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
second quarter (“Q2 2019”) and first half of 2019 (“YTD 2019”). The
Q2 2019 results include strong growth in production, net earnings
and operating cash flow compared to the second quarter of 2018 (“Q2
2018”), as well as significant improvement in unit costs. 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 highlights of Q2 2019 results
include:
- Strong net earnings: Net earnings of
$104.2 million ($0.50 per basic share) increased
69% from $61.5 million ($0.29 per basic share) in Q2 2018 and
compared to record net earnings of $110.1 million ($0.52 per basic
share) the previous quarter; adjusted net earnings
in Q2 2019 totaled $105.5 million ($0.50 per basic
share), 66% higher than $63.4 million ($0.30 per basic
share) in Q2 2018 and versus record adjusted net earnings of $112.1
million ($0.53 per basic share in Q1 2019
- Revenue grows 31%: Revenue totaled
$281.3 million, 31% increase from $214.7 million
in Q2 2018 and compared to record revenue of $304.9 million in Q1
2019; Q2 2019 gold sales of 212,091 ounces
compared to 164,305 ounces in Q2 2018 and 232,929 ounces the
previous quarter
- Significant growth in EBITDA1,2,3: EBITDA of
$185.8 million, 50% higher than $123.7 million in
Q2 2018 and compared to record EBITDA of $201.6 million in Q1
2019
- Operating cash flow increases 52%: Net cash
provided by operating activities3 of $178.4
million, 48% growth from $120.9 million in Q2 2018 and 2%
higher than $174.4 million in Q1 2019
- Continued Solid free cash flow1: Free cash
flow of $53.0 million compared to $60.7 million in
Q2 2018 and record free cash flow of $93.1 million the previous
quarter, with the change from both prior periods reflecting
increased capital expenditures in support of advancing key growth
projects
- Growth projects ramp up: Growth capital
expenditures1 totaled $48.5 million in Q2 2019
(excluding capitalized exploration), including $32.7 million at
Macassa and $14.1 million at Fosterville; full-face sinking at
Macassa #4 shaft project on track to commence in August 2019
- Continued focus on exploration: Exploration
and evaluation expenditures in Q2 2019 totaled $44.4
million ($6.2 million expensed and $38.2 million
capitalized), with $29.4 million relating to the acceleration of
advanced exploration work in the Northern Territory.
- Continued strong operating results
- Production of 214,593 ounces,
30% increase from 164,685 ounces in Q2 2018 and compared to record
quarterly production of 231,879 ounces the previous quarter
- Production costs of $66.2
million compared to $66.5 million in Q2 2018 and $70
million in Q1 2019
- Operating cash costs per ounce sold1 averaged
$312, 23% improvement from $404 in Q2 2018 and
versus $290 the previous quarter
- AISC per ounce sold1 averaged
$638, 16% better than $757 in Q2 2018 and compared
to $560 in Q1 2019 (change from previous quarter reflects reduced
sales volumes and timing of sustaining capital expenditures).
- Cash at June 30, 2019 totaled $469.4 million,
13% increase from $416.1 million at March 31, 2019 and 41% increase
from $332.2 million at December 31, 2018.
Key highlights of YTD 2019 results include:
- Record half-year financial results
- Net earnings of $214.3 million
($1.02/share), 92% increase from $111.5 million
($0.53/share) for YTD 2018
- Adjusted net earnings of $217.7
million ($1.04/share), 88% higher than $116.0 million
($0.55/share) for YTD 2018
- Net cash provided by operating activities of
$352.7 million, 68% growth from $210.5 million for
YTD 2018
- Free cash flow totaling $146.1
million, 32% higher than $110.9 million for same period in
2018
- Revenue of $586.2 million,
42% growth from $412.9 million for YTD 2018
- EBITDA of $387.4 million, 73%
increase from $224.3 million for YTD 2018.1. See “Non-IFRS
Measures” later in this press release and on pages 27 – 33 of the
MD&A for the three and six months ended June 30, 2019.2. Refers
to Earnings before Interest, Taxes, Depreciation, and
Amortization. 3. Of continuing operations.
- Strong YTD 2019 operating results
- Production of 446,472 ounces,
43% increase from 312,329 ounces for YTD 2018
- Operating cash cost per ounce sold of
$301, 29% improvement from $424 for the same
period in 2018
- AISC per ounce sold of $597,
25% better than $793 for YTD 2018.
- Strong focus on shareholder returns in YTD
2019
- Common share price increased 58% (on TSX), to
C$56.42/share at June 30, 2019 from C$35.60/share at December 31,
2018 (C$60.09/share at July 30, 2019)
- Quarterly dividend increased to $0.04/share
(from C$0.04/share) for second quarter 2019 dividend, paid on July
12, 2019 to shareholders of record on June 28, 2019; change to
paying dividend in US dollars increases value of dividend by
approximately 30%
- Repurchased 400,000 common shares in Q2 2019
through Normal Course Issuer Bid for total cost of $12.8 (C$17.1)
million.
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold, commented: “During Q2 2019, we
continued to generate strong growth in production, earnings and
cash flows compared to the same period in 2018. Fosterville
achieved a record quarter and exceeded target production levels
driven by higher than expected grades. Even more encouraging, we
are now positioned to significantly grow production at Fosterville
during the second half of the year. In Canada, tonnage at Macassa
was affected by water in the mine from the spring run-off, and we
had lower than planned grades at the Holt Complex. We have already
seen higher production levels at Macassa in July, with the mine
remaining on track to achieve its full-year guidance of over
240,000 ounces. At the Holt Complex, we are ramping up production
at Holloway, and continue to target approximately 20,000 ounces for
the year. We are also expecting higher levels of mill throughput at
the Holt mine and expect to achieve increased production from the
mine in the final two quarters of 2019. Based on our results to
date, and expectations for the remainder of the year, we remain
well positioned to achieve our full-year 2019 consolidated
operating guidance, which includes production of 950,000 –
1,000,000 ounces with operating cash costs per ounce sold averaging
$285 – $305 and AISC per ounce sold averaging $520 – $560.”
