Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the “
Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
announced production for the second quarter of 2019 (“Q2 2019”) of
214,593 ounces and for the first six months of 2019 (“H1 2019”) of
446,472 ounces. Production in Q2 2019 was driven by record
quarterly production at Fosterville totaling 140,701 ounces,
bringing year-to-date production at the mine to 269,145 ounces at
June 30, 2019. Production at Fosterville is expected to increase
from Q2 2019 levels in each of the final two quarters of the year,
with the mine remaining on track to achieve full-year 2019 guidance
of 570,000 – 610,000 ounces. On a consolidated basis, the Company
continues to target full-year 2019 production of 950,000 –
1,000,000 ounces. All dollar amounts are expressed in U.S. dollars,
unless otherwise noted.
Highlights of Q2 2019 and H1 2019
production results:
- Consolidated Q2 2019 production of 214,593
ounces compared to 164,685 ounces in the second quarter of 2018
(“Q2 2018”) and 231,879 ounces the previous quarter (“Q1 2019”) (H1
2019 consolidated production of 446,472 ounces, 43% higher than
312,329 ounces in the first half of 2018 (“H1 2018”))
- Gold poured in Q2 2019 of 216,166 ounces,
with consolidated gold sales totaling 212,091 ounces (H1 2019 gold
poured of 446,417 ounces, with total gold sales of 445,020
ounces)
- Record quarterly production at Fosterville
totaling 140,701 ounces, an increase of 82% from 77,462 ounces in
Q2 2018 and 10% higher than 128,445 ounces in Q1 2019 (H1 2019
production of 269,145 ounces, a 90% increase from 141,305 ounces in
H1 2018)
- Production at Macassa in Q2 2019 totaling
49,196 ounces compared to 60,571 ounces in Q2 2018 and record
production of 72,776 ounces the previous quarter (H1 2019
production of 121,972 ounces, 6% higher than 114,609 ounces in H1
2018)
- Production at Holt Complex of 24,696 ounces
versus 26,652 ounces in Q2 2018 and 30,658 ounces in Q1 2019 (H1
2019 production of 55,355 ounces, similar to 56,415 ounces in H1
2018)
Other key developments during Q2 2019,
include:
- Exploration success at Macassa
- Underground drilling expands high-grade mineralization in the
South Mine Complex (“SMC”) to the east, west and to depth; two new
areas of high-grade mineralization along the Amalgamated Break
identified.
- Strong Q1 2019 net earnings and free cash flow
- On May 7, 2019, the Company reported strong financial results
for Q1 2019, including record adjusted net earnings per share of
$0.53 and free cash flow of $93.1 million
- Cash and cash equivalents at June 30, 2019 totaled $469
million, an increase of $137 million or 41% from $332 million at
December 31, 2018 (and an increase of $53 million or 13% from $416
million at March 31, 2019).
- Continued focus on shareholder returns
- Quarterly dividend of C$0.04/share paid on April 12, 2019 to
shareholders of record at March 31, 2019; Q2 2019 quarterly
dividend of $0.04/share announced on May 7, 2019, to be paid on
July 12, 2019 to shareholders of record on June 28, 2019. The Q2
2019 dividend payment is the first time the Company’s quarterly
dividend is being paid in US dollars. (US dollar dividend payments
are converted into Canadian dollars for Canadian shareholders using
the spot price exchange rate on July 11, 2019, the date prior to
the payment date)
- Common share price increased 36% in Q2 2019 (55% year to date)
on the TSX, closing on Friday, July 5, 2019 at C$55.03/share
($42.07/share on the NYSE and A$61.54/share on the ASX (July
4)).
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold, commented: “Fosterville achieved a
record quarter in Q2 2019, with production exceeding planned levels
largely due to strong grade performance in the Swan Zone. We are
targeting higher levels of production from Fosterville in both the
third and fourth quarters of the year as ounces produced from the
Swan Zone increase, with the mine tracking well towards its
full-year 2019 guidance of 570,000 – 610,000 ounces. At Macassa, we
saw average grades more in line with expected levels in Q2 2019,
which compared to Q1 2019 when the record average quarterly grade
of 29.6 g/t was achieved mainly due to grade outperformance in the
SMC. Tonnes processed during Q2 2019 were lower than expected,
largely reflecting excess water from the spring run-off, which
limited the use of the lower loading pocket at the #3 Shaft. The
impact of the water extended longer than anticipated, through to
the end of the quarter. Water levels are receding, and we do not
expect third and fourth quarter production to be impacted. Macassa
remains on track to achieve its full-year 2019 guidance of 240,000
– 250,000 ounces.”
