Kirkland Lake Gold Stock Isn’t Done Growing Yet

Kirkland Lake Gold [stock_market_widget type="inline" template="generic" color="default" assets="KL.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock has gone from strength to strength this year, rising to the tune of 60% as a combination of higher gold prices in 2019 and a solid production profile has boosted investor confidence.

Looking ahead, don’t be surprised to see Kirkland Lake stock scale new highs as the dual catalysts that the company is currently sitting on will lead to a better financial performance. Let’s see how.

There’s a Lot to Like About Kirkland Gold

Kirkland Lake Gold has hit a purple patch as far as gold production is concerned. The company believes it can produce one million ounces of gold in 2019, and don’t be surprised if it hits that level given the way it performed in the first quarter of the year.

Kirkland Lake Gold produced 231,879 ounces of gold in the first quarter of 2019, up 57% from the prior-year period. This was a new production record for the company. But this was not the only positive for the company.

Kirkland Lake Gold managed to deliver net income of $110 million during the quarter as compared to just over $50 million in the prior-year period.

Kirkland Lake Gold’s production costs during the quarter declined to $70 million as compared to $71.5 million in the year-ago period. This is impressive considering the massive increase in the company’s production. More specifically, the company’s all-in sustaining cost per ounce sold fell by a third from the year-ago quarter to an average of $560 an ounce.

On the back of the increased production and lower costs, Kirkland Lake Gold managed to deliver net income of $110 million during the quarter as compared to just over $50 million in the prior-year period.

The good news is that the company looks all set to sustain this impressive growth rate going forward.

More Upside Ahead  

For the full year, Kirkland Lake Gold believes it can deliver production between 920,000 ounces and 1 million ounces. Its all-in sustaining cost per ounce of gold sold is expected to average between $520 and $560. This means that there’s a possibility of further decline in the company’s cost profile, which could lead to an increase in its earnings.

Moreover, Kirkland Lake will also be helped by an improvement in the price of gold. The precious metal’s price has been rising higher in recent months thanks to the global economic turmoil. Looking ahead, it is anticipated the price of gold could cross the $1,500 an ounce mark this year.

Yahoo Finance reports:

Analysts at the investment bank wrote in a new note Wednesday that a combination of a weak dollar and rising global uncertainties could keep gold prices hot. Goldman raised its 12-month gold price forecast to $1,475 an ounce from $1,425 an ounce.

So as Kirkland Lake Gold continues to increase production and keep a handle on its costs, its financial performance will keep getting better. The company is expected to deliver a 40% jump in revenue this year, while earnings are expected to go up to $2.23 a share from $1.36 per share last year.

As a result, Kirkland Lake Gold stock can deliver more upside in the coming months.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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