U.S. analyst John Tumazos gives a contrarian view on Kirkland Lake Gold – by Barry Critchley (Financial Post – June 21, 2016)


John Tumazos is a U.S.-based metals and forest products analyst who has a particular interest in the Canadian gold sector. For many years Tumazos plied his trade on the street — where he was a perennial all-star. For the past few years he has run his own research company — known as Very Independent Research, LLC — where he sells the service to more than 30 institutional investors. He is also an investor in some of the companies that he researches.

Recently he weighed in on Kirkland Lake Gold, which owns five former high-grade mines in the Kirkland Lake, Ont., area and which expects to produce 270,000-290,000 ounces of gold this year. The company recently replaced its chief executive, George Ogilvie, with Tony Makuch who is expected to arrive in a few weeks. In February 2015, Eric Sprott was named chairman.

Tumazos has now downgraded Kirkland Lake, a stock that he owns, to neutral from overweight. He gave two reasons: price appreciation (over the past year the stock is up by 86.90 per cent) and “future direction uncertainties.”

Part of his reasoning is that none of the company’s board — there are six directors in all with Makuch set to be named to the board shortly — had the “strength of will” to tell Sprott to stand down to keep former CEO George Ogilvie.” In his report, Tumazos said Kirkland had “just reported record gold output and record quarterly profits after turning around the difficult Macassa mine.”

According to Bloomberg, ten analysts, eight of whom rate it either a buy or outperform, follow Kirkland.

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