Kinross Does Well-Timed IPO

Kinross Gold Corporation (KGC - Analyst Report) will offer 20.9 million common shares at a price of US$17.25 per common share. The Company has also granted to the underwriters an over-allotment option, exercisable for a period of 30 days from the date of closing of the offering, to purchase up to an additional 3,135,000 common shares at the offering price. The gross proceeds of the offering will be approximately US$360.5 million (US$414.6 million if the over-allotment option is exercised in full).

Conclusion: Well-timed deal for Kinross. Why? Gold prices are weak due to a strengthening US$, low inflation, lower oil prices, lower interest rates and low growth. Emerging market growth is declining and central banks are selling to finance bailouts and deficits. New projects are being put on hold or canceled. Indian demand for jewelry (which consumes 45% of world gold production) is very weak.

However, the deal will still get done, as gold bugs around the world still have a strong appetite for the metal as a monetary safe haven, despite our reasoning above.

Read the full analyst report on KGC