Earnings Season Nears for Senior Gold Producers

With several of the world's largest gold producers scheduled to report fourth
quarter earnings later this week, Stifel Nicolaus discussed its outlook for the
companies in a report to clients published this week: Goldcorp (GG) – reports
Wednesday after the market close - "We forecast 4Q11 EPS of $0.56, below
consensus $0.60 and 3Q11's $0.57. We note high-growth companies have inherent
delivery risks, which are almost always short term in nature. Irrespective of
likely quarterly volatility, Goldcorp, with its attractive 60% production growth
profile by 2015 from assets in the Americas, remains our top pick among the
seniors. We maintain our Buy rating and US$65/share target price." Kinross
Gold (KGC) – reports Wednesday after the market close - "We forecast 4Q11
EPS of $0.19, below consensus $0.21 and 3Q11's $0.24. Kinross has the highest
growth potential (65% by 2016E), but mainly from assets located in risky
jurisdictions (i.e., Russia, Mauritania, and Ecuador, versus Goldcorps in the
Americas). We note that while Kinross is relatively undervalued, the constant
stream of bad news and mis-steps has continued to weigh on the stock. We
maintain our Buy rating and US$17/share target price." Barrick Gold (ABX) –
reports Thursday before the market open - "We forecast 4Q11 EPS of $1.21,
below consensus $1.27 and 3Q11's $1.39. Barrick remains attractive for its
steady cash flow delivery and valuation from a solid 8 mmoz production base, in
our view. We calculate that for every $100/oz increase in gold prices, Barricks
cash flow increases by $500mn, or $0.50/share. We maintain our Buy rating and
US$70/share target price." Newmont Mining (NEM) – reports Friday before the
market open - "We forecast 4Q11 EPS of $1.17, below consensus $1.27 and
3Q11's $1.29. We reiterate our Hold rating.