Now that an epic blow has landed on the chin of Kinross Gold
Shortly after I added Kinross to my list of the top 10 gold stocks for 2012, I was sucker-punched by a double-digit decline in its shares when the company announced an impending non-cash goodwill impairment charge and a reassessment of the company's strategic growth plans. Fools who may have missed it are encouraged to review The Comprehensive View of Kinross Gold. But now, following this week's release of the annual report, I can confirm that this major gold producer remains a severely underappreciated powerhouse in the wake of its hardest-fought round yet.
Kinross certainly lost this particular round, recording a $2.78 billion net loss in the fourth quarter as a result of a $2.94 billion non-cash charge relating primarily to the company's Tasiast project in Mauritania. But in the midst of that thrashing, Kinross landed a few punches in 2011 by turning in the best operational performance in the company's history.
For the full year, Kinross produced a noteworthy 2.6 million gold-equivalent ounces (GEOs), expanding revenue 31% to $3.94 billion. In the face of substantial cost pressures, cash margins grew 32% to $906 per ounce sold. With robust cash flow and an existing cash balance of $1.76 billion in place to support the company's pending adjusted growth plans, Kinross saw fit to increase its dividend by 33% for semi-annual payments of $0.08 per share. At the current share price, that amounts to an annual yield near 1.5%. Rival Goldcorp
As cheap as membership in Mickey's gym
Superfluous Rocky references aside, I find it difficult to overstate how extremely undervalued Kinross' shares have become after a spate of losing rounds for shareholders. Longstanding Fools may recall a particularly successful valuation call that I made on shares of Silver Wheaton
In my view, a bargain valuation this extreme will not stand for long amidst this ongoing precious metals bull market, and I encourage value-oriented Fools to take a close look. Accordingly, I have just flagged my longstanding CAPScall on Kinross (initiated in 2006) as a top pick, and I invite my readers to follow suit. Although I personally retain a greater investment focus upon smaller-cap bargains Claude Resources
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Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Claude Resources, Goldcorp, Kinross Gold, Paramount Gold & Silver, and Silver Wheaton. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.