Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the “
Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
announced the Company’s financial and operating results for the
fourth quarter (“Q4 2020”) and full-year 2020 (“FY 2020”). For both
periods, the Company achieved record levels of production, revenue,
net earnings and adjusted net earnings. The Company also released
Mineral Reserve and Mineral Resource estimates as at December 31,
2020. The Company’s full financial statements and management
discussion & analysis are available on SEDAR at www.sedar.com
and on the Company’s website at www.kl.gold. All dollar amounts are
in U.S. dollars, unless otherwise noted.
- RECORD QUARTERLY RESULTS IN
Q4 2020 Record production 369,434 oz, net earnings $232.6M
or $0.86/share, adj. net earnings $265.8M or $0.98/share (after
$0.03/share reduction for prior-period depreciation
adjustments)
- ACHIEVED ALL FULL-YEAR 2020
GUIDANCE Production 1,369,652 oz (Guidance: 1.35-1.40M
oz); Op. cash costs/oz(1) $404 ($410-$430), AISC/oz(1) $800
($790-$810)
- RECORD EARNINGS
& CASH FLOW IN FY 2020 Net earnings $787.7M
(2.91/share), adjusted net earnings(1) $922.9M (3.41/share), Op.
cash flow $1,315.8M; free cash flow(1)$733.1M
- RETURNED $848.3M TO
SHAREHOLDERS IN 2020 Repurchased 18,925,900
shares for $732.4M and paid $115.9M in dividends, with two dividend
increases during 2020
- DETOUR LAKE: RIGHT
DEAL AT THE RIGHT TIME Detour Lake contributed
>40% of free cash flow in 2020, achieved significant exploration
success; Permit received to process up to 32.8M tonnes per
year
- EXPLORATION SUCCESS
AT ALL OPERATIONS Drill success at Detour Lake,
Macassa and Fosterville in 2020 highlight value creation potential
at all three assets
- EXCELLENT PROGRESS
WITH GROWTH PROJECTS #4 Shaft at Macassa,
exploration drive from Fosterville to Robbin’s Hill and multiple
projects at Detour Lake advancing on schedule
- TOTAL MINERAL
RESERVES INCREASE 3% Mineral Reserves at
operating costs increased 3% as at December 31, 2020 to 20,118,000
ounces
- SIGNIFICANT
PROGRESS WITH ESG INITIATIVES Multiple
initiatives aimed at promoting responsible environmental
management, equality and diversity, safety and community
support
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold commented: “2020 will go down as a
year that no one will ever forget. Faced with the challenges of a
global pandemic, our team rose to the occasion and effectively
responded to the COVID-19 virus with there being no transmission of
the virus at any of our sites during the year. At the same time
that we were focusing on protecting our people, we also turned in
our best year ever, achieving record levels of production, earnings
and cash flows and meeting all of our consolidated FY 2020
guidance. In Q4 2020, we had our best quarter of the year,
achieving record quarterly production and earnings, with all three
operations reaching their highest production levels of 2020.
Obviously, the high gold price environment was a key factor for
both the full year and Q4, but so was the hard work of a lot of
people at our company. “In addition to record results, we also
achieved a number of other important milestones in 2020. We
completed the acquisition of Detour Gold Corporation on January 31,
2020, with Detour Lake contributing over 40% of our free cash flow
for the year and significant production growth expected at the mine
in 2021. We also achieved encouraging exploration results at all
three of our cornerstone assets and made excellent progress with
our key growth projects. Very importantly, we returned $848.3
million to shareholders through share repurchases and dividend
payments, and in early January achieved our goal of repurchasing 20
million shares over a 12-to-24 month period. When we look at the
quality of our assets, the progress being achieved and the
tremendous upside that remains to be realized, we believe that the
value creation potential for our company remains industry
leading.”
Summary of Performance
FY 2020 (↑ indicates growth
from FY 2019)
- Effective response to
COVID-19, including introducing extensive health and
safety protocols, reducing or suspending operations and/or work
when required, and using remote work wherever possible; Nine
workers (employees or contractors) tested positive for COVID-19
during FY 2020; In each case public health agencies determined that
the infection was due to community spread and there was no
transmission of COVID-19 at the Company’s operations with people
coming in close contact with the infected workers all testing
negative.
- Record net
earnings of $787.7 million or $2.91 per
share (9% ↑); Adjusted net earnings(1) of $922.9 million or $3.41
per share (24% ↑).
- Record cash flows
including net cash provided by operating activities of $1,315.8
million (43%↑) and free cash flow(1) of $733.1 million (58%
↑).
- Revenue growth of
78%, to $2,460.1 million, with a 42% increase in gold
sales, to 1,388,944 ounces, contributing $575 million of the
increase and a $367 per ounce or 26% improvement in the average
realized gold price(1), to $1,772 per ounce, adding an additional
$509 million to revenue growth in FY 2020.
- Cash increased 20%
during FY 2020 to $847.6 million at December 31, 2020 with no
debt.
- $848.3 million returned to
shareholders with $732.4 million used to repurchase
18,925,900 shares through the Company’s normal course issuer bid
(“NCIB”) and $115.9 million paid in dividends with two increases to
the quarterly dividend during FY 2020.
- Strong operating results –
Consolidated guidance achieved:
° Production
of 1,369,652 ounces (41% ↑) (FY 2020 guidance: 1.35 – 1.40
million ounces)
° Production costs of $587.3 million vs
$281.0 million in FY 2019 ($356.1 million at Detour Lake in FY
2020)
° Operating cash costs per ounce
sold(1) of $404 ($264
excluding Detour Lake) versus $284 in FY 2019 (FY 2020 guidance:
$410 – $430)
° All-in
sustaining costs (“AISC”) per ounce
sold(1) of $800 ($566
excluding Detour Lake) versus $564 in FY 2019 (FY 2020 guidance:
$790 – $810).
- Acquired Detour Lake Mine
on January 31, 2020 with Detour Lake making a substantial
contribution to FY 2020 results, including $308.0(2) million of
free cash flow(2) (in 11 months), over 40% of the total free cash
flow(1) for the year; Subsequent to year-end 2020, permit
received to increase throughput to a maximum of 32.8 million tonnes
per year.
- Continued exploration
success with encouraging drilling results achieved at all
three of the Company’s cornerstone assets, including at Detour Lake
where there is increasing evidence that a much larger and
potentially higher-grade deposit may exist than is currently
included in Mineral Reserves.
- Excellent progress with key
growth projects, including the #4 Shaft project at
Macassa, the twin exploration drive from Fosterville to Robbin’s
Hill and a number of projects at Detour Lake in support of future
growth.
Q4 2020
- Record net
earnings of $232.6 million or $0.86 per share ($169.1
million or $0.81 in Q4 2019, $202.0 million or $0.73 in Q3 2020);
Adjusted net earnings(1) of $265.8 million or $0.98 per share
($185.3 million or $0.88 in Q4 2019, $254.0 million $0.92 in Q3
2020).
- Strong cash flows
including net cash provided by operating activities of $420.9
million (247.1 million in Q4 2019, $431.1 million in Q3 2020) and
free cash flow(1) of $232.4 million ($132.8 million in Q4 2019,
$275.7 million in Q3 2020).
- Revenue increased
to $691.5 million, 68% ↑ vs Q4 2019 and 9% ↑ from Q3 2020.
- Record quarterly production, solid unit cost
performance
° Production of 369,434 ounces vs 279,742
ounces in Q4 2019, 339,584 ounces in Q3 2020
° Production costs of $148.3 million vs $71.2
million in Q4 2019, $136.0 million in Q3 2020 (Detour Lake
contributed $95.1 million in Q4 2020 and $87.4 million in Q3
2020)
° Operating cash costs per ounce
sold(1) of $396 ($245
excluding Detour Lake) versus $255 in Q4 2019 and $406 in Q3 2020
($245 excluding Detour Lake)
° AISC
per ounce sold(1) of
$790 ($496 excluding Detour Lake) versus $512 in Q4
2019 and $886 in Q3 2020 ($622 excluding Detour Lake).
- $279.5 million returned to
shareholders, including $245.3 million used to repurchase
5,727,500 share through the NCIB and $34.2 million used for a
quarterly dividend payment on October 14, 2020 to shareholders of
record on September 30, 2020; 50% increase to quarterly dividend
announced, to US$0.1875 per share, effective the Q4 2020 dividend
payment on January 14, 2021 to shareholders of record on December
31, 2020.
(1) See
“Non-IFRS Measures” in this press release and on pages 40 – 47 of
the MD&A for the three and nine months ended September 30,
2020.(2) Excludes $60.5 million of transaction and
restructuring costs mainly related to Detour Gold acquisition.
Environment, Social and Governance
(“ESG”) Progress in FY 2020
During FY 2020, the Company achieved significant
advancements with its ESG program, both in terms of performance and
reporting. Key milestones achieved during the year are summarized
below.
- Adopted World Gold Council’s
Responsible Gold Mining Principles; Completed Year One External
Assurance
- Finalized policies and standards on
Human Rights, Supplier Code of Conduct and Grievance
Resolution
- Finalized a gender diversity policy
and established an Executive Leadership team to promote diversity,
equality and inclusion
- Verified that all active tailings
facilities meet or exceed all MAC/CDA and ANCOLD guidelines
- Received Tom Peters Memorial Mine
Reclamation Award in recognition of Detour Lake Mine’s Progressive
Reclamation Program aimed at reclaiming 10 hectares of land per
year commencing in 2019
- Achieved greenhouse gas (“GHG”)
emissions well below industry averages, with Macassa continuing to
have among the lowest GHG intensity rates in the industry
- Macassa purchased five 50-tonne
battery-powered underground haul trucks (first in industry), with
the first delivered in Q1 2021
- Launched donation program to
support local health care agencies and community support groups in
areas where the Company operates; A$1.0 million donated to support
Australian bush fire relief and prevention.
Distribution of production in 2021
On December 10, 2020, the Company announced its full-year 2021
guidance, including production guidance of 1,300,000 – 1,400,000
ounces. The Company also provided guidance on the distribution of
production during the year, with production targeted at
600,000 – 650,000 ounces in the first half of the year, and 700,000
– 750,000 ounces during the final six months of FY 2021. Within the
first half of the year, production is expected to total 270,000 –
290,000 ounces in Q1 2020 and 330,000 – 360,000 ounces in the
second quarter of the year. Based on the weighting of
production, as well as the timing for sustaining capital
expenditures, AISC per ounce sold are expected to average over $900
in the first six months of the year, and be highest in Q1 2020,
improving to approximately $700 during the second half of 2021.
Consolidated Mineral Reserves and Mineral
Resources as At December 31, 2020
On February 25, 2021, the Company released
Mineral Reserve and Mineral Resource estimates as at December 31,
2020, with the comparison period being December 31, 2019.
Mineral Reserve and Mineral Resource estimates are determined in
accordance with National Instrument 43-101 – Standards of
Disclosure for Mineral Projects, issued by the Canadian Securities
Administrators ("NI 43-101"). Additional details relating to the
Company’s Mineral Reserve and Mineral Resource estimates as at
December 30, 2020 are set out below.
The Company’s drilling program for the purpose
of replacing Mineral Reserves and Mineral Resources during 2020 was
significantly impacted by disruptions related to COVID-19. All
drilling was suspended during the second quarter as part of the
Company’s COVID-19 response. Drilling resumed later in the quarter
and ramped up over the remainder of the year, following strict
COVID-19 safety protocols. Of a total of 525,000 metres of drilling
planned for the year, approximately 340,000 metres or 65% was
completed.
For Kirkland Lake Gold assets as at December 31,
2020, Mineral Reserves were estimated using a long-term gold price
of US$1,300/oz (C$1,700/oz; A$1,765/oz). These price assumptions
are unchanged from the Mineral Reserve estimates as at December 31,
2019, with the exception of Detour Lake, where Mineral Reserve and
Mineral Resource estimates as at December 31, 2019 were calculated
using a long-term gold price of US$1,000/oz with an assumed
exchange rate of US$1.0:C$1.10. All Mineral Resource estimates are
provided exclusive of Mineral Reserves. Comparisons to previous
Mineral Reserves and Mineral Resources in this press release are to
estimates as at December 31, 2019. For more historical comparisons,
Mineral Resource estimates for the Australian operations prior to
the mid-year 2017 Mineral Reserve and Mineral Resource estimates
for Fosterville, released in June 2017, were calculated inclusive
of Mineral Reserves and, therefore, are not directly comparable to
the December 31, 2019 and December 31, 2018 estimates. Detailed
footnotes for the December 31, 2020 Mineral Reserve and Mineral
Resource estimates are provided later in this press release.
Consolidated Mineral Reserves at operating
assets as at December 31, 2020 totalled 20,118,000 ounces, after
depletion of 1,451,000 ounces, a 3% increase from 19,618,000 ounces
as at December 31, 2019. The increase in Mineral Reserves resulted
from a 6% increase in Mineral Reserves at Detour Lake Mine mainly
due to a lower average cut-off grade. Mineral Reserves at Macassa
included 2,282,000 ounces at an average grade of 20.1 g/t, with an
additional 86,000 ounces at an average grade of 8.7 g/t located in
near-surface zones along the Amalgamated Break. These Mineral
Reserves compared to Mineral Reserves as at December 31, 2019 of
2,360,000 ounces at an average grade of 22.1 g/t, with 93,000
ounces of Mineral Reserves in the near-surface zones at an average
grade of 10.7 g/t. At Fosterville, Mineral Reserves as at December
31, 2020 totalled 1,790,000 ounces at an average grade of 15.4 g/t,
with there being an additional 180,000 ounces at 5.3 g/t at
Robbin’s Hill. During FY 2020, a total of 647,000 ounces were
depleted at an average grade of approximately 33.0 g/t. The mine
replaced 337,000 ounces of the depleted ounces despite completing
approximately 52% of the planned drilling program during the
year. The Company’s December 31, 2020 Mineral Reserve estimate
does not include Mineral Reserves from non-operating assets.
