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Kinross Gold Buys Aurelian Resources

by: Trader Mark July 24, 2008 | about stocks: AUREF.PK / GLD / KGC    
Trader Mark

Trader Mark

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For gosh sakes - I just want a darn hedge (gold) and I had to buy the one company that decides it's going on an acquisition spree! It might be a fine deal in the long run but I bought this as a hedge - I know, I know, buy Gold ETF (GLD) next time. Down 5% this AM - I was wondering why this was the only gold stock in my watch list down this morning. When it rains it pours. Bah.

  • Kinross Gold Corp. (KGC) said Thursday it will acquire Canada-based Aurelian Resources Inc. (AUREF.PK) for more than $1 billion in a move designed to boost its mining reserves.
  • Toronto-based Kinross will pay 0.317 Kinross shares, plus 0.1429 of a warrant, for each Aurelian share. The warrant will have an exercise price of $32 per Kinross share, and will expire within five years.
  • The deal -- worth about Canadian $1.2 billion (U.S. $1.18 billion) -- gives Kinross control over Aurelian's gold, silver and base metals reserves in Ecuador's Cordillera del Condor region.
  • Kinross expects to issue about 47 million shares, or about 8 percent of its outstanding common shares, as part of the buyout. (wonderful)

Disclosure: Long Kinross Gold in fund; no personal position

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This article has 5 comments:

  •  
    Jul 24 07:35 PM
    With all the distressed prices of quality gold mines in safe political areas these nitwits move into a banana republic, the genius that runs the company is a dunce reject from Barrick if I recall correctly.
    Reply
  •  
    Jul 25 08:10 AM
    KGC is a great company. When the panic is over and the dust settles I will definately purchase this stock again! There is no doubt that KGC will be going to new highs, imvho.
    Reply
  •  
    Jul 25 11:47 AM
    It only works if and when Ecuador let's them mine the gold, which is currently on hold.

    And even then who knows how much will be paid in taxes to this dictatorial country.

    And what happens if their dictator decides to nationalize (takeover) the gold mines.

    I see nothing but lots of potential downsides to this deal. Extremely risky. Wouldn't touch this stock now with Mark's ten foot pole much less mine.

    I feel for you Mark, this used to be one of my favorite gold stocks to own.
    Reply
  •  
    Jul 25 04:23 PM
    Lots of mid sized golds will be buying the smaller fish during the mini-bear of the next year or so. They know that when gold goes above $1500 per tr oz everyone's aunt Nelly will be buying the pennies and other laggards, so they'd better do it while gold is down
    Reply
  •  
    Aug 01 10:58 PM
    Contray to what kinross gold claims in SEC filings,they treat their employees very bad at least here in Nevada. They have a larger then normal high employee turnover rate and operate/deal in bad faith with their employees. The current lack of safety oversight Enforcement here in Nevada is not just limited to NV OSHA, NV Mine Safety and Training Section is due for a shake up as is MSHA in this part of the world. Its no secret Kinross Gold has a free ride w/employee issues due to the lack of enforcement oversight.
    Reply
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