This TSX Gold Stock is a COVID Champ and Now Pays Dividend

When the coronavirus pandemic came to town earlier this year and wreaked havoc on all things dear, stock markets around were no exception. But as the markets tanked in nearly all sectors, some industries emerged as winners. One among them, of course, was safe asset gold.

Among many, one particular Canadian gold mining stock remains popular amid investors. After witnessing a brief slide in price during the market crash in March, its stocks made a steady recovery in the following six months. At the same time, its net earnings more than doubled in the second financial quarter of 2020, as compared to Q2 2019.

We are talking about Kinross Gold Corporation (TSX:K), whose stock price surged over 145 per cent since March 14. It also recorded a healthy year-to-date (YTD) increase of 91 per cent.

Kinross Gold Corporation is one of Canada’s senior mining companies, focusing on gold and silver mining. Based in Toronto, the company has a diverse portfolio of projects and mining sites across the United States, Russia, Ghana, Chile, Brazil, etc. On September 17, along with a business update, Kinross Gold announced a quarterly dividend payment of US$ 0.03 after a gap of seven years.

Kinross Gold’s Impressive Performance Through the Pandemic

Kinross Gold debuted on the Toronto Stock Exchange in 1993. In the last five years, its scrips have registered a remarkable growth of about 426 per cent in value. When the COVID-19 pandemic hit the Canadian markets in March this year, Kinross Gold’s stock price plunged to a low of C$ 4.81. However, it has made a steady recovery since, posting a growth of over 78 per cent in the last six months and of 29 per cent in three months.

(Kinross Gold stock’s YTD performance / Source: EODHD/Others, Thomson Reuters)

As the coronavirus outbreak ravaged the economy, investors turned bullish on safe assets like gold. This resulted in spot gold prices crossing the US$ 2,000-mark per ounce for the first time in August.

While the bullion price has slumped since (currently at US$ 1,878), gold stocks continue to be popular among investors. And Kinross Gold is one such stock, currently ranking high among most actively traded stocks on the TSX.

Kinross Gold Corporation currently has a market cap of C$ 14.8 billion. To understand its stock position better, let us take a look at the fundamentals of Kinross Gold stock.

Kinross Gold’s Relative Stock Performance:

Index: TSX 300 Composite Index
Sector: S&P/TSX Gold Index

(Data Source: EODHD/Others, Thomson Reuters)

Kinross Gold’s valuation metrics in the last twelve months (LTM) is as follows:

(Data Source: EODHD/Others, Thomson Reuters)

Kinross Gold’s Q2 2020 Financial Results Show Growth

Kinross Gold Corporation reported a healthy second quarter ending 30 June 2020. Its net earnings galloped from US$ 71 million in Q2 2019 to US$ 196 million in Q2 2020. Its net cash flow from operating activities was up 30 per cent year-over-year (YoY), amounting to US$ 432 million in the latest quarter.

The company saw cash and cash equivalents of over US$ 1,527 million and a total liquidity of U$ 2.3 billion in Q2 2020, both recording a quarter-over-quarter (QoQ) increase. Its revenue from metal sales was over US$ 1,007 million, up 20 per cent YoY. It also saw improvements its net debt-to-EBITDA ratio, and reported that it has no debt maturities until September 2021.

Kinross Gold’s Q2 2020 financial report stated that all its mines were in production through the quarter ending 30 June 2020. Its largest producing mines in Kupol, Paracatu and Tasiast, produced 63 per cent of the total production in the latest quarter. The company generated an average cost of sales of US$ 596 per Au eq oz.

Kinross Gold’s Forecasts

While the COVID-19 pandemic did not have extensive impacts on Kinross Gold’s overall financial performance in the first half of 2020, it remains a potential threat for business and production-related disruptions. In its latest quarter report, the company pointed that its sticking to its original 2020 plan for production, cost of sales, capital expenditures, etc.

Kinross Gold Corporation has also mapped out a “robust three-year guidance” where it plans to gradually ramp up its production by 20 per cent to 2.9 million gold equivalent ounces in 2023.

Bottomline

In times when no one really knows how long the pandemic will last or if lockdowns will return, investors continue to take refuge in safe assets like gold stocks. While some market analysts feel that the gold rally has lost its steam, given its recent slump in price, others argue that there is still room for further growth. These market movements are subject to macro- economic and micro-economic factors and developments in the materials sectors.