Q2 and H1 2019 Production Results
|
Q2 2019 |
Q2 2018 |
Q1 2019 |
H1 2019 |
H1 2018 |
Fosterville1 |
|
|
|
|
|
Ore Milled (tonnes) |
111,280 |
121,342 |
140,184 |
251,464 |
245,011 |
Grade (g/t Au) |
39.9 |
20.6 |
29.0 |
33.8 |
18.7 |
Recovery (%) |
98.7 |
96.2 |
98.3 |
98.5 |
96.0 |
Gold Production (ozs) |
140,701 |
77,462 |
128,445 |
269,145 |
141,305 |
Macassa |
|
|
|
|
|
Ore Milled (tonnes) |
72,681 |
89,781 |
77,990 |
150,671 |
176,442 |
Grade (g/t Au) |
21.5 |
21.5 |
29.6 |
25.7 |
20.5 |
Recovery (%) |
97.9 |
97.7 |
98.2 |
98.1 |
97.7 |
Gold Production (ozs) |
49,196 |
60,571 |
72,776 |
121,972 |
114,609 |
Holt Complex3 |
|
|
|
|
|
Ore Milled (tonnes) |
185,398 |
195,054 |
200,786 |
386,184 |
401,798 |
Grade (g/t Au) |
4.4 |
4.5 |
5.0 |
4.7 |
4.6 |
Recovery (%) |
95.0 |
94.1 |
95.7 |
95.4 |
94.6 |
Gold Production (ozs) |
24,696 |
26,652 |
30,658 |
55,355 |
56,415 |
Total Consolidated Production (ozs) |
214,593 |
164,685 |
231,879 |
446,472 |
312,329 |
Total Consolidated Gold Sales (ozs) |
212,091 |
164,305 |
232,929 |
445,020 |
312,068 |
- Numbers may not add due to rounding
- The Holt Complex includes the Holt Mine, Taylor Mine and
Hollowing Mine, which all feed the Holt Mill. On February 21, 2019,
the Company announced plans to resume operations at Holloway
following completion of a revised and updated royalty agreement.
Production from Holloway is included in the Company’s commercial
production effective that date.
Performance Against Full-Year 2019 Production
Guidance
|
Macassa |
Holt Complex |
Fosterville |
Consolidated |
2019 Guidance (,000 ozs) |
240 – 250 |
140 – 150 |
570 – 610 |
950 – 1,000 |
H1 2019 Production (ozs) |
121,972 |
55,355 |
269,145 |
446,472 |
H1 2019 production totaled 446,472, an increase
of 43% from 312,329 ounces in H1 2018. The main contributor to the
strong growth compared to the same period in 2018 was record
production at Fosterville, mainly due to a significant improvement
in the average grade. Production from Fosterville is expected to
increase significantly during the second half of the year, as is
production from the Holt Complex. Macassa ended H1 2019 well
positioned to achieve its full-year 2019 production guidance, with
production in the second half of the year expected to be similar to
the H1 2019 total of 121,972 ounces. The Company remains on track
to achieve its full-year 2019 production guidance of 950,000 –
1,000,000 ounces of gold production.
Review of Operating Mines
Fosterville
The Fosterville Mine produced 140,701 ounces in
Q2 2019, an increase of 82% from 77,462 ounces in Q2 2018 and 10%
higher than 128,445 ounces the previous quarter. Production in Q2
2019 resulted from processing 111,280 tonnes at an average grade of
39.9 g/t and average mill recoveries of 98.7%. The growth in
production from both prior periods was due to a significant
increase in the average grade, which was 94% and 38% higher than in
Q2 2018 and Q1 2019, respectively. The strong grade performance in
Q2 2019 resulted from increased mining of high-grade stopes in the
Swan Zone during the quarter compared to the previous quarter as
the stoping front continued to progress deeper into the high-grade
sections of the Swan Zone. There were no production stopes from the
Swan Zone included in Q2 2018 production. Tonnes processed in Q2
2019 were largely in line with expected levels, with the reduction
from both prior periods largely reflecting a focus on maximizing
grade in the mine plan.
Production at Fosterville in H1 2019 totaled
269,145 ounces, an increase of 90% from 141,305 ounces for the same
period in 2018. H1 2019 production resulted from processing 251,464
tonnes at an average grade of 33.8 g/t and average recoveries of
98.5%. The increase from H1 2018 was mainly due to an 81%
improvement in the average grade, largely reflecting the
contribution from high-grade stopes in the Swan Zone to H1 2019
production. Stope production from the Swan Zone commenced during
the third quarter of 2018. Mill throughput in H1 2019 averaged
1,390 tonnes per day, in line with expected levels and similar to
the 1,350 tonnes per day average achieved in H1 2018.
Following completion of H1 2019, Fosterville was
on track to achieve the mine’s full-year 2019 production guidance
of 570,000 – 610,000 ounces. Production levels in H2 2019 are
expected to be significantly higher than during the first half of
the year, reflecting increased production from the Swan Zone.
