Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the “
Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
announced production for the first quarter of 2020 (“Q1 2020”) of
330,864 ounces, an increase of 98,985 ounces or 43% from 231,879
ounces for the first quarter of 2019 (“Q1 2019”). Q1 2020
production included 91,555 ounces related to production in Q1 2020
from Detour Lake Mine (“Detour Lake”), following the Company’s
acquisition of Detour Gold Corporation (“Detour Gold”) on January
31, 2020. Excluding the impact of Detour Lake Mine, Q1 2020
production was 7,430 ounces or 3% higher than the same period in
2019, reflecting a 24% increase in production from Fosterville. All
dollar amounts are expressed in U.S. dollars, unless otherwise
noted.
Highlights of Q1 2020 production
results:
- Consolidated Q1 2020 production of 330,864
ounces, 43% increase from 231,879 ounces in Q1 2019 and 18% higher
than 279,742 ounces in the previous quarter (239,309 ounces in Q1
2020 excluding impact of Detour Lake)
- Gold poured in Q1 2020 totaling 326,933
ounces, with total gold sold of 344,586 ounces (difference between
sales and production largely relates to gold inventory at Detour
Gold on January 31, 2020)
- Production from Detour Lake Mine from January 31,
2020 totaling 91,555 ounces despite disruptions caused by
COVID-19
- Strong production at Fosterville of 159,864
ounces, 24% increase from 128,445 ounces in Q1 2019 reflecting a
46% improvement in the average grade to 42.4 g/t; Q1 2020
production compared to record quarterly production of 191,893
ounces in the fourth quarter of 2019 (“Q4 2019”), with the change
mainly reflecting a record average grade of 49.3 g/t the previous
quarter
- Production at Macassa totaling 50,861 ounces
compared to record quarterly production of 72,776 ounces in Q1
2019, when an average grade of 29.6 g/t reflected significant grade
outperformance in the South Mine Complex, and 56,379 ounces the
previous quarter (lower mill throughput compared to previous
quarter largely reflected disruptions caused by COVID-19)
- Production at Holt Complex of 28,584 ounces
compared to 30,658 ounces in Q1 2019 and 31,469 ounces the previous
quarter.
Other highlights of Q1 2020
- Completed acquisition of Detour Gold on
January 31, 2020, adding a third cornerstone asset in one of the
Company’s core jurisdictions, Canada, with substantial value
creation potential through increased production, lower unit costs
and exploration upside; 77,217,129 common shares were issued to
Detour Gold shareholders as consideration for the transaction;
Company gained $159 million of cash at closing of Detour Gold
acquisition and, subsequently, used $100 million to repay Detour
Gold’s outstanding debt and $30 million to close out Detour Gold’s
hedge positions; Detour integration progressing well with annual
synergies and value enhancement opportunities targeted at $75 –
$100 million
- Repurchased 9.7 million common shares through
normal course issuer bid (“NCIB”) for $329 million
- Extensive measures taken to protect employees from
COVID-19 virus including reducing the number of people at
mine sites by transitioning Detour Lake and Macassa mines to
reduced operations, temporarily suspending operations at the Holt
Complex and suspending all exploration drilling; Health and safety
protocols introduced including remote work wherever possible,
medical screening, enhanced cleaning and hygiene practices,
increased food safety, social distancing of workers, increased
reliance on technology such as hosting virtual meetings and the
suspension of all non-essential work at, and visits to, the
Company’s mine sites; Management Task Force meets daily to assess
emerging developments and identify new measures required to protect
the Company’s people, their families and communities
- Cash position of $530 million with no debt at
March 31, 2020.
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold, commented: “Our top priority is the
health and wellbeing of our people, their families and our
communities. We have taken numerous steps to protect people from
COVID-19, including shutting down Holt Complex and substantially
reducing operations at Detour Lake and Macassa. A mine-by-mine
review of our COVID-19 strategy is provided in the Review of
Operations that follows. Overall, our people are doing a great job
putting our health and safety protocols into practice and working
together as a team. The hard work and cooperation they are giving
and the initiative they are showing is very impressive and we are
very grateful for all of their efforts. A clear example of the
effectiveness of our team is our performance in the first quarter.
Faced with the unprecedented challenges of the COVID-19 pandemic,
our operations still turned in a very strong first quarter. We
increased production year over year, even before adding in the
contribution from Detour Lake Mine since January 31, 2020.
Production growth was once again driven by Fosterville, where we
continue to achieve strong grade performance from the Swan
Zone.
“As part of our COVID-19 protocols, we have
suspended exploration drilling at all sites. Notwithstanding, we
fully expect to carry out extensive drill programs at Fosterville,
Macassa and Detour Lake during 2020. All three of these mines have
considerable exploration upside, which we believe will fuel strong
growth in Mineral Reserves. Detour Lake already has a large Mineral
Reserve base and mine life. Our goal is to significantly increase
the current base of 14.8 million ounces, which will help drive
production growth while also maintaining a long mine life. At
Macassa, we had very encouraging exploration results in 2019,
including large extensions to the South Mine Complex and the
intersection of high-grade zones along the Amalgamated Break. At
Fosterville, we succeeded in substantially extending the Phoenix
System down-plunge of the Swan Zone, demonstrated the potential of
Robbin’s Hill to be a second mining operation at Fosterville, and
intersected the quartz with visible gold mineralization that
largely comprises the Swan Zone in multiple areas across the mining
lease. Based on our recent results, we are confident that both
Macassa and Fosterville have the potential for significant Mineral
Reserve growth through continued exploration success.”
