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
first quarter of 2020 (“Q1 2020”). A number of key developments
occurred in Q1 2020, including the unprecedented challenges related
to the COVID-19 pandemic and extensive measures taken by the
Company to protect its workforce; the acquisition of Detour Gold
Corporation (“Detour Gold”) on January 31, 2020, with Detour Lake
Mine contributing significant free cash flow in its first two
months with the Company; as well as the suspension of operations at
non-core assets. Also during Q1 2020, the value creation potential
of the Company’s three cornerstone assets was demonstrated, with
strong year-over-year growth in net earnings and earnings per share
and record levels of gold sales, revenue, EBITDA and free cash flow
being achieved. The Company’s full consolidated financial
statements and management discussion & analysis are available
on SEDAR at www.sedar.com and on the Company’s website at
www.klgold.com. All dollar amounts are in U.S. dollars, unless
otherwise noted.
Key Developments Impacting Q1
2020:
- Detour Gold
acquisition: Completed acquisition of Detour Gold on
January 31, 2020, adding a third cornerstone asset, Detour Lake
Mine; Detour Lake is a large-scale open pit mine located in
Northern Ontario with significant potential for growth in Mineral
Reserves and production, improved unit costs and regional
exploration success
- COVID-19 response:
Implemented extensive health and safety protocols to protect
workers from COVID-19 virus; transitioned Detour Lake and Macassa
mines to reduced operations and temporarily suspended operations at
Holt Complex; Company commencing gradual recall of workers at
Detour Lake and Macassa (Holt Complex remains on suspension);
COVID-19 to impact production and costs during much of 2020
- $20 million
donation: Subsequent to quarter end, Kirkland Lake Gold
announced plans to donate US$20 million over the next 12 months to
medical, social and community organizations in the areas of Canada
and Australia where the Company operates; donations to provide
support to local health units and facilities, food banks, municipal
services and other essential social support groups which may
encounter difficulties due to slowing economies and reduced funding
as a result of COVID-19
- Company guidance
withdrawn: Based on the move to reduced operations due to
the COVID-19 pandemic, the Company withdrew its full-year 2020
guidance on April 1, 2020; Revised guidance to be issued as Detour
Lake and Macassa make progress towards returning to more
predictable levels of production; Holt Complex guidance
discontinued; Company also withdraws three-year production guidance
to assess long-term effects of COVID-19 and potential impact of
pandemic on production profile of Fosterville, Macassa and Holt
Complex and while it works to incorporate Detour Lake into the
Company’s long-term business plans.
Highlights of Q1 2020
Performance
- Net earnings grow
84%: Net earnings of $202.9 million ($0.79 per share), 84%
higher than $110.1 million ($0.52 per share) in Q1 2019 and 20%
higher than $169.1 million ($0.81 per share) in Q4 2019: Adjusted
net earnings1 totalled $179.2 million ($0.70 per share) versus
$113.8 million ($0.54 per share) in Q1 2019 and $185.3 million
($0.88 per share) in Q4 2019
- Revenue growth of
82%: Revenue totalled $554.7 million, 82% increase from
$304.9 million in Q1 2019 and 35% higher than $412.4 million in Q4
2019 (Revenue from Detour Lake of $179.4 million in Q1 2020); gold
sales totalled 344,586 ounces, 48% higher than 232,929 ounces in Q1
2019 and 278,438 ounces in Q4 2019; Average gold price of $1,586
per ounce versus $1,307 per ounce in Q1 2019 and $1,481 per ounce
the previous quarter
- EBITDA1,2 increases
94%: EBITDA of $391.5 million, 94% increase from $201.6
million in Q1 2019 and 37% higher than $285.6 million the previous
quarter
- Adjusted free cash flow1 of
$191.4 million: Net cash provided by operating activities
of $241.5 million and free cash flow of $130.9 million; Excluding
the impact of $60.5 million of non-recurring transaction and
restructuring costs, mainly related to the Detour Gold acquisition,
adjusted net cash provided by operating activities totalled $302.0
million versus $175.8 million in Q1 2019 and $247.1 million the
previous quarter, while adjusted free cash flow1 totalled $191.4
million versus $94.5 million in Q1 2019 and $132.8 million in Q4
2019 (Detour Lake Mine contributed $78.0 million of free cash flow
from January 31, 2020 to March 31, 2020)
- Strong financial
position: Cash at March 31, 2020 totalled $530.9 million
with no debt
- Growth capital
expenditures: Growth capital expenditures, excluding
capitalized exploration expenditures, totalled $22.6 million,
including $11.1 million related to the #4 Shaft project; Based on
progress to date, shaft project scope and schedule modified with
total project completion to depth of 6400 feet now targeted for
late 2022, over a year ahead of original schedule
- Exploration
expenditures: Total exploration expenditures totalled
$36.0 million, including $5.9 million of expensed expenditures and
$30.1 million of capitalized expenditures; Subsequent to quarter
end, the Company announced encouraging drill results at Macassa,
including identification of new, large corridor of high-grade
mineralization in close proximity to #4 shaft and continued
expansion of the South Mine Complex (“SMC”)
- 9.7 million shares
repurchased: 9,713,500 shares repurchased in Q1 2020 for
$329.8 million (C$443.1 million)
- Quarterly dividend
doubled: Q1 2020 dividend doubled to US$0.125 per share,
paid on April 13, 2020 to shareholders of record on March 31,
2020
- Solid operating
results:• Production of 330,864 ounces, 43% increase
from 231,879 ounces in Q1 2029 and 18% higher than 279,742 ounces
in Q4 2019 (excluding Detour Lake, production totalled 239,309
ounces, with change from prior quarters relating mainly to grades
at Fosterville, which at 42.4 g/t increased 46% from Q1 2019 and
compared to record grade of 49.3 g/t in Q4 2019)• Production
costs totalled $161.6 million ($87.8 million from Detour Lake Mine)
versus $70.0 million in Q1 2019 and $71.2 million the previous
quarter• Operating Cash costs per ounce1 of $440 ($319 excluding
Detour Lake) compared to $290 in Q1 2019 and $255 in Q4 2019;
excluding Detour Lake, change from previous periods largely
reflected lower sales and higher levels of operating developments
at Macassa during Q1 2020 (lower sales due mainly to reduced
average grade from record high of 29.6 g/t in Q1 2019 and lower
tonnage versus Q4 2019 largely reflecting impact of reduced
operations due to COVID-19)• AISC per ounce sold1 of $776
versus $560 in Q1 2019 and $512 the previous quarter; excluding
Detour Lake, AISC per ounce averaged $619, with the increase from
prior periods due to lower sales and higher operating cash costs at
Macassa (variance to Q4 2019 also resulted from increased
sustaining capital expenditures from low levels during Q4 2019 due
largely to increase in capital development metres and the timing of
equipment procurement).(1) See “Non-IFRS Measures” later in this
press release and starting on page 24 of the MD&A for the three
months ended March 31, 2020.(2) Refers to Earnings before Interest,
Taxes, Depreciation, and Amortization.