CONSOLIDATED MINERAL RESERVE ESTIMATE (EFFECTIVE
DECEMBER 31, 2020)
|
December 31, 2020 |
|
December 31, 2019 |
|
Proven and Probable |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
Depleted Oz2020 (000's) |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
|
|
Macassa |
3,532 |
20.1 |
2,282 |
187 |
3,320 |
22.1 |
2,360 |
|
Macassa Near Surface |
308 |
8.7 |
86 |
|
273 |
10.7 |
93 |
|
Total CDN Underground |
3,841 |
19.2 |
2,369 |
187 |
3,593 |
21.2 |
2,453 |
|
Detour Lake Pit - Above 0.5 g/t(1) |
382,969 |
0.96 |
11,862 |
617(1) |
397,680 |
0.99 |
12,640 |
|
Detour Lake Pit - Below 0.5 g/t |
114,426 |
0.41 |
1,510 |
|
|
|
|
|
West Detour Pit - Above 0.5 g/t |
58,530 |
0.95 |
1,779 |
|
54,920 |
0.94 |
1,660 |
|
West Detour Pit - Below 0.5 g/t |
32,121 |
0.40 |
416 |
|
|
|
|
|
North Pit - Above 0.5 g/t |
5,877 |
0.95 |
180 |
|
5,950 |
0.98 |
187 |
|
North Pit - Below 0.5 g/t |
2,192 |
0.41 |
29 |
|
|
|
|
|
Detour Low Grade Fines |
|
|
|
|
18,900 |
0.59 |
360 |
|
Total CDN Open Pit – Above 0.5 g/t |
447,376 |
0.96 |
13,821 |
617 |
477,450 |
0.97 |
14,846 |
|
Total CDN Open Pit – Below 0.5 g/t |
148,739 |
0.41 |
1,954 |
|
|
|
|
|
Total CDN Operations |
599,956 |
0.94 |
18,144 |
804 |
481,043 |
1.12 |
17,300 |
|
Fosterville |
3,610 |
15.4 |
1,790 |
647 |
3,000 |
21.8 |
2,100 |
|
Robbins Hill |
1,060 |
5.3 |
180 |
|
1,240 |
5.5 |
218 |
|
Total AUS Operations |
4,670 |
13.1 |
1,970 |
647 |
4,240 |
17.0 |
2,320 |
|
Total |
604,627 |
1.03 |
20,118 |
1,451 |
485,283 |
1.26 |
19,618 |
|
Holt Complex(2) |
|
|
|
31 |
5,432 |
4.0 |
702 |
|
Hislop(3) |
|
|
|
|
176 |
5.8 |
33 |
|
Northern Territory(4) |
|
|
|
5 |
988 |
4.0 |
128 |
|
Total NON OPERATING |
|
|
|
37 |
6,596 |
4.1 |
863 |
|
Total w/ NON OPERATING |
604,627 |
1.03 |
20,118 |
1,488 |
491,879 |
1.30 |
20,481 |
|
(1) Kirkland Lake Gold acquired Detour Gold
on January 31, 2020. Please refer to detailed footnotes set out
below.
CONSOLIDATED MEASURED & INDICATED MINERAL RESOURCES*
(EFFECTIVE DECEMBER 31, 2020)
|
December 31, 2020 |
December 31, 2019 |
|
Measured and Indicated |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
|
|
Macassa |
1,800 |
13.3 |
769 |
1,616 |
13.8 |
717 |
|
Macassa Near Surface |
117 |
6.1 |
23 |
47 |
7.8 |
12 |
|
Holt Complex(2) |
11,690 |
4.5 |
1699 |
7,752 |
4.2 |
1047 |
|
Hislop(3) |
1,337 |
4.0 |
173 |
1,147 |
3.6 |
132 |
|
Detour Zone 58N |
2,900 |
5.8 |
534 |
2,900 |
5.8 |
534 |
|
Canamax(5) |
|
|
|
240 |
5.1 |
39 |
|
Total CDN Underground |
17,844 |
5.6 |
3,198 |
13,702 |
5.7 |
2,482 |
|
Detour Lake(1) |
107,748 |
1.15 |
3,991 |
81,400 |
1.15 |
3,003 |
|
West Detour |
23,462 |
0.88 |
667 |
31,000 |
0.88 |
878 |
|
Aquarius |
23,112 |
1.49 |
1106 |
22,300 |
1.29 |
926 |
|
Total CDN Open Pit |
154,323 |
1.16 |
5,763 |
134,700 |
1.11 |
4,807 |
|
Total CDN Operations |
172,166 |
1.62 |
8,961 |
148,402 |
1.5 |
7,290 |
|
Fosterville |
7,690 |
5.6 |
1,390 |
12,300 |
5.3 |
2,080 |
|
Robbins Hill |
2,120 |
4.8 |
329 |
3,460 |
3.5 |
386 |
|
Northern Territory(4) |
25,200 |
2.3 |
1,830 |
17,200 |
2.5 |
1,410 |
|
Total AUS Operations |
35,000 |
3.2 |
3,540 |
32,900 |
3.7 |
3,870 |
|
Total |
207,148 |
1.88 |
12,505 |
181,362 |
1.91 |
11,164 |
|
* M&I Mineral Resources are reported exclusive of Mineral
Reserves.Please refer to detailed footnotes set out below.
CONSOLIDATED INFERRED MINERAL RESOURCES (EFFECTIVE
DECEMBER 31, 2020)
|
December 31, 2020 |
December 31, 2019 |
|
Inferred |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
|
|
Macassa |
1,349 |
17.0 |
737 |
1,039 |
16.7 |
557 |
|
Macassa Near Surface |
96 |
8.6 |
26 |
146 |
11.5 |
54 |
|
Holt Complex(2) |
9,097 |
4.5 |
1310 |
9,097 |
4.4 |
1,294 |
|
Hislop(3) |
804 |
3.8 |
97 |
797 |
3.7 |
95 |
|
Detour Zone 58N |
1,000 |
4.4 |
136 |
1,000 |
4.4 |
136 |
|
Canamax(5) |
|
|
|
170 |
4.3 |
23 |
|
Total CDN Underground |
12,346 |
5.8 |
2,306 |
12,248 |
5.5 |
2,160 |
|
Detour Lake(1) |
31,830 |
0.82 |
844 |
33,600 |
0.79 |
855 |
|
West Detour |
20,476 |
0.95 |
626 |
9,300 |
0.95 |
282 |
|
Aquarius |
502 |
0.87 |
14 |
|
|
|
|
Total CDN Open Pit |
52,808 |
0.87 |
1,484 |
42,900 |
0.82 |
1,137 |
|
Total CDN Operations |
65,153 |
1.81 |
3,790 |
55,148 |
1.86 |
3,297 |
|
Fosterville |
6,140 |
6.5 |
1,280 |
8,450 |
6.4 |
1,740 |
|
Robbins Hill |
2,420 |
6.0 |
467 |
2,670 |
4.5 |
383 |
|
Northern Territory(4) |
19,200 |
2.3 |
1,390 |
15,200 |
2.6 |
1,270 |
|
Total AUS Operations |
27,700 |
3.5 |
3,140 |
26,400 |
4.0 |
3,390 |
|
Total |
92,867 |
2.32 |
6,929 |
81,469 |
2.55 |
6,689 |
|
(1) The Detour Lake Mine was acquired
by Kirkland Lake Gold effective January 31, 2020 pursuant to the
acquisition of Detour Gold. An updated NI 43-101 compliant
technical report with respect to the Detour Lake Mine will be filed
in Q1 2021. Depletion in 2020, as noted in the Consolidated Mineral
Reserve table is as of January 1,2020.(2) The Holloway
Mine was placed on care and maintenance in March 2020. Operations
at the remainder of the Holt Complex were suspended effective April
2, 2020, with the suspension being extended until further notice on
July 16, 2020. The Holt Complex assets were on care and maintenance
as at December 31, 2020.(3) The Hislop mine is a former
producer acquired as part of St Andrew Goldfields in January 2016.
Hislop has not been operated since the
acquisition.(4) The Cosmo mine and Union Reefs mill
(part of the Company’s Northern Territory assets) were placed on
care and maintenance effective June 30, 2017. Test mining and
processing activities commenced at these assets in October 2019.
These activities were suspended in March
2020.(5) Canamax included as part of Holt Complex in
2020.
CANADIAN OPERATIONS MINERAL RESERVES AND
MINERAL RESOURCES AS AT DECEMBER 31, 2020
Macassa
Mineral Reserves as at December 31, 2020
totalled 2,368,000 ounces after depletion of 187,000 ounces during
FY 2020, which compared to Mineral Reserves as at December 31, 2019
of 2,453,000 ounces. Mineral Reserves at depth at December 31, 2020
totalled 2,282,000 ounces at an average grade of 20.1 g/t. In
addition, Macassa also had Mineral Reserves of 86,000 ounces at an
average grade of 8.7 g/t in near-surface zones along the
Amalgamated Break, where the Company plans to commence production
in Q4 2021 using a ramp from surface currently under
development.
Measured and Indicated (“M&I”) Mineral
Resources at depth at December 31, 2020 increased 7% from December
31, 2019 to 769,000 ounces with a similar average grade of 13.3
g/t. Inferred Mineral Resources increased 32% to 737,000 ounces at
a slightly higher average grade of 17.0 g/t. M&I Mineral
Resources in the near-surface zones along the Amalgamated Break
totalled 23,000 ounces at 6.1 g/t, while Inferred Mineral Resources
in these zones totalled 26,000 ounces at 8.6 g/t. The increase in
Mineral Resources in FY 2020 largely reflected additions to Mineral
Resources that, that in some cases were not converted to Mineral
Reserves due to disruptions to drilling, with the mine completing
approximately half of the planned drilling metres for the year.
In 2021, total capital and expensed exploration
expenditures at Macassa are targeted at $45 – $50 million.
Significant exploration development is planned in 2021, including
continued work on the near-surface ramp to access zones along the
Amalgamated Break. In addition, development to extend exploration
drifts is planned on the 5150, 5300, 5705, 5807 levels mainly in
support of drilling to infill and extend the SMC and to evaluate
targets along the Amalgamated Break and Main Break. During FY 2020,
the Company identified a new, large corridor of high-grade
mineralization at depth along the Main Break on the Kirkland
Minerals property. In total, approximately 250,000 metres of
underground and surface drilling are planned at Macassa in FY 2021,
with the primary targets being the SMC, Amalgamated Break and the
new high-grade corridor along the Main Break.
|
December 31, 2020 |
December 31, 2019 |
% Change |
Macassa |
Tonnes (000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Tonnes (000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Gold Grade |
Gold Ounces |
Mineral Reserves |
|
|
|
|
|
|
|
|
Proven |
235 |
15.9 |
120 |
383 |
20.3 |
250 |
-22 |
-52 |
Probable |
3,297 |
20.4 |
2,162 |
2,930 |
22.4 |
2,110 |
-9 |
2 |
Proven + Probable |
3,532 |
20.1 |
2,282 |
3,320 |
22.1 |
2,360 |
-9 |
-3 |
Mineral Resources |
Exclusive of Mineral Reserves |
Exclusive of Mineral Reserves |
|
|
Measured |
295 |
15.8 |
150 |
311 |
16.0 |
160 |
-1 |
-6 |
Indicated |
1,505 |
12.8 |
619 |
1,305 |
13.3 |
558 |
-4 |
11 |
Measured + Indicated |
1,800 |
13.3 |
769 |
1,616 |
13.8 |
717 |
-4 |
7 |
Inferred |
1,349 |
17.0 |
737 |
1,039 |
16.7 |
557 |
2 |
32 |
|
December 31, 2020 |
December 31, 2019 |
% Change |
Macassa Near Surface |
Tonnes (000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Tonnes (000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Gold Grade |
Gold Ounces |
Mineral Reserves |
|
|
|
|
|
|
|
|
Proven |
|
|
|
- |
- |
- |
|
|
Probable |
308 |
8.7 |
86 |
273 |
10.7 |
93 |
-19 |
-7 |
Proven + Probable |
308 |
8.7 |
86 |
273 |
10.7 |
93 |
-19 |
-7 |
Mineral Resources |
Exclusive of Mineral Reserves |
Exclusive of Mineral Reserves |
|
|
Measured |
0 |
|
0 |
|
|
|
|
|
Indicated |
117 |
6.1 |
23 |
47 |
7.8 |
12 |
-22 |
90 |
Measured + Indicated |
117 |
6.1 |
23 |
47 |
7.8 |
12 |
-22 |
90 |
Inferred |
96 |
8.6 |
26 |
146 |
11.5 |
54 |
-25 |
-51 |
Please refer to detailed footnotes set out below. |
Detour Lake
On January 31, 2020, the Company completed the
acquisition of Detour Gold Corporation. Through the acquisition,
Detour Gold became a subsidiary of the Company and the Company
obtained 100% ownership of the Detour Lake open-pit mine. As a
result of the acquisition, the Company gained 14,846,000 ounces of
open-pit Mineral Reserves at an average grade of 0.97 g/t. These
Mineral Reserves were calculated at a long-term gold price of
US$1,000 per ounce with an assumed exchange rate of US$1.0:C$1.10.
For the Mineral Reserve estimates as at December 31, 2020, the
Company changed the gold price and exchange rate assumptions to be
consistent with the Company’s other assets (long-term gold price of
US$1,300 with an exchange rate of US$1.0:C$1.31). Mineral Reserves
at Detour Lake as at December 31, 2020 were estimated at 13,821,000
ounces at an average grade of 0.96 g/t at an average cut-off grade
above 0.5 g/t with an additional 1,954,000 ounces of low-grade
Mineral Reserves at an average grade of 0.41 g/t, most of which
will be processed at the end of the mine life. In total, Mineral
Reserves increased 6% largely due to a lower average cut-off grade
in FY 2020 compared to the 0.5 g/t cut-off grade used for the
December 31, 2019 Mineral Reserve estimates. Cut-off grades for the
December 31, 2020 Mineral Reserve calculations were based on an
optimal variable format with cut-off grades ranging from 0.35 g/t
to 0.50 g/t.
M&I Mineral Resources at December 31, 2020
were estimated at 4,625,000 ounces at an average grade of 1.10 g/t,
a 20% increase from 3,881,000 ounces at an average grade of 1.08
g/t as at December 31, 2019. Inferred Mineral Resources totaled
1,470,000 ounces at an average grade of 0.87 g/t, 29% higher than
1,137,000 ounces at an average grade of 0.82 g/t in the previous
Mineral Resource estimates. The increase in M&I and Inferred
Mineral Resources largely resulted from the update in gold price
for Mineral Resource calculations. Mineral Resources for the
December 31 ,2020 estimates were defined using a gold price of
US$1,500/oz and US$/C$ exchange rate of 1.31. The 2019 Mineral
Resources used a gold price of US$1,200/oz and US$/C$ exchange rate
of 1.10.
