Gold mining darling in last phase of its bull run?

2019年1月24日

Kirkland lake has had a good run the last few years. Mining some very cheap gold in stable countries like canada and australia and increasing its output year after year, this darling has been a 10 bagger in just 3 years in a quiet gold market!
All good things must come to an end and while I foresee gold to still do good the coming weeks, it might be the last hurrah for this gold stock.
Even at the high end of their production target they will only produce 800000 ounces in 2019.
Granted they usually outperform their targets but at 37.4 CAD, the company is valued at 7.85B Cad or 5.85B USD.
At a gold price of 1285 USD that is a production worth of just over 1 Billion USD. It is very rare to see a gold miner trade at 6 times its output.

For comparison Barrick will produce about 5.8 million ounces next year and some copper worth just over 1 Billion dollars for a total output of around 8.7 Billion.
This compares with its 20.8 Billion valuation which is slighty over twice as high as its production.

Granted Kirkland's mines are top quality more than Barrick's but one does pay top dollar for these shares as well. My expectation is one last run higher before a longer period of cooldown.
Depending on the gold price, this correction could range from bad to worse.