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold, commented: “Throughout my career, I
have seen that, in times of adversity, quality people rise to the
occasion. Faced with the challenges of the COVID-19 pandemic, our
team did extremely well protecting themselves and each other, while
also turning in a very solid performance for the quarter. As a
company, we have also risen to the occasion to support our local
communities. We are donating US$20 million to assist community
groups in the areas of Canada and Australia where we operate in
recognition of the essential services that these groups provide and
the challenges they are, or may be, faced with in obtaining funding
and social assistance as a result of a slowing economic
environment.
Turning to our Q1 2020 performance, we achieved
strong earnings growth year over year and generated significant
free cash flow. Our production increased from Q1 2019, even
excluding Detour Lake, with Fosterville continuing to be a key
driver of our performance. Looking at Detour Lake, the mine
contributed $78 million of free cash flow in its first two months
since the acquisition, and that included a period of running at
reduced operations. In addition, we took steps to remove non-core
assets from our portfolio, including placing the Holloway Mine,
part of the Holt Complex, on care and maintenance, and suspending
test mining and processing, as well as all exploration activities,
in the Northern Territory. We also temporarily suspended operations
at the remainder of the Holt Complex as part of our COVID-19
protocols. We have since extended the period of temporary
suspension at these assets. Our non-core assets have not been
contributing to shareholder returns for the Company, and when you
consider the exceptional value of our three cornerstone assets,
Fosterville, Macassa and Detour Lake, the right course of action
clearly is to focus our investments and management time on
realizing their full potential.
“Speaking of value potential, all three of these
assets have substantial exploration upside, which we expect will
drive future growth in Mineral Reserves, mine lives and possibly
production levels. Last week, we saw a good illustration of this
upside, with encouraging drill results being released at Macassa.
These results included the continued expansion of the SMC. Very
significantly, they also included the identification of a new,
large corridor of high-grade mineralization along the historic Main
Break below the former workings at the Kirkland Minerals
property. At 700 metres long and 300 metres high, this
corridor has considerable potential, which is enhanced even more by
the fact it is located in close proximity to the location of the
new #4 Shaft, which we now expect to complete by late 2022, over a
year ahead of the original schedule. We also have equally
attractive exploration targets at Fosterville and Detour Lake and,
though our exploration programs have been disrupted by COVID-19, we
are taking steps to resume work and continue to see exploration
success at our cornerstone assets as an important potential
catalyst for value creation in 2020.”
COVID-19
In response to the extensive global health risks
resulting from the COVID-19 pandemic, the Company introduced a
number of measures in March to protect employees, their families
and the Company’s communities. The health and wellbeing of the
Company’s workforce is Kirkland Lake Gold’s top priority. Among
these measures, the Company took steps to reduce the number of
people at mine sites by transitioning to reduced operations at
Detour Lake (effective March 23, 2020) and Macassa (April 2, 2020),
and temporarily suspended operations at the Holt Complex (April 2,
2020). In addition, the Company introduced an extensive list of
health and safety protocols including remote work wherever
possible, medical screening, enhanced cleaning and hygiene
practices, increased food safety, social distancing of workers and
the increased reliance on technology such as hosting virtual
meetings. As part of the health and safety protocols, the Company
also suspended all non-essential work at, and visits to, all of the
Company’s mine sites, including all exploration drilling and
reduced levels of work at a number of projects, including the #4
Shaft project at Macassa and surface infrastructure projects at
Fosterville. Operations have continued at Fosterville throughout
the COVID-19 crisis, with the Company’s health and safety protocols
having been introduced.
On May 6, 2020, the Company announced that it
was beginning to recall employees who were off work as part of the
COVID-19 protocols. The Company expects the ramp up of business
activities to be gradual with the timing to be determined by
ongoing government actions and other developments related to the
pandemic. The Company does not anticipate achieving full production
levels during the second quarter of 2020 and anticipates seeing
some impact on production and costs during most of the year. At the
current time, it is not possible to estimate the extent to which
the COVID-19 pandemic will impact the Company’s business
performance in 2020.
Guidance Withdrawn
On April 1, 2020, the Company withdrew its 2020
guidance, which had been released on December 18, 2019 and updated
on February 19, 2020 to reflect the acquisition of Detour Gold. As
a result, there is no review of performance against 2020 guidance
included in this press release. The Company plans to release new
guidance for 2020 once Detour Lake and Macassa have returned to
more predictable levels of production. Included in the new guidance
will be revised production and cost targets for Detour Lake,
Macassa and Fosterville. 2020 guidance for the Holt Complex is
being discontinued given that these assets remain on temporary
suspension with no timeline for a resumption of operations
currently being contemplated. The Company is also withdrawing its
three-year production guidance while it assesses the long-term
effects of COVID-19 and the potential impact of the pandemic on the
production profile of Fosterville, Macassa and Holt Complex, and
while it works to incorporate Detour Lake into the Company’s
long-term business plans.
