Kinross Gold Corp.'s more than 7% rise on Toronto and New York markets so far Tuesday is no doubt being viewed as a step in the right direction by RBC Capital's Stephen D. Walker, after the analyst said earlier in the day that Kinross' low current valuation makes it a sitting duck.
He told clients in a note that any one of Barrick Gold Corp., Newmont Mining Corp., or Goldcorp Inc. could pull the trigger on a takeover bid for Kinross, citing first and foremost the company's significant 25 to 35% valuation discount on its 2009 cash flow estimates.
Mr. Walker also noted the company's estimated 76% production growth over the next two years and the development upside at Cerro Casale, a joint venture project with Barrick, as further rationale for an offer to emerge.
"With production growing from an estimated 1.6 million ounces in 2007 to 2.8 million ounces in 2009, Kinross is in an enviable position among the Tier 1 producers (along with Goldcorp), with strong forecast growth in production, earnings and cash flow," the analyst wrote in a note to clients.
Here is the full article.