Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the
“Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
re-issued guidance for 2020 after withdrawing the Company’s
guidance for the year on April 2, 2020 due to the impact of
measures introduced to protect the Company’s workers in response to
the COVID-19 pandemic. Included among the re-issued guidance is
production of 1,350,000 – 1,400,000 ounces, improved unit costs,
lower expected sustaining capital expenditures and higher target
growth capital expenditures resulting from new growth projects at
Detour Lake Mine. Ongoing costs related to the Company’s COVID-19
protocols are included in operating cash cost guidance, while
non-recurring COVID-19 costs, estimated at $10 – $15 million and
incurred during periods of reduced or suspended operations, are
excluded from the Company’s re-issued 2020 guidance. All dollar
amounts are in US dollars unless otherwise stated.
The decision to re-issue 2020 guidance follows
the ramp up of operations at Detour Lake and Macassa, which had
both been transitioned to reduced operations as part of the
Company’s COVID-19 response. The Company has also resumed work on
key projects, including shaft sinking at the Macassa #4 shaft
project, and is ramping up exploration drilling, which had ceased
company wide as part of the Company’s COVID-19 protocol to suspend
all non-essential activities. Operations at the Holt Complex remain
on temporary suspension after being stopped effective April 2,
2020. The Company continues to have a wide range of health and
safety protocols in place designed to protect workers, with many of
the measures relating to medical screening and social distancing
expected to be in place for the foreseeable future.
Highlights of Re-Issued 2020
Guidance
- Production
guidance of 1,350,000 – 1,400,000 ounces compares to withdrawn
guidance for 2020 of 1,470,000 – 1,540,000 ounces and 2019
production of 974,615 ounces. The change from previous guidance
reflects the removal of production guidance for the Holt Complex
after March 31, 2020 (Holt Complex production of 28,584 ounces in
first quarter 2020 (“Q1 2020”) is included in re-issued guidance)
and lower expected levels of production at Macassa due largely to
COVID-19. (Q1 2020 consolidated production totaled 330,864
ounces.)
- Operating cash
costs per ounce sold1 guidance of $410 – 430 and all-in
sustaining cost (“AISC”) per ounce sold guidance of $790 – $810 are
improved from previous guidance of $450 – $470 and $820 – $840,
respectively, as the impact of COVID-19 protocols is expected to be
offset by the suspension of operations at Holt Complex as well as
the impact of a number of Company initiatives and changes in market
conditions. (Q1 2020 operating cash costs per ounce sold of $440
and AISC per ounce sold of $776.)
- Exploration
expenditure2 guidance is revised to $130 – $150 million,
including capitalized exploration expenditures, from $150 – $170
million in the previous guidance. The reduction from previous
guidance reflects disruptions caused by COVID-19, partially offset
by the inclusion of $18.0 million of exploration expenditures
related to the Company’s Northern Territory assets, mainly incurred
in Q1 2020, which was not included in previous guidance.
Exploration drilling across the Company was suspended at the end of
March due to COVID-19, with the resumption of drilling at
Fosterville, Macassa and Detour Lake commencing in May and the ramp
up expected to continue over the next few months. (Q1 2020
exploration expenditures of $36.0 million.)
- Sustaining capital
expenditure1 guidance of $390 – $400 million compares to
previous guidance of $420 – $430. The reduction mainly reflects the
removal of expected sustaining capital expenditures at Holt Complex
after March 31, 2020 from re-issued guidance as well as the impact
of changes in market conditions, partially offset by the impact of
a number of Company initiatives. (Q1 2020 sustaining capital
expenditures totaled $90.0 million, including $48.3 million for two
months at Detour Lake.)
- Growth capital
expenditure1 guidance of $95 – $105 million compares to
previous guidance of $70 – $80 million. The increase in growth
capital expenditure guidance relates mainly to the addition of new
projects at the Detour Lake Mine following the completion of the
Detour Gold acquisition. (Q1 2020 growth capital expenditures of
$22.6 million.)
- See the “Non-IFRS Measures” section
starting on page 24 of the Company’s MD&A for the three months
ended March 31, 2020 filed on the Company’s profile on SEDAR at
www.sedar.com.
- Exploration expenditures include
capital expenditures related to infill drilling for Mineral
Resource conversion, capital expenditures for extension drilling
outside of existing Mineral Resources and expensed
exploration.