In 2021, total capital and expensed exploration
expenditures at Detour Lake are targeted at $40 – $45 million.
Significant exploration development is planned at Detour Lake in
2021, with a continued focus on drilling in the Saddle Zone between
the Main and West pit locations, as well as to the west of the west
pit, where drilling in late FY 2020 extended the mineralized
corridor by 200 metres. In addition, drilling in the Saddle Zone
will continue to drill targets at depth where high-grade
intersections in FY 2020 demonstrated the potential that both
production levels and average grades can be augmented through the
addition of an underground mining operation. In total, 272,000
metres of surface drilling are planned at Detour Lake in FY
2021.
|
December 31, 2020 |
December 31, 2019 |
% Change |
Detour |
Tonnes(000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Tonnes (000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Gold Grade |
Gold Ounces |
Open Pit |
|
|
|
|
|
|
|
|
Mineral Reserves |
|
|
|
|
|
|
|
|
Proven |
83,747 |
1.17 |
3145 |
81,050 |
1.24 |
3240 |
-6 |
-3 |
Probable |
512,369 |
0.77 |
12,630 |
396,400 |
0.91 |
11,606 |
-16 |
9 |
Proven + Probable |
596,115 |
0.82 |
15,775 |
477,450 |
0.97 |
14,846 |
-15 |
6 |
Mineral Resources |
Exclusive of Mineral Reserves |
Exclusive of Mineral Reserves |
|
|
Measured |
21,285 |
1.65 |
1,128 |
16,700 |
1.34 |
722 |
23 |
56 |
Indicated |
109,926 |
1.00 |
3,529 |
95,600 |
1.03 |
3,160 |
-3 |
12 |
Measured + Indicated |
131,211 |
1.10 |
4,657 |
112,300 |
1.08 |
3,881 |
2 |
20 |
Inferred |
52,306 |
0.87 |
1,470 |
42,900 |
0.82 |
1,137 |
7 |
29 |
|
December 31, 2020 |
December 31, 2019 |
% Change |
Detour |
Tonnes (000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Tonnes (000's) |
Grade (g/t) |
Gold Ozs (000’s) |
Gold Grade |
Gold Ounces |
Underground |
|
|
|
|
|
|
|
|
Mineral Reserves |
|
|
|
|
|
|
|
|
Proven |
- |
- |
- |
- |
- |
- |
- |
- |
Probable |
- |
- |
- |
- |
- |
- |
- |
- |
Proven + Probable |
|
|
|
|
|
|
|
|
Mineral Resources |
Exclusive of Mineral Reserves |
Exclusive of Mineral Reserves |
|
|
Measured |
|
|
|
|
|
|
|
|
Indicated |
2,900 |
5.80 |
534 |
2,900 |
5.80 |
534 |
- |
- |
Measured + Indicated |
2,900 |
5.80 |
534 |
2,900 |
5.80 |
534 |
- |
- |
Inferred |
1,000 |
4.35 |
136 |
1,000 |
4.35 |
136 |
- |
- |
(1) |
Kirkland Lake Gold acquired Detour Gold on January 31, 2020. Please
refer to detailed footnotes set out below. An updated National
Instrument 43-101 compliant technical report with respect to the
Detour Lake Mine will be filed in Q1 2021 |
AUSTRALIAN OPERATIONS MINERAL RESERVES AND
MINERAL RESOURCES AS AT DECEMBER 31, 2020
Fosterville
Mineral Reserves as at December 31, 2020
totalled 1,970,000 ounces, including 1,790,000 ounces at an average
grade of 15.4 g/t in the Lower Phoenix and Harrier systems
(including 1,253,000 ounces at an average grade of 30.6 g/t in the
Swan Zone) and 180,000 ounces at an average grade of 5.3 g/t at
Robbin’s Hill. The December 31, 2020 Mineral Reserves compare to
Mineral Reserves as at December 31, 2019 of 2,318,000 ounces,
including 2,100,000 ounces at an average grade of 21.8 g/t in the
Lower Phoenix (1,560,000 ounces at an average grade of 38.6 g/t in
the Swan Zone) and 218,000 ounces at an average grade of 5.5 g/t at
Robbin’s Hill. The change from the previous year reflected
depletion during FY 2020 of approximately 647,000 ounces at a grade
of approximately 33.0 g/t, with the mine adding 337,000 ounces or
52% of the depleted ounces through drilling during FY 2020.
M&I Mineral Resources at December 31, 2020
were estimated at 1,717,000 ounces, including 1,390,000 ounces at
Lower Phoenix and Harrier at an average grade of 5.6 g/t and
329,000 ounces at an average grade of 4.8 g/t at Robbin’s Hill. The
December 31, 2020 M&I Mineral Resources compared to the M&I
Mineral Resource estimate of 2,466,000 ounces as at December 31,
2019, which included 2,080,000 ounces at an average grade of 5.3
g/t in Lower Phoenix and Harrier and 386,000 ounces at an average
grade of 3.5 g/t at Robbin’s Hill. Inferred Mineral Resources at
December 31, 2020 were estimated at 1,280,000 ounces at an average
grade of 6.5 g/t in Lower Phoenix and Harrier and 467,000 ounces at
an average grade of 6.0 g/t at Robbin’s Hill, which compared to
1,740,000 ounces at an average grade of 6.4 g/t in Lower Phoenix
and Harrier and 383,000 ounces at an average grade of 4.5 g/t at
Robbin’s Hill in the December 31, 2019 Mineral Resource
estimates.
Exploration results at Fosterville in FY 2020
demonstrated the size and scale of the gold systems at Lower
Phoenix, Cygnet, Robbin’s Hill and Harrier and confirmed the
presence of quartz with visible gold within each of these systems.
Exploration expenditures at Fosterville in FY 2021 are estimated at
$85 – $95 million, the mine’s largest budget ever. Drilling during
the year, the mine is targeting 232,000 metres of underground and
surface drilling and will continue to focus on Mineral Reserves and
Mineral Resource replacement and the identification of new
high-grade zones at each of the key targets and other regional
targets.
|
December 31, 2020 |
December 31, 2019 |
% Change |
Fosterville |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
Tonnes(000's) |
Grade(g/t) |
Gold Oz(000’s) |
GoldGrade |
GoldOunces |
Mineral Reserves |
|
|
|
|
|
|
|
|
Proven |
1,050 |
24.4 |
822 |
695 |
31.9 |
714 |
-24 |
15 |
Probable |
2,570 |
11.8 |
973 |
2,300 |
18.8 |
1,390 |
-37 |
-30 |
Proven + Probable |
3,610 |
15.4 |
1,790 |
3,000 |
21.8 |
2,100 |
-29 |
-15 |
Mineral Resources |
Exclusive of Mineral Reserves |
Exclusive of Mineral Reserves |
|
|
Measured |
752 |
5.1 |
124 |
2000 |
3.7 |
240 |
38 |
-48 |
Indicated |
6,930 |
5.7 |
1,260 |
10,300 |
5.6 |
1,840 |
1 |
-31 |
Measured + Indicated |
7,690 |
5.6 |
1,390 |
12,300 |
5.3 |
2,080 |
6 |
-33 |
Inferred |
6,140 |
6.5 |
1,280 |
8,450 |
6.4 |
1,740 |
1 |
-27 |
|
December 31, 2020 |
December 31, 2019 |
% Change |
Swan* |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
GoldGrade |
GoldOunces |
Mineral Reserves |
|
|
|
|
|
|
|
|
Proven |
551 |
36.3 |
643 |
493 |
40.5 |
641 |
-10 |
0 |
Probable |
722 |
26.3 |
610 |
764 |
37.4 |
919 |
-30 |
-34 |
Proven + Probable |
1,270 |
30.6 |
1,250 |
1,260 |
38.6 |
1,560 |
-21 |
-20 |
Mineral Resources |
Exclusive of Mineral Reserves |
Exclusive of Mineral Reserves |
|
|
Measured |
25 |
13.2 |
11 |
30 |
46.4 |
45 |
-72 |
-76 |
Indicated |
119 |
5.9 |
23 |
59 |
18.2 |
34 |
-68 |
-34 |
Measured + Indicated |
144 |
7.2 |
33 |
89 |
27.7 |
79 |
-74 |
-58 |
Inferred |
33 |
4.0 |
4 |
93 |
19.3 |
57 |
-79 |
-92 |
* The Swan Zone Mineral Reserve and Mineral
Resource estimates are components of the estimates for the
Fosterville mine.
|
December 31, 2020 |
December 31, 2019 |
% Change |
Robbins Hill |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
Tonnes(000's) |
Grade(g/t) |
Gold Ozs(000’s) |
GoldGrade |
GoldOunces |
Mineral Reserves |
|
|
|
|
|
|
|
|
Proven |
|
|
|
|
|
|
|
|
Probable |
1,060 |
5.3 |
180 |
1,240 |
5.5 |
218 |
-4 |
-17 |
Proven + Probable |
1,060 |
5.3 |
180 |
1,240 |
5.5 |
218 |
-4 |
-17 |
Mineral Resources |
Exclusive of Mineral Reserves |
Exclusive of Mineral Reserves |
|
Measured |
|
|
|
|
|
|
|
|
Indicated |
2,120 |
4.8 |
329 |
3,460 |
3.5 |
386 |
38 |
-15 |
Measured + Indicated |
2,120 |
4.8 |
329 |
3,460 |
3.5 |
386 |
38 |
-15 |
Inferred |
2,420 |
6.0 |
467 |
2,670 |
4.5 |
383 |
34 |
22 |
* The Robbin’s Hill Mineral Reserve and Mineral
Resource estimates are reported separately from Fosterville as it
is anticipated that Robbin’s Hill will be a new and separate mining
operation feeding the Fosterville Mill. Please refer to detailed
footnotes set out below.
REVIEW OF FINANCIAL AND OPERATING
PERFORMANCE
Table 1. Financial and Operating Performance
(in thousands of dollars, except per share amounts) |
Three Months ended December 31, 2020 |
Three Months Ended December 31, 2019 |
Three Months Ended September 30, 2020 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
Revenue |
$691,548 |
$412,379 |
$632,843 |
$2,460,104 |
$1,379,988 |
Production
costs |
148,276 |
71,169 |
136,023 |
587,306 |
281,034 |
Earnings before
income taxes |
337,586 |
232,042 |
295,316 |
1,152,709 |
798,182 |
Net earnings |
$232,573 |
$169,135 |
$202,022 |
$787,705 |
$560,080 |
Basic earnings per
share |
$0.86 |
$0.81 |
$0.73 |
$2.91 |
$2.67 |
Diluted earnings
per share |
$0.85 |
$0.80 |
$0.73 |
$2.91 |
$2.65 |
Cash flow from
operating activities |
$420,932 |
$247,100 |
$431,119 |
$1,315,791 |
$919,390 |
Cash
investment on mine development and PPE |
$188,507 |
$114,319 |
$155,428 |
$582,727 |
$456,423 |
|
Three Months ended December 31, 2020 |
Three Months Ended December 31, 2019 |
Three Months Ended September 30, 2020 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
Tonnes
milled |
6,087,218 |
462,372 |
6,144,753 |
22,213,358 |
1,670,478 |
Grade (g/t
Au) |
2.0 |
19.1 |
1.8 |
2.0 |
18.5 |
Recovery (%) |
95.7% |
98.3% |
95.3% |
95.7% |
98.1% |
Gold produced
(oz) |
369,434 |
279,742 |
339,584 |
1,369,652 |
974,615 |
Gold Sold
(oz) |
371,009 |
278,438 |
331,959 |
1,388,944 |
979,734 |
Average realized
price ($/oz sold)(1) |
$1,875 |
$1,481 |
$1,907 |
$1,772 |
$1,405 |
Operating cash
costs per ounce ($/oz sold)(1) |
$396 |
$255 |
$406 |
$404 |
$284 |
AISC ($/oz
sold)(1) |
$790 |
$512 |
$886 |
$800 |
$564 |
Adjusted net
earnings(1) |
$265,769 |
$185,303 |
$254,003 |
$922,858 |
$576,414 |
Adjusted net
earnings per share(1) |
$0.98 |
$0.88 |
$0.92 |
$3.41 |
$2.74 |
Free
cash flow(1) |
$232,425 |
$132,781 |
$275,691 |
$733,064 |
$462,967 |
(1) |
Non-IFRS - the definition and reconciliation of these Non-IFRS
measures are included on pages 40-47 of the MD&A for the three
and twelve months ended December 31, 2020. |
Table 2. Review of Earnings
Performance
(in thousands except per share amounts) |
Three Months ended December 31, 2020 |
Three Months Ended December 31, 2019 |
Three Months Ended September 30, 2020 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
|
|
|
|
|
|
Revenue |
$691,548 |
$412,379 |
$632,843 |
$2,460,104 |
$1,379,988 |
|
|
|
|
|
|
Production costs |
(148,276) |
(71,169) |
(136,023) |
(587,306) |
(281,034) |
Royalty expense |
(23,497) |
(11,002) |
(21,481) |
(85,485) |
(36,432) |
Depletion and depreciation |
(120,920) |
(52,865) |
(86,707) |
(383,052) |
(168,921) |
Earnings from mine operations |
398,855 |
277,343 |
388,632 |
1,404,261 |
893,601 |
|
|
|
|
|
|
Expenses |
|
|
|
|
|
General and administrative(1) |
(7,382) |
(10,576) |
(20,409) |
(60,490) |
(45,365) |
Transaction costs |
0 |
(1,236) |
707 |
(33,131) |
(1,236) |
Exploration |
(3,602) |
(9,336) |
(2,498) |
(14,415) |
(33,469) |
Care and maintenance |
(9,288) |
(239) |
(14,256) |
(33,004) |
(1,191) |
Rehabilitation costs |
1,344 |
0 |
(32,626) |
(33,730) |
0 |
Earnings from operations |
379,927 |
255,956 |
319,550 |
1,229,491 |
812,340 |
|
|
|
|
|
|
Finance and other items |
|
|
|
|
|
Other income (loss), net |
(41,077) |
(25,166) |
(23,453) |
(72,489) |
(18,817) |
Finance income |
(1,696) |
1,948 |
1,524 |
3,543 |
6,941 |
Finance costs |
432 |
(696) |
(2,305) |
(7,836) |
(2,282) |
|
|
|
|
|
|
Earnings before income taxes |
337,586 |
232,042 |
295,316 |
1,152,709 |
798,182 |
Current income tax expense |
(81,698) |
(62,414) |
(66,097) |
(276,945) |
(189,572) |
Deferred income tax expense |
(23,315) |
(493) |
(27,197) |
(88,059) |
(48,530) |
|
|
|
|
|
|
Net earnings |
$232,573 |
$169,135 |
$202,022 |
$787,705 |
$560,080 |
|
|
|
|
|
|
Basic earnings per share |
$0.86 |
$0.81 |
$0.73 |
$2.91 |
$2.67 |
Diluted earnings per share |
$0.85 |
$0.80 |
$0.73 |
$2.91 |
$2.65 |
|
|
|
|
|
|
Weighted average number of common shares outstanding (in
000's) |
|
|
|
|
|
Basic |
271,770 |
210,102 |
275,280 |
270,401 |
210,142 |
Diluted |
272,703 |
211,382 |
275,471 |
271,355 |
211,645 |
(1) |
General and administrative expense for 2020 and Q4 2020 (2019 and
Q4 2019) include general and administrative expenses of $50.3
million and $11.6 million ($36.3 million and $10.1 million in 2019)
and share based payment expense of $10.2 million and ($4.2) million
($9.0 million and $0.5 million in 2019). |
Revenue
Revenue in FY 2020 totalled $2,460.1 million, an
increase of $1,080.1 million or 78% from $1,380.0 million in FY
2019. Of the growth in revenue, $575 million related to a 42%
increase in gold sales, to 1,388,944 ounces, while $509 million
resulted from a $367 or 26% increase in the averaged realized gold
price(1), to $1,772 per ounce from $1,405 per ounce for FY 2019.