“Turning to our growth programs, we will be
commencing full-face sinking at the Macassa #4 shaft project during
August, which will mark a major milestone for the project. The
project remains on track for phase one completion by the second
quarter of 2022. At Fosterville, we continued to advance our key
growth projects, including construction of a new ventilation
system, paste-fill plant and new water treatment plant. The water
treatment plant is expected to be in operation during the third
quarter, with the ventilation and paste-fill projects also targeted
for completion during the second half of the year. In the Northern
Territory, we have accelerated advanced exploration work and are
progressing with underground development aimed at supporting a
potential resumption of operations.”
Review of Financial and Operating
Performance
Table 1. Financial Highlights
(in
thousands of dollars, except per share amounts) |
Three Months Ended June 30, 2019 |
Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
Revenue |
$281,267 |
|
$214,653 |
|
$586,179 |
|
$412,890 |
|
Production costs |
|
66,161 |
|
|
66,494 |
|
|
136,201 |
|
|
137,977 |
|
Earnings before income
taxes |
|
152,432 |
|
|
90,109 |
|
|
312,021 |
|
|
161,997 |
|
Net earnings |
$104,195 |
|
$61,486 |
|
$214,341 |
|
$111,523 |
|
Basic earnings per share |
$0.50 |
|
$0.29 |
|
$1.02 |
|
$0.53 |
|
Diluted earnings per
share |
$0.49 |
|
$0.29 |
|
$1.01 |
|
$0.52 |
|
Cash flow from operating
activities |
$178,378 |
|
$120,912 |
|
$352,742 |
|
$210,549 |
|
Cash
investment on mine development and PPE |
$125,341 |
|
$60,260 |
|
$206,655 |
|
$99,688 |
|
Table 2. Operating Highlights
|
Three Months Ended June 30, 2019 |
Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
Tonnes milled |
|
369,359 |
|
406,185 |
|
788,319 |
|
823,541 |
Grade (g/t Au) |
|
18.4 |
|
13.1 |
|
18.0 |
|
12.3 |
Recovery (%) |
|
|
98.1% |
|
|
96.4% |
|
|
98.0% |
|
|
96.3% |
Gold produced (oz) |
|
214,593 |
|
164,685 |
|
446,472 |
|
312,329 |
Gold Sold (oz) |
|
212,091 |
|
164,305 |
|
445,020 |
|
312,068 |
Average realized price ($/oz
sold)(1) |
$1,320 |
$1,301 |
$1,313 |
$1,316 |
Operating cash costs per ounce
($/oz sold)(1) |
$312 |
$404 |
$301 |
$424 |
AISC ($/oz sold)(1) |
$638 |
$757 |
$597 |
$793 |
Adjusted net earnings(1) |
$105,536 |
$63,441 |
$217,668 |
$116,002 |
Adjusted net earnings per share(1) |
$0.50 |
$0.30 |
$1.04 |
$0.55 |
- Non-IFRS - the definition and reconciliation of these Non-IFRS
measures are included on pages 27 – 33 of the MD&A for the
three and six months ended June 30, 2019
Revenue
Revenue in Q2 2019 totaled $281.3 million, an
increase of $66.6 million or 31% from $214.7 million in Q2 2018.
The increase in revenue from Q2 2018 largely reflected a 29%
increase in gold sales, to 212,091 ounces, which had a $62.2
million favourable impact on revenue compared to Q2 2018. Also
contributing to higher revenue was a $4.0 million impact from a
higher average realized gold price, to $1,320 per ounce in Q2 2019
versus $1,301 per ounce in Q2 2018. The increase in gold sales was
attributable to Fosterville, where ounces sold increased 78%, to
133,481 ounces from 75,100 ounces in Q2 2018. The favourable
impact of higher gold sales at Fosterville more than offset lower
sales volumes at Macassa and the Holt Complex compared to Q2
2018.
Q2 2019 revenue of $281.3 million compared to
revenue of $304.9 million the previous quarter. A higher average
realized gold price in Q2 2019, $1,320 per ounce versus $1,307 per
in Q1 2019, had a $2.8 million favourable impact on the change in
revenue compared to the previous quarter. Q2 2019 gold sales
compared to record quarterly gold sales of 232,929 ounces in Q1
2019, with the change in gold sales reducing revenue by $27.2
million quarter over quarter. Q2 2019 gold sales at Fosterville
were similar to the 132,048 ounces of gold sold in Q1 2019. Gold
sales at Macassa in Q2 2019 of 55,010 ounces compared to gold sales
of 67,305 ounces the previous quarter, when the mine achieved
record production based on an average grade of 29.6 g/t in Q1 2019
(21.5 g/t in Q2 2019). Gold sales at the Holt Complex totaled
23,600 ounces versus 33,576 ounces in Q1 2019. The reduction in
gold sales at the Holt Complex mainly reflected the impact of lower
grades on production levels compared to the previous quarter.
Revenue for YTD 2019 totaled $586.2 million, an
increase of $173.3 million or 42% from $412.9 million from YTD
2018. The increase in revenue from YTD 2018 reflected a 43%
increase in gold sales, to 445,020 ounces, which had a $175.0
million favourable impact on revenue compared to YTD 2018. The
strong growth in gold sales was driven by Fosterville, where gold
sales totaled 265,529 ounces, an increase of 94% from 136,600
ounces for the same period in 2018. The favourable impact of
significantly higher grades on production levels accounted for the
increase in Fosterville’s gold sales year over year. Gold sales at
Macassa for YTD 2019 increased 5%, to 122,315 ounces, as the
favourable impact of a 24% increase in the average grade more
than offset lower tonnes processed leading to higher levels of
production compared to YTD 2018. Gold sales at the Holt Complex for
YTD 2019 totaled 57,176 ounces versus 59,380 ounces for the same
period in 2018. The average realized gold price for YTD 2019
was $1,313 per ounce, similar to the average realized gold price of
$1,316 per ounce in YTD 2018. The change in the gold price reduced
revenue by $1.3 million for YTD 2019 compared to the first half of
2018.