Macassa
The Macassa Mine produced 49,196 ounces in Q2
2019, which compared to 60,571 ounces in Q2 2018 and record
production of 72,776 ounces the previous quarter. Production in Q2
2019 resulted from processing 72,681 tonnes at an average grade of
21.5 g/t and average recoveries of 97.9%. The change in production
from Q2 2018 reflected lower tonnes milled largely reflecting the
impact of excessive water in the mine during the spring run-off,
which limited the use of the lower loading pocket at the #3 Shaft.
The change in production from the previous quarter resulted from a
reduction in the average grade from the record quarterly grade of
29.6 g/t in Q1 2019, as well as reduced tonnes milled.
Production at Macassa in H1 2019 totaled 121,972
ounces, an increase of 6% from 114,609 ounces for the same period
in 2018. The increase in production in H1 2019 reflected a 25%
improvement in the average grade, to 25.7 g/t, reflecting
significant grade outperformance from stopes on the 5700 Level of
the SMC during Q1 2019. The impact of a higher average grade
compared to H1 2018 more than offset a reduction in tonnes milled
in H1 2019 versus the same period a year earlier.
At June 30, 2019, Macassa was well positioned to
achieve the mine’s full-year 2019 production guidance of 240,000 –
250,000 ounces, with tonnes milled expected to increase in H2 2019
from levels achieved in the first half of the year.
Holt Complex
During Q2 2019, the Holt Complex produced 24,696
ounces based on processing 185,398 tonnes at an average grade of
4.4 g/t and at average recoveries of 95.0%. Production in Q2 2019
compared to production of 26,652 ounces in Q2 2018 and 30,658
ounces the previous quarter. The change in production from Q2 2018
largely reflected lower production at Taylor Mine (10,204 ounces
versus 12,940 ounces in Q2 2018) as the favourable impact of a
higher average grade was more than offset by reduced mill
throughput. Compared to the previous quarter, production at Holt
Mine of 12,928 ounces in Q2 2019 compared to 17,225 ounces in Q1
2019 with the reduction reflecting lower average grades (3.9 g/t in
Q2 2019 versus 4.8 g/t the previous quarter). Q2 2019 production at
Taylor compared to production of 12,377 ounces in Q1 2019 with the
change reflecting both a lower average grade (5.2 g/t versus 5.4
g/t the previous quarter) and reduced tonnes milled (64,186 tonnes
in Q2 2019 versus 75,085 tonnes process in Q1 2019). At Holloway,
1,564 ounces were produced in Q2 2019 versus nil in Q2 2018 and
1,056 ounces the previous quarter.
For H1 2019, the Holt Complex produced 55,355
ounces, similar to the 56,415 ounces produced for the same period
in 2018. Production at Holt Mine of 30,153 ounces was largely
unchanged from 30,387 ounces in H1 2018. The Taylor Mine produced
22,581 ounces in H1 2019 compared to 25,995 ounces in H1 2018, as
reduced levels of mill throughput more than offset an increase in
the average grade year over year. The Holloway Mine produced
2,621 ounces in H1 2019 versus 33 ounces while on care and
maintenance in H1 2018.
The Company is targeting higher levels of
production from the Holt Complex in H2 2019 compared to the first
half of the year. Production at Holloway is expected to ramp up
with full-year 2019 production targeted at approximately 20,000
ounces. The Company’s full-year 2019 production guidance for the
Holt Complex remains unchanged at 140,000 – 150,000 ounces.
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 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.
For further information on Kirkland Lake Gold and to receive
news releases by email, visit the website www.klgold.com.
Filing of Full-Year 2018 Financial Statements and
MD&A
The Company’s 2018 annual report, including the
consolidated Financial Statements and Management’s Discussion &
Analysis, was filled with the SEC and on SEDAR on February 21, 2019
and are available on the Company’s website. In addition, the
Company makes available, and will provide to all shareholders, upon
request, hard copies of these documents free of charge.
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:
changes to 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); fluctuation in gold price; changes in foreign
exchange rates (particularly the Canadian dollar, Australia dollar
and U.S. dollar); disruptions affecting operations; 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 regulations (including tax legislation); 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, 2018, which are filed with the securities regulatory
authorities in certain provinces of Canada and available at
www.sedar.com.
Forward looking statements include information
as to plans, strategy and future operational and financial
performance, project timeline, expected production rates, the use
of stockpile inventory, expected recoveries and other statements
that express management’s expectations or estimates on future
production. While such statements are considered reasonable by the
Company at the time of making such statements, 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@klgold.com
Mark Utting, Vice-President, Investor Relations Phone: +1
416-840-7884 E-mail: mutting@klgold.com
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