Acquisition of Detour Gold
On January 31, 2020, the Company acquired all
issued and outstanding shares of Detour Gold Corporation (“Detour
Gold”), through a plan of arrangement announced on November 25,
2019. Pursuant to the plan of arrangement, Detour Gold shareholders
received 0.4343 Kirkland Lake Gold common shares in exchange for
each Detour Gold share held immediately prior to closing of the
Arrangement. In aggregate, the Company issued 77,217,129 common
shares of Kirkland Lake Gold to former Detour Gold shareholders as
consideration for their Detour Gold shares. In addition, all
outstanding stock options of Detour were exchanged under the
agreement. Subsequent to the share issuance, Kirkland Lake and
former Detour shareholders owned 73% and 27%, respectively of the
shares of the combined Company. With the completion of the
transaction, Detour Gold has become a wholly owned subsidiary of
Kirkland Lake Gold, and the Company is now the owner and operator
of Detour Lake, a large-scale, open-pit gold mine in Northern
Ontario. The acquisition adds a third cornerstone asset to the
Company’s portfolio, with 2019 production at Detour Lake of 601,566
ounces. Like Macassa and Fosterville, Detour Lake combines free
cash generating operations with significant in-mine growth
potential and attractive regional exploration upside.
From January 31, 2020 to the end of Q1 2020,
Detour Lake produced 91,555 ounces of gold, with gold sales
totalling 110,456 ounces, operating cash costs per ounce of $696
and AISC per ounce sold of $1,108. For the same period, revenue
from Detour Lake totalled $179.4 million, earnings from operations
were $45.3 million and the mine generated $78.0 million of free
cash flow (non-IFRS measure). The $78.0 million of free cash flow
in Q1 2020 (excludes transaction related costs).
Non-Core Assets
Recognizing the Company intention to focus on
its three cornerstone assets, Fosterville, Macassa and Detour Lake,
the Company designated the Holt Complex and assets in the Northern
Territory of Australia as non-core on February 19, 2020 with plans
to consider all options to maximize value. In March, the Company
discontinued activities at two locations: it transitioned the
Holloway Mine, part of the Holt Complex, to care and maintenance,
and also suspended test mining and processing, as well as all
exploration drilling, in the Northern Territory. The Company also
announced the temporary suspension of operations at the remainder
of the Holt Complex (Taylor and Holt mines and Holt Mill) as part
of the Company’s COVID-19 protocols. As at May 6, 2020, these
assets remained on temporary suspension.
REVIEW OF FINANCIAL AND OPERATING
PERFORMANCE
Table 1. Financial Highlights
(in
thousands of dollars, except per share amounts) |
Three Months endedMarch 31, 2020 |
Three Months EndedMarch 31, 2019 |
Three Months EndedDecember 31, 2019 |
Revenue |
|
$554,738 |
|
$304,912 |
|
$412,379 |
Production costs |
|
161,592 |
|
70,040 |
|
71,169 |
Earnings before income
taxes |
|
294,525 |
|
159,589 |
|
232,042 |
Net earnings |
|
$202,878 |
|
$110,146 |
|
$169,135 |
Basic earnings per share |
|
$0.79 |
|
$0.52 |
|
$0.81 |
Diluted earnings per
share |
|
$0.77 |
|
$0.52 |
|
$0.80 |
Cash flow from operating
activities |
|
$241,506 |
|
$175,802 |
|
$247,100 |
Cash
investment on mine development and PPE |
|
$110,637 |
|
$81,314 |
|
$114,319 |
Table 2. Operating Highlights
|
Three Months EndedMarch 31, 2020 |
Three Months EndedMarch 31, 2019 |
Three Months EndedDecember 31, 2019 |
Tonnes milled |
|
4,118,105 |
|
418,960 |
|
462,371 |
Average Grade (g/t Au) |
|
2.6 |
|
17.6 |
|
19.1 |
Recovery (%) |
|
95.9% |
|
97.9% |
|
98.3% |
Gold produced (oz) |
|
330,864 |
|
231,879 |
|
279,742 |
Gold Sold (oz) |
|
344,586 |
|
232,929 |
|
278,438 |
Average realized price ($/oz
sold)(1) |
|
$1,586 |
|
$1,307 |
|
$1,481 |
Operating cash costs per ounce
($/oz sold)(1) |
|
$440 |
|
$290 |
|
$255 |
AISC ($/oz sold)(1) |
|
$776 |
|
$560 |
|
$512 |
Adjusted net earnings(1) |
|
$179,169 |
|
$113,764 |
|
$185,303 |
Adjusted net earnings per
share(1) |
|
$0.70 |
|
$0.54 |
|
$0.88 |
Adjusted free cash flow(1) |
|
$191,363 |
|
$94,488 |
|
$132,781 |
(1) Non-IFRS - the definition and reconciliation of these
Non-IFRS measures are included on pages 24 – 29 of the MD&A for
the three months ended March 31, 2020.