Tony Makuch, President and Chief Executive
Officer, commented: “We withdrew our 2020 guidance recognizing the
uncertainties around COVID-19 and the need to assess the impacts of
the many measures and protocols introduced to protect workers,
their families and our communities. We are still working on
assessing these impacts but felt that it was important to advise
the market about our current expectations for full-year 2020,
recognizing that new developments related to COVID-19 occur
constantly and our guidance is subject to change. Based on current
expectations, we anticipate results not dissimilar to our previous
guidance. Production in 2020 is now targeted at 1,350,000 –
1,400,000 ounces, approximately 90% of the previous target range of
1,470,000 – 1,540,000 ounces. The expected reduction mainly results
from the removal of the Holt Complex from our guidance after March
31, 2020, and somewhat lower production at Macassa due to the
impact of COVID-19 protocols. At Detour Lake, we expect to make up
most of the lost production during the period of reduced operations
and our production guidance for Fosterville remains
unchanged.
“Turning to costs, we expect improved unit costs
compared to previous guidance due to the removal of Holt Complex
from our 2020 guidance, which is a relatively high-cost operation,
as well as changes in market conditions. Exploration expenditure
guidance is reduced largely due to the impact of suspending
drilling as part of our COVID-19 response. To be clear, we plan to
complete all the drilling programs included in our initial 2020
guidance but recognize that completion of some of this work will
likely move into 2021. We currently have nine drills deployed at
Fosterville, four drills at Macassa and two drills at Detour Lake,
with plans to increase the number of drills at all three of these
assets over the next few months. Sustaining capital expenditure
guidance is reduced, largely reflecting the removal of planned
capital expenditures at Holt Complex, while growth capital
expenditure guidance has increased mainly due to the commencement
of a number of new projects at Detour Lake Mine, including
construction of an assay lab, an air strip, a welding shop and a
number of mill improvements. Growth capital at Macassa and
Fosterville remains largely unchanged from the initial guidance of
$50 – $55 million for Macassa and approximately $20 million for
Fosterville. As previously announced, we are making excellent
progress with the Macassa #4 shaft and, with a change in project
scope, now expect completion in late 2022, over a year ahead of the
initial schedule. At Fosterville, we completed commissioning of the
new ventilation system earlier this month and our new gold
room/refinery is completed and fully operational.”
Re-Issued 2020 Guidance (as at June 30,
2020)
($
millions unless otherwise stated) |
Macassa |
Detour Lake |
Holt Complex |
Fosterville |
Consolidated |
Gold production (kozs) |
210 – 220 |
520 – 540 |
29 |
590 – 610 |
1,350 - 1,400 |
Operating cash costs/ounce sold ($/oz)(1)(2) |
$490 - $510 |
$610 - $630 |
$955 |
$130 - $150 |
$410 - $430 |
AISC/ounce sold ($/oz)(1)(2) |
|
|
|
|
$790 - $810 |
Operating cash costs ($M)(1)(2) |
|
|
|
|
$560 - $580 |
Royalty costs ($M) |
|
|
|
|
$80 - $85 |
Sustaining capital ($M)(2) |
|
|
|
|
$390 - $400 |
Growth capital ($M)(2)(3) |
|
|
|
|
$95 - $105 |
Exploration ($M)(4)(5) |
|
|
|
|
$130 - $150 |
Corporate G&A ($M)(6) |
|
|
|
|
$50 - $55 |
- COVID-19 costs of $10.0 – $15.0
million are excluded from operating cash costs, AISC and capital
expenditures in re-issued 2020 guidance.
- See “Non-IFRS Measures” set out
starting on page 24 of the MD&A for the three months ended
March 31, 2020 for further details. The most comparable IFRS
Measure for operating cash costs, operating cash costs per ounce
sold and AISC per ounce sold is production costs, as presented in
the Consolidated Statements of Operations and Comprehensive Income,
and total additions and construction in progress for sustaining and
growth capital. Operating cash costs, operating cash cost per ounce
sold and AISC per ounce sold reflect an average US$ to C$ exchange
rate of 1.35 and a US$ to A$ exchange rate of 1.47.
- Growth capital expenditures exclude
capitalized depreciation.
- Exploration expenditures include
capital expenditures related to infill drilling for Mineral
Resource conversion, capital expenditures for extension drilling
outside of existing Mineral Resources and expensed exploration.
Also includes capital expenditures for the development of
exploration drifts.
- Re-issued exploration expenditure
guidance includes $18.0 million related the Northern Territory
assets (no production, costs or expenditures related to the
Northern Territory were included in the previous 2020
guidance.
- Includes general and administrative
costs and severance payments. Excludes share-based payment
expense.