Earnings from Mine Operations
Earnings from mine operations in Q2 2019 totaled
$175.3 million, an increase of 60% from $109.5 million in Q2 2018.
The increase mainly reflected higher levels of revenue in Q2 2019.
Production costs in Q2 2019 totaled $66.2 million versus $66.5
million for the same period in 2018. Depletion and depreciation
costs in Q2 2019 totaled $33.1 million, which compared to $32.5
million in Q2 2018, as the impact of higher production volumes in
Q2 2019 was largely offset by a reduction in depletion and
depreciation expense on a per ounce produced basis driven by a
larger depletion and depreciation base. The larger depletion
and depreciation base resulted from an increase in Mineral Reserves
at the Company’s operations following the release of the Company’s
December 31, 2018 Mineral Reserve and Mineral Resource estimates on
February 21, 2019. Royalty expense in Q2 2019 totaled $6.7 million
versus $6.2 million in Q2 2018.
Q2 2019 earnings from mine operations of $175.3
million compared to earnings from mine operations of $185.3 million
the previous quarter. The change mainly reflected higher levels of
revenue in Q1 2019 driven by record quarterly gold sales.
Production costs, depletion and depreciation costs and royalty
expense were all lower in Q2 2019 compared to the previous quarter,
mainly reflecting reduced production and sales volumes.
For YTD 2019, earnings from mine operations
totaled $360.6 million, an increase of 78% from $202.2 million for
YTD 2018. The year-over-year increase in earnings from mine
operations mainly resulted from strong revenue growth driven by a
42% increase in gold sales. Production costs totaled $136.2 million
compared to $138.0 million for YTD 2018. The reduction in
production costs mainly reflected lower tonnes processed and the
favourable impact of productivity improvement measures on
production costs at the Macassa mine. Depletion and depreciation
costs increased to $74.4 million from $60.4 million for YTD 2018,
as the impact of significantly higher production volumes was only
partially offset by lower depletion and depreciation costs. Royalty
expense totaled $15.0 million versus $12.2 million for YTD 2018,
with higher sales volumes accounting for the increase.
Unit Cost Performance (See Non-IFRS
measures)
Operating cash costs per ounce sold in Q2 2019
averaged $312, a $92 or 23% improvement from $404 in Q2 2018. The
significant improvement from Q2 2018 mainly resulted from a 40%
improvement in the Company’s average grade, to 18.4 g/t from 13.1
g/t for the same period a year earlier. Operating cash costs per
ounce sold at Fosterville averaged $120 per ounce sold, a 50%
improvement from $239 in Q2 2018, reflecting the favourable impact
of significantly higher grades in Q2 2019 versus Q2 2018. Operating
cash costs per ounce sold at Macassa averaged $446 compared to $414
in Q2 2018, largely reflecting lower sales volumes resulting from
reduced milled tonnes. Operating cash costs per ounce sold at the
Holt Complex averaged $1,085 versus $848 for the same period in
2018. The main factor contributing to the increase in operating
cash costs per ounce sold at the Holt Complex was the inclusion of
the Holloway mine in Q2 2019 results following a decision to resume
operations at the mine during Q1 2019. Excluding the impact of the
Holloway mine, where work to ramp up production continued during
the quarter, operating cash costs per ounce sold at the Holt
Complex averaged $896 in Q2 2019.
Q2 2019 operating cash costs per ounce sold of
$312 compared to operating cash costs per ounce sold of $290 in Q1
2019, with the change mainly reflecting the impact of lower tonnes
milled, which more than offset the favourable impact of an
improvement in the Company’s consolidated average grade, to 18.4
g/t in Q2 2019 versus 17.6 g/t the previous quarter. Fosterville’s
operating cash costs per ounce sold improved 17% from the prior
quarter, reflecting an improvement in the average grade to 39.9 g/t
from 29.0 g/t in Q1 2019. Operating cash costs per ounce sold at
Macassa increased in Q2 2019 from the record level of $332 in Q1
2019 when the mine achieved significant grade outperformance in
stopes around the 5700 Level of the South Mine Complex ("SMC").
Operating cash costs per ounce sold at the Holt Complex in Q2 2019
increased from $780 in Q1 2019. Excluding the impact of the
Holloway mine in both Q2 2019 and Q1 2019, operating cash costs per
ounce sold at the Holt Complex of $896 in Q2 2019 compared to $713
the previous quarter, with the increase reflecting lower average
grades at both Holt and Taylor versus the first quarter of the
year.
Operating cash costs per ounce sold for YTD 2019
averaged $301, a 29% improvement from $424 for YTD 2018 and in line
with full-year 2019 guidance of $285 - $305. For YTD 2019,
Fosterville’s operating cash costs per ounce sold were $132, 49%
better than $261 for the same period in 2018 reflecting an 81%
increase in the average grade to 33.8 g/t for YTD 2019. At Macassa,
operating cash costs per ounce sold averaged $384, a 15%
improvement from $453 for YTD 2018. Like Fosterville, lower
operating cash costs per ounce sold at Macassa also reflected
higher grades, with the mill grade for YTD 2019 at Macassa
averaging 25.7 g/t versus 20.7 g/t for YTD 2018. Operating cash
costs per ounce sold at the Holt Complex averaged $906 for YTD 2019
($789 excluding the impact of the Holloway mine), which compared to
$744 for YTD 2018.