Table 3. Review of Financial Performance
(in thousands except per share amounts) |
Three Months EndedMarch 31, 2020 |
|
Three Months EndedMarch 31, 2019 |
|
Three Months EndedDecember 31, 2019 |
|
|
|
|
Revenue |
|
$554,738 |
|
|
$304,912 |
|
|
$412,379 |
Production costs |
|
(161,592) |
|
|
(70,040) |
|
|
(71,169) |
Royalty expense |
|
(21,249) |
|
|
(8,284) |
|
|
(11,002) |
Depletion and
depreciation |
|
(92,839) |
|
|
(41,300) |
|
|
(52,865) |
Earnings from mine operations |
|
279,058 |
|
|
185,288 |
|
|
277,343 |
|
|
|
|
Expenses |
|
|
|
General and
administrative(1) |
|
(12,562) |
|
|
(12,099) |
|
|
(10,576) |
Transaction costs |
|
(33,838) |
|
|
— |
|
|
(1,236) |
Exploration |
|
(5,931) |
|
|
(12,022 |
) |
|
(9,336) |
Care
and maintenance |
|
(2,890) |
|
|
(196 |
) |
|
(239) |
Earnings from operations |
|
223,837 |
|
|
160,971 |
|
|
255,956 |
|
|
|
|
Finance and other items |
|
|
|
Other income (loss), net |
|
72,205 |
|
|
(2,117) |
|
|
(25,166) |
Finance income |
|
2,596 |
|
|
1,438 |
|
|
1,948 |
Finance
costs |
|
(4,113) |
|
|
(703) |
|
|
(696) |
|
|
|
|
Earnings before income
taxes |
|
294,525 |
|
|
159,589 |
|
|
232,042 |
Current income tax
expense |
|
(70,130) |
|
|
(40,921) |
|
|
(62,414) |
Deferred income tax expense |
|
(21,517) |
|
|
(8,522) |
|
|
(493) |
|
|
|
|
Net earnings |
|
$202,878 |
|
|
$110,146 |
|
|
$169,135 |
|
|
|
|
Basic earnings per share |
|
$0.79 |
|
|
$0.52 |
|
|
$0.81 |
Diluted
earnings per share |
|
$0.77 |
|
|
$0.52 |
|
|
$0.80 |
|
|
|
|
Weighted average number of
common shares outstanding (in 000's) |
|
|
|
Basic |
|
257,418 |
|
|
210,193 |
|
|
210,102 |
Diluted |
|
258,360 |
|
|
211,967 |
|
|
211,382 |
(1) General and administrative expense for Q1
2020 (Q1 2019 and Q4 2019) include general and administrative
expenses of $15.0 million ($8.7 million and $10.1 million) and
share based payment expense (recovery) of $(2.5) million ($3.4
million and $0.5 million).
Revenue
Revenue in Q1 2020 totalled $554.7 million, an
increase of $249.8 million or 82% from $304.9 million in Q1 2019,
with a 48% increase in sales volumes (344,586 ounces in Q1 2020
versus 232,929 ounces in Q1 2019) providing $146 million of the
improvement and a $279 per ounce increase in the average gold price
($1,586 per ounce in Q1 2020 versus $1,307 per ounce in Q1 2019)
having a $96 million favourable impact on revenue versus the same
period a year earlier. In addition to volume and price factors,
changes in foreign exchange rates increased revenue by $7.8 million
compared to Q1 2019. Revenue in Q1 2020 was $142.3 million or 35%
higher than $412.4 million the previous quarter, reflecting a $98
million favourable impact from a 24% increase in gold sales
volumes, from 278,438 ounces in Q4 2019, and $36 million of revenue
growth from a 7% increase in the average realized gold price from
$1,481 per ounce the previous quarter. Excluding the impact of
Detour Lake in Q1 2020, which contributed $179.4 million of revenue
from January 31, 2020 to the end of the quarter, revenue in Q1 2020
totalled $375.3 million, based on sales volumes of 234,130 ounces
and an average realized price of $1,583 per ounce. On the same
basis, that is excluding the contribution from Detour Lake, revenue
increased 23% from Q1 2019 and was 9% lower than the previous
quarter due to a 16% reduction in gold sales volumes from the
quarterly record level of 278,438 ounces in Q4 2019.
Net Earnings and Adjusted Net
Earnings1
Net Earnings
Net earnings in Q1 2020 totalled $202.9 million
($0.79 per share), an increase of 84% from $110.1 million ($0.52
per share) in Q1 2019. Strong revenue growth was the primary factor
contributing to the increase in net earnings from Q4 2019. The 82%
increase in revenue, to $554.7 million, was driven by both higher
gold sales and an improvement in the average realized gold
price. Other favourable factors driving growth in net
earnings included a $72.9 million foreign exchange pre-tax gain
related to the strengthening of the US dollar against the Canadian
and Australian dollars during Q1 2020, which resulted in other
income for the quarter of $72.2 million pre-tax versus other loss
of $2.1 million for the same period a year earlier, as well as
lower expensed exploration costs with a higher proportion of
exploration expenditures in Q1 2020 being capitalized compared to
Q1 2019. Total exploration expenditures, including both expensed
and capitalized exploration expenditures, totalled $36.0 million
versus $17.6 million in Q1 2019.
Partially offsetting the favourable factors
contributing to earnings growth were the impact of higher
production costs and depletion and depreciation expense reflecting
the addition of costs for the Detour Lake Mine as of January 31,
2020. In addition, net earnings were reduced by $33.8 million
pre-tax of transaction costs related to the Detour Gold
acquisition, as well as a $13.0 million pre-tax increase in royalty
expense, with $7.2 million of the increase resulting from a new
2.75% royalty on gold sales at Fosterville introduced by the
Victorian Government effective January 1, 2020. Finance costs
increased year over year by $3.4 million pre-tax due largely to
unrealized and realized mark-to-market loss on derivative contracts
primarily related to hedge positions on diesel fuel held by Detour
Gold. These contracts were closed out shortly after the acquisition
was completed on January 31, 2020. Higher average shares
outstanding also had an unfavourable impact on earnings per share,
with average shares outstanding in Q1 2020 increasing 22%, to 257.4
million, from 210.2 million in Q1 2019. The increase in average
shares outstanding related to the 77,217,129 shares issued as
consideration for the acquisition of Detour Gold.
