gold stocks as the “canary in the coal mine”. Basically all their balance sheets have been written off. They all did acquisitions at the top of the price of gold, and that went on their balance sheet. After the debacle of the share price coming back in 2013, you are now getting all the write-offs. There was a very unenthusiastic rally in the 1^st quarter of this year. Now we are seeing the rollover. He is not seeing anything in his system to give you a “Buy” signal.

Doesn’t usually have very much good to say about gold companies and even less so about this company. Blew its brains out on a very unsuccessful African acquisition. Suffering with low gold prices and high debt.

He has G-T and two ETFs. They are going to be flat in production for a while. Chopping of dividends will continue. Switch to G-T.

Gold. During the boom years in gold, they expanded quite rapidly and paid very rich premiums for companies they acquired. As a result of that spending, they now have to take write-downs as the price of gold has come down. They have a fair amount of debt which he is not happy with. Would prefer a gold company with the strongest balance sheet.

Has been beaten up because of sins of a past management team. Seems to be focused on free cash flow and firing on all cylinders. Free Cash flow not as same level as others. It is at the riskier end of the spectrum due to exposure to Russia.

Gold stocks have not done well and this one specifically has not done well. It has done some base building at this stage. If gold turns around then this stock could participate. Otherwise it will meander between $3.50 and $5.50.

Back in the 1940s every dollar invested in gold exploration returned $105. In 2000, that $1 returned $1 and today it is below $1. There is only one company that he has ever seen that has outperformed bullion. Buy iShares Gold Bullion (CGL-T) instead.

Gold sector is okay and is trying to form a bottom. This one is a relative under performer, so if you are going to enter the group, try to pick stocks that are relative outperformers. However, if the sector does turn, and there is a bullish stampede into gold stocks, this would be swept away with it but in the meantime, he would say it is just dead money.

The overall trend has been down. If this could break out from its current basing to the upside, it could be a positive sign, but he would really rather see the long-term downtrend broken, probably at $6.