Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the “
Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
announced production results for the second quarter (“Q2 2020”) and
first half (“YTD 2020”) of 2020. Q2 2020 production totaled 329,770
ounces, an increase of 115,177 ounces or 54% from 214,593
ounces for the second quarter of 2019 (“Q2 2019”). For YTD 2020,
the Company produced 660,634 ounces, 214,162 ounces or 48% higher
than the first half of 2019 (“YTD 2019”). All dollar amounts are
expressed in U.S. dollars, unless otherwise noted.
Highlights of Q2 2020 production
results:
- Consolidated Q2 2020
production of 329,770 ounces, a 54% increase from 214,593
ounces in Q2 2019 and largely unchanged from 330,864 ounces the
previous quarter (660,634 ounces in YTD 2020 versus 446,472 ounces
in YTD 2019)
- Gold poured in Q2
2020 totaling 338,573 ounces versus 216,166 ounces in Q2
2019 and 326,933 ounces in Q1 2020 (YTD 2020 gold poured of 665,506
ounces compared to 446,417 ounces for YTD 2019)
- Q2 2020 gold sales
totaling 341,390 ounces at an average realized price of $1,716 per
ounce compared to gold sales of 212,091 ounces ($1,320 per ounce)
in Q2 2019 and 344,586 ounces ($1,586 per ounce) the previous
quarter (YTD 2020 gold sales of 685,976 ounces ($1,650 per ounce)
versus gold sales of 445,020 ounces ($1,313 per ounce) for YTD
2019)
- Production from Detour Lake
Mine totaling 131,992 ounces despite disruptions caused by
COVID-19 (Production from the closing of the Detour Gold
Corporation (“Detour Gold”) acquisition on January 31, 2020
to June 30, 2020 totaled 223,547 ounces)
- Strong production at
Fosterville of 155,106 ounces, a 10% increase from 140,701
ounces in Q2 2019 mainly reflecting higher tonnes processed; Q2
2020 production was similar to production of 159,864 ounces the
previous quarter (YTD 2020 production of 314,970 ounces, 17% higher
than 269,145 ounces in YTD 2019)
- Production at
Macassa totaling 41,865 ounces compared to quarterly
production of 49,196 ounces in Q2 2019 with the reduction largely
related to a lower average grade; Q2 2020 production compared to
50,861 ounces the previous quarter reflecting a greater impact on
tonnes processed from COVID-19 protocols as well as a lower average
grade (YTD 2020 production of 92,726 ounces compared to YTD 2019
production of 121,972 ounces)
- Operations at Holt
Complex were placed on temporary suspension effective
April 2, 2020 with production for Q2 2020 totaling 807 ounces;
Production in Q2 2019 totaled 24,696 ounces, while production in Q1
2020 totaled 28,584 ounces (YTD 2020 production totaled 29,390
ounces versus 55,355 ounces for YTD 2019).
Other highlights:
- Encouraging exploration
results at Macassa Mine including the identification of a
new, large corridor of high-grade mineralization in close proximity
to the #4 shaft, currently under development, and also the
continued expansion of the South Mine Complex (“SMC”)
- Exploration success at
Detour Lake Mine with initial drilling intersecting broad
zones of mineralization in the Saddle Zone between the Main and
West pits at attractive open-pit grades with higher-grade intervals
supporting the possibility for underground Mineral Resources at
depth; Drilling at 58 North Zone intersects high grades 175.0 m
west of the current underground Mineral Resource
- Ramp up of reduced
operations and suspended non-essential activities commenced in May;
COVID-19 health and safety protocols remain in place:
Workers at Detour Lake and Macassa began to be recalled starting in
early May after both mines transitioned to reduced operations due
to COVID-19 around the end of March; Exploration drilling and work
on key projects resumed early in Q2 2020 after being suspended in
late Q1 2020 (exploration drilling to ramp up over the next few
months); Extensive health and safety protocols introduced in March
remain in place, with many protocols relating to medical screening
and social distancing expected to remain for the foreseeable
future
- Cash position of $537
million with no debt at June 30, 2020; $133 million paid
in Australia during Q2 2020 representing the final tax instalment
for the 2019 tax year; $50 million used in Q2 2020 to repurchase
1,345,600 common shares through the Company’s normal course issuer
bid (total YTD 2020 share repurchases of 11,059,100 common shares
for $380 million).