Net earnings in Q1 2020 of $202.9 million
increased $33.8 million or 20% from $169.1 million the previous
quarter. Earnings per share of $0.79 compared to $0.81 in Q4 2019
with the change reflecting a higher level of average shares
outstanding from 210.1 million in Q4 2019 to 257.4 million in Q1
2020, with the increase resulting from the shares issued for the
Detour Gold acquisition. Favourable factors impacting the change in
net earnings quarter over quarter included strong revenue growth,
reflecting both higher sales volumes and an improvement in the
average realized gold price, as well as the impact of the $72.9
million pre-tax foreign exchange gains in Q1 2020, which resulted
in other income of $72.2 million pre-tax versus other loss of $25.2
million in Q4 2019. The other loss in Q4 2019 reflected foreign
exchange losses due to a weakening of the US dollar during the
quarter. Partially offsetting the favourable factors contributing
to higher net earnings were increased production costs and
depletion and depreciation expense, largely due to the Detour Gold
acquisition, the impact of the $33.8 million pre-tax transactions
costs in Q1 2020 (versus transaction costs of $1.2 million pre-tax
in Q4 2019) and higher royalty expense, due largely to the new
2.75% royalty on gold sales at Fosterville. Included among other
factors that impacted the change in net earnings was a favourable
impact from lower expensed exploration costs in Q1 2020, which was
more than offset by higher levels of Corporate G&A, care and
maintenance costs and finance costs quarter over quarter.
Adjusted Net Earnings1
Adjusted net earnings totalled $179.2 million
($0.70 per share) versus $113.8 million ($0.54 per share) for the
same period in 2019 and $185.3 million ($0.88 per share) in Q4
2019. The difference between net earnings and adjusted net earnings
in Q1 2020 related to the exclusion from adjusted net earnings of
$72.9 million pre-tax ($52.5 million after tax) of foreign exchange
gains, partially offset by the exclusion of $33.8 million pre-tax
($24.9 million after tax) of transaction costs related to the
Detour Gold acquisition, $3.7 million pre-tax ($2.6 million after
tax) of severance costs and $1.5 million pre-tax ($1.3 million
after tax) related to a mark-to-market loss on fair valuing the
Company’s warrant investments. The difference between net
earnings and adjusted net earnings in Q1 2019 was the exclusion
from adjusted net earnings of $2.3 million pre-tax ($1.6 million
after tax) of purchase allocation adjustments on inventory. In Q4
2019, the main difference between adjusted net earnings and net
earnings was the exclusion from adjusted net earnings of $23.3
million pre-tax ($16.1 million after tax) of foreign exchange
losses.
Cash and Cash Flows
The Company’s cash balance of $530.9 million at
March 31, 2020 compared to cash of $707.2 million at December 31,
2019. The change in cash during the quarter largely resulted from
the use of $474.6 million of cash for financing activities, which
more than offset strong cash generated from operating activities
and also cash received from investing activities, the latter
representing cash acquired as part of the Detour Gold acquisition.
Net cash provided from operating activities totalled $241.5
million. Excluding the impact of $60.5 million of non-recurring
transaction and restructuring costs, mainly related to the Detour
Gold acquisition, adjusted net cash provided by operating
activities1 totalled $302.0 million, which compared to $175.8
million in Q1 2019 and $247.1 million the previous quarter. On the
same basis, that is excluding non-recurring costs, growth in net
cash provided by operating activities compared to both prior
periods largely reflected higher levels of net earnings.
Net cash provided by investing activities of
$60.7 million reflected the acquisition of $173.9 million of cash
as part of the transaction to acquire Detour Gold. The addition of
cash from the Detour Gold acquisition more than offset the use of
cash for additions to mining interests and plant and equipment
during the quarter. Contributing to the $474.6 million of net
cash used for financing activities was $329.8 million of cash used
to repurchase 9,713,500 shares through the NCIB, as well as $98.6
million to repay Detour Gold’s outstanding debt and $30.3 million
to close out that company’s hedge positions relating to forward
gold sales as well as hedges on currencies and diesel fuel. The
Company also used $12.6 million of cash for the payment of the
fourth quarter 2019 quarterly dividend of US$0.06 per share, which
was paid on January 13, 2020 to shareholders of record on December
31, 2019.
Free Cash Flow1 and Adjusted Free Cash Flow1
Free cash flow in Q1 2020 totalled $130.9
million. Excluding the impact of $60.5 million of non-recurring
transaction and restructuring costs, adjusted free cash flow for
the quarter was a record $191.4 million, more than double the $94.5
million of adjusted free cash flow in Q1 2019 and 44% higher than
$132.8 million the previous quarter. The increase in adjusted free
cash flow reflected higher levels of net cash provided by operating
activities, adjusted for non-recurring costs. Also contributing to
the increases in free cash flow was $78 million of free cash flow
from the Detour Lake Mine from January 31, 2020, the date it was
acquired, to March 31, 2020. Additions to mineral properties and
property, plant and equipment totalled $110.6 million in Q1 2020
versus $79.2 million in Q1 2019 and $114.3 million the previous
quarter.
(1) Non-IFRS - the definition and reconciliation of these
Non-IFRS measures are included on pages 24 – 29 of the MD&A for
the three months ended March 31, 2020.
REVIEW OF OPERATING MINES
Macassa Mine Complex
Production at Macassa in Q1 2020 totalled 50,861
ounces compared to record quarterly production of 72,776 ounces in
Q1 2019 and 56,379 ounces the previous quarter. Production in Q1
2020 resulted from processing 82,256 tonnes at an average grade of
19.7 g/t and average recoveries of 97.7%. The change from Q1 2019
reflected a record average grade at Macassa in Q1 2019 of 29.6 g/t
mainly due to grade outperformance in a number of stopes in the
SMC, as well as the impact in Q1 2020 of lower than planned tonnes
processed and average grades, with lower tonnes processed largely
resulting from disruptions caused by the COVID-19 pandemic. The
change from Q4 2019 was mainly due to lower tonnes processed
quarter over quarter.