AISC per ounce sold in Q2 2019 averaged $638 or
16% better than the Q2 2018 average of $757, with lower operating
cash costs per ounce sold largely accounting for the improvement
from the same period in 2018. In addition, while sustaining capital
expenditures increased to $49.8 million in Q2 2019 from $44.1
million in Q2 2018, they improved on a per ounce sold basis, to
$235 per ounce sold in Q2 2019 from $268 per ounce sold in Q2 2018.
AISC per ounce sold at Fosterville improved 41% to $318 in Q2 2019
from $538 in Q2 2018, with the improvement resulting from lower
operating cash costs and sustaining capital expenditures on a per
ounce sold basis. AISC per ounce sold at Macassa averaged $788 in
Q2 2019, which compared to $687 in Q2 2018 as the impact of lower
operating cash costs per ounce sold was more than offset by an
increase in sustaining capital per ounce sold. AISC per ounce sold
at the Holt Complex in Q2 2019 averaged $1,576 ($1,289 excluding
the impact of the Holloway mine), which compared $1,262 in Q2 2018
when the Holloway mine was on care and maintenance.
Compared to the previous quarter, AISC per ounce
sold of $638 in Q2 2019 increased from $560 in Q1 2019, reflecting
higher sustaining capital expenditures as well as an increase in
operating cash costs per ounce sold. Sustaining capital
expenditures in Q2 2019 compared to sustaining capital expenditures
in Q1 2019 of $42.0 million or $180 per ounce sold, with the
increase in sustaining capital expenditures in Q2 2019 reflecting
the timing of mobile plant and equipment purchases at Fosterville
and increased capital development at the Holt and Holloway mines.
AISC per ounce sold at Fosterville was largely unchanged from $315
in Q1 2019 as the impact of higher sustaining capital expenditures
was offset by improved operating cash costs per ounce sold.
Macassa’s Q2 2019 AISC per ounce sold increased from $602 the
previous quarter reflecting both higher operating cash costs and
sustaining capital expenditures on a per ounce sold basis, largely
reflecting reduced gold sales compared to Q1 2019. AISC per ounce
sold at the Holt Complex increased from $1,075 in Q1 2019 ($982
excluding the impact of the Holloway mine), with the increase
reflecting higher sustaining capital expenditures and operating
cash costs per ounce sold.
For YTD 2019, AISC per ounce sold averaged $597,
25% better than $793 for YTD 2018, reflecting both improved
operating cash costs per ounce sold and sustaining capital
expenditures per ounce sold versus the same period in 2018.
Sustaining capital expenditures for YTD 2019 totaled $91.7 million
or $206 per ounce sold, which compared to $86.2 million or $276 per
ounce sold for YTD 2018. At Fosterville, AISC per ounce sold
for YTD 2019 averaged $316, 43% better than $555 for the same
period in 2018. On a year-to-date basis, AISC per ounce sold at
Macassa improved 8%, to $686 for YTD 2019 from $747 for YTD 2018.
AISC per ounce sold at the Holt Complex averaged $1,282 ($1,106
excluding the impact of the Holloway mine) versus $1,156 for YTD
2018.
Additional Expenses
Corporate G&A expense (excluding share-based
payments expense and transaction costs) totaled $9.8 million
compared to $5.8 million in Q2 2018 and $8.7 million the previous
quarter. The increase from both prior periods largely related to
the expansion of corporate capabilities in both Canada and
Australia in support of the Company's continued growth. Share based
payment expense in Q2 2019 totaled $2.4 million versus $1.6 million
for the same period in 2018 and $3.4 million the previous quarter.
The increase in share-based payment expense from Q2 2018 largely
related to share-price appreciation, resulting in greater
mark-to-market values for the Company’s outstanding deferred-share
units. YTD corporate G&A expense totaled $18.4 million compared
to $12.8 million for YTD 2018.
Exploration and evaluation expenditures
(expensed) in Q2 2019 totaled $6.2 million versus $15.8 million in
Q2 2018 and $12.0 million the previous quarter. As a result
of a review of the Company's drilling programs, and the extent to
which drilling is being completed contiguous to, and for the
purpose of extending existing mining areas, a greater proportion of
exploration expenditures in Q2 2019 were capitalized compared to
the previous quarter. YTD 2019 exploration and evaluation
expenditures (expensed) totaled $18.2 million versus $32.5 million
for YTD 2018.
Other loss in Q2 2019 totaled $5.4 million,
which compared to other income of $4.3 million in Q2 2018. The
other loss in Q2 2019 mainly related to unrealized and realized
foreign exchange losses of $4.5 million, largely reflecting the
strengthening of the Canadian dollar relative to the US and
Australian dollars during Q2 2019. Other income in Q2 2018
resulted from unrealized and realized foreign exchange gains of
$6.5 million due to the weakening of the Australian dollar against
the US dollar, partially offset by the impact of a $2.7 million
pre-tax mark-to-market loss of the fair valuing of the Company’s
warrant investments. Other loss in Q1 2019 of $2.1 million resulted
from an unrealized and realized foreign exchange loss due to the
strengthening of both the Australian and Canadian dollars against
the US dollar during the quarter. For YTD 2019, other loss totaled
$7.5 million, mainly reflecting unrealized and realized foreign
exchange losses of $6.6 million, as well as a pre-tax
mark-to-market loss of $0.9 million related to the fair valuing of
warrant investments. Other loss for YTD 2019 compared to other
income of $9.7 million for the same period in 2018, reflecting
$10.4 million of unrealized and realized foreign exchange gains due
to the strengthening of the US dollar during the first half of last
year.
Finance costs in Q2 2019 totaled $0.3 million,
mainly reflecting interest expense on financial leases and other
loans. Finance costs totaled $1.1 million in Q2 2018 and $0.7
million the previous quarter. YTD 2019 finance costs totaled $1.0
million versus $1.8 million for YTD 2018.
