This gold producer just reported that its gold production rose by 32%, year-over-year. The company also raised its dividend.
Kirkland Lake Gold Ltd. (KL)
From Global Investing
I’m picking a way to beat inflation—gold. My pick is Kirkland Lake Gold, a Canadian mod-cap. It just signed a strategic alliance with the largest gold major, Newmont Goldcorp, itself formed by a recent merger with Barrick, to work together to resume mining for the yellow metal at the open pit Holt Mine which KL resumed excavating early in 2019 under a new royalty agreement. KL then suspended its work in July, 2020 over covid-19 risks to miners, which clobbered its stock.
The duo will also work on reviving Newmont properties near Timmins, Ontario. The main reason I am buying KL, which trades under that ticker both on the NYSE and in Toronto, is that it upped its quarterly dividend to 18.75 US cents from 12.5¢ (50%) last Wednesday, something it would not have done without some good reason, like finding more gold in these very old Canadian mines. The dividend is payable to shareholder of record on Dec. 31, New Year’s eve, on January 14, 2021. The money was raised by KL by selling shares of Novo Resources Corp and warrants on its own shares early in Dec. The warrants, not registered or sold to US shareholders, allow the holders to buy new KL shares at $2.80/sh in 2021, giving KL proceeds of $71 million which will fund a lot of digging. KL still retains 4% of Novo, vs. the 12.1% it owned before the last sale. It now doesn’t have to inform shareholders of any future Novo sales under Canadian law because it owns less than 10%.
Kirkland tries to be good to shareholders, even non-Canadians who don’t get a tax break or the right to buy warrants. Its actively bought back its shares for about $618 million (US) and paid dividends of $2.71/sh through the first 3 quarters of this year. Note that in addition to aged mines in Ontario, it also owns open pit Detour Lake and Macassa in Ontario. Kirkland also has a mine in Victoria, Australia. Before the Covid shutdown it earned $2.06/sh, 42% up from prior year and free cash flow topped $500 million, up 92% from 2019 thanks in part to Australian tax breaks. It has zero debt, unusual for a goldmine.
Vivian Lewis, Global Investing, global-investing.com, 212-758-9480, December 20, 2020