KCN – RBS Australia rates the stock as Hold

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Kingsgate has embarked on a take-over spree, announcing its second acquisition target in as many weeks and with management suggesting a third one might not be far off. RBS analysts comment the bid for Chilean junior explorer Laguna Resources is immaterial but if successful the longer term upside could be "appealing".

The deal would only represent about 2% of Kingsgate’s market capitalisation, but RBS sees potential for the company to create much more value out of this deal given time. However, the earlier announced Dominion ((DOM)) takeover would be EPS and NPV dilutive and this is why RBS sticks to a Hold rating.

For investors looking for mid-cap gold exposure, the stockbroker prefers Regis Resources ((RRL)) and Perseus ((PRU)).

Sector: Materials.

Target price is $11.42.Current Price is $10.41. Difference: $1.01 – (brackets indicate current price is over target). If KCN meets the RBS Australia target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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