Finance income, mainly related to interest
income on bank deposits, totaled $1.4 million in Q2 2019 versus
$0.9 million for the same period in 2018 and unchanged from the
previous quarter. YTD 2019 finance income totaled $2.8 million
compared to $1.7 million for YTD 2018, with the increase reflecting
higher cash balances during the first half of 2019 versus the same
period in 2018.
Income tax expense in Q2 2019 included current
income tax expense of $35.3 million and deferred income tax expense
of $12.9 million. In Q2 2018, current income tax expense totaled
$10.5 million, with deferred income tax expense totalling $18.1
million with the high level of deferred income tax expense
resulting from the utilization of $16.3 million of deferred tax
assets in respect of loss carryforwards during Q2 2018 to reduce
current income tax expense. Q1 2019 included current income tax
expense of $40.9 million and deferred income tax expense of $8.5
million. The Company’s effective tax rate in Q2 2019 was
31.6%, which compared to 31.8% in Q2 2018 and 31.0% the previous
quarter. For YTD 2019, current income tax expense totaled
$76.2 million versus $15.7 million for YTD 2018, while deferred
income tax expense for YTD 2019 was $21.5 million compared to $34.8
million for the same period in 2018. The higher levels of deferred
income tax expense compared to current income tax expense for YTD
2018 resulted from the utilization of $28.7 million of deferred tax
assets in respect of loss carryforwards during the first half of
2018 to reduce current income tax expense. The Company’s effective
tax rate for YTD 2019 was 31.3% compared to 31.6% for YTD 2018.
Net earnings in Q2 2019 total $104.2 million or
$0.50 per basic share
Net earnings in Q2 2019 totaled $104.2 million
($0.50 per basic share), an increase of $42.7 million or 69% from
$61.5 million ($0.29 per basic share) in Q2 2018. The $42.7 million
increase in net earnings from Q2 2018 largely reflected a 31%
increase in revenue, improved unit costs and lower exploration and
evaluation expenditures compared to the same period in 2018.
Partially offsetting these factors were higher corporate G&A
expense and other loss of $5.4 million versus other income of $4.3
million in Q2 2018. Q2 2019 net earnings compared to net earnings
of $110.1 million ($0.52 per basic share) in Q1 2019, a 5%
reduction in earnings from mine operations, reflecting lower
revenue, as well as an increased other loss that more than offset
the impact of reduced exploration and evaluation costs and lower
finance costs.
Net earnings for YTD 2019 totaled $214.3 million
($1.02 per basic share), an increase of $102.8 million or 92% from
$111.5 million ($0.53 per basic share). The increase was driven by
strong revenue growth, improved unit costs as well as lower
expensed exploration and evaluation costs, which more than offset
higher corporate G&A expense and other loss of $7.5 million
versus other income of $9.7 million for the same period in
2018.
Adjusted net earnings (Non-IFRS) in Q2 2019
total $105.5 million or $0.50 per basic share
The Company's adjusted net earnings in Q2 2019
totaled $105.5 million ($0.50 per basic share), compared to $63.4
million ($0.30 per basic share) in Q2 2018 and $112.1 million
($0.53 per basic share) in Q1 2019. The difference between adjusted
net earnings and net earnings in Q2 2019 related to the exclusion
from adjusted net earnings of severance costs as well as a
mark-to-market loss on fair valuing the Company’s warrant
investments. The difference between adjusted net earnings and net
earnings in Q2 2018 was entirely related to fair valuing the
Company’s warrant investments. The difference between adjusted net
earnings and net earnings in Q1 2019 mainly related to the
exclusion from adjusted net earnings of purchase price allocation
adjustments on inventory, as well as severance costs.
Adjusted net earnings for YTD 2019 totaled
$217.7 million ($1.04 per basic share), which compared to $116.0
million ($0.55 per basic share) for YTD 2018. The difference
between net earnings and adjusted net earnings for YTD 2019 mainly
reflected the exclusion from adjusted net earnings of purchase
price allocation adjustments on inventory and severance payments.
The difference between net earnings and adjusted net earnings for
YTD 2018 reflected the exclusion from adjusted net earnings of
losses related to purchase price allocation adjustments on
inventory.
Q2 2019 net cash provided by operating
activities of $178.4 million, free cash flow (Non-IFRS) totals
$53.0 million
Cash totaled $469.4 million at June 30, 2019, an
increase of $137.2 million or 41% from $332.2 million at December
31, 2018 and $53.3 million or 13% from March 31, 2019. The increase
in cash during Q2 2019 mainly reflected the $178.4 million of net
cash provided by operating activities for the quarter, which
compared to net cash provided by operating activities of $120.9
million and $174.4 million in Q2 2018 and Q1 2019, respectively.
The 48% increase from Q2 2018 mainly reflecting strong earnings
growth compared to the same period in 2018. The 2% increase in net
cash provided by operating activities from the previous quarter
mainly reflected reduced income taxes paid, largely reflecting cash
payment of a significant component of the Company’s 2018 Ontario
Mining Tax obligations during Q1 2019.
Among the main uses of cash during Q2 2019 was
$102.3 million of net cash used for investing activities, which
compared to $75.8 million in Q2 2018 and $86.0 million in Q1 2019.
The increase in net cash used in investing activities in Q2 2019
related to significant increases in additions to mining interests
and plant and equipment in support of both current operations and
the continued advancement of the Company’s growth projects.
