Cramer's Call: Kinross Gold CEO Tye Burt
Cramer says a gold stock is good for any portfolio. He has been recommending Yamana Gold for a while now because he thinks it’s a good growth stock. The company is regularly raising its earnings and its output.
But another company has shown up on the radar that’s piqued his interest – Kinross Gold. KGC has the fifth-largest gold reserve base in the world and is the eighth-largest producer in the world. President and CEO Tye Burt dialed in to share his philosophy on growth.
“Growth philosophy is, we think, a fundamental starting point to delivering value to shareholders,” Burt says. He sees that growth starting with a solid reserve base, so the company is standing on 45 million ounces of gold, 70 million ounces of silver and 3 billion pounds of copper.
“We’re going to grow the production base off that reserve base by 60% over the next two years,” Burt says. “That will grow our production from 1.5 million ounces to 2.6 million ounces.” The CEO expects the cash cost of getting these precious metals out of the ground to drop significantly as well.
Burt puts the cost of mining an ounce of gold at about $335, and he’ll sell it at the market rate of about $675. The difference makes up KGC’s cash flow, which doubled last year to about $300 million from 2005 to 2006. The cash flow should continue to grow, Burt says, with the new production.
“That’s why we’re so excited,” Burt says. “Margins expand, and the production base is expanding.”
Cramer’s still bullish on Yamana, but for those Home Gamers who think that the stock has climbed too far, Kinross is worth considering.
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