Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the “
Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
announced production for the second quarter of 2018 (“Q2 2018”) of
164,685 ounces and for the first six months of 2018 (“H1 2018”) of
312,329 ounces. Production in Q2 2018 exceeded target levels for
the quarter driven by record quarterly production from Macassa of
60,571 ounces and record monthly production in June at Fosterville
of 31,710 ounces (77,462 ounces for Q2 2018). At June 30, 2018, the
Company remained well positioned to achieve its full-year 2018
consolidated production guidance of over 620,000 ounces. Details of
the Company’s Q2 and H1 2018 conference call and webcast are
provided later in this press release. All dollar amounts are
expressed in U.S. dollars, unless otherwise noted.
Highlights of Q2 2018 and H1 2018
production results:
- Consolidated Q2 2018 production of 164,685
ounces, compared to 160,305 ounces in the second quarter of 2017
(“Q2 2017”) and 147,644 ounces in the first quarter of 2018 (“Q1
2018”)
- Gold poured in Q2 2018 of 162,748 ounces, with
consolidated gold sales totaling 164,305 ounces
- Record quarterly production at Macassa
totaling 60,571 ounces in Q2 2018, an increase of 33% from 45,699
ounces in Q2 2017 and 12% from the previous quarterly record of
54,038 ounces in Q1 2018
- Strong results at Fosterville in Q2 2018 with
production totaling 77,462 ounces, compared to 77,069 ounces in Q2
2017 and 63,843 ounces the previous quarter
- Production at Holt and Taylor of 13,712 ounces
and 12,940 ounces, respectively, in Q2 2018, compared to production
of 15,101 ounces and 12,218 ounces, respectively in Q2 2017 and
16,675 ounces and 13,055 ounces, respectively, in Q1 2018
- Record first-half production totaling 312,329
ounces in H1 2018, an increase of 7% from 290,733 ounces in the
first six months of 2017 (“H1 2017”), with year-over-year
production increasing 21% at Macassa, to 114,609 ounces, and 15% at
Fosterville, to 141,305 ounces
- Year-to-date 2018 gold poured of 310,793
ounces, with H1 2018 gold sales of 312,068 ounces.
Other key developments during Q2 2018,
include:
- Significant exploration success
- Fosterville: High-grade, visible-gold bearing
quartz veins intersected at Robbin’s Hill, 3.8 km from Fosterville
Mine, highlighting the potential to identify new areas of
high-grade gold mineralization
- Macassa: Underground in-fill drilling
intersects high-grade mineralization within and outside existing
Mineral Resources of the South Mine Complex in support of future
growth in Mineral Resources and Mineral Reserves
- Northern Territory: High-grade, visible-gold
bearing mineralization extended to 1,000 metres below surface at
Union Reefs, identifying a potential new source of gold
production
- Taylor: High-grade mineralization intersected
up to 2.9 km east of Shaft Deposit, new gold system discovered
below the West Porphyry Deposit extended by 150 metres to
depth.
- Strong cash and cash flow
- Cash and cash equivalents increased $43 million or 16% during
Q2 2018, to approximately $318 million at June 30, 2018. Factors
affecting cash included continued strong operating cash flow, the
weighting of capital expenditures to the second half of 2018 (“H2
2018”), the release of approximately $20 million of
previously-restricted cash (reflecting changes to security
requirements related to rehabilitation performance guarantees) and
the use of $15.0 million (C$20.0 million) of cash to acquire four
million common shares of Novo Resources Corp.
- On May 2, 2018, the Company reported strong Q1 2018 net
earnings of $53.8 million ($0.25/share), cash flow from operating
activities of $89.6 million and free cash flow of $50.2
million.
- Continued focus on shareholder returns
- Quarterly dividend of C$0.02/share paid on April 13, 2018, with
an increase to C$0.03/share announced effective for Q2 2018
dividend payable on July 13, 2018
- Common share price increased 40% in Q2 2018 (44% year to date),
closing on Friday, June 29, 2018 at C$27.84 on the TSX (C$29.20 per
share as at July 9, 2018).
Tony Makuch, President and Chief
Executive Officer of Kirkland Lake Gold, commented: “We had a
strong second quarter, achieving record quarterly production at
Macassa and a record month in June at Fosterville. Average grades
at both mines were above expected levels. Contributing to
Fosterville’s strong results was higher than planned mining in
areas close to the contact of the Eagle and Swan zones, where we
encountered greater widths and higher average grades than were
anticipated. At Macassa, production on the 5700 Level, a relatively
new area of mining, continued to outperform on grade, as they did
during the first quarter of the year. We will be mining in and
around this area throughout the balance of 2018. Based on our solid
first-half results, and expectations for H2 2018, we are very much
on track to achieve our consolidated production guidance for 2018
of more than 620,000 ounces.”
