One stock I would consider a "best idea" for the coming year is also a way to beat inflation with gold. My pick is Kirkland Lake Gold (KL), a Canadian mid-cap trading on the New York exchange, suggests international investing expert Vivian Lewis, editor of Global Investing.
The company just signed a strategic alliance with the largest gold major, Newmont Goldcorp (NEM) — itself formed by a recent merger with Barrick — to work together to resume mining for the yellow metal at the open pit Holt Mine which Kirkland resumed excavating early in 2019 under a new royalty agreement.
Kirkland Lake then suspended its work in July, 2020 over Covid-19 risks to miners, which clobbered its stock. The duo will also work on reviving Newmont properties near Timmins, Ontario.
The main reason I am buying KL, which trades under that some ticker on both the NYSE and in Toronto, is that it recently upped its quarterly dividend to 18.75 US cents from 12.5¢ (50%) — something it would not have done without some good reason, like finding more gold in these very old Canadian mines.
The money was raised by KL selling shares of Novo Resources Corp. and warrants on its own shares early in December. The warrants, not registered or sold to US shareholders, allow the holders to buy new KL shares at $2.80 per share in 2021, giving the miner proceeds of $71 million — which will fund a lot of digging.
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KL still retains 4% of Novo, vs. the 12.1% it owned before the last sale. It now doesn't have to inform shareholders of any future Novo sales under Canadian law because it owns less than 10%.
Kirkland tries to be good to shareholders, even non-Canadians who don't get a tax break or the right to buy warrants. It has actively bought back its shares for about $618 million (US) and paid dividends of $2.71 per shares through the first 3 quarters of last year.
Note that in addition to aged mines in Ontario, it also owns open pit Detour Lake and Macassa in Ontario. Kirkland also has a mine in Victoria, Australia.
Before the Covid shutdown it earned $2.06 per share, 42% up from prior year and free cash flow topped $500 million, and up 92% from 2019, thanks in part to Australian tax breaks. The company has zero debt, which is unusual for a gold miner.