Previous 2020 Guidance (as at February
19, 2020, withdrawn effective April 2, 2020)
($
millions unless otherwise stated) |
Macassa |
Detour Lake |
Holt Complex |
Fosterville |
Consolidated(1) |
Gold production (kozs) |
240 – 250 |
520 - 540 |
120 – 140 |
590 – 610 |
1,470 - 1,540 |
Operating cash costs/ounce sold ($/oz)(2) |
$470 - $490 |
$720 - $740 |
$790 - $810 |
$130 - $150 |
$450 - $470 |
AISC/ounce sold ($/oz)(2) |
|
|
|
|
$820 - $840 |
Operating cash costs ($M)(2) |
|
|
|
|
$700 - $720 |
Royalty costs ($M) |
|
|
|
|
$85 - $90 |
Sustaining capital ($M)(2) |
|
|
|
|
$420 - $430 |
Growth capital ($M)(2)(3) |
|
|
|
|
$70 - $80 |
Exploration ($M)(4) |
|
|
|
|
$150 - $170 |
Corporate G&A ($M)(5) |
|
|
|
|
$50 - $55 |
- Excluded production, costs and
expenditures related to the Company’s Northern Territory
assets.
- See “Non-IFRS Measures” set out
starting on page 24 of the MD&A for the three months ended
March 31, 2020 for further details. The most comparable IFRS
Measure for operating cash costs, operating cash costs per ounce
sold and AISC per ounce sold is production costs, as presented in
the Consolidated Statements of Operations and Comprehensive Income,
and total additions and construction in progress for sustaining and
project capital. Operating cash costs, operating cash cost per
ounce sold and AISC per ounce sold reflect an average US$ to C$
exchange rate of 1.30 and a US$ to A$ exchange rate of 1.43.
- Growth capital expenditures exclude
capitalized depreciation.
- Exploration expenditures include
capital expenditures related to infill drilling for Mineral
Resource conversion, capital expenditures for extension drilling
outside of existing Mineral Resources and expensed
exploration. Also includes capital expenditures for the
development of exploration drifts.
- Includes general and administrative
costs and severance payments. Excludes share-based payment
expense.
Effective June 30, 2020, consolidated production
guidance for 2020 was 1,350,000 – $1,400,000 ounces, with the
reduction from the previous guidance mainly related to the removal
of Holt Complex production guidance after March 31, 2020. Actual
production in Q1 2020 of 28,584 ounces from the Holt Complex is
included in the re-issued production guidance for 2020. The
reduction in production guidance also reflects lower expected
production at Macassa due to disruptions caused by COVID-19
protocols. At Detour Lake, the Company expects to make up most of
the production lost during reduced operations over the last two
months, while production guidance at Fosterville remains
unchanged.
Guidance for operating cash costs per ounce sold
and AISC per ounce sold is improved to $410 – $430 and $790 – $810,
respectively, from the previous guidance of $450 – $470 and $820 –
$840, respectively, largely due to the suspension of operations at
Holt Complex, a relatively high cost operation, as well as the
impact of a number of Company initiatives and changes in market
conditions. These factors more than offset the impact of COVID-19
protocols on productivity and efficiency, particularly at
Macassa.
Exploration expenditure guidance is reduced to
$130 – $150 million from $150 – $170 million in the previous
guidance. The reduction from previous guidance largely reflects
disruptions caused by COVID-19, with all exploration drilling being
suspended around the end of March, as well as the impact of changes
in market conditions. These factors are partially offset by the
inclusion of $18.0 million of exploration expenditures related to
the Company’s Northern Territory assets, mainly incurred in Q1
2020, which was not included in previous guidance. The Company
excluded the Northern Territory assets from previous 2020 guidance
while it considered the future of these assets. With a decision
being reached in March to discontinue all test production and
exploration work in the Northern Territory, with no plans for a
resumption of business activities other than the continuation of
ongoing water rehabilitation work, the $18.0 million of realized
exploration expenditures are now included in the Company’s 2020
guidance. The resumption of exploration drilling at Fosterville,
Macassa and Detour Lake commenced in May with the ramp up expected
to continue over the next few months.
2020 guidance for sustaining capital
expenditures is revised to $390 – $400 million from $420 – $430
million previously with the reduction largely related to the
removal of planned sustaining capital expenditures for the Holt
Complex after March 31, 2020 and changes in market conditions,
partially offset by the impact of a number of Company initiatives.
Growth capital expenditures are now targeted at $95 – $105 million
compared to previous guidance of $70 – $80 million, with the
increase mainly related to the addition of new growth projects at
Detour Lake Mine. The Company’s guidance for 2020 growth capital
expenditures at Macassa and Fosterville remains unchanged at $50 –
$55 million and approximately $20 million, respectively.
The re-issued 2020 guidance for royalty expense
totaled $80 – $85 million, which compares to previous guidance of
$85 – $90 million. The reduction from the previous guidance mainly
reflects the removal of expected royalty expense at the Holt
Complex, primarily the Holt Mine, from March 31, 2020 to the end of
the year. Corporate G&A expense guidance remains unchanged at
$50 – $55 million.