Q2 and H1 2018 Production Results
|
Q2 2018 |
Q2 2017 |
Q1 2018 |
H1 2018 |
H1 2017 |
Fosterville |
|
|
|
|
|
Ore Milled (tonnes) |
121,342 |
147,486 |
123,669 |
245,011 |
285,273 |
Grade (g/t Au) |
20.6 |
17.2 |
16.8 |
18.7 |
14.2 |
Recovery (%) |
96.2 |
94.7 |
95.7 |
96.0 |
94.3 |
Gold Production (ozs) |
77,462 |
77,069 |
63,843 |
141,305 |
123,153 |
Macassa |
|
|
|
|
|
Ore Milled (tonnes) |
89,781 |
105,084 |
86,661 |
176,442 |
196,544 |
Grade (g/t Au) |
21.5 |
13.9 |
19.9 |
20.5 |
15.4 |
Recovery (%) |
97.7 |
97.0 |
97.6 |
97.7 |
94.1 |
Gold Production (ozs) |
60,571 |
45,699 |
54,038 |
114,609 |
94,422 |
Holt |
|
|
|
|
|
Ore Milled (tonnes) |
95,343 |
105,470 |
122,280 |
217,623 |
211,099 |
Grade (g/t Au) |
4.8 |
4.7 |
4.5 |
4.6 |
4.7 |
Recovery (%) |
94.2 |
94.8 |
94.8 |
94.5 |
94.8 |
Gold Production (ozs) |
13,712 |
15,101 |
16,675 |
30,387 |
30,419 |
Taylor |
|
|
|
|
|
Ore Milled (tonnes) |
99,711 |
67,520 |
84,464 |
184,175 |
130,809 |
Grade (g/t Au) |
4.3 |
5.8 |
5.0 |
4.6 |
5.7 |
Recovery (%) |
94.1 |
96.2 |
95.5 |
94.8 |
96.5 |
Gold Production (ozs) |
12,940 |
12,218 |
13,055 |
25,995 |
23,160 |
Operations on Care & Maintenance1 |
|
|
|
|
|
Cosmo – Gold Production (ozs) |
n/a |
10,213 |
n/a |
n/a |
19,305 |
Holloway – Gold Production (ozs) |
n/a |
5 |
33 |
33 |
274 |
Gold Production (excluding operations on care and maintenance or
sold in 2017) |
164,685 |
150,087 |
147,611 |
312,296 |
271,154 |
Total Consolidated Production (ozs)2 |
164,685 |
160,305 |
147,644 |
312,329 |
290,733 |
Total Consolidated Gold Sales (ozs) |
164,305 |
151,208 |
147,763 |
312,068 |
289,109 |
1) The Cosmo Mine was placed on care and
maintenance effective June 30, 2017 (see News Release dated May
4/17). The Holloway mine was placed on care and maintenance
effective December 31, 2016 (see News Release dated Dec.
12/16). 2) Production numbers may not add to total due to
rounding.
Performance Against Full-Year 2018 Production
Guidance
|
Macassa |
Holt |
Taylor |
Fosterville |
Consolidated |
2018 Guidance (,000 ozs) |
215 – 225 |
65 – 75 |
60 – 70 |
260 – 300 |
+620 |
H1 2018 Production (ozs) |
114,609 |
30,387 |
25,995 |
141,305 |
312,3291 |
1) Includes 33 ounces related to the Holloway mine
H1 2018 production totaled 312,329 ounces, an
increase of 7% from 290,733 ounces in Q1 2017. Excluding production
from mines currently on care and maintenance, total consolidated
production of 312,296 ounces for H1 2018 grew by 15% from 271,154
ounces in H1 2017. Based on year-to-date results as at June 30,
2018, the Company entered the second half of the year well
positioned to achieve its full-year 2018 consolidated production
guidance of more than 620,000 ounces.
Review of Operating Mines
Fosterville
The Fosterville Mine produced 77,462 ounces in
Q2 2018, based on processing 121,342 tonnes at an average grade of
20.6 g/t and average mill recoveries of 96.2%. A key driver of the
strong quarterly results in Q2 2018 was record monthly production
in June of 31,710 ounces, which resulted from processing 33,296
tonnes at an average grade of 30.4 g/t and average recoveries of
97.5%. Q2 2018 production compared to production of 77,069 ounces
in Q2 2017, when the mine processed 147,486 tonnes at an average
grade of 17.2 g/t and average recoveries of 94.7%. Production in Q2
2018 increased 21% from 63,843 ounces in Q1 2018, reflecting a 23%
increase in the average grade. The growth from the previous quarter
largely reflected increased mining activity in parts of the Eagle
Zone located close to the contact with the Swan Zone. Average
widths and grades in these areas have exceeded expectations. In
addition, the Company also processed a small amount of development
material from the Swan Zone during Q2 2018, which also returned
higher than expected average grades.
