- By Alberto Abaterusso

Yesterday Kinross Gold Corporation (KGC) announced its results for the second quarter ending on June 30. The miner reported adjusted net loss of $9.8 million, or 0.01 cents per share, compared with adjusted net loss of $13.6 million, or 0.01 cents per share, in the second quarter of 2015 and met analysts' expectations on EPS.

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• KGC 15-Year Financial Data

• The intrinsic value of KGC

• Peter Lynch Chart of KGC

The miner reported revenue of $876.4 million, compared with $755.2 million in the second quarter of 2015 and beat analysts' expectations on revenue by $14.97 million .

Kinross produced 671,267 gold equivalent ounces (Au eq. oz.), compared to 660,898 Au eq. oz. in the second quarter of 2015.

Summary of KGC's Second Quarter 2016 Operating and Financial Results:

The miner reported all-in sustaining cost per Au eq. oz. sold of $988 compared to $1,011 in the second quarter of 2015. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $976 in the second quarter of 2016, compared to $1,006 in the second quarter of 2015. The average realized gold price in the second quarter of 2016 increased to $1,266 per ounce, compared to $1,194 per ounce in the second quarter fo 2015. Adjusted operating cash flow of $187.2 million, or 15 cents per share, compared to $161.4 million, or 14 cents per share, in the second quarter of 2015. Reported net loss of $25.0 million, or 0.02 cents per share, compared to a loss of $83.2 million, or 0.07 cents per share, in the second quarter of 2015.

During the second quarter, Kinross has resolved the issue at its Tasiast gold mine in Mauritania where activities were suspended after the Government of Mauritania ordered expatriates, whose work permits were invalid, to stop working. Kinross expects to resume normal operations in August.

On April 3, Kinross Gold Corporation announced the completion of a deal offering 83,400,000 common shares at a price of $3 per share for gross proceeds of approximately $250 million.

We can consider this $3 share price as an intrinsic value of the stock. But as of today, with the price of gold trending higher, it is unlikely that Kinross will trade at $3 per share again or even below this level price.

Stock Price Forecast: Analysts offering 12-month price forecasts for Kinross Gold Corp have a mean target of 6.28 with a high estimate of 8 and a low estimate of 4.50.

Source: Yahoo Finance

The consensus price target of a period is the average of individual price target estimates submitted by covering sell-side analysts. Normally, it is a 12-month period. Assuming this is the price at which the stock will trade in 12 months time, if we discount it at an appropriate rate, we should obtain the present value of Kinross stock.

If we discount the average price target of $6.28 by 8.40%, we will get the present value of Kinross of $ 5.79.

8.40% is the cost of capital of the entire industry "metals & mining", see here.

$6.28/(1+.084)^1 = $5.79.

Benjamin Graham recommends a margin of safety of 50% for the defensive investor and a margin of safety of 20% or more for the aggressive investor. This means that if we apply a margin of safety between 20 and 50% to the present value, we will obtain a value between $2.90 and $4.63 per share.

Yesterday, the stock closed at $5.01 per share with a volume of 19,990,434 shares traded on the New York Stock Exchange. The share price is up $3.19 or +175% YTD:

Late October might offer a more convenient entry point into this gold player, considering its nature of being a cyclical stock.

The majority of the analysts recommend to hold Kinross.

Source: Yahoo Finance

Analysts see the following strengths in Kinross:

• Revenue growth as Round Mountain continues to perform well and Bald Mountain increases its gold production, with the gold price trending higher.

The acquisition of Bald Mountain and 50% of Round Mountain on January 11, 2016 for $610 million will help Kinross to diversify its operations, increase its low-risk U.S. exposure, add more than 400,000 ounces of gold over the first three years and generate free cash flow to fund expansions.

• A solid financial position.

As of June 30, Kinross had cash and cash equivalents of $968.2 million, 7.8% less from the fourth quarter of 2015 level. The decrease in cash and cash equivalents was due to the acquisition of the Bald Mountain mine and the remaining 50% interest in the Round Mountain mine. The decrease was offset by net proceeds of $275.7 million from the equity issuance in the first quarter of 2016 and $276.9 million of free cash flow generated from its operations in the first half of 2016. The company also has credit of $1,499.6 million available, bringing the total liquidity to approximately $2.5 billion, considered being sufficient to fund the Tasiast Phase One expansion and repay $250 million in senior notes, the current portion of long-term debt that is due in September.

As of June 30, Kinross has $1.7 in LT debt which is due in 2020, as the company has extended the maturity dates of its $500 million term loan and $1,500 million revolving credit facility by one year respectively to August 10, 2020 and August 10, 2021.

Albeit the afore mentioned strengths, recently TheStreet Ratings Team found "that the company's CFO has been weak overall."

For 2016, Kinross expects gold production will be between 2.7m and 2.9m (Au eq. oz.); production cost of sales will be between $675 - $735 per Au eq. oz. and AISC will be between $890 - $990 per Au eq. oz.

Capital expenditures guidance was increased to $755 million to reflect the additional $160 million expected to be spent on the Tasiast Phase One expansion, but the miner will provide an update in the third quarter.

Disclosure: I have no positions in Kinross Gold Corporation.

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This article first appeared on GuruFocus.

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• KGC 15-Year Financial Data

• The intrinsic value of KGC

• Peter Lynch Chart of KGC