Q1 2020 Production
Q1 2019 Production Results |
Q1 2020 |
Q1 2019 |
Q4 2019 |
Fosterville |
|
|
|
Ore Milled (tonnes) |
118,701 |
140,184 |
121,998 |
Grade (g/t Au) |
42.4 |
29.0 |
49.3 |
Recovery (%) |
98.8 |
98.3 |
99.2 |
Gold Production (ozs) |
159,864 |
128,445 |
191,894 |
Macassa |
|
|
|
Ore Milled (tonnes) |
82,256 |
77,990 |
87,573 |
Grade (g/t Au) |
19.7 |
29.6 |
20.5 |
Recovery (%) |
97.7 |
98.2 |
97.8 |
Gold Production (ozs) |
50,861 |
72,776 |
56,379 |
Detour Lake1 |
|
|
|
Ore Milled (tonnes) |
3,708,022 |
|
|
Grade (g/t Au) |
0.84 |
|
|
Recovery (%) |
90.9 |
|
|
Gold Production (ozs) |
91,555 |
|
|
Holt Complex2 |
|
|
|
Ore Milled (tonnes) |
209,126 |
200,786 |
252,801 |
Grade (g/t Au) |
4.6 |
5.0 |
4.1 |
Recovery (%) |
93.4 |
95.7 |
94.1 |
Gold Production (ozs) |
28,584 |
30,658 |
31,469 |
Total Consolidated Production (ozs)3 |
330,864 |
231,879 |
279,742 |
Total Consolidated Gold Sales (ozs) |
344,586 |
232,929 |
278,438 |
1) The Detour Lake Mine was acquired on January 31, 2020.
Production in Q1 2020 represents output from that date to the end
of the quarter.2) The Holloway Mine, a component of Holt Complex,
resumed commercial operation in Q1 2019 after being placed on care
and maintenance in December 2016. The mine was returned to a state
of care and maintenance in March 2020. Production levels from
Holloway included 1,286 in Q1 2020, 1,056 ounces in Q1 2019 and
5,797 ounces in Q4 2019.3) Production numbers may not add to total
due to rounding.
Q1 2020 production totaled 330,864 ounces, an
increase of 43% from 231,879 in Q1 2019. The main contributor to
the strong growth compared to the same period in 2019 was the
contribution of 91,555 ounces from Detour Lake, following the
acquisition of Detour Gold on January 31, 2020. Excluding the
contribution from Detour Lake, production in Q1 2020 increased
7,430 ounces or 3% from Q1 2019. Excluding the impact of Detour
Lake, production growth was driven by Fosterville reflecting the
favourable impact of a 46% improvement in the average grade year
over year, to 42.4 g/t in Q1 2020.
Review of Operations
Fosterville
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 and increased grades
due to mine sequencing in the Swan Zone compared to Q1 2019. Q1
2020 production compared to record quarterly production of 191,893
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 as well as the impact of grade outperformance in a
number of Swan Zone stopes during the previous quarter.
COVID-19 Update: Fosterville Mine continues to operate at
full levels of production. The Company’s COVID-19 health and safety
protocols have been implemented, including remote work, social
distancing, increased cleaning and hygiene and the suspension of
all non-essential work and visits to site.
Macassa
Production at Macassa in Q1 2020 totaled 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
mainly 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 South Mine Complex. The change from the previous quarter
resulted from both a reduction in tonnes processed as well as a
lower average grade.
COVID-19 Update: The Macassa Mine is
operating at reduced levels until April 30, 2020, with ongoing work
focused on production as well as water and environmental
management. All non-essential activities have been suspended,
including exploration drilling, work on a new surface ramp and mill
upgrades. Work on the new #4 shaft project is continuing at reduced
levels, with the project remaining on schedule and budget. Macassa
is currently operating with approximately 65% of its normal
workforce.
Detour Lake
Production at Detour Lake from January 31, 2020
to March 31, 2020 totaled 91,555 ounces, which involved processing
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 reduced operations
due to the COVID-19 virus, as well as the impact of severe winter
weather conditions in Q1 2020 and reduced availability of drilling
equipment.
COVID-19 Update: The Company transitioned Detour
Lake Mine to reduced operations 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. All personnel not essential for the performance of
these activities are off work until April 30, 2020. Approximately
300 workers are performing the essential activities during 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.
Holt Complex
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.
COVID-19 Update: The Company has suspended
operations at the Holt Complex, including the Holt and Taylor mines
and Holt Mill until April 30, 2020, with these operations being
placed on temporary care and maintenance. Most of the 529 employees
at the Holt Complex are off work while operations remain suspended,
with a small number of employees continuing to work to manage the
sites during this period.
Qualified Person
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 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 www.klgold.com.
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 future production,
Mineral Reserve growth and the expectation of exploration success
at the Company’s assets, realization of future synergies in
connection with the integration of Detour Gold and the anticipated
timing thereof, as well as the reduction of operations at the
Macassa and Detour Lake mines, and suspension of operations
at the Holt Complex, and anticipated effects thereof, the ability
of the Macassa and Detour Lake mines and Holt Complex to fully
resume operations effective April 30, 2020 and the anticipated
overall impact of the Company’s COVID 19 response plan.
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 impacts of the COVID 19 pandemic and government response to
such pandemic, the ability of the Company to continue operations at
its mine sites in lieu of the pandemic and the risk of future shut
downs as a result thereof; future development and growth potential
of the Company’s projects; future exploration activities planned at
the Canadian and Australian properties; risks relating to
government regulations; 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; 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 associated with the integration of Detour Gold; 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 for the year ended
December 31, 2019 and financial statements and related MD&A for
the financial year ended December 31, 2019 and 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 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.
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
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