Kinross CEO Tye BurtFred Lum/The Globe and Mail
Gold investors looking for instant gratification should probably bypass producer Kinross Gold Corp. Deal junkies, on the other hand, might want to stay tuned.
The Toronto-based miner has made a lot of moves in recent weeks as it shuffles parts of its portfolio, and chief executive officer Tye Burt signals there could be more transactions to come.
The results, however, may not show up for years.
The strategy has drawn some criticism that Kinross has no short-term growth plans and will lag behind its peers. That's a shot Mr. Burt deflects as short-sightedness.
"My answer to the critics is that you can't always focus on the short term," Mr. Burt said in an interview Friday. "It's very difficult to have a designer growth curve every year."
As the head of the fourth-largest North American gold producer, Mr. Burt is also adamant that size doesn't matter.
"It's not about being the biggest gold producer, it's about being a highly profitable, high-margin gold producer," he said.
"As a result we are always looking to trade lower margin assets for higher margin assets and that's not always conventional wisdom in the gold mining industry."
It's that mindset that has propelled Kinross to boost its presence in Russia, sell down its stake in a Chilean mine project, and return to Canada after a two-year absence - all in the past two months.
The latest was a $140-million deal announced late this week to buy exploration company Underworld Resources Inc., whose flagship asset is the White Gold project in Yukon. Kinross had stopped mining in Canada in 2008 when it did an asset swap with Goldcorp for a stake in a mine operation in Chile.
"We see it as returning to our roots in a way, in a prolific region," Mr. Burt said.
Underworld will help Kinross extend its mine life in Canada and raise the average grade life across the company's assets. Mr. Burt denied suggestions that moving back into Canada balances out its portfolio in places such as Russia, which has been viewed as politically risky.
"It wasn't an attempt to offset some other anxiety," he said.
Kinross has been trying for years to ease concerns about its Russian presence, which today accounts for about one quarter of its annual production. It's also the largest Canadian investor in Russia.
The miner was recently tapped as the only Canadian company to sit on Russia's Foreign Investment Advisory Council, a 42-company body chaired by Russian Prime Minister Vladimir Putin, which Kinross said shows its clout in the country.
That came shortly after Kinross said it would pay $368-million (U.S.) for the Dvoinoye gold deposit and another gold property in eastern Russia, both near its huge Kupol mine.
"I think there are more political risks of different kinds in many other gold producing countries," Mr. Burt said.
Mr. Burt's other big move recently was the sale of a 25-per-cent stake in the $4-billion Cerro Casale project in Chile to Barrick Gold Corp. The deal leaves Kinross with 25 per cent of the gold and copper project, and Barrick with the rest.
That deal gives Kinross some extra cash and a much smaller capital commitment, but not everyone sees it as ideal.
"We question the strategy of selling assets in an era where large deposits are extremely difficult to replace," CIBC World Markets Inc. said in a recent report.
Mr. Burt, however, believes he has the best of both worlds: some exposure to the asset, but also extra cash for future acquisitions.