Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the “
Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
announced the Company’s full-year guidance for 2019, which includes
strong production growth, improved unit costs and a continued
strong commitment to exploration and growth. The Company also
announced today three-year production guidance, which includes the
Fosterville Mine achieving over 500,000 ounces of production by
2020 and demonstrates the potential for consolidated production to
reach one million ounces by 2021. All dollar amounts are expressed
in U.S. dollars unless otherwise noted.
Highlights of 2019 guidance
include:
- Production growth to 740,000 – 800,000 ounces,
driven largely by significantly higher production at Fosterville,
as well as increased production at Macassa
- Operating cash costs per ounce sold1 to
improve to $360 – $380
- All-in sustaining costs (“AISC”) per ounce
sold1 to achieve significant improvement to $630 – $680
- Exploration expenditures estimated at $100 –
$120 million, including capitalized exploration expenditures, with
$85 – $100 million targeted for Fosterville and the Northern
Territory in Australia
- Sustaining capital expenditures1 of $150 –
$170 million, with sustaining capital expenditures on a per ounce
of gold sold basis expected to improve significantly from 2018
levels
- Growth capital expenditures1 of $155 – $165
million in 2019, largely reflecting expenditures for the Macassa #4
shaft project and growth projects at Fosterville. (1) See the
“Non-IFRS Measures” section starting on page 35 of the Company’s
MD&A for the three and nine months ended September 30, 2018
filed on the Company’s profile on SEDAR at
www.sedar.com.
Highlights of three-year production
guidance include:
- Consolidated: Kirkland Lake Gold is targeting
consolidated production growth of 10 – 15% per year over the next
three years, with production of 740,000 – 800,000 ounces in 2019 to
be followed by production of 850,000 – 910,000 ounces in 2020 and
945,000 – 1,005,000 ounces in 2021
- Fosterville: Production to increase to over
500,000 ounces in 2020 and reach over 570,000 ounces by 2021 driven
by higher grades and increased throughput in 2021
- Macassa: Production to reach 245,000 – 255,000
ounces in 2021, with output to increase substantially in 2022 with
the commencement of production from the new #4 shaft
- Holt Complex: Production, including output
from the Taylor and Holt mines using the Holt Mill, to total over
120,000 ounces in both 2019 and 2020, increasing to over 130,000
ounces in 2021 (additional production potential at Holloway Mine,
where advanced exploration work is commencing ahead of possible
resumption of operations)
- Northern Territory: Work at Cosmo Mine and
Union Reefs moving to advanced exploration phase with focus on
evaluating potential restart of operations as early as second half
of 2019 (no ounces from Northern Territory included in 2019 or
three-year production guidance).
Tony Makuch, President and Chief Executive
Officer, commented: “Kirkland Lake Gold is poised to achieve
substantial production growth and improved unit costs in 2019. We
will also continue to invest in exploration and additional
production growth, with our plan being to reach one million ounces
of annual gold production as early as 2021. While achieving one
million ounces of production will be a significant milestone, it is
more important that the growth we achieve continues to drive down
unit costs, increases margins and positions us to generate
substantial amounts of free cash flow going forward.
“Not surprisingly, the key driver of our
three-year growth is Fosterville, where we expect to achieve over
half a million ounces of annual gold production by 2020 and close
to 600,000 ounces in 2021. As demonstrated from recent drilling and
production results, the Swan Zone is a truly unique, high-grade
zone that we are continuing to grow. We continue to explore for
more zones like Swan at Fosterville and are encouraged by the fact
that similar mineralization has been intersected in multiple
locations. At Macassa, we expect to achieve incremental growth in
production, with guidance for 2021 of 245,000 – 255,000 ounces, to
be followed by a large step-up in output in 2022 with production
commencing from the new #4 shaft. Elsewhere, we are transitioning
both the Holloway Mine and Northern Territory assets from care and
maintenance to advanced exploration with a focus on evaluating the
potential to resume operations at both locations.
“Finally, turning to capital, based on our
current growth plans we will see the peak level of growth capital
expenditures in 2019, with these expenditures to be reduced
starting in 2020. The Macassa #4 shaft project is advancing very
well, with full-face shaft sinking set to commence in the second
quarter of 2019. At Fosterville, our three key projects, new
ventilation, a paste fill plant and water treatment plant, will be
completed during 2019, as will additional initiatives that have
been included in our 2019 plan, such as a new power transformer,
new refinery and gold room and a thiocyanate destruction plant. We
have also included in our guidance growth capital expenditures for
the first half of the year related to the Northern Territory and
Holloway Mine as we continue to assess these assets.”
