Kinross Gold

Kinross' second-quarter adjusted net income of USD 848 million—EPS of USD 0.71—is up 57% from a year ago but similar to the previous quarter. The stronger gold price more than offset lower volumes and increased unit costs from last year. Its USD 0.04 cents per share quarterly dividend is up 33%.

Why it matters: Guidance is maintained, and our estimates are little changed. We expect slightly higher volumes in the second half from the 980,000 gold equivalent ounces sold in the first, but lower gold prices based on the futures curve mean we expect 2026 EPS of USD 2.50, up 36% on 2025.

The bottom line: Spot gold of around USD 4,100 per ounce—double our midcycle assumption from 2030—is the main driver of no-moat Kinross shares trading significantly above our unchanged USD 9.30 per share fair value estimate.

Big picture: The elevated gold price means it is currently highly profitable, allowing it to move into a net cash position of USD 1.9 billion at the end of June 2026 from net debt of USD 2.2 billion at the end of December 2022. The firm has also raised its dividend and restarted share buybacks. Its strong balance sheet also gives it capacity to extend existing mines while developing new ones such as Curlew, Great Bear, and, further down the track, Lobo-Marte. These investments are needed to maintain production at around 2 million GEO given its short reserve life of about a decade. Its average mined grades are also higher than both its reserve and resource grades, with resources including the large, high-grade, long-life Great Bear project that we think will likely be developed. Silver byproduct credits are also likely to materially fall once Lobo-Marte replaces La Coipa.

Long view: Along with the gold price returning to being driven by the fundamentals of supply and demand, this drives our view that earnings will fall by a negative compound annual growth rate of 20% over our five-year forecast period.

Lower GEO sales at its Nevada operations more than offset higher production from the Tasiast and Paracatu mines in the second quarter. The latter two mines are currently its lowest-cost operations and comprised around 60% of attributable sales volumes in the period. However, we expect their contribution to fall to around 40% of total volumes midcycle from 2030 as their production falls as mined grades revert to reserve grades.

We lower our fair value estimate for Kinross to USD 9.30 per share, from USD 10.00, due to weaker gold prices.

We now assume gold averages around USD 4,400 per ounce from 2026 to 2028 based on the futures curve, down from about USD 4,900. However, our assumed midcycle price remains about USD 2,050 per ounce from 2030. This is based on our estimate of the long run marginal cost of production.

We also assume silver averages about USD 60 per ounce from 2027 based on spot, reverting to around USD 37 per ounce midcycle from 2030, 1/55th of our assumed midcycle gold price.

Cash flow is discounted at an 8.8% weighted average cost of capital, based on a long-term capital structure comprising 25% debt and 75% equity. We assume a 10.6% long-term cost of equity, reflecting gold's lack of systematic risk and correlation to GDP. The company’s higher exposure to sovereign risk also means we think shareholders require additional return commensurate with these risks. We apply a 5.4% pretax cost of debt, reflecting what we expect Kinross’ long-term cost of debt will be in a normalized interest rate environment.

As a commodity producer, Kinross is a price taker and needs low-cost mines with long lives and a low installed capital base to support the longer-term excess returns needed to justify an economic moat.

We assign a no-moat rating to Kinross as its modestly below-industry-average production costs weigh on its ability to generate returns in excess of its cost of capital. Its all-in sustaining costs (including byproduct credits) in 2025 of roughly USD 1,540 per ounce place it in the second quartile of the gold AISC curve, around the 45th percentile. Due to the flatness of the industry cost curve, only miners in the lowest quartile tend to enjoy a material operating cost advantage. And that would need to be paired with an efficiently invested capital base and long reserve life to warrant a moat. Kinross’ total production costs are not low enough to justify a moat, and so we don’t think the company exhibits a low-cost advantage.

We also think Kinross' history of disappointing acquisitions and an overinflated invested capital base also makes it difficult to assign the company an economic moat, though we acknowledge its investment decision discipline has improved in recent years. Kinross’ adjusted return on invested capital is below its weighted average cost of capital. We have included around USD 5 billion in asset and intangibles write-downs on the basis that the impairments relate to assets developed or acquired in the ordinary course of business, and so should be included when calculating ROIC, as they are a normal part of doing business as a gold miner.

The company averaged ROIC in the 10 years ended Dec. 31, 2025, of about 5%, while ROIC averaged 8% in the five years ended Dec. 31, 2025, albeit inflated by ROIC of 21% in 2025 due to the incredible gold bull market. However, we think elevated gold prices are temporary. We estimate that Kinross will generate a ROIC in the low single digits midcycle in 2030, below its WACC of about 9%. Forecast below-WACC returns support our qualitative no-moat assessment.

In terms of commodity prices used for our forecasts, our assumed midcycle gold price is about USD 2,050 per ounce from 2030 based on our estimate of the marginal cost of production. We also assume silver prices of about USD 37 per ounce midcycle from 2030, being 1/55th of our assumed midcycle gold price.

Tasiast and Paracatu, Kinross' two largest operations by production, sit in the lower half of the industry cost curve.

The Great Bear project in Canada is a potential long-life, low-cost mine that we think is likely to be developed, increasing its exposure to low sovereign risk locales.

Gold companies tend not to follow general economic cycles. They can also provide a hedge to inflation risk.

Kinross sits broadly in the middle of the gold cost curve, making it more leveraged to movements in gold prices compared with its lower-cost competitors.

More than half of Kinross’ operations are in higher-sovereign-risk locales, including Brazil and Mauritania.

Gold is subject to the whims of investors, who can move as a herd and affect the gold price.