{"id":339838,"date":"2010-02-19T08:37:00","date_gmt":"2010-02-19T13:37:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:397981"},"modified":"2010-02-19T08:37:00","modified_gmt":"2010-02-19T13:37:00","slug":"kinross-boosts-valuation-with-barrick-cerro-casale-deal","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/339838","title":{"rendered":"Kinross boosts valuation with Barrick Cerro Casale deal"},"content":{"rendered":"<p>Kinross Gold Corp.\u2019s <a href=\"http:\/\/www.financialpost.com\/story.html?id=2579043\" >deal to sell half<\/a> of its stake in the Cerro Casale deposit to Barrick Gold Corp. for US$475-million provides a valuation boost for Kinross shares. The agreement will give Barrick 75% of the Chilean copper-gold project, while Kinross\u2019 stake will be reduced to 25%.<\/p>\n<p>\u201cThis is a great result for Kinross as it attains a very reasonable price on 25% and the residual stake of 25% is right-sized for Kinross,\u201d said Canaccord Adams analyst Steven Butler.<\/p>\n<p>He noted that the consideration paid by Barrick is considerably higher than the $773-million it paid for Arizona Star\u2019s 50% share of the project in 2007. This is considered a reflection of today\u2019s higher gold and copper price environment.<\/p>\n<p>The sale has raised the valuation Canaccord Adams has on the asset from US$400-million to US$795-million. It also had Mr. Butler hiking his price target on Kinross shares from US$27 to US$27.75.<\/p>\n<p>Wellington West Capital Markets analyst Paolo Lostritto previously valued 50% of the project at US$899-million.<\/p>\n<p>Accompanying the transaction were details of an updated feasibility study. It showed that capital costs for the project have escalated from Wellington\u2019s estimate of US$3.6-billion to US$4.2-billion. However, Mr. Lostritto said the Barrick transaction dampens the negative higher capital costs associated with this project.<\/p>\n<p>\u201cThe announced partial divestiture of Cerro Casale has monetized some value and helped diversify future development risk,\u201d he told clients, reiterating a target price of $22 on Kinross shares.<\/p>\n<p>Meanwhile, RBC Capital Markets analyst Stephen D. Walker downgraded Kinross from Outperform to Sector Perform and trimmed his price target from US$25 to US$21.<\/p>\n<p>This reflects the analyst\u2019s projected decline in cash flow per share for both 2010 and 2011 compared to 2009, along with a net asset value decline from US$15.50 per share to US$11.75.<\/p>\n<p>\u201cWhile Kinross has a number of high quality development projects that should ultimately create shareholder value, the near-term share price catalysts are limited,\u201d Mr. Walker said in a note.<\/p>\n<p>He expects Kinross shares to trade in the US$17 to US$21 range for the next 12 months and would be a buyer at the low end. <\/p>\n<p><a href=\"mailto:jratner@nationalpost.com\">Jonathan Ratner<\/a> <\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/network.nationalpost.com\/np\/aggbug.aspx?PostID=397981\" width=\"1\" height=\"1\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kinross Gold Corp.\u2019s deal to sell half of its stake in the Cerro Casale deposit to Barrick Gold Corp. for US$475-million provides a valuation boost for Kinross shares. The agreement will give Barrick 75% of the Chilean copper-gold project, while Kinross\u2019 stake will be reduced to 25%. \u201cThis is a great result for Kinross as [&hellip;]<\/p>\n","protected":false},"author":4059,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-339838","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/339838","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4059"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=339838"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/339838\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=339838"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=339838"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=339838"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}