Production costs in Q1 2020 totalled $26.4
million versus $22.4 million in Q1 2019 and $25.6 million the
previous quarter. Operating cash costs per ounce sold averaged $536
in Q1 2020 versus $332 in Q1 2019 and $471 in Q4 2019. The increase
in operating cash costs per ounce sold compared to both prior
periods largely reflected lower sales volumes in Q1 2020 (50,765
ounces versus record sales of 67,305 ounces in Q1 2019 and 54,342
ounces the previous quarter) as well as higher costs related to
increased levels of operating development and other mining costs
during Q1 2020. AISC per ounce sold averaged $850 in Q1 2020
compared to $602 in Q1 2019 and $721 in Q4 2019. The change from Q1
2019 resulted from higher operating cash costs and the impact of
lower sales volumes on unit costs. Sustaining capital expenditures
were largely unchanged year over year, totalling $15.1 million
versus $15.5 million in Q1 2019, but were higher on a per ounce
sold basis, averaging $297 per ounce sold in Q1 2020 versus $231
per ounce sold for the same period a year earlier. Compared
to the prior quarter, the most significant factor contributing to
the increase in AISC per ounce sold was higher sustaining capital
expenditures in Q1 2020, which at $15.1 million in Q1 2020 were 40%
higher than $10.8 million in Q4 2019 (the lowest quarterly level in
2019). The increase in sustaining capital expenditures reflected
higher levels of capital development in Q1 2020 as well as the
timing for mobile equipment procurement, with a low level of
procurement expenditures in Q4 2019. On a per ounce sold basis,
sustaining capital expenditures averaged $297 versus $198 the
previous quarter.
Growth projects: Growth capital expenditures at
Macassa in Q1 2020 totalled $16.1 million. Of total growth
expenditures, $11.1 million related to the #4 shaft project. During
Q1 2020, sinking of the #4 shaft advanced 760 feet, reaching a
total depth of 1,960 feet at March 31, 2020. Other work during the
quarter included equipping the shaft, excavating the 1540 Level
station and completion of the compressor house heat recovery unit.
At March 31, 2020, the project was on care and maintenance as part
of the Company’s response to the COVID-19 pandemic, with work
resuming in late April. Based on the rate of progress to date, the
Company conducted a review of the project in Q1 2020 and, as a
result, modified the project scope and schedule. The #4 shaft is
now expected to be completed in one phase, to a depth of 6400 feet,
with project completion targeted for late 2022, over one year
sooner than the initial project schedule. The project remains on
budget with the revised schedule offering some potential for
capital cost savings.
COVID-19 Update: The Macassa Mine began
operating with a reduced workforce in March due to concerns over
the COVID-19 virus. Based on high levels of absenteeism caused in
part by and the introduction of travel restrictions between Ontario
and Quebec, the mine was placed on reduced operations effective
April 2, 2020 until April 30, 2020. Essential work that continued
during this period related mainly to production, though at reduced
levels, as well as water and environmental management. All
non-essential activities were suspended, including exploration
drilling, sinking work on the #4 Shaft project, work on a new
surface ramp and mill upgrades. Sinking of the #4 Shaft
resumed near the end of April. During the period of reduced
operations, Macassa operated with approximately 65% of its normal
workforce. In early May, the Company began a gradual ramp up of
operations at Macassa, with the timing for reaching full levels of
production to be determined by ongoing development related to the
COVID-19 pandemic. Included among work resuming at the mine was
underground diamond drilling as well as work on major capital
projects, with work on the #4 shaft project having resumed in late
April.
Detour Lake Mine
Production at Detour Lake from January 31, 2020,
the date of acquisition by Kirkland Lake Gold, to March 31, 2020
totalled 91,555 ounces. Production for Q1 2020 was impacted by the
transition of the mine to reduced operations effective March 23,
2020 as part of the Company’s response to the COVID-19 pandemic.
During Q1 2020, the mine processed 3,708,022 tonnes at an average
grade of 0.84 g/t at average recoveries of 90.9%. The average grade
in Q1 2020 was lower than the previous quarter’s average grade of
0.93 g/t mainly due to a higher proportion of mill feed coming from
stockpiles during Q1 2020 where grades are typically lower than
from mine production. The increased processing of stockpiles
reflected the move to reduced operations, as well as the impact of
severe winter weather conditions in Q1 2020 and reduced
availability of drilling equipment.
Production costs at Detour Lake Mine for the
period January 31, 2020 to March 31, 2020 totalled $87.8 million.
Operating cash costs per ounce sold averaged $696 in Q1 2020, which
was better than the guidance range of $720 - $740 prior to the
Company’s 2020 guidance being withdrawn on April 1, 2020. AISC per
ounce sold averaged $1,108, in line with expected levels.
Sustaining capital expenditures at Detour Lake from January 31,
2020 to March 31, 2020 totalled $48.3 million. All capital
expenditures at Detour Lake Mine are reported as sustaining capital
expenditures.
COVID-19 Update: The Company transitioned Detour
Lake Mine to reduced operations in response to the COVID-19
pandemic effective March 23, 2020. Continuing activities at the
mine include mill processing of reduced feed from the open pit and
stockpiled ore, management of water levels during the spring
run-off and environmental management activities. During this time,
the mine operated with one shovel and eight trucks, which compares
to normalized operations of five shovels and approximately 34
trucks. All personnel not essential for the performance of
essential activities were off work until April 30, 2020.
Approximately 300 workers were on site during the period of reduced
operations, approximately 30% of the normal workforce during full
operations. In addition to company-wide health and safety
protocols, a number of additional measures applicable to a remote
camp operation have been added to Detour Lake’s efforts to protect
workers, including processes for the assessment, isolation and
ambulatory evacuation of employees showing any kind of symptoms and
increased food and camp accommodation hygiene safety. In early May,
the Company commenced a gradual ramp up of operations at Detour
Lake with the timing for reaching full levels of production to be
determined by ongoing developments related to the COVID-19
pandemic.