Partially offsetting the impact of increased capital expenditures
on net cash used in investing activities was the release of $22.4
million of previously-restricted cash reflecting changes in
security requirements related to rehabilitation performance
guarantees. Net cash used in financing activities in Q2 2019
totaled $20.2 million versus $14.1 million in Q2 2018 and $8.3
million the previous quarter. The increase in cash used in
financing activities in Q2 2019 compared to Q2 2018 mainly related
to $12.8 million used to repurchase 0.4 million common shares
(versus $1.0 million to repurchase 69,400 shares in Q2 2018) and
$6.3 million used for a dividend payment of C$0.04 per share (paid
on April 12, 2019 to shareholders of record on March 31,
2019), which compared to $3.3 million of dividend payments in Q2
2018, when the dividend was C$0.02 per share. Partially offsetting
the increased use of cash for share repurchases and dividend
payments, was a reduction in the payment of lease obligations to
$3.7 million in Q2 2019 from $10.4 million for the same period in
2018. Compared to the previous quarter, there were no share
repurchases in Q1 2019. Cash used for dividend payments and
the payment of lease obligations was unchanged in Q2 2019 compared
to the previous quarter.
For YTD 2019, net cash provided by operating
activities totaled $352.7 million, an increase of $142.2 million or
68% from $210.5 million for YTD 2018. The increase from the same
period in 2018 mainly reflected the 92% increase in net earnings
year over year. Partially offsetting the impact of increased net
earnings was an increase in income taxes paid to $29.4 million from
$8.4 million for YTD 2018, as well as a reduction of $14.7 million
related to changes in non-cash working capital, which compared to
an increase in cash of $6.6 million for the same period in 2018.
Net cash used in investing activities for YTD 2019 totaled $188.3
million, an increase of $73.8 million or 64% from $114.5 million.
The increase reflected higher levels of growth and sustaining
capital expenditures for YTD 2019, partially offset by the release
of previously-restricted cash of $22.4 million in YTD 2019 and a
reduction in investments in public and private entities ($4.6
million for YTD 2019 versus $16.1 million for YTD 2018, with the
latter related to the purchase of 4.0 million share of Novo
Resources for C$5.00 per share in May 2018). Net cash used in
financing activities for YTD 2019 totaled $28.5 million, which
compared to $20.4 million for the same period in 2018. The increase
related to the $12.8 million used for share repurchases in Q2 2019
versus $1.0 million used in YTD 2018, and $12.7 million of cash
used for dividend payments in the first six months of 2019 compared
to $6.7 million for YTD 2018.
Free cash flow in Q2 2019 totaled $53.0 million,
which compared to $60.7 million in Q2 2018 and record free cash
flow of $93.1 million the previous quarter. The change in free cash
flow in Q2 2019 compared to both prior periods resulted from
significant growth in mineral property additions and additions to
property, plant and equipment, as investment levels rose both at
current operations and to advance the Company’s growth plans, which
more than offset increases in net cash provided by operating
activities in Q2 2019 compared to Q2 2018 and Q1 2019. For
YTD 2019, free cash flow totaled $146.1 million, an increase of
$35.2 million or 32% as the impact of higher levels of mineral
property additions and additions to property, plant and equipment
was more than offset by the 68% increase in net cash provided by
operating activities, to $352.7 million for YTD 2019.
Table 3. Review of Financial Performance
(in thousands except per share amounts) |
Three Months Ended June 30, 2019 |
Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
|
|
|
|
|
Revenue |
$281,267 |
|
$214,653 |
|
$586,179 |
|
$412,890 |
|
|
|
|
|
|
Production costs |
|
(66,161 |
) |
|
(66,494 |
) |
|
(136,201 |
) |
|
(137,977 |
) |
Royalty expense |
|
(6,716 |
) |
|
(6,217 |
) |
|
(15,000 |
) |
|
(12,235 |
) |
Depletion and
depreciation |
|
(33,064 |
) |
|
(32,484 |
) |
|
(74,364 |
) |
|
(60,432 |
) |
Earnings from mine operations |
|
175,326 |
|
|
109,458 |
|
|
360,614 |
|
|
202,246 |
|
|
|
|
|
|
Expenses |
|
|
|
|
General and
administrative(1) |
|
(12,131 |
) |
|
(7,468 |
) |
|
(24,230 |
) |
|
(16,228 |
) |
Exploration and
evaluation |
|
(6,214 |
) |
|
(15,763 |
) |
|
(18,236 |
) |
|
(32,466 |
) |
Care
and maintenance |
|
(215 |
) |
|
(230 |
) |
|
(411 |
) |
|
(1,039 |
) |
Earnings from operations |
|
156,766 |
|
|
85,997 |
|
|
317,737 |
|
|
152,513 |
|
|
|
|
|
|
Finance and other items |
|
|
|
|
Other income (loss), net |
|
(5,384 |
) |
|
4,290 |
|
|
(7,501 |
) |
|
9,654 |
|
Finance income |
|
1,357 |
|
|
943 |
|
|
2,795 |
|
|
1,661 |
|
Finance
costs |
|
(307 |
) |
|
(1,121 |
) |
|
(1,010 |
) |
|
(1,831 |
) |
|
|
|
|
|
Earnings before taxes |
|
152,432 |
|
|
90,109 |
|
|
312,021 |
|
|
161,997 |
|
Current income tax
expense |
|
(35,291 |
) |
|
(10,526 |
) |
|
(76,212 |
) |
|
(15,672 |
) |
Deferred tax expense |
|
(12,946 |
) |
|
(18,097 |
) |
|
(21,468 |
) |
|
(34,802 |
) |
|
|
|
|
|
Net earnings |
$104,195 |
|
$61,486 |
|
$214,341 |
|
$111,523 |
|
|
|
|
|
|
Basic earnings per share |
$0.50 |
|
$0.29 |
|
$1.02 |
|
$0.53 |
|
Diluted
earnings per share |
$0.49 |
|
$0.29 |
|
$1.01 |
|
$0.52 |
|
- General and administrative expense for Q2 2019 include general
and administrative expenses of $9.8 million ($5.8 million in Q2
2018 and $8.7 million in Q1 2019), and share based payment expense
of $2.4 million ($1.6 million in Q2 2018 and $3.4 million in Q1
2019).