The increase in revenue from FY 2019 largely reflected the 537,566
ounces of gold sales from Detour Lake since the mine’s acquisition
on January 31, 2020, which resulted in revenue of $960.9 million.
Revenue at Fosterville increased $234.6 million or 27%, to $1,119.5
million, reflecting a higher average realized gold price(1) and an
increase in sales to 631,635 ounces from 624,645 ounces in FY 2019.
These favourable contributions to revenue were only partially
offset by significantly lower revenue at Holt Complex resulting
from the suspension of operations at the Complex effective April 2,
2020. Revenue at Holt Complex in FY 2020 totaled $53.2 million
versus $161.4 million a year earlier. Revenue at Macassa in FY 2020
totaled $326.6 million, slightly lower than revenue of $333.6
million in FY 2019 as the impact of a reduction in sales volumes
from 239,240 ounces the previous year to 185,855 ounces in FY 2020
offset a higher average realized gold price(1).
Revenue in Q4 2020 totalled $691.5 million, an
increase of $279.1 million, or 68% from $412.4 million in Q4 2019.
Of the growth in revenue, $146 million related to a $394 per ounce
increase in the average realized gold price(1), to $1,875 per ounce
from $1,481 per ounce in Q4 2019, while $137 million was due to a
33% increase in sales volumes (371,009 ounces in Q4 2020 versus
278,438 ounces in Q4 2019). Detour Lake contributed $286.0 million
to the Company's revenue in Q4 2020, the impact of which was only
partially offset by the loss of revenue from Holt Complex due to
the suspension of operations. Holt Complex contributed $1.2 million
of revenue in Q4 2020 (related to the sale of 646 ounces resulting
cleaning the mill circuit) compared to $46.8 million of revenue in
Q4 2019. Revenue at Fosterville totalled $308.9 million in Q4 2020
versus $284.5 million in Q4 2019, as the favourable impact of a
higher realized gold price(1) was only partially offset by lower
sales from record quarterly level of 192,213 ounces in Q4 2019.
Revenue at Macassa in Q4 2020 totalled $95.4 million, a 32%
increase as a higher realized gold price(1) more than offset a
small reduction in sales, to 51,174 ounces from 54,342 ounces in Q4
2019.
Revenue of $691.5 million in Q4 2020 was $58.7
million or 9% higher than $632.8 million the previous quarter. The
increase in revenue quarter over quarter resulted from a $74
million favourable impact from a 12% increase in gold sales
(371,009 ounces compared to 331,959 ounces in Q3 2020), which more
than offset a $12 million unfavourable impact from a 2% reduction
in the average realized gold price(1) ($1,875 per ounce versus
$1,907 per ounce in Q3 2020). Revenue at Detour Lake and Macassa
increased 9% and 27%, respectively, reflecting higher levels of
gold sales, with sales at Detour Lake increasing to 153,296 ounces
from 137,632 ounces in Q3 2020 and sales at Macassa growing 29%
from 39,588 ounces during the previous quarter. Revenue at
Fosterville in Q4 2020 increased 5% from Q3 2020, to $308.9 million
from $295.2 million the previous quarter.
Net Earnings and Adjusted Net
Earnings(1)
Net Earnings and Earnings Per Share
Net earnings for FY 2020 totalled $787.7 million
($2.91 per basic share), an increase of $227.6 million or 41% from
$560.1 million ($2.67 per basic share) in FY 2019. The increase in
net earnings compared to FY 2019 mainly reflected the 78% increase
in revenue year over year, which had a $2.80 favourable impact on
earnings per share. Also contributing to earnings growth was
reduced expensed exploration, with a greater proportion of
exploration expenditures being capitalized in FY 2020 versus FY
2019.
The favourable impact of increased revenue and
lower expensed exploration was only partially offset by higher
costs in a number of areas. Production costs and depletion and
depreciation expense increased from FY 2019 largely reflecting the
addition of Detour Lake Mine, which had production costs of $356.1
million and depletion and depreciation costs of $214.8 million for
the 11 months ending December 31, 2020. An increase in other loss
mainly reflected higher foreign exchange losses due to a weakening
of the US dollar during FY 2020, while royalty costs increased
mainly due to the introduction of a new 2.75% royalty introduced by
the Victorian Government effective January 1, 2020, which added
$30.5 million of royalty expense at Fosterville. Other significant
factors having an unfavourable impact on net earnings compared to
FY 2019 included higher rehabilitation costs reflecting the $32.6
million increase in environmental remediation provisions in Q3 2020
resulting from a new water rehabilitation program in the Northern
Territory, transaction costs of $60.5 million related to the Detour
Gold acquisition and higher care and maintenance costs resulting
from the suspension of operations at Holt Complex and business
activities in the Northern Territory.
In addition, there was an unfavourable impact on
net earnings per share year over year by an increase in average
shares outstanding, to 270.4 million in FY 2020 from 210.1 million
for FY 2019, reflecting the issuance of 77,217,129 shares as
consideration for the acquisition of Detour Gold on January 31,
2020, partially offset by the impact of share repurchases through
the Company’s NCIB.
Net earnings in Q4 2020 totalled $232.6 million
($0.86 per share), a $63.5 million or 38% increase from $169.1
million ($0.81 per share) in Q4 2019. A 68% increase in revenue,
reflecting both a higher realized gold price and increased gold
sales, was the primary driver of net earnings growth compared to Q4
2019, with lower expensed exploration and evaluation costs and
slightly lower corporate G&A expense also contributing to the
improvement. Partially offsetting these favourable factors were
increased production costs and depletion and depreciation expense,
mainly reflecting to the addition of Detour Lake Mine effective
January 31, 2020, a higher effective tax rate (31.1% in Q4 2020
versus 27.1% in Q4 2019) due to a greater proportion of taxable
earnings in Canada, mainly resulting from the acquisition of Detour
Lake Mine, the impact of higher foreign exchange losses in Q4 2020
on other loss, higher royalty expense mainly related to the new
2.75% royalty applicable to Fosterville effective January 1, 2020
and increased care and maintenance costs due to the suspension of
activities at Holt Complex and in the Northern Territory.
The increase in net earnings per share compared
to Q4 2019 was achieved despite a $0.18 per share unfavourable
impact from an increase in average shares outstanding (271.8
million for Q4 2020 versus 210.1 million shares in Q4 2019), which
resulted from the issuance of 77,217,129 shares related to the
Detour Gold acquisition.
Net earnings in Q4 2020 totalled $232.6 million
($0.86 per share) a $30.6 million or 15% increase from $202.0
million ($0.73 per share) the previous quarter. The increase in net
earnings was mainly driven by solid revenue growth, as higher sales
volumes more than offset the impact of a slightly lower average
realized gold price. Also contributing to the increase in net
earnings quarter over quarter were lower Corporate G&A expense
and reduced rehabilitation costs, with the $31.3 million reduction
in rehabilitation costs related to the $32.6 million increase in
the environmental remediation provision in Q3 2020. Partially
offsetting these factors were increased depletion and depreciation
costs, the impact of increased foreign exchange losses and higher
production costs. The increase in depletion and depreciation was
mainly at Detour Lake and largely resulted from increased volumes
as well as adjustments to fair value estimates related to purchase
price allocation. These adjustments increased depletion and
depreciation expense in Q4 2020 by approximately $20.0 million,
approximately half of which related to revisions to depletion and
depreciation expense during the first three quarter of FY 2020.
Adjusted Net Earnings(1)
Adjusted net earnings(1) for FY 2020 totalled
$922.9 million ($3.41 per share), an increase of $346.5 million or
60% from $576.4 million ($2.74 per share) for the same period in
2019. The difference between net earnings and adjusted net
earnings(1) for FY 2020 related to the exclusion from adjusted net
earnings(1) of $58.5 million ($44.6 million after tax) of foreign
exchange losses, $33.8 million ($24.9 million after tax) of
transaction costs, mainly related to the Detour Gold acquisition,
the $32.6 million ($22.8 million after tax) increase in
environmental remediation provisions in Q3 2020, $18.0 million
($12.5 million after tax) of restructuring and severance costs
resulting from the suspension of operations at Holt Complex and
business activities in the Northern Territory, as well as $15.4
million ($10.6 million after tax) of costs related to the Company’s
COVID-19 response. The difference between net earnings and adjusted
net earnings(1) in FY 2019 was the exclusion from adjusted net
earnings(1) of $16.2 million ($12.9 million after tax) of foreign
exchange losses, as well as $2.3 million ($1.6 million after tax)
related to purchase price allocation adjustments on inventory.
Adjusted net earnings(1) in Q4 2020 totalled
$265.8 million ($0.98 per share), an increase of 43% from $185.3
million ($0.88 per share) in Q4 2019 and $254.0 million ($0.92 per
share) in Q3 2020. The difference between net earnings and adjusted
net earnings(1) in Q4 2020 mainly related to the exclusion from
adjusted net earnings(1) of $35.0 million ($22.8 million after tax)
of foreign exchange losses relating to a weakening of the US dollar
against the Canadian and Australian dollars during the quarter. The
primary difference between net earnings and adjusted net
earnings(1) in Q4 2019 related to the exclusion from adjusted net
earnings of $23.3 million ($16.1 million after tax) of foreign
exchange losses. The difference between net earnings and adjusted
net earnings(1) in Q3 2020 mainly related to the exclusion from
adjusted net earnings(1) of the $32.6 million ($22.8 million after
tax) increase in environmental remediation provisions, $23.6
million ($18.0 million after tax) of foreign exchange losses, as
well as $8.1 million ($5.6 million after tax) of restructuring and
severance costs mainly at the Holt Complex.
Cash and Cash Flow
The Company’s cash balance at December 31, 2020
totalled $847.6 million, a $140.4 million or 20% increase from
$707.2 million at December 31, 2019. For FY 2020, net cash provided
from operating activities totalled $1,315.8 million, which compared
to $919.4 million in FY 2019, with the increase reflecting strong
revenue and earnings growth year over year.
A total of $189.8 million of cash was used for
investing activities, which included $582.7 million of cash used
for additions to mining interests and plant and equipment, and
$27.2 million used for investments in other public and private
entities, mainly Wallbridge Mining Company Ltd. These uses of cash
were partially offset by $174.3 million of proceeds from the sale
of investments in Osisko Mining Inc., Novo Resources Corp. and De
Grey Mining Ltd., receipt of $173.9 million of cash, which was
acquired as part of the Detour Gold transaction and $75.0 million
received from Newmont related to a new strategic alliance agreement
entered into by the two companies in Q3 2020.
Cash used from financing activities for FY 2020
totalled $987.4 million, with the largest component being $732.4
million of cash used to repurchase 18,925,900 shares through the
Company’s NCIB. Also contributing to cash used for financing
activities for FY 2020 were $115.9 million used for dividend
payments, the use of $98.6 million to repay Detour Gold’s
outstanding debt during Q1 2020, $30.3 million of cash used to
close out Detour Gold’s hedge positions relating to forward gold
sales as well as hedges on currencies and diesel fuel and $10.2
million for the payment of lease obligations.
The Company’s cash balance totalled of $847.6
million at December 31, 2020 was largely unchanged from $848.5
million at September 30, 2020. Net cash provided by operating
activities totalled $420.9 million, which compared to net cash
provided by operating activities of $247.1 million in Q4 2019 and
$431.1 million the previous quarter. The increase from Q4 2019
reflected strong cash generation by the Company’s operations. The
change from Q3 2020 largely reflected the difference in changes in
non-cash working capital during the two quarters as well as higher
levels of income taxes paid in Q4 2020. Net cash from investing
activities in Q4 2020 totalled $147.2 million, as additions to
mining interests and plant and equipment totalling $188.5 million
and investments in public and private entities of $19.6 million
more than offset the receipt of $64.6 million in proceeds from the
sale of investments in Novo Resources Corp. and De Grey Mining Ltd.
Contributing to the $277.1 million of net cash used for financing
activities in Q4 2020 was $245.3 million (C$319.5 million) of cash
used to repurchase 5,727,500 common shares through the Company’s
NCIB and $34.2 million used for the quarterly dividend payment of
US$0.125 per share paid on October 14, 2020 to shareholders of
record at the close of business on September 30, 2020.
Free cash flow(1)
Free cash flow(1) in FY 2020 totalled $733.1
million, which compared to free cash flow(1) of $463.0 million in
FY 2019. Excluding $60.5 million of transaction and restructuring
costs, mainly related to the Detour Gold acquisition, and a $132.6
million tax installment payment related to 2019 taxable income in
Australia during Q2 2020, free cash flow(1) in FY 2020 totalled
$926.2 million. For Q4 2020 free cash flow(1) totalled $232.4
million, an increase of $99.6 million or 75% from free cash flow(1)
of $132.8 million in Q4 2019, with the increase being driven by a
70% increase in net cash provided by operating activities, to
$420.9 million. Free cash flow(1) in Q4 2020 compared to free cash
flow(1) of $275.7 million in Q3 2020, with the reduction reflecting
increased mineral property additions and additions to property,
plant and equipment, as well as lower net cash provided by
operating activities.
