08.19
The company has laid out a plan for organic growth from existing assets.
We see the profile as the best for firms producing more than 2 million
ounces per year. In 2014, the company could be producing 60% more gold
than current levels with operating costs that are similar to now.
Performance at Paracatu has lagged expectations as the start-up for this
expansion has been slow. Nevertheless we see achievements relatively easy
to meet based on expectations for operating costs of $500/oz given input
parameters to meet this level.
The assets from the Bema acquisition contributed 51% of the EBITDA for
the company in Q2. It is difficult to see how KGC could support its current
EV without having done this transaction three years ago. We think KGC has
done a better job at acquisitions in this market than others.
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