KL Additional info... Literally one of the best run most profitable Gold Miners in politically safe Oz and Can bucks that also gain a currency pop when output sold in USA, EU, UK markets... Whereas Juniors are a takeover bet and much higher risk
Kirkland Lake is among the most shareholder value-focused gold miners in the market. On May 6, Kirkland Lake reported first-quarter financial results. Like many other gold miners, it withdrew full-year guidance due to the uncertainty associated with COVID-19.
The company earned $0.79 per share, up 84% from the first quarter of 2019. Its balance sheet is in excellent health, with no debt and $531 million in cash. With ample free cash flow, Kirkland repurchased nearly 10 million KL shares and doubled its dividend to $0.125 per quarter.
One of the key takeaways from the quarter is that the Detour Lake asset that Kirkland Lake acquired on Jan. 31 had a great operating result in the two months it was under new ownership.
Detour Lake “had very, very good operating performance, producing 92,000 ounces in two months ending March 31,” said CEO Tony Makuch on the earnings call. “Cash costs of $696 and all-in sustaining costs of $1,108 per ounce were in line with expected levels for the quarter.
During the quarter, we saw the tremendous leverage Detour Lake has on the gold price. I already mentioned $78 million of free cash flow generated in two months, and that was about 40% of our total free cash flow for the quarter excluding nonrecurring items of the company.”
Kirkland Lake shares trade at just 12 times the consensus forward earnings estimate. That’s a slight discount to its peers, even though Kirkland Lake has superior assets located in very mining-friendly jurisdictions.
Moreover, it has a currency benefit from producing gold in mines that have operating costs denominated in Canadian dollars and Australian dollars. We think fair value for Kirkland is well into the $60s and that the stock could hit this price by early 2021.