Should Investors Be Afraid of Kinross Gold's $1 Billion Announcement?
Up more than 37% year to date, shares of Kinross Gold (NYSE: KGC) have glittered brightly -- due in part to an unexpectedly strong Q1 earnings report -- in 2017. Lately, however, the stock has been losing its luster. Following a mid-September announcement that the company has completed its feasibility studies and will proceed with the Phase Two expansion of the Tasiast mine in Mauritania and the Round Mountain Phase W project in Nevada, shares have fallen more than 6%. Management estimates initial capital costs for the expansion project at Tasiast to be approximately $590 million, while it plans on committing about $445 million to the Round Mountain project.
It's no surprise that investors are circumspect about the planned development at Tasiast considering the company took a $3.1 billion writedown on the project in 2013. But is the market overreacting? And how does Round Mountain factor in to the equation? Let's dig in even deeper to unearth more details of the two projects in order to determine if the market is correctly interpreting this commitment to organic growth as a red flag.
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Source: Fool.com
