Kinross Gold (K.TO)

Another company that was completely sideswiped by gold prices. They had some management changes and took some significant write downs such as West African project. Probably some more write downs in the near future. Management acting on a new approach of capital discipline.

Just announced that they are leaving their Ecuador interests. He is wary of golds and only wants to own ones that have free cash flow at $1300 gold or less and there are only about 3 or 4. This does not fit in that category and will need $1500-$1600 gold to actually have free cash flow and be sustaining.

(Market Call Minute) Looking for further developments in West Africa.

(Market Call Minute.) Made the catastrophic acquisition of the Red Back mine and have been writing it down steadily ever since. Stock is now getting down to a low enough level where, if bullion turns, it probably can be bought. (See Top Picks.)

The gold sector has been decimated, and Kinross made some questionable acquisitions. If gold goes above $1400 per ounce, then you might make some money.

Has new management team. New mines coming on, pretty good cash position. Management is being cautious. Down from 16 to 5.5 so buying now is fine.

Needing help from gold prices. When it reported it showed the stays of some decent cost controls. Thinks they will post-pone some of the CAP-X. If gold stays in $1400s, the stock won’t go anywhere.

Have a wonderful collection of to-be-built assets. Thinks they will have to sell themselves. Too much capital required.

(Market Call Minute) Gold market is cheap here.

In the midst of an expansion program and there will be some questions about the balance sheet and their ability to finance that over time. If you’re putting new money in, Yamana (YRI-T) would be your better choice of the two.

Problem with the gold sector is that a lot of the people in the industry are mavericks and can be too optimistic. When things are going really well, that is often when they do takeovers and take on a lot of debt. When gold comes down in price, and things are tougher, that means they are in a worse financial position. Debt on this company’s balance sheet is just brutal. If it got down to $3-$4, he could be looking at it more carefully but right now they are going to get less in terms of revenues.

(Market Call Minute.) Hasn’t been a fan of this company for a long, long time.

This is on her radar screen. Have gone on a kind of acquisitions spree and they have all paid out and they’ve had to write down assets. All of the gold stocks in general have not done very well. Probably a good time to make some investments in this area.

This stock will follow the price of gold. A major producer in countries such as Russia and North America. If you think the price of gold will go up, this is a good barometer. It has gotten so beaten up because of its acquisition of Redback Mining of which they had to write off part of it.

Gold is universally hated and the rule of thumb is to buy things when people hate them. This has been a poor performer but now has new management. Doing about 2.5 million ounces a year compared to Barrick (ABX-T) at 7 million which would have to acquire companies like Kinross every year to maintain production. This company just has to wait for small goal companies to go broke and get them at incredibly attractive valuations. Gold industry is saying they are not going to do anymore big projects, watch their costs, write off some properties and focus on growth. Music to his ears.