Qualified Persons
The technical contents related to Kirkland Lake
Gold Ltd. mines and properties, have been reviewed and approved by
Natasha Vaz, P.Eng., Senior Vice President, Technical Services and
Innovation 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 press release, 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. Refer
to the MD&A for the three months ended March 31, 2020 dated May
5, 2020 for the most recent non-IFRS reconciliations.
Cautionary Note Regarding
Forward-Looking Information
This News Release includes certain
"forward-looking statements". All statements other than statements
of historical fact included in this release are forward-looking
statements that involve various risks and uncertainties. These
forward-looking statements include, but are not limited to,
statements with respect to planned exploration programs and
anticipated results and timing thereof, costs and expenditures,
changes in Mineral Resources and conversion of Mineral Resources to
proven and probable reserves, and other information that is based
on forecasts of future operational or financial results, estimates
of amounts not yet determinable and assumptions of management.
These forward-looking statements include, but are not limited to,
statements with respect to future exploration potential, project
economics, timing and scope of future exploration, anticipated
costs and expenditures, anticipating timing and effects of the #4
shaft project, potential impacts on operations as a result of
COVID19, changes in Mineral Resources and conversion of Mineral
Resources to proven and probable reserves, and other information
that is based on forecasts of future operational or financial
results, estimates of amounts not yet determinable and assumptions
of management.
Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as
"expects" or "does not expect", "is expected", "anticipates" or
"does not anticipate", "plans", "estimates" or "intends", or
stating that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved) are not
statements of historical fact and may be "forward-looking
statements." Forward-looking statements are subject to a variety of
risks and uncertainties that could cause actual events or results
to differ from those reflected in the forward-looking statements.
Exploration results that include geophysics, sampling, and drill
results on wide spacings may not be indicative of the occurrence of
a mineral deposit. Such results do not provide assurance that
further work will establish sufficient grade, continuity,
metallurgical characteristics and economic potential to be classed
as a category of Mineral Resource. A Mineral Resource that is
classified as "Inferred" or "indicated" has a great amount of
uncertainty as to its existence and economic and legal feasibility.
It cannot be assumed that any or part of an "indicated Mineral
Resource" or "Inferred Mineral Resource" will ever be upgraded to a
higher category of resource. Investors are cautioned not to assume
that all or any part of mineral deposits in these categories will
ever be converted into proven and probable reserves.
There can be no assurance that forward-looking
statements will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to
differ materially from the Company’s expectations include, among
others, risks related to international operations, risks related to
obtaining the permits required to carry out planned exploration or
development work, the actual results of current exploration
activities, conclusions of economic evaluations and changes in
project parameters as plans continue to be refined as well as
future prices of gold, as well as those factors discussed in the
section entitled "Risk Factors" in the Company’s Annual Information
Form for the year ended December 31, 2019 and other disclosures of
"Risk Factors" by the Company and its predecessors, including but
not limited to the Company’s interim consolidated financial
statement and management discussion and analysis for the period
ended March 31, 2020, available on SEDAR and EDGAR. Although
Kirkland Lake Gold has attempted to identify important factors that
could cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove
to be accurate as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements.
Cautionary Note to U.S. Investors -
Mineral Reserve and Resource Estimates
All resource and reserve estimates included in
this news release or documents referenced in this news release have
been prepared 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 (the "CIM
Standards"). NI 43-101 is a rule developed by the Canadian
Securities Administrators, which established standards for all
public disclosure an issuer makes of scientific and technical
information concerning mineral projects. The terms "mineral
reserve", "proven mineral reserve" and "probable mineral reserve"
are Canadian mining terms as defined in accordance with NI 43-101
and the CIM Standards. These definitions differ materially from the
definitions in SEC Industry Guide 7 ("SEC Industry Guide 7") under
the United States Securities Act of 1933, as amended, and the
Exchange Act.
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 and the CIM Standards; 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 U.S. Securities and Exchange Commission (the "SEC").
Investors are cautioned not to assume that all or any part 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 very limited circumstances.
Investors are cautioned not to assume that all or any part of a
Mineral Resource exists, will ever be converted into a Mineral
Reserve or is or will ever be economically or legally mineable or
recovered.
FOR FURTHER INFORMATION PLEASE CONTACT
Anthony Makuch, President, Chief Executive
Officer & DirectorPhone: +1 416-840-7884E-mail:
tmakuch@kl.goldMark Utting, Senior Vice President, Investor
Relations Phone: +1 416-840-7884 E-mail: mutting@kl.gold
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