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold, commented: “We had a very solid
second quarter despite the impact of COVID-19 and the extensive
measures we took to protect our workers, their families and our
communities. In Australia, Fosterville continued to perform well,
with tonnes processed increasing in the quarter and grades
continuing to average around 40 g/t. At Detour Lake, the ramp
up of business activities after the mine was placed on reduced
operations in March due to COVID-19 commenced in early May and has
gone very well. Detour Lake produced over 130,000 ounces in Q2 2020
even with lower average grades during the period of reduced
operations due largely to processing stockpiled material. With
improving operating performance, strong free cash flow generation
and very encouraging exploration results from early drilling, our
acquisition of Detour Gold is already emerging as a very successful
transaction, with substantial value creation potential. We have
also benefited greatly from our decision to close out Detour Gold’s
hedge positions shortly after the acquisition, with Detour’s gold
hedges priced between $1,300 and $1,490 per ounce versus our
average realized price in Q2 2020 of $1,716 per ounce. Turning to
Macassa, our processing volumes were impacted by COVID-19 more than
at other operations, which in combination with lower grades
resulted in Q2 2020 production below planned levels. With our
workforce now back to pre-COVID-19 levels, recognizing that our
social distancing protocols remain in place, we expect to see
higher volumes and improved grades at Macassa during the second
half of the year. We also continue to generate encouraging
exploration results at Macassa, which highlight the potential for
considerable growth in Mineral Reserves and Mineral Resources in
the SMC and along both the Main/’04 and Amalgamated
breaks.”
Q2 and YTD 2020 Production
Production Results |
Q2 2020 |
|
Q2 2019 |
|
Q1 2020 |
|
YTD 2020 |
|
YTD 2019 |
|
Fosterville |
|
|
|
|
|
|
|
|
|
|
Ore Milled (tonnes) |
123,473 |
|
111,280 |
|
118,701 |
|
242,175 |
|
251,464 |
|
Grade (g/t Au) |
39.5 |
|
39.9 |
|
42.4 |
|
40.9 |
|
33.8 |
|
Recovery (%) |
99.0 |
|
98.7 |
|
98.8 |
|
98.9 |
|
98.5 |
|
Gold Production (ozs) |
155,106 |
|
140,701 |
|
159,864 |
|
314,970 |
|
269,145 |
|
Macassa |
|
|
|
|
|
|
|
|
|
|
Ore Milled (tonnes) |
77,624 |
|
72,681 |
|
82,256 |
|
159,879 |
|
150,671 |
|
Grade (g/t Au) |
17.2 |
|
21.5 |
|
19.7 |
|
18.5 |
|
25.7 |
|
Recovery (%) |
97.6 |
|
97.9 |
|
97.7 |
|
97.6 |
|
98.1 |
|
Gold Production (ozs) |
41,865 |
|
49,196 |
|
50,861 |
|
92,726 |
|
121,972 |
|
Detour Lake1 |
|
|
|
|
|
|
|
|
|
|
Ore Milled (tonnes) |
5,655,992 |
|
|
|
3,708,022 |
|
9,364,014 |
|
|
|
Grade (g/t Au) |
0.79 |
|
|
|
0.84 |
|
0.81 |
|
|
|
Recovery (%) |
91.7 |
|
|
|
90.9 |
|
91.4 |
|
|
|
Gold Production (ozs) |
131.992 |
|
|
|
91,555 |
|
223,547 |
|
|
|
Holt Complex2 |
|
|
|
|
|
|
|
|
|
|
Ore Milled (tonnes) |
6,192 |
|
185,398 |
|
209,126 |
|
215,318 |
|
386,184 |
|
Grade (g/t Au) |
4.0 |
|
4.4 |
|
4.6 |
|
4.5 |
|
4.7 |
|
Recovery (%) |
100.1 |
|
95.0 |
|
93.4 |
|
93.6 |
|
95.4 |
|
Gold Production (ozs) |
807 |
|
24,696 |
|
28,584 |
|
29,390 |
|
55,355 |
|
Total Consolidated Production (ozs)3 |
329,770 |
|
214,593 |
|
330,864 |
|
660,634 |
|
446,472 |
|
Total Consolidated Gold Sales (ozs) |
341,390 |
|
232,929 |
|
344,586 |
|
685,976 |
|
445,020 |
|
- The Detour Lake Mine was acquired
on January 31, 2020. Production in Q1 2020 represents output from
that date to March 31, 2020. YTD 2020 production represents output
from that date to June 30, 2020.
