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Higher gold prices bode well for Kinross Gold Corp.'s (KGC) top-line growth. Various exploration and expansion activities undertaken will enhance production levels.
Kinross has received approval for a huge investment in the Paracatu mine expansion, which started production in the third quarter of 2008. The acquisition of Bema Gold will bring in various synergies.
The company reported a 43% rise in net profits helped by stronger gold price and higher production following the opening of the low-cost Kupol mine in Russia. However, declining production levels at some of the existing operations and higher mining, energy, and administrative overhead costs are likely to constrain margin expansion.
Consequently, we reiterate our Hold recommendation on shares of Kinross, with a six-month target price of $18.00.
Read the full analyst report on KGC
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