(1) |
The Review of Financial Performance section includes a number of
Non-IFRS measures. The definition and reconciliation of these
Non-IFRS measures are included on pages 40-47 of the MD&A for
the three and twelve months ended December 31, 2020. |
Review of Operating Mines
Macassa
Production at Macassa in FY 2020 totalled
183,037 ounces, which resulted from processing 312,759 tonnes at an
average grade of 18.6 g/t and at average recoveries of 97.7%. FY
2020 production compared to production of 241,297 ounces for FY
2019, which resulted from processing 324,077 tonnes at an average
grade of 23.7 g/t and at average recoveries of 97.9%. The reduction
from FY 2019 reflected both reduced tonnes processed and a
significantly lower average grade resulting from the transition to
reduced operations as part of the Company’s COVID-19 response
during Q2 2020, the impact of ongoing health and safety protocols
related to COVID-19 through the remainder of the year and reduced
workforce productivity and equipment availability in Q3 2020
resulting from excessive heat in the mine during the quarter, which
lead to reduced mining rates and a lower than planned average
grade, as mining during the quarter focused on the most accessible
stopes, which were the lower-grade stopes planned for the
quarter.
Production costs for FY 2020 totalled $107.3
(including $3.3 million related to the Company’s COVID-19 response)
versus $99.2 million for FY 2019. Operating cash costs per ounce
sold(1) averaged $562 compared to $414 for the same period in 2019
with the change largely reflecting the impact of lower tonnes
processed and average grade on production and sales volumes, as
well as higher costs related to operating development, maintenance
and underground mining services. AISC per ounce sold(1) averaged
$922 for FY 2020 versus $695 a year earlier. The change from FY
2019 resulted from the impact of a lower sales volumes on per ounce
costs and higher operating costs(1). Sustaining capital
expenditures(1) in FY 2020 totalled $56.3 million, or $303 per
ounce sold, versus $55.4 million , or $231 per ounce sold, in FY
2019.
Production at Macassa in Q4 2020 totaled 52,283
ounces compared to production of 56,379 ounces in Q4 2019 and
38,028 ounces the previous quarter. Production in Q4 2020 resulted
from processing 74,353 tonnes at an average grade of 22.4 g/t and
average recoveries of 97.7%, which compared to 87,573 tonnes
processed in Q4 2019 at an average grade of 20.5 g/t and average
recoveries of 97.8% and 78,526 tonnes at an average grade of 15.4
g/t and average recoveries of 97.8% in Q3 2020. The change in
production from Q4 2019 largely reflected lower tonnes processed
which was only partially offset by an improvement in the average
grade, mainly due to mine sequencing in the SMC. The 37% increase
in production compared to the previous quarter was due to a 45%
improvement in the average grade reflecting a greater proportion of
higher-grade stopes in the SMC being mined during the final quarter
of the year.
Production costs in Q4 2020 totalled $27.2
million versus $25.6 million in Q4 2019 and $26.0 million the
previous quarter. Operating cash costs per ounce sold(1) averaged
$534 in Q4 2020 versus $471 in Q4 2019 and $648 in Q3 2020. The
increase in operating cash costs per ounce sold(1) from Q4 2019
reflected higher operating costs mainly due to higher levels of
operating development and increased maintenance expense, as well as
the impact of lower sales volumes. The reduction from Q3 2020
reflected the favourable impact of a higher average grade on sales
volumes in Q4 2020. AISC per ounce sold(1) averaged $941 in Q4 2020
compared to $721 in Q4 2019 and $1,081 the previous quarter. The
increase from Q4 2019 largely related to higher sustaining capital
expenditures(1), which totalled $17.3 million or $338 per ounce
sold compared to a low level in Q4 2019 of $10.0 million or $185
per ounce sold. Higher sustaining capital expenditures(1) in Q4
2020 largely related to increased capital development, as well as
investments in mill enhancements and underground infrastructure
including a new shop and ventilation upgrades. The improvement in
AISC per ounce sold from Q3 2020 largely related to the impact of a
higher average grade on sales volumes, which resulted in lower
operating cash costs(1) and sustaining capital expenditures(1) on a
per ounce sold basis. Sustaining capital expenditures(1) in Q3 2020
totaled $14.1 million or $357 per ounce sold.
Growth projects: Growth capital(1) expenditures
at Macassa for FY 2020 totalled $46.6 million ($11.4 million in Q4
2020). Of total growth expenditures for FY 2020, $35.2 million
($8.1 million in Q4 2020) related to the #4 shaft project. During
Q4 2020, the shaft advanced 875 feet and had reached a depth of
4,240 feet as of December 31, 2020. On May 6, 2020, the Company
announced that, based on progress to date and the results of a
review of the #4 shaft project earlier in the year, the project
scope and schedule for the #4 Shaft was revised. The project is now
expected to be completed in one phase, to a depth of 6,400 feet,
with project completion targeted for late 2022, over one year
sooner than the initial project schedule. The project was
approximately one month ahead of schedule at the end of FY 2020.
Capital expenditures incurred to December 31, 2020 for the #4 Shaft
project totalled $177.0 million, with the project continuing to
target total capital expenditures of $320 million or lower.
Detour Lake
Production at Detour Lake in FY 2020 totalled
516,757 ounces, which resulted from processing 21,091,938 tonnes at
an average grade of 0.83 g/t with average recoveries of 91.3%. The
516,757 ounces of production in FY 2020 was below the re-issued
full-year 2020 guidance range of 520,000 – 540,000 ounces,
reflecting slightly lower than planned average grades and tonnes
processed during the second half of 2020.
Production costs for the 11 months ended
December 31, 2020 totalled $356.1 million (including $8.9 million
of COVID-19 related costs). Operating cash costs per ounce sold(1)
averaged $625 per ounce sold, while AISC per ounce sold(1) averaged
$1,171. The mine’s sustaining capital expenditures(1) totalled
$269.5 million or $501 per ounce sold. Gold sales at Detour Lake in
FY 2020 totalled 537,566 ounces, higher than the production total
of 516,757, largely reflecting the sale of approximately 21,000
ounces from inventory in Q1 2020 upon completion of the Detour Gold
acquisition on January 31, 2020.
Production at Detour Lake in Q4 2020 totaled
153,143 ounces, which involved processing 5,829,230 tonnes at an
average grade of 0.89 g/t and average recoveries of 91.8%.
Production in Q4 2020 compared to production in Q3 2020 of 140,067
ounces, which resulted from processing 5,898,694 tonnes at an
average grade of 0.81 g/t and average recoveries of 90.7%. The
increase in production quarter over quarter resulted from a higher
average grade due to mine sequencing with mining advancing to the
later stages of Phase 1 which involved higher-grade areas than
during the previous quarter.
Production costs at Detour Lake Mine in Q4 2020
totalled $95.1 million (including $1.2 million of COVID-19 related
costs). Operating cash costs per ounce sold(1) averaged $612 in Q4
2020 compared to $634 the previous quarter, with the improvement
resulting from the favourable impact of a higher average grade on
sales volumes. AISC per ounce sold(1) averaged $1,207 versus $1,259
in Q3 2020 reflecting lower operating cash costs and sustaining
capital expenditures(1) on a per ounce sold basis as a result of
higher sales volumes. During Q4 2020, sustaining capital
expenditures(1) at Detour Lake totalled $80.7 million, unchanged
from the previous quarter. However, on a per ounce sold basis,
sustaining capital expenditures(1) totaled $527 versus $586 in Q3
2020.
Growth projects: Growth capital expenditures(1)
at Detour Lake for both FY 2020, excluding capitalized exploration,
totalled $29.5 million ($17.8 million in Q4 2020). Growth capital
expenditures(1) mainly related to the procurement of mobile
equipment, deferred stripping and investments in surface
infrastructure.
Holt Complex
On February 19, 2020, the Company designated the
Holt Complex as a non-core asset with plans to review options for
maximizing value. In mid-March, the Company placed the Holloway
Mine on care and maintenance, with no plans for a future resumption
of operations. Effective April 2, 2020, the Company suspended
operations at the Taylor Mine and Holt Mine and Mill as part of the
Company’s response to the COVID-19 pandemic while the Company
continued the strategic review of the Holt Complex assets involving
the consideration of all options for the maximizing of value. On
July 16, 2020, the Company announced that the suspension of
operations at the Holt Complex was being extended until further
notice. Care and maintenance costs of $16.6 million were recorded
for the Holt Complex in FY 2020 ($2.8 million in Q4 2020), of which
$8.4 million related to restructuring and severance expense ($0.4
million in Q4 2020).
In August 2020, the Company entered into a
strategic alliance agreement with Newmont through which Newmont
paid the Company $75 million (not included in earnings) to acquire
an option on certain mining and mineral rights related to the
Company’s Holt Mine property. The agreement also includes a
commitment by the two companies to work together to identify
additional regional exploration opportunities around their
respective land positions where they may cooperate to advance
projects.
For FY 2020, Holt Complex produced 29,391
ounces, almost all of which was in Q1 2020, which compared to
production of 113,952 ounces for FY 2019. Production costs for FY
2020 totalled $36.1 million (including $2.4 million of
COVID-19-related costs) versus $104.9 million for FY 2019.
Operating cash costs per ounce sold(1) averaged $981 in FY 2020
versus $904 per ounce for FY 2019, while AISC per ounce sold(1)
averaged $1,380 compared to $1,353 for the FY 2019. Sustaining
capital expenditures(1) for FY 2020 totalled $9.1 million, or $268
per ounce sold, versus $43.3 million, or $374 per ounce sold, for
FY 2019.
No production was recorded from the Holt Complex
during Q4 2020 and Q3 2020. The Complex recorded gold sales of 646
ounces in Q4 2020 related to cleaning the mill circuit resulting in
$1.2 million of revenue. During Q4 2019, a total of 31,469 ounces
was produced from processing 252,801 tonnes at an average grade of
4.1 g/t and average recoveries of 94.1%. Production costs in Q4
2019 totalled $25.2 million, while operating cash costs per ounce
sold(1) averaged $790 and AISC per ounce sold(1) averaged $1,321.
Sustaining capital expenditures(1) during Q4 2019 were $14.4
million or $450 per ounce sold.
Fosterville Mine
Production at Fosterville for FY 2020 was a
record 640,467 ounces, 21,101 ounces or 3% higher than the 619,366
ounces produced in FY 2019. FY 2020 production resulted from
processing 593,343 tonnes at an average grade of 33.9 g/t and
average recoveries of 98.9%. The increase from FY 2019 was mainly
due to a 20% increase in tonnes processed, which more than offset a
14% reduction in the average grade. The 640,467 ounces of
production for FY 2020 exceeded full-year 2020 production guidance
of 590,000 – 610,000 ounces mainly due to higher than planned
tonnes processed and average grades during the second half of
2020.
Production costs were $87.8 million (including
$0.7 million of COVID related costs) for FY 2020 versus $76.9
million for the same period in 2019. The increase largely related
to significantly higher mining and milling rates in FY 2020 vs a
year earlier. Operating cash costs per ounce sold(1) and AISC per
ounce sold(1) for FY 2020 of $139 and $312, respectively, which
compared to $119 and $291, respectively, in FY 2019. Contributing
to AISC per ounce sold(1) for FY 2020 were increased royalty
payments of $30.5 million or $48 per ounce sold resulting from the
new 2.75% royalty introduced by the Victorian Government effective
January 1, 2020. Excluding the impact of the new royalty, AISC per
ounce sold(1) for FY 2020 improved 9% from the FY 2019 level,
mainly due to lower sustaining capital expenditures(1) during FY
2020. Sustaining capital expenditures(1) for FY 2020 totalled $56.4
million ($89 per ounce sold) versus $89.3 million ($143 per ounce
sold) for FY 2019. Contributing to lower FY 2020 sustaining capital
expenditures were disruptions resulting from the Company’s COVID-19
protocols, including the suspension of project and development work
during Q2 2020, lower equipment procurement, and reduced levels of
capital development, reflecting mine sequencing, with a greater
proportion of development work focused on operating activities and
growth projects (the twin exploration drive to Robbin’s Hill) in FY
2020 than in FY 2019.
The Fosterville Mine produced 164,008 ounces in Q4
2020 based on processing 183,635 tonnes at an average grade of 28.1
g/t and average mill recoveries of 98.9%. Q4 2020 production
compared to record production of 191,894 ounces in Q4 2019, when
the mine processed 121,998 tonnes at an average grade of 49.3 g/t
and average recoveries of 99.2%. Q4 2020 production compared to
production of 161,489 ounces the previous quarter when the mine
processed 167,533 tonnes at an average grade of 30.3 g/t and at
average recoveries of 99.0%. The change from Q4 2019 reflected a
lower average grade, which more than offset the impact of increased
tonnes processed, resulting from higher mining rates in both Lower
Phoenix and Harrier as the mine benefited from recent investments
in improved ventilation and paste fill. The reduction in the
average grade reflected mine sequencing in the Swan Zone as well as
a lower proportion of total mined tonnes coming from the Swan Zone
versus other, lower-grade, areas. The increase in production from
the previous quarter resulted from increased tonnes processed in Q4
2020.
Production costs were $25.9 million in Q4 2020
versus $20.3 million in Q4 2019 and $22.7 million the previous
quarter (including $0.7 million of COVID-19 related costs).
Operating cash costs per ounce sold(1) averaged $156, compared to
operating cash costs per ounce sold(1) of $106 in Q4 2019 and $142
the previous quarter. The change compared to both prior periods
mainly reflected a lower average grade in Q4 2020, as well as the
impact of increased mining rates. AISC per ounce sold(1) averaged
$314 versus $258 in Q4 2019 and $349 in Q3 2020. The change from Q4
2019 largely reflected the impact of the new 2.75% royalty
introduced by the Victorian Government effective January 1, 2020.
The new royalty contributed $8.5 million or $51 per ounce sold to
AISC per ounce sold(1) in Q4 2020 ($8.0 million or $52 per ounce
sold in Q3 2020). Excluding the impact of the new royalty, AISC per
ounce sold(1) in Q4 2020 averaged $263 per ounce, similar to the Q4
2019 level as higher operating cash costs were largely offset by
lower levels of sustaining capital expenditures(1), reflecting
reduced capital development, ground support and mobile equipment
procurement versus the same period in 2019. Compared to the
previous quarter, the reduction in AISC per ounce sold(1) resulted
from lower sustaining capital expenditures mainly reflecting
reduced levels of capital development and mobile equipment
procurement compared to Q3 2020. Sustaining capital expenditures(1)
in Q4 2020 totalled $11.5 million ($69 per ounce sold) versus $23.6
million ($123 per ounce sold) in Q4 2019, and $18.1 million ($117
per ounce sold) in Q3 2020.