- The Holloway Mine, a component of
Holt Complex, was placed on care and maintenance in March 2020 with
no plans for a resumption of operations. The remainder of the Holt
Complex was placed on temporary suspension effective April 2, 2020
as part of the Company’s COVID-19 response. The Complex remained on
temporary suspension as at June 30, 2020.
- Production numbers may not add to
totals due to rounding.
Performance Against Full-Year 2020
Production Guidance
|
Macassa |
Holt Complex |
DetourLake |
Fosterville |
Consolidated |
2020 Guidance (,000 ozs) |
210 – 220 |
29 |
520 – 540 |
590 – 610 |
1,350 – 1,400 |
YTD 2020 Production (ozs) |
92,726 |
29,390 |
223,547 |
314,970 |
660,634 |
After withdrawing guidance for 2020 on April 2,
2020 due to uncertainties related to the COVID-19 pandemic, the
Company issued new guidance on June 30, 2020, including the
production guidance provided in the table above. YTD 2020
production totaled 660,634 ounces, an increase of 48% from 446,472
ounces for YTD 2019 and compared to full-year guidance of 1,350,000
– 1,400,000 ounces. The main contributor to the strong growth
compared to the same period in 2019 was the contribution of 223,547
ounces from Detour Lake, following the acquisition of Detour Gold
on January 31, 2020. Partially offsetting the contribution from
Detour Lake was lower production at the Holt Complex (29,390 ounces
for YTD 2020 versus 55,355 ounces for YTD 2019) as a result of the
operation being placed on temporary suspension effective April 2,
2020. At June 30, 2020, Fosterville was tracking well against its
full-year 2020 production guidance. Production at Detour Lake and
Macassa is expected to increase in the second half of 2020 with
production activities at both mines having ramped up after being
placed on reduced operations near the end of March as part of the
Company’s COVID-19 response. Production of 29,390 ounces from Holt
Complex in YTD 2020 is included in the Company’s re-issued 2020
production guidance. This re-issued guidance assumes no production
from the Holt Complex in the second half of the year.
Review of Operations
Fosterville
The Fosterville Mine produced 155,106 ounces in
Q2 2020 based on processing 123,473 tonnes at an average grade of
39.5 g/t and average mill recoveries of 99.0%. Q2 2020 production
increased 10% from 140,701 ounces in Q2 2019, when the mine
processed 111,280 tonnes at an average grade of 39.9 g/t and
average recoveries of 98.7%. Q2 2020 production compared to
production of 159,864 ounces the previous quarter when the
mine recorded an average quarterly grade of 42.4 g/t at average
recoveries of 98.8%. The higher average grade in Q1 2020 reflected
mine sequencing in the lower Phoenix system.
Production at Fosterville for YTD 2020 totaled
314,970 ounces, a 17% increase from 269,145 ounces for YTD 2019.
YTD 2020 production resulted from processing 242,175 tonnes at an
average grade of 40.9 g/t and average recoveries of 98.9%. The
increase from YTD 2019 was mainly due to a 21% improvement in the
average grade, to 40.9 g/t for YTD 2020. Mill throughput in YTD
2020 averaged 1,331 tonnes per day compared to 1,390 tonnes per day
for YTD 2019.
Macassa
Production at Macassa in Q1 2020 totaled 41,865
ounces compared to production of 49,196 ounces in Q2 2019.