Production at Fosterville in H1 2018 totaled
141,305 ounces, a 15% increase from H1 2017. H1 2018 production
resulted from processing 245,011 tonnes at an average grade of 18.7
g/t and average recoveries of 96.0%, which compared to processing
285,273 tonnes at an average grade of 14.2 g/t and average
recoveries of 94.3% in H1 2017. The 32% increase in the average
grade compared to H1 2017 mainly resulted from the continued
transition to mining deeper, higher-grade stopes, consistent with
the trend towards higher grades at depth at Fosterville. The
reduction in tonnes milled compared to the prior year reflected the
mine’s focus on extracting high-grade stopes at depth within the
Lower Phoenix System. The Company continues to target initial
production from a second mining front, in the Harrier System, near
the end of 2018.
Following completion of H1 2018, Fosterville was
on track to achieve the mine’s full-year 2018 production guidance
of 260,000 – 300,000 ounces.
Macassa
The Macassa Mine achieved record quarter
production in Q2 2018 of 60,571 ounces based on 89,781 tonnes
milled at an average grade of 21.5 g/t and average mill recoveries
of 97.7%. Q2 2018 production was 33% higher than the 45,699 ounces
produced in Q2 2017, when 105,084 tonnes were processed at an
average grade of 13.9 g/t. The increase from the same quarter
in 2017 resulted from a 55% improvement in the average grade,
largely reflecting mining higher-grade stopes, favourable grade
reconciliations in Q2 2018 and the impact of improvements in grade
control practices. The strong grade performance related mainly to
stope production on or around the 5700-foot level, where mining
commenced at the end of last year and which represents the deepest
production recorded to date in the South Mine Complex. In addition,
all tonnes processed in Q2 2018 related to mine production, whereas
15,083 tonnes of the 105,084 tonnes processed in Q2 2017 were drawn
from low-grade stockpiles and had an averaged grade of 1.4 g/t. The
grade of the 90,001 tonnes of mine production processed in Q2 2017
averaged 16.0 g/t. Q2 2018 production at Macassa was 12% higher
than the previous quarterly production record at Macassa of 54,038
ounces in Q1 2018, when a total of 86,661 tonnes were processed
(all from mine production) at an average grade of 19.9 g/t and
average recoveries of 97.6%.
Production at Macassa in H1 2018 totaled 114,609
ounces, a 21% increase from H1 2017. H1 2018 production resulted
from processing 176,442 tonnes at an average grade of 20.5 g/t and
average recoveries of 97.7%. All tonnes processed in H1 2018 were
from mine production. In H1 2017, a total of 196,544 tonnes were
processed at an average grade of 15.4 g/t. Of tonnes processed in
H1 2017, 175,547 tonnes related to mine production and averaged
17.0 g/t, with the remaining 20,997 tonnes being drawn from
low-grade stockpiles and averaging 1.6 g/t. The 33% increase
in the average grade from mine production, to 20.5 g/t in H1 2018
from 17.0 g/t grade in H1 2017, reflected mining higher-grade
stopes, the impact of favourable grade reconciliations in H1 2018
and improved grade control practices.
At June 30, 2018, Macassa was well positioned to
achieve the mine’s full-year 2018 production guidance of 215,000 –
225,000 ounces.
Holt
During Q2 2018, the Holt mine produced 13,712
ounces, which compared to 15,101 ounces in Q2 2017 and 16,675
ounces the previous quarter. Production in Q2 2018 resulted from
processing 95,343 tonnes at an average grade of 4.8 g/t and average
recoveries of 94.2%, which compared to processing 105,470 tonnes at
an average grade of 4.7 g/t and average recoveries of 94.8% in Q2
2017 and 122,280 tonnes at an average grade of 4.5 g/t and average
recoveries of 94.8% in Q1 2018. During Q2 2018, the mine had a
21-day planned shutdown in order to replace approximately 700
guides on the Holt shaft, which impacted both tonnes processed and
ounces produced for the quarter. The new guides will contribute to
enhanced productivity from the shaft going forward. Average grades
improved from both prior periods. Processing rates and ounces
produced are expected to increase during the remaining quarters of
2018.
