Gold Stocks (GDX) Bounce, Kinross (KGC) Surges 5.4% on Earnings
By jturbin | November 9, 2012 4:21 AM EST
GOLD STOCKS NEWS – Gold stocks rebounded from earlier losses in mid-day trading on Thursday, as the Market Vectors Gold Miners ETF (GDX) advanced by as much as $0.37, or 0.7%, to $51.44 per share. The strength in gold stocks and the GDX was fueled by a modest rally in COMEX gold futures, which climbed by $11.60, or 0.7%, to $1,725.60 per ounce. Gold stocks in Canada fared slightly better than their American-listed counterparts, as the S&P/TSX Global Gold Index moved higher by 1.0% to 337.54.
One of the best performing gold stocks this morning was GDX component Kinross Gold (KGC), which jumped $0.51, or 5.4%, to $9.90 per share. Kinross turned sharply higher after reporting third quarter adjusted earnings of $0.22 per share, well above the $0.19 consensus estimate among Wall Street analysts. On the operational side, Kinross reiterated its full-year production guidance of 2.5-2.6 million gold equivalent ounces at cash costs of $690-$725 per ounce.
Following Kinross’ results, Stifel Nicolaus analyst George Topping noted that while the Company beat on earnings, it “remains hamstrung by capital constraints.” He added that “We remain cautious given the current high capex spending at Tasiast especially as the final project parameters (including size and cost) are not yet established,” and maintained his Hold rating on KGC (the firm does not issue price targets on Hold-rated stocks).
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In contrast to Kinross, shares of AngloGold Ashanti (AU) fell by $1.08, or 3.1%, to $33.87 after the Company released its quarterly earnings results. The South African-based gold miner reported earnings per share of $0.61, which CIBC analyst Arnold Van Graan noted was below his $0.66 forecast. AngloGold Ashanti’s production came in at 1.03 million ounces, also below Van Graan’s 1.049 million ounce estimate.
Nonetheless, the CIBC analyst reiterated his Sector Outperformer rating and his R490.00 (approximately $56.25) price target on AngloGold. While Van Graan acknowledged that shares of AU may continue to struggle in the near-term, he contended that “The company’s significant offshore production base (68%) puts it at an advantage to its SA (South African) peers and this is not fully reflected in the company’s valuation.”
Among other widely-traded gold stocks, GDX components Barrick Gold (ABX) and Newmont Mining (NEM) advanced by 1.3% to $36.72 and by 1.7% to $49.55 per share. On the downside, Randgold Resources (GOLD) slipped by 1.0% to $113.25 per share.