Today we highlight the Best and Not So Best performers from our 2015 Ubika Gold 20 Index.
BEST:
Kirkland Lake Gold Inc. (TSX: KGI)
Price: $4.80 | Market Cap: C$391 million
Figure 1: Kirkland Lake Gold Inc. (TSX: KGI) 1 Year Return of +45.0% vs. S&P/TSX Composite’s (9.4%)
Source: Thomson Reuters (18/12/2015)
The Northeastern Ontario gold producer of 150,000 ounces annually, is the Ubika Gold20 top performer for 2015. Despite a time of falling metals prices, with bullion dropping 11.2% over the year, Kirkland Lake has still managed to produce positive shareholder returns.
The Company’s success was largely due to its last 7 quarters of operational profitability, and 6 straight quarters of positive cash flows. Most recently, the Company announced Q2/2015 financial results, generating C$51 million in Revenue and C$8 million in FCF.
Figure 2: Kirkland Lake’s Rising Gross Profit Margins
Source: Thomson Reuters (18/12/2015)
The company has gone through several good changes over the year, including the successful acquisition of another public gold producer, St Andrew Goldfields Ltd. in November. The combined entity is expected to produce 260-310k ounces of gold in 2016 with attractive cash costs between US$600-690/oz gold. The acquisition is accretive to Kirkland Lake shareholders based on net asset value, production and cash flow per share. Transaction is expected to close in January 2016 after the required shareholder approval.
WORST:
Rubicon Minerals Corp. (TSX: RMX)
Price: $0.13 | Market Cap: C$229 million
Figure 3: Rubicon Minerals Corp. (TSX: RMX) 1 Year Return of (88.7%) vs. S&P/TSX Composite’s (9.3%)
Source: Thomson Reuters (18/12/2015)
From a C$500 million Market Cap Company, to C$50 million, Rubicon Minerals has not had a positive year. The damage came rushing down at the start of October when the Company was ordered by the Ministry of Environment and Climate Change to temporarily suspend mill operations at its Phoenix Gold Project, to treat elevated ammonia levels, discharge sufficient water from the tailings management facility, and to upgrade the Tailings Management Facility.
The company poured its first gold at the Phoenix Project in June. Yet at the same time, its Q2 financials showed that the company spent tens of millions more than expected in the quarter, leading to primary warning signs. Analysts even had trouble getting detailed answers from the Company on the reasons for such large unplanned expenditures.
Then in October, Rubicon announced that CEO Michael Lalonde was departing, and that the company had milling problems that were nearly a month old.