Full-Year 2019 Guidance
2019 Guidance (as at May 7, 2019)(1)
($
millions unless otherwise stated) |
Macassa |
Holt Complex(2) |
Fosterville |
Consolidated |
Gold production (kozs) |
240 – 250 |
140 - 150 |
570 - 610 |
950 - 1,000 |
Operating cash costs/ounce sold ($/oz) (3) |
$400 - $420 |
$660 - $680 |
$130 - $150 |
$285 - $305 |
AISC/ounce sold ($/oz) (3) |
|
|
|
$520 - $560 |
Operating cash costs (3) |
|
|
|
$290 - $300 |
Royalty costs |
|
|
|
$25 - $30 |
Sustaining and growth capital (3) |
|
|
|
$150 - $170 |
Growth capital(3)(4) |
|
|
|
$155 - $165 |
Exploration and
evaluation(5) |
|
|
|
$100 - $120 |
Corporate G&A(6) |
|
|
|
$26 - $28 |
- Full-year 2019 guidance as at May 7, 2019.
- Production and operating cash cost guidance for the Holt
Complex for full-year 2019 includes results for the Holloway mine,
which resumed operations during Q1 2019, as one of three mines
included in the Holt Complex.
- See “Non-IFRS Measures” set out starting on page 27 of this
MD&A for further details. The most comparable IFRS Measure for
operating cash costs is production costs, as presented in the
Consolidated Statements of Operations and Comprehensive Income, and
total additions and construction in progress for sustaining and
growth capital. Operating cash costs per ounce and AISC per ounce
sold are comparable to production costs on a unit basis. Operating
cash costs, operating cash cost per ounce sold and AISC per ounce
sold reflect an average US$ to C$ exchange rate of 1.33 and a US$
to A$ exchange rate of 1.41.
- Growth capital expenditures guidance as at May 7, 2019 excluded
$18.4 million of capital expenditures related to the Macassa #4
shaft project, which are expected to be recorded as capital
expenditures in 2019, but were paid in cash on an advanced basis in
2018.
- Exploration and evaluation expenditures guidance for full-year
2019 include both expensed and capitalized exploration
expenditures. All capitalized expenditures related to the
Northern Territory are included in exploration and evaluation
expenditures consistent with the advanced exploration program being
carried out in the Northern Territory in 2019.
- Includes general and administrative costs and severance
payments. Excludes non-cash share-based payment expense.
YTD 2019 Results
($
millions unless otherwise stated) |
Macassa |
Holt Complex(2) |
Fosterville |
Consolidated |
Gold production (kozs) |
121,972 |
55,355 |
269,145 |
446,472 |
Operating cash costs/ounce sold ($/oz)(1) |
$384 |
$906 |
$132 |
$301 |
AISC/ounce sold ($/oz)(1) |
|
|
|
$597 |
Operating cash costs (1) |
|
|
|
$133.7 |
Royalty costs |
|
|
|
$15.0 |
Sustaining capital(1) |
|
|
|
$91.7 |
Growth capital (excluding capitalized
exploration)(1)(3) |
|
|
|
$88.3 |
Exploration (including capitalized
exploration)(4) |
|
|
|
$72.8 |
Corporate G&A expense(5) |
|
|
|
$18.4 |
- See “Non-IFRS Measures” set out starting on page 27 of this
MD&A for further details. The most comparable IFRS Measure for
operating cash costs is production costs, as presented in the
Consolidated Statements of Operations and Comprehensive Income, and
total additions and construction in progress for sustaining and
growth capital. Operating cash costs per ounce and AISC per ounce
sold are comparable to production costs on a unit basis. Operating
cash costs, operating cash cost per ounce sold and AISC per ounce
sold reflect an average US$ to C$ exchange rate of 1.33 and a US$
to A$ exchange rate of 1.42.
- Production, cost and expenditure results for YTD 2019 include
results for the Holloway mine, which resumed operations during Q1
2019, as one of three mines included in the Holt Complex.
- Growth capital expenditures exclude $18.4 million of capital
expenditures related to the Macassa #4 shaft project, which have
been recorded as capital expenditures in YTD 2019, but were paid in
cash on an advanced basis in 2018.
- Exploration and evaluation expenditures include both expensed
and capitalized exploration expenditures. All capitalized
expenditures related to the Northern Territory are being included
in exploration and evaluation expenditures consistent with the
advanced exploration program being carried out in the Northern
Territory in 2019.
- Includes general and administrative costs and severance
payments. Excludes non-cash share-based payment expense.
- Gold production for YTD 2019 totaled 446,472
ounces, a 43% increase from YTD 2018 driven by record production at
Fosterville. The Company ended the first half of 2019 well
positioned to achieve its improved full-year 2019 consolidated
production guidance of 950,000 - 1,000,000 ounces of gold, with
production at both Fosterville and the Holt Complex expected to
increase in the second half of 2019. At Fosterville,
production in the second half of 2019 is expected to increase
significantly from 269,145 ounces for YTD 2019 as development
advances to depth into the high-grade Swan Zone. Production at the
Holt Complex is expected to increase as operations ramp up at
Holloway and tonnes processed improves at the Holt Mine. Macassa
ended YTD 2019 with production of 121,972, with the mine entering
the second half of the year on track to achieve full-year 2019
guidance of 240,000 - 250,000 ounces.
- Production costs for YTD 2019 totaled $136.2
million. Operating cash costs for the first half of the year
totaled $133.7 million, in line with target levels. Operating cash
costs are expected to increase in the second half of the year as
production volumes increase at Fosterville as well as at the
Holloway Mine.