For H1 2018, Holt produced 30,387 ounces,
largely unchanged from the 30,419 ounces produced in H1 2017 as a
3% increase in tonnes processed (217,623 tonnes in H1 2018 versus
211,099 tonnes in H1 2017) was offset by a slight reduction in the
average grade (4.6 g/t in H1 2018 compared to 4.7 g/t the previous
year).
The Company is targeting higher levels of
production in H2 2018 compared to the first half of the year, and
expects the Holt Mine to achieve the mine’s full-year 2018
production guidance of 65,000 – 75,000 ounces.
Taylor
Gold production from the Taylor Mine during Q2
2018 totaled 12,940 ounces, based on 99,711 tonnes processed at an
average grade of 4.3 g/t and average recoveries of 94.1%. Q2 2018
production increased 6% from Q2 2017, when production totaled
12,218 ounces based on 67,520 tonnes processed at an average grade
of 5.8 g/t and average recoveries of 96.2%. Production in Q2 2018
compared to production of 13,055 ounces the previous quarter when a
total of 84,464 tonnes were processed at an average grade of 5.0
g/t and average recoveries of 95.5%. The average grade in Q2 2018
largely reflected mine sequencing with grades expected to increase
over the balance of the year.
For H1 2018, Taylor produced 25,995 ounces from
processing 184,175 tonnes at an average grade of 4.6 g/t and
average recoveries of 94.8%. H1 2018 production compared to H1 2017
production of 23,160 ounces, which resulted from processing 130,809
tonnes at an average grade of 5.7 g/t and average recoveries of
96.5%.
Grades at the Taylor Mine are expected to
improve in H2 2018 and the Company continues to target full-year
2018 production from Taylor of 60,000 – 70,000 ounces.
Q2 and H1 2018 Financial Results and Conference Call
Details
The Company will release its financial and
operating results for Q2 and H1 2018 before the market opens on
Wednesday, August 1, 2018. The Company will then host a conference
call to review the results later that day (Wednesday, August 1,
2018) at 1:30 pm ET. Those wishing to join the call can do so using
the telephone numbers listed below. The call will also be webcast
and available on the Company’s website at www.klgold.com.
Date: |
WEDNESDAY, AUGUST 1, 2018 |
Conference Id: |
8986758 |
Time: |
1:30
pm ET |
Toll-free number: |
1
(866) 393-4306 |
International callers: |
1
(734) 385-2616 |
Webcast URL: |
https://event.on24.com/wcc/r/1772072/71EDE740C03CE70A2D11FB00652CC45A |
Qualified Persons
Pierre Rocque, P.Eng., Vice President, Canadian
Operations and Ion Hann, FAusIMM, General Manager, Fosterville Gold
Mine are “qualified persons” as defined in National Instrument
43-101 and have 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 mid-tier gold
producer with 2018 production targeted at over 620,000 ounces of
gold from mines in Canada and Australia. The production profile of
the Company is anchored by two high-grade, low-cost operations,
including the Macassa Mine located in Northeastern 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.
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 “forward looking
statements” and "forward-looking information" within the meaning of
applicable securities laws, including statements regarding the
plans, intentions, beliefs and current expectations of Kirkland
Lake Gold with respect to future business activities and operating
performance. Forward-looking information is often identified by the
words "may", "would", "could", "should", "will", "intend", "plan",
"anticipate", "believe", "estimate", "expect" or similar
expressions and include information regarding: (i) the amount of
future production over any period; (ii) assumptions relating to
revenues, operating cash flow and other revenue metrics set out in
the Company's disclosure materials; and (iii) future exploration
plans.
Investors are cautioned that forward-looking
information is not based on historical facts but instead reflect
Kirkland Lake Gold's management's expectations, estimates or
projections concerning future results or events based on the
opinions, assumptions and estimates of management considered
reasonable at the date the statements are made. Although Kirkland
Lake Gold believes that the expectations reflected in such
forward-looking information are reasonable, such information
involves risks and uncertainties, and undue reliance should not be
placed on such information, as unknown or unpredictable factors
could have material adverse effects on future results, performance
or achievements of the combined company. Among the key factors that
could cause actual results to differ materially from those
projected in the forward-looking information are the following: the
future development and growth potential of the Canadian and
Australian operations; the future exploration activities planned at
the Canadian and Australian operations and anticipated effects
thereof; 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, financial statements and related MD&A for the
financial year ended December 31, 2017, and its interim financial
statements and related MD&A for the period ended March 31,
2018, which are 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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