Growth projects: Growth capital expenditures(1)
at Fosterville for FY 2020, excluding capitalized exploration,
totalled $18.5 million ($3.9 million in Q4 2020). Work during FY
2020 focused mainly on construction of a new transformer station,
new gold room/refinery and Aster Plant (tailings effluent
remediation plant), as well as completion of a ventilation system
and paste fill project during Q2 2020.
Northern Territory
On February 19, 2020, the Company announced that
the Northern Territory assets had been designated as non-core with
the Company planning to consider strategic options for maximizing
the value of these assets. In March 2020, the Company announced the
suspension of test mining and processing in the Northern Territory
and also the suspension of exploration activities. The decision
reflected results of the test production to date, as well as other
priorities within the Company. Care and maintenance expense for the
Company’s Northern Territory assets totalled $6.4 million in Q4
2020 and $16.4 million for FY 2020, including $2.8 million of
restructuring and severance costs recorded in Q2 2020. Exploration
expenditures in FY 2020 in the Northern Territory totalled $18.3
million, of which $15.8 million were incurred in Q1 2020.
Exploration expenditures in Q4 2020 were $0.2 million.
Consistent with the Company’s commitment to
effective environmental management, a three-year, $60 – $65 million
water rehabilitation program was launched in the Northern Territory
during Q3 2020, which resulted in a $32.6 million increase in the
environmental remediation provisions being recorded during the
quarter (included as rehabilitation costs in net earnings for FY
2020). The program, which is intended to address environmental
issues caused by prior owners of the assets, involves managing the
Howley Streak waste dumps, rehabilitation of dams and treatment of
site water inventory. The objective of the program involves
restoring approximately 360ha to grazing land quality, removing
waste rock dumps and filling existing open pits.
(1) |
The Review of Operating Mines section includes a number of Non-IFRS
measures. The definition and reconciliation of these Non-IFRS
measures are included on pages 40-47 of the MD&A for the three
and twelve months ended December 31, 2020. |
FULL-YEAR 2020 GUIDANCE - RE-ISSUED JUNE
30, 2020
On April 1, 2020, the Company withdrew its 2020
guidance, which had originally been released on December 18, 2019
and was updated on February 19, 2020 to reflect the acquisition of
Detour Gold. The Company’s 2020 guidance was withdrawn due to
uncertainties related to the COVID-19 pandemic. On May 6, 2020, the
Company also withdrew its three-year production guidance while it
assessed the long-term effects of COVID-19 and while it works to
incorporate Detour Lake into the Company’s long-term business
plans.
On June 30, 2020, the Company re-issued guidance
for 2020 recognizing the progress achieved in ramping up business
activities that had been impacted by the Company’s COVID-19
response. Included among the re-issued guidance was production of
1,350,000 – 1,400,000 ounces, approximately 90% of the withdrawn
2020 production guidance, as well as improved unit costs, lower
expected sustaining capital expenditures(1) and higher target
growth capital expenditures(1) resulting from new growth projects
at Detour Lake Mine. Changes from previous guidance were largely
driven by the removal of production, unit cost and expenditure
guidance for the Holt Complex as of April 2, 2020, the date that
operations were suspended at the Complex. The Holt Complex’s
results to April 2, 2020 are included in the Company’s re-issued
2020 guidance. No changes were made to the re-issued 2020
consolidated guidance as of November 4, 2020 though the Company did
indicate in its MD&A for the three and nine months ended
September 30, 2020 that Macassa was not expected to achieve the
re-issued production guidance range, while Fosterville was expected
to beat its target range for FY 2020 production.
Full-Year 2020 Guidance (as of November
4, 2020)
($ millions unless otherwise stated) |
Macassa |
Detour Lake |
Holt Complex |
Fosterville |
Consolidated |
Gold production (kozs) |
210 – 220 |
520 – 540 |
29 |
590 – 610 |
1,350 - 1,400 |
Operating cash costs/ounce sold
($/oz)(1)(2) |
$490 - $510 |
$610 - $630 |
$955 |
$130 - $150 |
$410 - $430 |
AISC/ounce sold ($/oz)(1)(2) |
|
|
|
|
$790 - $810 |
Operating cash costs
($M)(1)(2) |
|
|
|
|
$560 - $580 |
Royalty costs ($M) |
|
|
|
|
$80 - $85 |
Sustaining capital ($M)(1) |
|
|
|
|
$390 - $400 |
Growth capital ($M)(1)(3) |
|
|
|
|
$95 - $105 |
Exploration ($M)(4)(5) |
|
|
|
|
$130 - $150 |
Corporate G&A ($M)(6) |
|
|
|
|
$50 - $55 |
(1) |
See “Non-IFRS Measures” set out starting on page 40 of the
MD&A for the three and twelve months ended December 31, 2020
for further details. The most comparable Measure for operating cash
costs, operating cash cost per ounce sold and AISC per ounce sold
is production costs, as presented in the Consolidated Statements of
Operations and Comprehensive Income, and total additions and
construction in progress for sustaining and growth capital.
Operating cash costs, operating cash cost per ounce sold and AISC
per ounce sold reflect an average US$ to C$ exchange rate of 1.35
and a US$ to A$ exchange rate of 1.47. |
(2) |
COVID-19 related costs of $15.4 million for FY 2020 are excluded
from operating cash costs, AISC and capital expenditures in
re-issued 2020 guidance. |
(3) |
Capital expenditures exclude capitalized depreciation. |
(4) |
Exploration expenditures include capital expenditures related to
infill drilling for Mineral Resource conversion, capital
expenditures for extension drilling outside of existing Mineral
Resources and expensed exploration. Also includes capital
expenditures for the development of exploration drifts. |
(5) |
Re-issued exploration expenditure guidance includes $18.3 million
related the Northern Territory assets (no production, costs or
expenditures related to the Northern Territory were included in the
previous 2020 guidance). |
(6) |
Includes general and administrative costs and severance payments.
Excludes share-based payment expense (including expense related to
share price changes). |
FY 2020 Results
($ millions unless otherwise stated) |
Macassa |
Detour Lake |
Holt Complex |
Fosterville |
Consolidated |
Gold production (ozs) |
183,037 |
516,757 |
29,391 |
640,467 |
1,369,652 |
Operating cash costs/ounce sold
($/oz)(1)(2) |
$562 |
$625 |
$981 |
$139 |
$404 |
AISC/ounce sold ($/oz)(1)(2) |
|
|
|
|
$800 |
Operating cash costs
($M)(1)(2) |
|
|
|
|
$561.1 |
Royalty costs ($M) |
|
|
|
|
$85.5 |
Sustaining capital ($M)(1) |
|
|
|
|
$396.2 |
Growth capital ($M)(1)(3) |
|
|
|
|
$92.5 |
Exploration ($M)(4)(5) |
|
|
|
|
$122.7 |
(1) |
See “Non-IFRS Measures” set out starting on page 40 of the MD&A
for the three and twelve months ended December 31, 2020 for further
details. The most comparable IFRS Measure for operating cash costs,
operating cash costs per ounce sold and AISC per ounce sold is
production costs, as presented in the Consolidated Statements of
Operations and Comprehensive Income, and total additions and
construction in progress for sustaining and growth capital.
Operating cash costs, operating cash cost per ounce sold and AISC
per ounce sold reflect an average US$ to C$ exchange rate of 1.35
and a US$ to A$ exchange rate of 1.45. |
(2) |
COVID-19 related costs of $15.4 million for FY 2020 are excluded
from operating cash costs, AISC and capital expenditures in
re-issued 2020 guidance. |
(3) |
Capital expenditures exclude capitalized depreciation. |
(4) |
Exploration expenditures include capital expenditures related to
infill drilling for Mineral Resource conversion, capital
expenditures for extension drilling outside of existing Mineral
Resources and expensed exploration. Also includes capital
expenditures for the development of exploration drifts. |
(5) |
Re-issued exploration expenditure guidance includes $18.3 million
related the Northern Territory assets (no production, costs or
expenditures related to the Northern Territory were included in the
previous 2020 guidance). |
(6) |
Includes general and administrative costs and severance payments.
Excludes share-based payment expense (including expense related to
share price changes). |
Gold production for FY 2020
totalled 1,369,652 ounces, in line with the Company’s FY 2020
guidance of 1,350,000 - 1,400,000 ounces. At Fosterville, FY 2020
production of 640,467 ounces beat the guidance range of 590,000 –
610,000 ounces, largely reflecting higher than planned tonnes
processed during the year. Production at Detour Lake Mine for the
11 months from January 31, 2020 to December 31, 2020 totalled
516,757 ounces, below the guidance range of 520,000 – 540,000
ounces, with the shortfall reflecting a slightly lower than
expected average grade. At Macassa, production for FY 2020 of
183,037 ounces did not achieve the re-issued guidance, reflecting
the impact on tonnes processed and average grades of excessive heat
in the mine during Q3 2020 as well as ongoing protocols related to
COVID-19
Production costs for FY 2020
totalled $587.3 million (including $15.4 million of costs related
to the Company’s COVID-19 response), while operating cash costs(1)
totalled $561.1 million, in line with target levels.
Operating cash costs per ounce
sold(1) for FY 2020 averaged $404, better
than the re-issued FY 2020 guidance of $410 - $430. Both
Fosterville and Detour Lake achieved their re-issued FY 2020
guidance. Macassa’s operating cash costs per ounce sold(1) exceeded
the FY 2020 target range, reflecting lower than expected business
volumes and average grades during the year as well as higher
operating costs due largely to increased levels of operating
development and higher costs for maintenance and underground mining
services.
AISC per ounce
sold(1) for FY 2020 averaged $800, in the
mid-range of the FY 2020 guidance of $790 - $810.
Royalty costs for FY 2020
totalled $85.5 million, at the top of the Company’s re-issued
guidance range of $80 – $85 million.
Sustaining capital
expenditures(1) for FY 2020 totalled
$396.2 million, excluding capitalized depreciation, which was in
line with the FY 2020 guidance of $390 – $400 million.
Growth capital
expenditures(1) totalled $92.5
million for YTD 2020 (excluding capitalized exploration), which
compared to re-issued FY 2020 guidance of $95 – $105 million. Of
total growth capital expenditures(1) for FY 2020, Macassa accounted
for $44.6 million, with $35.2 million relating to the #4 Shaft
project. Growth capital expenditures(1) at Detour Lake totalled
$29.5 million, mainly related to the procurement of mobile
equipment, deferred development and investments in surface
infrastructure. Growth capital expenditures(1) at Fosterville
totalled $18.5 million, mainly related to construction of a new
transformer station, new gold room/refinery and Aster Plant, as
well as completion of a ventilation system during Q2 2020.
Exploration and evaluation
expenditures for FY 2020 totalled $122.7 million (including
capitalized exploration), slightly below the re-issued FY 2020
guidance range of $130 - $150 million due to the time required to
fully ramp up drilling programs after their suspension in Q2 2020
as part of the Company’s COVID-19 response. Of the $122.7 million
of exploration expenditures, Fosterville accounted for $57.8
million, Macassa for $31.4 million, Detour Lake for $14.0 million,
Northern Territory for $18.3 (most of which was incurred in Q1
2020) and Holt Complex for $0.9 million. See the Growth and
Exploration section of this MD&A for a review of exploration
activities and results in FY 2020.
Corporate G&A expense for
FY 2020 totalled $50.3 million, in the low end of the Company’s
re-issued FY 2020 guidance of $50 – $55 million.
(1) |
The Full-Year 2020 Guidance section includes a number of Non-IFRS
measures. The definition and reconciliation of these Non-IFRS
measures are included on pages 40-47 of the MD&A for the
three and twelve months ended December 31, 2020. |
FY 2021
Guidance(1)
($ millions unless otherwise stated) |
Macassa |
Detour Lake |
Fosterville |
Consolidated |
Gold production (kozs) |
220 – 255 |
680 – 720 |
400 –425 |
1,300 - 1,400 |
Operating cash costs/ounce sold
($/oz)(2) |
$450 - $470 |
$580 - $600 |
$230 - $250 |
$450 - $475 |
AISC/ounce sold ($/oz)(2) |
|
|
|
$790 - $810 |
Operating cash costs ($M)(2) |
|
|
|
$600 - $630 |
Royalty costs ($M) |
|
|
|
$82 - $88 |
Sustaining capital ($M)(2) |
|
|
|
$280 - $310 |
Growth capital ($M)(2)(3) |
|
|
|
$250 - $275 |
Exploration ($M)(4) |
|
|
|
$170 - $190 |
Corporate G&A ($M)(5) |
|
|
|
$50 - $55 |
(1) |
The Company’s 2021 guidance assumes an average gold price of $1,800
per ounce as well as a US$ to C$ exchange rate of 1.31 and a US$ to
A$ exchange rate of 1.39. Assumptions used for the purposes of
guidance may prove to be incorrect and actual results may differ
from those anticipated. |
(2) |
See “Non-IFRS Measures” set out starting on page 40 of the MD&A
for the three and twelve months ended December 31, 2020 further
details. The most comparable IFRS Measure for operating cash costs,
operating cash costs per ounce sold and AISC per ounce sold is
production costs, as presented in the Consolidated Statements of
Operations and Comprehensive Income, and total additions and
construction in progress for sustaining and growth capital. |
(3) |
Capital expenditures exclude capitalized depreciation. |
(4) |
Exploration expenditures include capital expenditures related to
infill drilling for Mineral Resource conversion, capital
expenditures for extension drilling outside of existing Mineral
Resources and expensed exploration. Also includes capital
expenditures for the development of exploration drifts. |
(5) |
Includes general and administrative costs and severance payments.
