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Morningstar | Kinross Will See Largely Stable Performance in 2019 as It Works on Its Development Projects

Kinross Gold is a senior gold miner with production split roughly 60% in the Americas, more than 20% in Russia, and less than 20% in West Africa.One of Kinross' largest mines is Kupol in Russia. Kupol operates with low costs thanks to high-grade deposits. The nearby Dvoinoye deposit leverages Kupol's facilities, further supporting low costs. Although the expected mine life is short, the company has historically done a good job extending production through exploration.Kinross' acquisition history has its missteps, the largest being Red Back in 2010 for more than $7 billion. Kinross paid a high price, and only now is the expansion at the Tasiast mine nearing production. Phase One of the expansion was completed in 2018, while Phase Two remains uncertain as the company negotiates with the Mauritanian government and explores alternatives.Kinross expanded its U.S. production with the acquisition of assets from Barrick, which helped the company expand its production in a mining-friendly jurisdiction. The company has done a good job of extracting more production from these assets, making the acquisition look even better in hindsight.Our long-term nominal gold price forecast is $1,300 per ounce in 2020 dollars. In recent years, investment demand weakened as the Federal Reserve raised rates amid the strength of the U.S. economy. This downward pressure on gold prices should soften in the near term, as the U.S. central bank appears to be opting for a more dovish approach due to rising economic uncertainty.On the back of stabilizing investment demand and improving jewelry demand in China, we expect gold prices to reach a nominal price of $1,300 per ounce by 2020.