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. On April 1, 2020, the Company announced that
operations were being temporarily suspended at the Taylor Mine and
Holt Mine and Mill as part of the Company’s response to the
COVID-19 pandemic. At the beginning of May 2020, the Company
extended the temporary suspension of operations at the Holt and
Taylor mines and Holt Mill for an indefinite period reflecting
ongoing developments related to the COVID-19 virus and while the
Company continues the strategic review of the Holt Complex assets
involving the consideration of all options for the maximizing of
value.
During Q1 2020, the Holt Complex produced 28,584
ounces, which resulted from processing 209,126 tonnes at an average
grade of 4.6 g/t at average recoveries of 93.4%. Q1 2020 production
compared to production of 30,658 ounces in Q1 2019 and 31,469
ounces in Q4 2019. The change from Q1 2019 reflected lower average
grades and tonnes processed at both the Taylor and Holt mines,
which was only partially offset by higher tonnes processed at
Holloway. Compared to the previous quarter, the change in
production mainly reflected a significant reduction in tonnes
processed at the Holloway Mine, which more than offset the impact
of higher average grades at both the Taylor and Holt mines. During
March 2020, the Holloway Mine was transitioned to care and
maintenance with no plans at the present time for a future
resumption of operations.
Production costs totalled $28.4 million in Q1
2020 compared to $26.2 million in Q1 2019 and $25.2 million the
previous quarter. Operating cash costs per ounce sold averaged $955
compared to $780 in Q1 2019. The change from the same period in
2019 largely reflected the impact of a lower average grade at all
three mines on production and sales volumes as well as higher
production costs at Holloway as the mine was being transitioned to
care and maintenance. Higher operating cash costs per ounce sold in
Q1 2020 versus Q4 2019 mainly reflected increased operating cash
costs at the Taylor mine due largely to higher contractor and
maintenance costs as well as the impact of lower tonnes processed
on production and sales volumes quarter over quarter, which more
than offset an improvement in the average grade. AISC per ounce
sold averaged $1,368 compared to $1,075 per ounce in Q1 2019 and
$1,321 per ounce in Q4 2019. Sustaining capital expenditures
totalled $9.1 million ($306 per ounce sold) versus $7.5 million
($224 per ounce sold) in Q1 2019 and $15.6 million ($490 per ounce
sold) the previous quarter.
COVID-19 Update: The Company temporarily
suspended operations at the Holt Complex effective April 2, 2020,
including the Holt and Taylor mines and Holt Mill, initially until
April 30, 2020. A small number of employees continued to work
while operations were temporarily suspended in order to manage the
sites during this period with the Company’s COVID-19 health and
safety protocols being implemented at each site. At the beginning
of May 2020, the Company extended the temporary suspension of these
operations reflecting ongoing developments related to the COVID-19
virus and while the Company continues the strategic review of the
Holt Complex assets involving the consideration of all options for
the maximizing of value.
Fosterville Mine
The Fosterville Mine produced 159,864 ounces in
Q1 2020 based on processing 118,701 tonnes at an average grade of
42.4 g/t and average mill recoveries of 98.8%. Q1 2020 production
increased 24% from 128,445 ounces in Q1 2019, when the mine
processed 140,184 tonnes at an average grade of 29.0 g/t and
average recoveries of 98.3%. The increase in production compared to
the same period in 2019 resulted from a 46% increase in the average
grade, reflecting higher levels of production from the high-grade
Swan Zone compared to Q1 2019. Q1 2020 production compared to
record quarterly production of 191,894 ounces the previous quarter
when the mine recorded its highest ever average quarterly grade of
49.3 g/t at record average recoveries of 99.2%. The higher average
grade in Q4 2019 reflected mine sequencing in the Swan Zone as well
as the impact of grade outperformance in a number of Swan Zone
stopes during the previous quarter.
Production costs were $18.9 million in Q1 2020
versus $21.4 million in Q1 2019 and $20.3 million the previous
quarter. Operating cash costs per ounce sold averaged $126, a 13%
improvement from $144 in Q1 2019, with the favourable impact of a
46% increase in the average grade on production and sales volumes
and lower costs related to operating development largely accounting
for the improvement. Operating cash costs per ounce sold in Q1 2020
were slightly higher than $106 in Q4 2019 when a record quarterly
average grade of 49.3 g/t resulted in production for the quarter of
191,894 ounces and sales of 192,213 ounces. AISC per ounce sold
averaged $313 versus $315 in Q1 2019 and $258 in Q4 2019. The
comparison to both prior periods was impacted by a new 2.75%
royalty introduced by the Victorian Government effective January 1,
2020. The new royalty contributed $7.2 million or $47 per ounce
sold to AISC per ounce sold in Q1 2020. Excluding the impact of the
new royalty, AISC per ounce sold in Q1 2020 was $266, 16% better
than $315 in Q1 2019 and largely unchanged from the previous
quarter. Sustaining capital expenditures in Q1 2020 totalled $17.3
million ($113 per ounce sold) compared to $18.9 million ($143 per
ounce sold) in Q1 2019 and $25.3 million ($132 per ounce sold) in
Q4 2019. Sustaining capital expenditures in Q4 2019 were higher
than in Q1 2020 mainly due to significant levels of lateral and
vertical capital development in the final quarter of 2019.
Growth projects: Growth capital expenditures at
Fosterville in Q1 2020 totalled $6.5 million (excluding capitalized
exploration expenditures). Work on growth projects during Q1 2020
focused on the mine's new ventilation system, targeted for
commissioning in Q2 2020, and construction of a new power
transformer, refinery and gold room, as well as a number of other
projects.
COVID-19 Update: Fosterville Mine
continued to operate throughout Q1 2020, with production largely
remaining at target levels. The Company’s COVID-19 health and
safety protocols were implemented, including remote work, social
distancing, increased cleaning and hygiene and the suspension of
all non-essential work and visits to site. Non-essential work
suspended mainly involved all regional exploration drilling and
work on a number of surface infrastructure projects, such as
office, coreshed and storage facility expansions, as well as Aster
(thiocyanate destruction) plant construction.