Excludes share-based payment expense (including expense related to
share price changes). |
Gold production in FY 2021 is
targeted at 1,300,000 – 1,400,000 ounces, which compares to
re-issued FY 2020 production guidance of 1,350,000 – 1,400,000
ounces (included 29,391 ounces of production at Holt Complex) and
FY 2020 production of 1,369,652 ounces. Production in FY 2021 is
expected to be led by Detour Lake, which is targeting 680,000 –
720,000 ounces of production compared to 516,757 ounces for 11
months in 2020. In addition to the impact of a full year of
operations at Detour Lake in FY 2021, the increase in production in
the coming year is expected to be driven by a higher average grade
and increased mill throughput. Production is also expected to
increase at Macassa in FY 2021, with guidance for the year of
220,000 – 255,000 ounces. Production at Fosterville is targeted to
decline as the mine transitions to a lower-grade profile, with the
impact of reduced grades to be only partially offset by higher
tonnes processed. Production at Fosterville in FY 2021 is targeted
at 400,000 – 425,000 ounces.
Operating cash costs per ounce
sold(1) are expected to average $450 – $475, which
compares the re-issued FY 2020 guidance of $410 – $430 and FY 2020
operating cash costs(1) of $404 per ounce sold. The expected
increase from FY 2020 levels mainly reflects the impact of higher
tonnes mined and lower grades at Fosterville, which is expected to
more than offset improved operating cash costs per ounce sold(1) at
both Detour Lake and Macassa.
AISC per ounce sold(1)are
targeted to average $790 – $810, unchanged from FY 2020 guidance
and in line with FY 2020 AISC(1) of $800 per ounce sold. AISC per
ounce sold(1) at Detour Lake and Macassa are targeted to improve in
2021 to better than $900 and $750, respectively, while AISC per
ounce sold(1) at Fosterville is expected to increase reflecting a
lower average grade and higher sustaining capital
expenditures(1).
Operating cash costs(1) for FY
2021 are estimated at $600 – $630 million, which compares to the
re-issued FY 2020 guidance of $560 – $580 million and total
operating cash costs of $561.1 million in FY 2020, with the
increase mainly related to a full year of results for Detour Lake
versus 11 months in 2020.
Royalty costs in FY 2021 are
estimated at $82 – $88 million, similar to re-issued FY 2020
guidance of $80 – $85 million and in line with FY 2020 royalty
costs of $85.5 million.
Sustaining capital
expenditures(1) in FY 2021 are targeted at $280 – $310
million compared to FY 2020 guidance of $390 – $400 million and FY
2020 sustaining capital expenditures(1) of $396.2 million. The
anticipated reduction in sustaining capital expenditures in FY 2021
from the FY 2020 levels is mainly related to lower deferred
stripping costs at Detour Lake being included in sustaining capital
expenditures(1), with the majority of deferred stripping costs in
FY 2021 included in growth capital expenditures(1). Higher
sustaining capital expenditures(1) at Fosterville in 2021, largely
reflecting increased mobile equipment procurement, are expected to
be largely offset by lower sustaining capital expenditures at
Macassa.
Growth capital expenditures(1)
are estimated at $250 – $275 million in FY 2021 compared to FY 2020
guidance of $95 – $105 million and FY 2020 growth capital
expenditures(1) of $92.5 million. The expected increase in growth
capital expenditures(1) in FY 2021 largely reflects higher growth
capital expenditures(1) a Detour Lake. Of planned growth capital
expenditures(1) in FY 2021, Detour Lake accounts for $160 – $170
million, with approximately $90 million relating to deferred
stripping and the remainder to a number of growth capital projects,
including investments in mill improvements, increased tailings
capacity, completion of an assay lab (construction commenced in
2020) and other enhancements to site infrastructure. Deferred
stripping costs at Detour Lake in FY 2021 mainly relate to a
significant stripping campaign as part of Phase 4, which will
support production in future years. Growth capital expenditures(1)
at Macassa are targeted at $85 – $95 million, with the #4 Shaft
project expected to account for $55 – $60 million and the remainder
largely related to completion of a ventilation upgrade project,
mill improvements and increased development to support future mine
production. Growth capital expenditures(1) at Fosterville in FY
2021 are targeted at $5 – $10 million reflecting the completion of
a number of key projects during 2020.
Exploration expenditures in FY
2021 are estimated at $170 – $190 million versus re-issued FY 2020
guidance of $130 – $150 million and to FY 2020 exploration
expenditures of $122.7 million. Of total exploration expenditures,
approximately $85 – $95 million are targeted for Fosterville, where
drilling will continue to focus Mineral Reserve and Mineral
Resource replacement and identifying new high-grade zones at key
targets, including Lower Phoenix, Cygnet, Robbin’s Hill and
Harrier. Exploration expenditures in Canada are also expected to
total $85 – $95 million, with expenditures of $45 – $50 million
targeted for Macassa and $40 – $45 million for Detour Lake.
Corporate G&A expense in
2021 is estimated at $50 – $55 million, unchanged from the
re-issued FY 2020 guidance and compared to FY 2020 Corporate
G&A costs of $50.3 million.
(1) |
The FY 2021
Guidance section includes a number of Non-IFRS measures. The
definition and reconciliation of these Non-IFRS measures are
included on pages 40-47 of the MD&A for the three and
twelve months ended December 31, 2020. |
THREE-YEAR PRODUCTION
GUIDANCE
Three-Year Production Guidance(1)
|
Detour Lake |
Macassa |
Fosterville |
Consolidated |
2021 (kozs) |
680 – 720 |
220 – 255 |
400 – 425 |
1,300 – 1,400 |
2022 (kozs) |
680 – 720 |
295 – 325 |
325 – 400 |
1,300 – 1,445 |
2023 (kozs) |
680 – 720 |
400 - 425 |
325 – 400 |
1,405 – 1,545 |
(1) |
Three-year production guidance does not include any production from
the Holt Complex or Northern Territory. |
On December 10, 2020, the Company released
three-year production guidance on a consolidated basis and for each
of its producing assets. Detour Lake is expected to achieve
significant growth in 2021, with production increasing to 680,000 –
720,000 ounces at AISC per ounce sold(1) lower than $900. This
higher level of production, resulting from both increased
production rates and improvement in average grades, is targeted to
be maintained for the next few years and eventually increase
further to approximately 800,000 ounces in 2025 based on the
existing mine plan. In addition, the Company expects to issue a new
mine plan in 2022, following completion of the current exploration
drilling program, which it believes could result in a significantly
improved longer-term outlook for the Detour Lake Mine.
Production at Macassa is expected to ramp up
over the next three years, reaching 400,000 ounces in 2023
following completion of the #4 Shaft. Production in 2021 is
targeted at 220,000 – 255,000 ounces at AISC per ounce sold(1)
averaging below $750. With completion of the #4 Shaft on track for
late 2022 and production commencing from near surface zones using a
surface ramp, production is targeted to increase to 295,000 –
325,000 ounces in 2022 before increasing to 400,000 – 425,000
ounces in 2023.
Commencing in 2021, production at Fosterville
will be lowered from levels achieved in FY 2020 and FY 2019. The
change is being undertaken as the Company adjusts the mining plan
to create a more sustainable operation while drilling continues to
identify new Mineral Reserves and Mineral Resources, with a focus
on drilling to identify additional high-grade zones. Fosterville’s
production profile over the next three years includes a target of
400,000 – 425,000 ounces in 2021, moving to a range of 325,000 –
400,000 ounces in 2022 and 2023.
(1) |
The Three-Year Production Guidance section includes a number of
Non-IFRS measures. The definition and reconciliation of these
Non-IFRS measures are included on pages 40-47 of the
MD&A for three and twelve months ended December 31, 2020. |
FY and Q4 2020 Financial Results and
Conference Call Details
A conference call to discuss the FY and Q4 2020
results will be held by senior management today, Thursday, February
25, 2021, at 2:00 pm ET. Call-in information is provided below. The
call will also be webcast and accessible on the Company’s website
at www.kl.gold.
DATE: |
THURSDAY, FEBRUARY 25, 2021 |
CONFERENCE ID: |
|
3578964 |
TIME: |
|
2:00 pm ET |
TOLL-FREE
NUMBER: |
(833) 968-2183 |
INTERNATIONAL CALLERS: |
+1 2363892444 |
WEBCAST URL: |
|
https://event.on24.com/wcc/r/2947662/AFEE3DD0266ED9B152C88BEDC9F7ED9D |
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold Ltd. is a senior gold
producer operating in Canada and Australia that is targeting
1,300,000 – 1,400,000 ounces of production in 2021. The production
profile of the Company is anchored by three high-quality
operations, including the Macassa Mine and Detour Lake Mine, both
located in Northern Ontario, and the Fosterville Mine located in
the state of Victoria, Australia. Kirkland Lake Gold’s solid base
of quality assets is complemented by district scale exploration
potential, supported by a strong financial position with extensive
management expertise.
For further information on Kirkland Lake Gold and
to receive news releases by email, visit the website
www.kl.gold.
Qualified Persons
The technical contents related to Kirkland Lake Gold Ltd. mines
and properties in this press release, have been reviewed and
approved by Natasha Vaz, P.Eng., Senior Vice President, Technical
Services and Innovation, Eric Kallio, P.Geo, Senior Vice President,
Exploration and Andre Leite, P.Eng., AUSIMM CP (MIN), MEng.,
Technical Services Manager. Ms. Vaz, Mr. Kallio and
Leite are “qualified persons” as defined in National Instrument
43-101 and have reviewed and approved disclosure of the technical
information and data in this press release.
Readers are referred to the NI 43-101 2018
Technical Reports for the Fosterville property entitled, “Updated
NI 43-101 Technical Report Fosterville Gold mine in the State of
Victoria, Australia” (the “Fosterville Report”) and the amended and
restated NI 43-101 Technical report for Macassa entitled “Macassa
Property, Ontario, Canada, Updated NI 43-101 Technical Report” (the
“Macassa Report”) effective December 31, 2018 and dated April 1,
2018 and July 19, 2018, respectively. An updated NI 43-101
Technical Report with respect to the Detour Lake Mine will be filed
in Q1 2021.
Footnotes Related to Mineral Reserve
Calculations
1. |
CIM definitions (2019) were followed in the estimation of Mineral
Reserves and all Mineral Reserves have been reported in accordance
with NI 43-101. |
2. |
Mineral Reserves were estimated using a long-term gold price of
US$1,300/oz (C$1,700/oz; A$1,765/oz). |
3. |
Cut-off grades for Canadian Assets were calculated for each stope,
including the costs of: mining, milling, General and
Administration, royalties and capital expenditures and other
modifying factors (e.g. dilution, mining extraction, mill
recovery). |
4. |
Cut-off grades for Australian Assets were calculated for each
mining block, including the costs of: mining, milling, General and
Administration, royalties and capital expenditures and other
modifying factors (e.g. dilution, mining extraction, mill
recovery). |
5. |
Cut-off grades for Detour Lake were calculated using an optimized
variable cut-off grade over time, including the costs of: mining,
milling, General and Administration, royalties and capital
expenditures and other modifying factors (e.g. dilution, mining
extraction, mill recovery). |
6. |
Dilution estimates vary by mining methods and ranges from 5% to
50%. |
7. |
Extraction estimates vary by mining methods and range from 60% to
90%. |
8. |
Mineral Reserves estimates for Canadian Operations (excluding
Detour Lake) were prepared under the supervision of Natasha Vaz,
P.Eng. |
9. |
Mineral Reserve estimates for Detour Lake were prepared under the
supervision of Andre Leite, P.Eng , AUSIMM CP (MIN), MEng.,
Technical Services Manager. |
10. |
Mineral Reserves estimates for Australian Operations were prepared
under the supervision of I.Hann, FAusIMM |
11. |
Totals may not add up due to rounding. |
Footnotes Related to Mineral Resource
Calculations
1. |
Mineral Resources classified in accordance with CIM Definition
Standards (2019). |
2. |
Mineral Resources for Detour Lake and West Detour project are based
on a cut-off grade of 0.50 g/t Au. |
3. |
Mineral Resources for Zone 58N are based on a cut-off grade of 2.2
g/t with an assumed mining dilution of 12%. |
4. |
Mineral Resources for Macassa and Holt Complex were estimated at
the following cut-off grades: |
|
Macassa '04/Main Break: 8.6 g/tMacassa Near Surface: 3.4
g/t Macassa SMC: 5.1
g/tHolt Mine: 2.8 g/t, with the exceptions noted belowHolt
Near-Surface Zones: 2.5 g/t (Tousignant, Cascade, North Mattawasaga
Pit)Holloway Mine: 2.8 g/t, with the exception of the Deep Thunder
(2.7g/t) and Canamax (2.5 g/t)Taylor Mine: 2.6 g/tHislop Property:
2.2 g/tAquarius: 0 g/t cutoff grade. |
5. |
Fosterville Open Pit Mineral Resources were estimated using cut-off
grades ranging between 0.8 g/t Au and 1.0 g/t Au. |
6. |
Fosterville Underground Mineral Resources were estimated using
cut-off grades ranging between 2.3 g/t Au and 3.1 g/t Au. |
7. |
Northern Territory Open Pit Mineral Resources were estimated using
a cut-off grade of 0.5 g/t Au. |
8. |
Northern Territory Underground Mineral Resources were estimated
using a cut-off grades ranging between 1.5 g/t Au and 2.0 g/t
Au. |
9. |
Mineral Resources were estimated using a gold price of US$1,500/oz
and a CAD/USD exchange rate of 1.31 for Detour Lake and West Detour
project. |
10. |
Mineral Resources were estimated using a gold price of US$1,300/oz
and a CAD/USD exchange rate of 1.25 for Zone 58N deposit. |
11. |
Mineral Resources were estimated using a gold price of US$1,500/oz
and a CAD/USD exchange rate of 1.28 for Macassa and Holt
Complex. |
12. |
Mineral Resources were estimated using a gold price of US$1,425/oz
and an AUD/USD exchange rate of 1.36 for the Australian
assets. |
13. |
Mineral Resources are Exclusive of Mineral Reserves. |
14. |
Mineral Resource estimates for the Fosterville Property were
prepared under the supervision of Troy Fuller, MAIG. |
15. |
Mineral Resource estimates for the Northern Territory properties
were prepared under the supervision of Mark Edwards, FAusIMM,
MAIG. |
16. |
Mineral Resource estimates for the Canadian assets (excluding
Detour Lake) were prepared under the supervision of Eric Kallio, P.
Geo. (Senior Vice-President, Exploration) |
17. |
Mineral Resource estimates for Detour Lake were prepared under the
supervision of Andre Leite, P.Eng , AUSIMM CP (MIN), MEng.,
Technical Services Manager. |
18. |
Tonnes and gold ounce information is rounded to the nearest
thousand; As a result, rows and columns may not add exactly due to
rounding. |
19. |
Mineral resources that are not Mineral Reserves do not have
demonstrated economic viability. |
Non-IFRS Measures
The Company has included certain non-IFRS
measures in this document, as discussed below. The Company believes
that these measures, in addition to conventional measures prepared
in accordance with IFRS, provide investors an improved ability to
evaluate the underlying performance of the Company. The non-IFRS
measures are intended to provide additional information and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. These measures do not
have any standardized meaning prescribed under IFRS, and therefore
may not be comparable to other issuers.
