Kinross shares surge as investors shrug US probe
Shares of Kinross Gold Corporation (NYSE:KGC TSE:K) leaped on Monday as investors in the world’s fifth largest gold producer in terms of output shrug off news of a corruption investigation into the Toronto-based company.
During lunchtime trade Kinross was trading up 7.9% in New York and 6.6% in Toronto affording the company a market value of $2.1 billion after more than 6 million shares changed hands on the NYSE.
Kinross on Friday in a press statement addressed an ongoing investigation by the US Securities and Exchange Commission and the Justice Department into allegations of corruption at the company’s West African operations.
The probe dates back to August 2013 and the latest subpoenas related to the case in July this year was “seeking information and documents on substantially the same subjects as had previously been raised,” said Kinross.
Kinross also said it was fully cooperating with federal authorities and was continuing to pursue its own investigation into the whistleblower case adding that “over the course of the past 25 months [it] has not identified issues that Kinross believes would have a material adverse effect on the company’s financial position or business operations.”
In an article in the Globe & Mail, Kinross painted itself as a victim of “noise” by contractors that bid unsuccessfully for work at its mine in in Mauritania.
Kinross purchased the Tasiast mine in 2010 from Red Back Mining for more than $7 billion and has spent more than $1 billion on the project since taking over the project.
In February Kinross announced its scrapping a $1.6 billion expansion at the mine and in the latest statements said it’s continuing its spending review with specific mention of Tasiast and in light of an agreement reached in July to extend its debt profile and amend its debt covenant.
Kinross recently also settled a number of class-action lawsuits in relation to the 2010 Tasiast purchase after writing off the bulk of the deal value.
Based on last year’s numbers Kinross is the world’s fifth largest gold producer in terms of output producing 2.71 million ounces of gold equivalent in 2014 with 200,00 ounces from Tasiast and some 720,000 ounces coming from its mines in Russia.
The company said recently it is on track to end 2015 at the higher end of its guidance for the year of 2.4 – 2.6 million ounces.