Kirkland Lake downgraded

MARKET darling Kirkland Lake Gold has reached the end of its ‘outperform’ road after a 50% gain this year, according to BMO Capital Markets.
Kirkland Lake downgraded Kirkland Lake downgraded Kirkland Lake downgraded Kirkland Lake downgraded Kirkland Lake downgraded

Priced-in: Fosterville had great numbers in June but the market already assumed as much

Staff reporter

Analyst Brian Quast has downgraded Kirkland from outperform to ‘market perform' because its value has been recognised by investors. 

He has kept its target share price at C$32.50 per share, not far off its current level of just under $30/share.

"We are lowering our rating on Kirkland Lake Gold to market perform from outperform following exceptional share price performance in recent years," Quast said.

"With a rock-solid balance sheet, continued strong operational results, and ongoing exploration success, we predict that KL Gold will retain premium multiples amongst the mid-cap producers.

"However, trading at 2.4x NPV and 11.1x 2018E cashflow per share versus peers, which trade at 1.4x NPV and 8.0x 2018E CFPS, we believe much of the future success of the company is already priced in."

The Canada and Australia-focused miner posted strong half-year results last week, with production of 312,329 ounces of gold in six months putting it on a strong track to reach guidance of 620,000oz for the year.

Fosterville continued its positive run even after moving into a new area, managing a head grade of 30.4gpt and recoveries of 97.5% for the month of June.