Free Cash Flow and Adjusted Free Cash Flow
In the gold mining industry, free cash flow is a
common performance measure with no standardized meaning. The
Company calculates free cash flow by deducting cash capital
spending (capital expenditures for the period, net of expenditures
paid through finance leases) from net cash provided by operating
activities.
The Company discloses free cash flow as it
believes the measure provides valuable assistance to investors and
analysts in evaluating the Company’s ability to generate cash flow
after capital investments and build the cash resources of the
Company. The Company also discloses and calculates adjusted free
cash flow by excluding items from free cash flow. The most directly
comparable measure prepared in accordance with IFRS is net cash
provided by operating activities less net cash used in investing
activities.
Operating Cash Costs and Operating Cash Costs
per Ounce Sold
Operating cash costs and operating cash cost per
tonne and per ounce sold are non-IFRS measures. In the gold mining
industry, these metrics are common performance measures but do not
have any standardized meaning under IFRS. Operating cash costs
include mine site operating costs such as mining, processing and
administration, but exclude royalty expenses, depreciation and
depletion and share based payment expenses and reclamation costs.
Operating cash cost per ounce sold is based on ounces sold and is
calculated by dividing operating cash costs by volume of gold
ounces sold.
The Company discloses operating cash costs and
operating cash cost per tonne and per ounce as it believes the
measures provide valuable assistance to investors and analysts in
evaluating the Company’s operational performance and ability to
generate cash flow. The most directly comparable measure prepared
in accordance with IFRS is total production expenses. Operating
cash costs and operating cash cost per ounce of gold should not be
considered in isolation or as a substitute for measures prepared in
accordance with IFRS.
Sustaining and Growth Capital
Sustaining capital and growth capital are
Non-IFRS measures. Sustaining capital is defined as capital
required to maintain current operations at existing levels. Growth
capital is defined as capital expenditures for major growth
projects or enhancement capital for significant infrastructure
improvements at existing operations. Both measurements are used by
management to assess the effectiveness of investment programs.
AISC and AISC per Ounce Sold
AISC and AISC per ounce are Non-IFRS measures.
These measures are intended to assist readers in evaluating the
total costs of producing gold from current operations. While there
is no standardized meaning across the industry for this measure,
the Company’s definition conforms to the definition of AISC as set
out by the World Gold Council in its guidance note dated June 27,
2013.
The Company defines AISC as the sum of operating
costs (as defined and calculated above), royalty expenses,
sustaining capital, corporate expenses and reclamation cost
accretion related to current operations. Corporate expenses include
general and administrative expenses, net of transaction related
costs, severance expenses for management changes and interest
income. AISC excludes growth capital expenditures, growth
exploration expenditures, reclamation cost accretion not related to
current operations, interest expense, debt repayment and taxes.
Average Realized Price per Ounce Sold
In the gold mining industry, average realized
price per ounce sold is a common performance measure that does not
have any standardized meaning. The most directly comparable measure
prepared in accordance with IFRS is revenue from gold sales.
Average realized price per ounce sold should not be considered in
isolation or as a substitute for measures prepared in accordance
with IFRS. The measure is intended to assist readers in evaluating
the total revenues realized in a period from current
operations.
Adjusted Net Earnings and Adjusted Net Earnings
per Share
Adjusted net earnings and adjusted net earnings
per share are used by management and investors to measure the
underlying operating performance of the Company.
Adjusted net earnings is defined as net earnings
adjusted to exclude the after-tax impact of specific items that are
significant, but not reflective of the underlying operations of the
Company, including foreign exchange gains and losses, transaction
costs and executive severance payments, purchase price adjustments
reflected in inventory and other items. Adjusted net earnings per
share is calculated using the weighted average number of shares
outstanding for adjusted net earnings per share.
Earnings before Interest, Taxes, Depreciation,
and Amortization (“EBITDA”)
EBITDA represents net earnings before interest,
taxes, depreciation and amortization. EBITDA is an indicator of the
Company’s ability to generate liquidity by producing operating cash
flow to fund working capital needs, service debt obligations, and
fund capital expenditures.
Working Capital
Working capital is a Non-IFRS measure. In the
gold mining industry, working capital is a common measure of
liquidity, but does not have any standardized meaning.
The most directly comparable measure prepared in
accordance with IFRS is current assets and current liabilities.
Working capital is calculated by deducting current liabilities from
current assets. Working capital should not be considered in
isolation or as a substitute from measures prepared in accordance
with IFRS. The measure is intended to assist readers in evaluating
the Company’s liquidity.
Risks and Uncertainties
The exploration, development and mining of
mineral deposits involves significant risks, which even a
combination of careful evaluation, experience and knowledge may not
eliminate. Kirkland Lake Gold is subject to several financial and
operational risks that could have a significant impact on its cash
flows and profitability. The most significant risks and
uncertainties faced by the Company include: the price of gold; the
uncertainty of production estimates (which assume accuracy of
projected grade, recovery rates, and tonnage estimates and may be
impacted by unscheduled maintenance, labour and other operating,
engineering or technical difficulties with respect to the
development of its projects, many of which may not be within the
control of the Company), including the ability to extract
anticipated tonnes and successfully realizing estimated grades; the
threat of outbreaks of viruses or other infectious disease,
including COVID-19; changes to operating and capital cost
assumptions; the inherent risk associated with project development
and permitting processes; the uncertainty of the mineral resources
and their development into mineral reserves; the replacement of
depleted reserves; foreign exchange risks; changes in applicable
laws and regulations (including tax legislation); reclamation
obligations; regulatory; tax matters and foreign mining tax
regimes, as well as health, safety, environmental and cybersecurity
risks. For more extensive discussion on risks and uncertainties
refer to the “Risks and Uncertainties” section in the December 31,
2019 Annual Information Form and the Company’s MD&A for the
period ended December 31, 2020 filed on SEDAR.
Cautionary Note Regarding
Forward-Looking Statements
Certain statements in this press release
constitute ‘forward looking statements’, including statements
regarding the plans, intentions, beliefs and current expectations
of the Company with respect to the future business activities and
operating performance of the Company. The words “may”, “would”,
“could”, “will”, “intend”, “plan”, “anticipate”, “believe”,
“estimate”, “expect” and similar expressions, as they relate to the
Company, are intended to identify such forward-looking statements.
Investors are cautioned that forward-looking statements are based
on the opinions, assumptions and estimates of management considered
reasonable at the date the statements are made, and are inherently
subject to a variety of risks and uncertainties and other known and
unknown factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
These factors include, among others, the development of the
Company’s properties and the anticipated timing thereof, expected
production from, and the further potential of the Company’s
properties, the potential to increase the levels of mineral
resources and mineral reserves and potential conversion of mineral
resources; the anticipated timing and commencement of exploration
programs on various targets within the Company’s land holdings and
the implication of such exploration programs (including but not
limited to any potential decisions to proceed to commercial
production), the anticipated overall impact of the Company’s
COVID19 response plans, including measures taken by the Company to
reduce the spread of COVID19, including but not limited to the
rapid testing implemented at the Company's sites, the ability to
lower costs and gradually increase production, the ability of the
Company to successfully achieve business objectives, the ability of
the Company to achieve its longer-term outlook and the anticipated
timing and results thereof, the performance of the Company’s equity
investments and the ability of the Company to realize on its
strategic goals with respect to such investments, the effects of
unexpected costs, liabilities or delays, the potential benefits and
synergies and expectations of other economic, business and or
competitive factors, including the ability of the Company to
realize on certain planned synergies associated with the
acquisition of Detour Gold Corporation, the Company's expectations
in connection with the projects and exploration programs being met,
the impact of general business and economic conditions, global
liquidity and credit availability on the timing of cash flows and
the values of assets and liabilities based on projected future
conditions, fluctuating gold prices, currency exchange rates (such
as the Canadian dollar versus the US dollar), mark-to-market
derivative variances, possible variations in ore grade or recovery
rates, changes in accounting policies, changes in the Company's
corporate mineral resources, changes in project parameters as plans
continue to be refined, changes in project development,
construction, production and commissioning time frames, the
possibility of project cost overruns or unanticipated costs and
expenses, higher prices for fuel, power, labour and other
consumables contributing to higher costs and general risks of the
mining industry, failure of plant, equipment or processes to
operate as anticipated, unexpected changes in mine life,
seasonality and unanticipated weather changes, costs and timing of
the development of new deposits, success of exploration activities,
permitting time lines, risks related to information technology and
cybersecurity, timing and costs associated with the design,
procurement and construction of the Company’s various capital
projects, including but not limited to potential future impacts and
effects of COVID19, including but not limited to potential future
delays and unanticipated suspension or interruption of operations,
the #4 Shaft project at the Macassa Mine, the ventilation, paste
plant, transformer and water treatment facility at the Fosterville
Mine, the ability to obtain all necessary permits associated with
the Detour Lake Mine, the ability to obtain the necessary permits
in connection with all of its various capital projects, including
but not limited to the rehabilitation of the Macassa tailings
facility and the development of a new tailings facility and the
anticipated results associated therewith, the West Detour project,
processing plant expansion at the Detour Lake Mine, the ability to
obtain renewals of certain exploration licences in Australia,
native and aboriginal heritage issues, including but not limited to
ongoing negotiations and consultations with the Company’s First
Nations partners, risks relating to infrastructure, permitting and
licenses, exploration and mining licences, government regulation of
the mining industry, risks relating to foreign operations,
uncertainty in the estimation and realization of mineral resources
and mineral reserves, quality and marketability of mineral product,
environmental regulation and reclamation obligations, including but
not limited to risks associated with reclamation and closure
obligations relating to the Northern Territory projects, risks
relating to the Northern Territory wet season, risks relating to
litigation and unanticipated costs to assume the defence of such
litigation, risks relating to applicable tax and potential
reassessments thereon, risks relating to changes to tax law and
regulations and the Company's interpretation thereof, foreign
mining tax regimes and the potential impact of any changes to such
foreign tax regimes, competition, currency fluctuations, government
regulation of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims, and limitations on
insurance, as well as those risk factors discussed or referred to
in the AIF of the Company for the year ended December 31, 2019
filed with the securities regulatory authorities in certain
provinces of Canada and available at www.sedar.com. Should one or
more of these risks or uncertainties materialize, or should
assumptions underlying the forward-looking statements prove
incorrect, actual results may vary materially from those described
herein as intended, planned, anticipated, believed, estimated or
expected. Although the Company has attempted to identify important
risks, uncertainties and factors which could cause actual results
to differ materially, there may be others that cause results not be
as anticipated, estimated or intended. The Company does not intend,
and does not assume any obligation, to update these forward-looking
statements except as otherwise required by applicable law.
Mineral resources are not mineral reserves, and
do not have demonstrated economic viability, but do have reasonable
prospects for eventual economic extraction. Measured and indicated
resources are sufficiently well defined to allow geological and
grade continuity to be reasonably assumed and permit the
application of technical and economic parameters in assessing the
economic viability of the resource. Inferred resources are
estimated on limited information not sufficient to verify
geological and grade continuity or to allow technical and economic
parameters to be applied. Inferred resources are too speculative
geologically to have economic considerations applied to them to
enable them to be categorized as mineral reserves. There is no
certainty that Measured or Indicated mineral resources can be
upgraded to mineral reserves through continued exploration and
positive economic assessment.
Information Concerning Estimates Of
Mineral Reserves And Measured, Indicated And Inferred
Resources
This press release has been prepared in
accordance with the requirements of the securities laws in effect
in Canada, which differ from the requirements of United States
securities laws. The terms “mineral reserve”, “proven mineral
reserve” and “probable mineral reserve” are Canadian mining terms
as defined in accordance with Canadian National Instrument
43-101-Standards of Disclosure for Mineral Projects (“NI 43-101”)
and the Canadian Institute of Mining, Metallurgy and Petroleum (the
“CIM”)-CIM Definition Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as amended. These definitions
differ from the definitions in SEC Industry Guide 7 under the
United States Securities Act of 1993, as amended (the “Securities
Act”).
Under SEC Industry Guide 7 standards, a “final”
or “bankable” feasibility study is required to report reserves, the
three-year historical average price is used in any reserve or cash
flow analysis to designate reserves and the primary environmental
analysis or report must be filed with the appropriate governmental
authority.
In addition, the terms “mineral resource”,
“measured mineral resource”, “indicated mineral resource” and
“inferred mineral resource” are defined in and required to be
disclosed by NI 43-101; however, these terms are not defined terms
under SEC Industry Guide 7 and are normally not permitted to be
used in reports and registration statements filed with the SEC.
Investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into
reserves. “Inferred mineral resources” have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred mineral
resource exists or is economically or legally mineable. Disclosure
of “contained ounces” in a resource is permitted disclosure under
Canadian regulations; however, the SEC normally only permits
issuers to report mineralization that does not constitute
“reserves” by SEC Industry Guide 7 standards as in place tonnage
and grade without reference to unit measures.
Accordingly, information contained in this
Management’s Discussion and Analysis contain descriptions of our
mineral deposits that may not be comparable to similar information
made public by U.S. companies subject to the reporting and
disclosure requirements under the United States federal securities
laws and the rules and regulations thereunder.
This document uses the terms “Measured”,
“Indicated” and “Inferred” Resources. US investors are advised that
while such terms are recognized and required by Canadian
regulations, the U.S. Securities and Exchange Commission does not
recognize them. “Inferred Mineral Resources” have a great amount of
uncertainty as to their existence, and as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of pre-feasibility, feasibility or
other economic studies. U.S. investors are cautioned not to assume
that all or any part of Measured or Indicated Mineral Resources
will ever be converted into Mineral Reserves. U.S. investors are
also cautioned not to assume that all or any part of an Inferred
Mineral Resource exists, or is economically or legally
mineable.
FOR FURTHER INFORMATION PLEASE CONTACT
Anthony Makuch, President, Chief Executive
Officer & DirectorPhone: +1
416-840-7884E-mail: tmakuch@kl.gold
Mark Utting, Senior Vice President, Investor RelationsPhone: +1
416-840-7884E-mail: mutting@kl.gold
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