Production in Q2 2020 resulted from processing 77,624 tonnes at an
average grade of 17.2 g/t and average recoveries of 97.6%, which
compared to 72,681 tonnes processed in Q2 2019 at an average grade
of 21.5 g/t and average recoveries of 97.9%. The change in
production from Q2 2019 largely reflected a lower average grade and
the impact of reduced operations due to COVID-19, which resulted in
lower than planned tonnes processed in Q2 2020. Production in Q2
2020 compared to production of 50,861 ounces the previous quarter
when the mine processed 82,256 tonnes at an average grade of 19.7
g/t and average recoveries of 97.7%. The reduction in tonnes
processed compared to Q1 2020 largely reflected a greater impact
from the transition to reduced operations due to COVID-19 in Q2
2020 compared to the previous quarter.
Production at Macassa in YTD 2020 totaled 92,726
ounces, which resulted from processing 159,879 tonnes at an average
grade of 18.5 g/t and at average recoveries of 97.6%. YTD 2020
production compared to production of 121,972 ounces for YTD 2019,
which resulted from processing 150,671 tonnes at an average grade
of 25.7 g/t and at average recoveries of 98.1%. YTD 2020 production
was below expected levels largely reflecting lower than planned
tonnes processed as a result of the transition to reduced
operations due to COVID-19, as well as lower than expected grades.
Both tonnes processed and average grades are expected to increase
in the second half of 2020.
Detour Lake
Production at Detour Lake in Q2 2020 totaled
131,992 ounces, which involved processing 5,655,992 tonnes at an
average grade of 0.79 g/t at average recoveries of 91.7%.
Production in Q2 2020 compared to production for the two months
from January 31, 2020, the date the acquisition of Detour Gold was
completed, to March 31, 2020 of 91,555 ounces, which resulted from
processing 3,708,022 tonnes at an average grade of 0.84 g/t and at
average recoveries of 90.9%. Tonnes processed in Q2 2020 averaged
62,154 tonnes per day, largely unchanged from the average in
February and March. The lower average grade in Q2 2020 compared to
the two months ended March 31, 2020, was mainly due to feeding
lower grade stockpiled material to the mill during reduced
operations. Production at Detour Lake for the five months ended
June 30, 2020 totaled 223,547 ounces, which resulted from
processing 9,364,014 tonnes at an average grade of 0.81 g/t and at
average recoveries of 91.4%.
Holt Complex
The assets included in the Holt Complex (Holt,
Holloway and Taylor mines and Holt Mill) were designated as
non-core on February 19, 2020 with the Company planning to assess
options for maximizing the value of these assets. In March 2020,
the Holloway Mine was transitioned to care and maintenance with no
plans for a future resumption of operations. Effective April 2,
2020, the remainder of the Holt Complex was placed on temporary
suspension effective April 2, 2020 as part of the Company’s
COVID-19 response. As a result, there was almost no production from
Holt Complex in Q2 2020 (807 ounces produced). Production in Q2
2019 totaled 24,696 ounces, which resulted from processing 185,398
tonnes at an average grade of 4.4 g/t and average recoveries of
95.0%. Production from the Holt Complex in Q1 2020 totaled 28,584
ounces, which resulted from processing 209,126 tonnes at an average
grade of 4.6 g/t and at average recoveries of 93.4%. For YTD 2020,
the Holt Complex produced 29,390 ounces from processing 215,318
tonnes at an average grade of 4.5 g/t and average recoveries of
93.6%.
At June 30, 2020, the Holt Complex remained on
temporary suspension while the Company continued to assess options
for the future of the Holt Complex assets. YTD production of 29,390
ounces from Holt Complex is included in the Company’s re-issued
2020 production guidance, with no production assumed in the second
half of the year.
Qualified Person
Natasha Vaz, P.Eng., Senior Vice President,
Technical Services and Innovation 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.kl.gold.
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, 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, the
anticipated overall impact of the Company’s COVID 19 response
plans, and changes in Mineral Resources and conversion of Mineral
Resources to proven and probable reserves.
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 years ended December 31, 2019 and 2018, and the
three months ended March 31, 2020, filed with the securities
regulatory authorities in certain provinces of Canada and available
on SEDAR and EDGAR. 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.
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.
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.gold
Mark Utting, Senior Vice President, Investor Relations Phone: +1
416-840-7884 E-mail: mutting@kl.gold
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