Shares of the Kinross Gold Corporation (KGC) stock were declining in the premarket today on December 9, 2021. KGC stock price saw a downtrend of 5.26% to drop at $5.58 a share at the time of this writing. The stock was also red in the previous trade and went low by 0.84% at closing. Let’s dig in to understand the reason behind this fall.
What’s Happening?
Kinross Gold Corporation recently announced that it has signed the definitive agreement with Great Bear Resources Ltd. According to the agreement, KGC stock will acquire all the issued and outstanding shares of the Great Bear. Under the agreement, KGC stock will pay an upfront payment of US$1.4 billion which represents C$29.00 per Great Bear common share on a fully diluted basis. The payment will be in the form of cash and KGC common shares payable at the Great Bear shareholders election. The potential US$46.0 million contingent consideration in the form of contingent right values is also applicable under this agreement.
This transaction will enable the KGC stock to hold the flagship Dixie project of Great Bear at Red Lake mining district in Ontario, Canada. This is the most exciting project of gold discovery across the globe with the characteristics of a top-tier deposit.
Financial View of KGC stock
In the third quarter of 2021, Kinross stock generated $862.5 million in revenue. The revenue decreased as compared to 1,131.3 million in the third quarter of 2020, due to lower production as well as average realized gold price. The company reported $870 per Au eq. oz production sales cost in the third quarter of 2021. This cost was $737 in the same period as the previous year. Attributable margin per Au eq. oz for the KGC stock was $920 in Q3,2021 as compared to $1,171 in the prior-year same quarter.
Adjusted operating cash flow and net operating cash flow of the company were $190.5 million and $269.9 million respectively. The stock recorded $38.9 million in free cash flow in the third quarter of 2021. Adjusted earnings of the KGC stock were $90.2 million, or $0.07 per share in the recently reported quarter. Capital expenditure was $231.0 million in the third quarter of 2021, higher than the same quarter of last year. By the end of the third quarter of 2021, KGC stock had $586.1 million in cash and cash equivalents.
Wrap Up
The sentiment is negative for the Kinross stock despite the announcement of the acquisition of Great Bear Resources. The financial results reflect that the revenue growth declined due to lower production and decreased average realized gold price.