Northern Territory
The Cosmo mine and Union Reefs mill were placed
on care and maintenance effective June 30, 2017. Following this
move, the Company undertook extensive exploration programs at
Cosmo, Union Reefs and, more recently, other selected targets. In
addition, the Company’s advanced exploration work at both the Cosmo
mine and Union Reefs mill, which resulted in the commencement of
test mining of mineralization in the Lantern Deposit at Cosmo and
test processing of this material at the Union Reefs mill in October
2019.
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. A small workforce remains in the
Northern Territory to complete ongoing rehabilitation work.
Q1 2020 Financial Results and Conference
Call Details
A conference call to discuss the Q1 2020 results
will be held by senior management today, Wednesday, May 6, 2020, 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: |
WEDNESDAY, MAY 6, 2020 |
Conference ID: |
9680145 |
Time: |
2:00 pm ET |
Toll-free number: |
(833) 968-2183 |
International callers: |
(825) 312-2102 |
Webcast URL: |
https://services.choruscall.com/links/kl200506.html |
Changes to Corporate
Branding
As of May 1, 2020, the Company has changed its
email convention and website url to end with “kl.gold” instead of
the former convention of “klgold.com”. The Company’s website
address is now www.kl.gold. Using the contact names at the end of
this press release, the new email convention is tmakuch@kl.gold and
mutting@kl.gold. The change comes during the integration of Detour
Lake and is intended to provide a consistent corporate branding
across the new Kirkland Lake Gold. The new branding also recognizes
the truly unique, highly competitive position the Company has
achieved within the gold mining industry with industry leading
profitability and financial strength. The old corporate branding
(“klgold.com”) will continue to be functional, both for email
addresses and the website address for a period of time to provide a
transition period.
Qualified Persons
The technical contents related to Kirkland Lake
Gold Ltd. mines and properties, have been reviewed and approved by
Natasha Vaz, P.Eng., Vice President, Technical Services and Eric
Kallio, P.Geo, Senior Vice President, Exploration. Ms. Vaz and Mr.
Kallio 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.
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold Ltd. is a growing gold
producer operating in Canada and Australia that produced 974,615
ounces in 2019. 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 at
www.kl.gold.
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
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 non-recurring 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, 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 non-recurring 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.
Shareholder Materials
Shareholders are reminded that the Company’s
annual information form and annual audited financial statements
have been filed with the various securities regulators and are
available on the Company’s website at www.kl.gold. Shareholders
have the ability to receive physical hard copies of the Company’s
financial statements free of charge upon request at
info@kl.gold.
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;
outbreaks of 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, 2019 filed on SEDAR and as set out in the
Company’s interim financial statements and MDA&A for the period
ended March 31, 2019.
Cautionary Note Regarding Forward-Looking
Information
This press release contains statements which
constitute "forward-looking information" within the meaning of
applicable securities laws, including statements regarding the
plans, intentions, beliefs and current expectations of Kirkland
Lake Gold with respect to future business activities and operating
performance. Forward-looking information is often identified by the
words "may", "would", "could", "should", "will", "intend", "plan",
"anticipate", "believe", "estimate", "expect" or similar
expressions and include information regarding: (i) the amount of
future production over any period; (ii) assumptions relating to
revenues, operating cash flow and other revenue metrics set out in
the Company's disclosure materials; and (iii) future exploration
plans.
Investors are cautioned that forward-looking
information is not based on historical facts but instead reflect
Kirkland Lake Gold's management's expectations, estimates or
projections concerning future results or events based on the
opinions, assumptions and estimates of management considered
reasonable at the date the statements are made. Although Kirkland
Lake Gold believes that the expectations reflected in such
forward-looking information are reasonable, such information
involves risks and uncertainties, and undue reliance should not be
placed on such information, as unknown or unpredictable factors
could have material adverse effects on future results, performance
or achievements of the combined company. Among the key factors that
could cause actual results to differ materially from those
projected in the forward-looking information are the following: the
future development and growth potential of the Canadian and
Australian operations; the future exploration activities planned at
the Canadian and Australian operations and anticipated effects
thereof; liquidity risk; risks related to community relations;
risks relating to the impact of COVID-19; risks relating to equity
investments; risks relating to first nations and Aboriginal
heritage; the availability of infrastructure, energy and other
commodities; nature and climactic conditions; 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
the #4 Shaft project at the Macassa Mine and the ventilation and
paste fill plant project at the Fosterville Mine; permitting, the
ability to obtain all necessary permits associated with the Detour
Lake Mine and various expansion projects; currency exchange rates
(such as the Canadian dollar and the Australian dollar versus the
United States dollar); risks associated with dilution; labour and
employment matters; risks in the event of a potential conflict of
interest; changes in general economic, business and political
conditions, including changes in the financial markets; changes in
applicable laws; and compliance with extensive government
regulation. This forward-looking information may be affected by
risks and uncertainties in the business of Kirkland Lake Gold and
market conditions. This information is qualified in its entirety by
cautionary statements and risk factor disclosure contained in
filings made by Kirkland Lake Gold, including its annual
information form and financial statements and related MD&A for
the financial year ended December 31, 2019 and 2018 and the
Company’s interim financial statements and MD&A for the period
ended March 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 information prove incorrect, actual results may
vary materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. Although Kirkland
Lake Gold 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 to be as anticipated,
estimated or intended. Kirkland Lake Gold does not intend, and do
not assume any obligation, to update this forward-looking
information except as otherwise required by applicable law.
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, Vice-President, Investor Relations Phone: +1
416-840-7884 E-mail: mutting@kl.gold
Kirkland Lake Gold (NYSE:KL)
Historical Stock Chart
From Feb 2024 to Mar 2024
Kirkland Lake Gold (NYSE:KL)
Historical Stock Chart
From Mar 2023 to Mar 2024