- Operating cash costs per ounce sold for YTD
2019 averaged $301, in line with full-year 2019 guidance of $285 -
$305. For YTD 2019, Macassa’s operating cash costs per ounce sold
averaged $384, better than the target range of $400 - $420, largely
reflecting a better than expected average grade for the first half
of the year of 25.7 g/t. Fosterville’s operating cash costs per
ounce sold averaged $132 during YTD 2019, in the low end of
full-year 2019 guidance of $130 - $150. Fosterville’s operating
cash costs per ounce sold are expected to improve over the balance
of the year as production increases during the third and fourth
quarters of 2019. Operating cash costs per ounce sold at the Holt
Complex averaged $906, well above the target range of $660 - $680.
Unit costs are expected to improve at the Holt Complex in the
second half of 2019 as production ramps up at the Holloway mine and
tonnes processed increases at Holt.
- AISC per ounce sold for YTD 2019 averaged
$597, above full-year 2019 guidance of $520 -
$560. AISC per ounce sold is expected to improve
during the second half of the year as quarterly production
increases at Fosterville and sustaining capital expenditure levels
decline at Macassa.
- Royalty costs for YTD 2019 totaled $15.0
million. The Company continues to target total royalty expense for
full-year 2019 of $25 - $30 million.
- Sustaining capital expenditures for YTD 2019
totaled $91.7 million and was tracking ahead of the existing
full-year 2019 target range of $150 - $170 million. The level
of sustaining capital expenditures during YTD 2019 reflected the
weighting of expenditures for capital development and the
procurement of mobile equipment at Macassa to the first half of the
year.
- Growth capital expenditures totalled $88.3
million for YTD 2019 (excluding capitalized exploration), which
compared to full-year 2019 guidance of $155 - $165 million. Of
total growth capital expenditures for YTD 2019, Macassa accounted
for $58.8 million, with approximately $42.4 million relating to the
#4 shaft project and the remainder largely funding a thickened
tails project and the construction of a new tailings impoundment
area. Fosterville accounted for $25.8 million of growth capital
expenditures for YTD 2019, mainly related to the mine’s three key
projects, including the new ventilation system, the paste fill
plant and a new water treatment plant.
- Exploration and evaluation expenditures for
YTD 2019 totaled $72.3 million (including capitalized exploration),
which compared to full-year 2019 guidance of $100 - $120 million.
Of total exploration expenditures, approximately $66.1 million were
in Australia, including $49.6 million in the Northern Territory and
$16.5 million at Fosterville. During Q2 2019, the Company
accelerated advanced exploration work in the Northern Territory,
including increasing underground development in support of a
potential resumption of operations later this year. Drilling in the
Northern Territory in YTD 2019 focused on infill and extension
drilling at the Lantern and Cosmo deposits and the continued
evaluation of targets at Union Reefs and, commencing in Q2 2019, at
Pine Creek. Drilling at Fosterville focused on underground drilling
in the Lower Phoenix and Harrier systems, surface drilling at
Robbin’s Hill, as well as exploration work at a number of regional
targets. In Canada, exploration expenditures for YTD 2019 totaled
$6.2 million and mainly focused on drilling at Macassa and Taylor
in support of growing and converting Mineral Resources as well as
identifying new areas of high-grade mineralization.
- Corporate G&A expense for YTD 2019 totaled
$18.4 million, with full-year corporate G&A costs now expected
to exceed the existing target range of $26 - $28 million.
Q2 2019 Financial Results and Conference
Call Details
A conference call to discuss the Q2 2019 results
will be held by senior management on Wednesday, July 31, 2019, at
10:00 am ET. Call-in information is provided below. The call will
also be webcast and accessible on the Company’s website at
www.klgold.com.
DATE: |
WEDNESDAY, JULY 31, 2019 |
CONFERENCE ID: |
7986489 |
TIME: |
10:00 am ET |
TOLL-FREE NUMBER: |
(833) 241-7254 |
INTERNATIONAL CALLERS: |
(647) 689-4218 |
Qualified Persons
Natasha Vaz, P.Eng., Vice President, Technical
Services is a “qualified person” as defined in National Instrument
43-101 and has reviewed and approved disclosure of the technical
information and data in this News Release.
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold Ltd. is a growing gold
producer operating in Canada and Australia that produced 723,701
ounces in 2018 and is on track to achieve significant production
growth over the next three years, including target production of
950,000 – 1,000,000 ounces in 2019, 930,000 – 1,010,000 ounces in
2020 and 995,000 – 1,055,000 ounces in 2021. The production profile
of the Company is anchored by two high-grade, low-cost operations,
including the Macassa Mine 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 and operational
expertise.
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 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 ounces 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 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.
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 or
technical difficulties), including the ability to extract
anticipated tonnes and successfully realizing estimated grades;
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); regulatory; tax matters and foreign
mining tax regimes, as well as health, safety, and environmental
risks. For more extensive discussion on risks and uncertainties
refer to the “Risks and Uncertainties” section in the December 31,
2018 Annual Information Form and the Company’s MD&A for the
period ended December 31, 2018 filed on SEDAR.
Cautionary Note Regarding Forward-Looking
Information
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.
Among factors that cause actual events to differ
materially from projected events are, 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 anticipated timing and commencement of
exploration programs on various targets within the Company’s land
holdings, 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, 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 the #4 Shaft project at the
Macassa Mine, the ventilation, paste plant and water treatment
facility at the Fosterville Mine, the ability to obtain the
necessary permits in connection with the rehabilitation of the
Macassa tailings facility and the development of a new tailings
facility and the anticipated results associated therewith, the
ability to obtain renewals of certain exploration licences in
Australia, native and aboriginal heritage issues, 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, risks relating to the Northern Territory
wet season, risks relating to litigation, 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, 2018 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.
Cautionary Note to U.S. Investors -
Mineral Reserve and Resource Estimates
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@klgold.com
Mark Utting, Vice-President, Investor Relations Phone: +1
416-840-7884 E-mail: mutting@klgold.com
Kirkland Lake Gold (TSX:KL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Kirkland Lake Gold (TSX:KL)
Historical Stock Chart
From Sep 2023 to Sep 2024