2019 Guidance
|
Macassa |
Taylor |
Holt |
Fosterville |
Consolidated5 |
Gold production (kozs)1 |
230 – 240 |
50 – 55 |
70 – 75 |
390 – 430 |
740 – 800 |
Op. cash costs ($/oz)2 |
440 – 460 |
690 – 710 |
620 – 640 |
200 – 220 |
$360 – $380 |
AISC/ounce sold ($/oz)2 |
|
|
|
|
$630 – $680 |
Operating cash costs ($M)2 |
|
|
|
|
$270 – $280 |
Royalty costs ($M) |
|
|
|
|
$25 – $30 |
Sustaining capital ($M)2 |
|
|
|
|
$150 – $170 |
Growth capital ($M)2,3 |
|
|
|
|
$155 – $165 |
Exploration ($M) |
|
|
|
|
$100 – $120 |
Corporate G&A ($M)4 |
|
|
|
|
$26 – $28 |
(1) Production and unit-cost guidance for 2019
does not include results for the Northern Territory or Holloway
Mine. (2) See “Non-IFRS Measures” set out starting on page 35
of the MD&A for the three and nine months ended September 30,
2018 for further details. The most comparable IFRS Measure for
operating cash costs, operating cash costs per ounce sold and AISC
per ounce sold is production costs, as presented in the
Consolidated Statements of Operations and Comprehensive Income, and
total additions and construction in progress for sustaining and
growth capital. Operating cash costs, operating cash cost per ounce
sold and AISC per ounce sold reflect an average US$ to C$ exchange
rate of 1.33 and a US$ to A$ exchange rate of 1.39. (3) Growth
capital expenditure guidance includes planned expenditures for the
Northern Territory and Holloway Mine during the first half of 2019,
with additional expenditures for the second half of the year to be
determined based on the results of current programs and other
developments. Growth capital expenditures exclude $14.2 million of
capital expenditures related to the Macassa #4 shaft project, which
are expected to be recorded as capital expenditures in 2019, but
have been paid in cash on an advanced basis in 2018. (4)
Includes general and administrative costs and severance payments.
Excludes non-cash share-based payment expense. (5) The
Company’s full financial results for full-year 2018 will be
released in late February 2019. As such, comparisons in this press
release involving financial measures included in the Company’s 2019
guidance are made to existing 2018 guidance, as well as the
Company’s nine-month 2018 results.
Review of 2019 Guidance
- Consolidated gold production in 2019 is
targeted at approximately 740,000 – 800,000 ounces, a substantial
increase from target production of over 670,000 ounces in 2018
(492,484 ounces for the first nine months (“YTD”) of 2018).
Production growth in 2019 will be driven by Fosterville, mainly
reflecting higher average grades compared to 2018. Production is
also expected to increase at Macassa in 2019, mainly driven by
higher tonnage, while production at Holt and Taylor is expected to
be similar to the comparable 2018 levels. The Company’s guidance
for 2019 does not include any production from the Northern
Territory or the Holloway Mine.
- Operating cash costs per ounce sold are
expected to average $360 – $380, which compares to current
full-year 2018 guidance of $385 – $410 and the average for YTD 2018
of $397. Improvement in operating cash costs per ounce sold in 2019
is expected to be driven by Fosterville, the Company’s lowest-cost
mine, which will account for a higher proportion of consolidated
production compared to 2018 and will benefit from higher average
grades in the coming year. Operating cash costs per ounce sold in
2019 at Macassa, Holt and Taylor are expected to be similar to
comparable 2018 levels.
- All-in sustaining costs (“AISC”) per ounce
sold are targeted to achieve substantial improvement in
2019, with guidance of $630 – $680, which compares to current 2018
guidance of $735 – $760 and YTD 2018 AISC per ounce sold of $738.
The improvement is largely expected to result from higher sales
volumes, with sustaining capital expenditures expected to remain
similar to comparable 2018 levels.
- Operating cash costs for 2019 are estimated at
$270 – $280 million, which compares to the current guidance for
full-year 2018 of $260 – $270 million and YTD 2018 operating cash
costs of $197.2 million.
- Royalty costs in 2019 are estimated at $25 –
$30 million compared to current guidance for 2018 of $22 – $27
million and total royalty costs of $18.8 million for YTD 2018.
- Sustaining capital expenditures in 2019 are
targeted at $150 – $170 million, unchanged from current guidance
for 2018 and compared to YTD 2018 sustaining capital expenditures
of $127.6 million. Sustaining capital expenditures are expected to
be similar to comparable 2018 levels as lower sustaining capital
expenditures at Macassa, largely reflecting reduced capital
development requirements, is offset by an increase in sustaining
capital expenditures at Fosterville. The expected increase in
sustaining capital expenditures at Fosterville mainly relates to
increased capital development and higher expenditures for mobile
equipment procurement as the mine continues to ramp up production
from the Swan Zone and other areas.
- Growth capital expenditures are estimated at
$155 – $165 million in 2019, which compares to current guidance for
2018 of $110 – $115 million and YTD 2018 growth capital
expenditures of $48.9 million. Of planned growth capital
expenditures in 2019, Macassa is expected to account for
approximately $80 million, with $50 – $55 million relating to the
#4 shaft project and the remainder largely funding a thickened
tails project and the construction of a new tailings impoundment
area. Capital expenditures for the #4 shaft project are expected to
decline following the end of 2019. Growth capital expenditures at
Fosterville in 2019 are estimated at approximately $55 million,
including approximately $35 million to complete the mine’s three
key projects, including the new ventilation system, the past fill
plant and a new water treatment plant. The remaining growth capital
expenditures at Fosterville relate to a number of smaller projects,
including a new power transformer, new refinery and gold room and a
thiocyanate destruction plant, all of which are scheduled for
completion during 2019. Approximately $15 million and $8 million of
growth capital expenditures are included in the Company’s 2019
guidance for the Northern Territory and Holloway, respectively,
representing planned expenditures during the first half of
2019.
- Exploration expenditures in 2019 are estimated
at $100 – $120 million, including capital exploration expenditures.
Of total exploration expenditures, approximately $85 – $100 million
are targeted for the Company’s Australian operations, with $15 –
$20 million of exploration expenditures estimated for the Company’s
Canadian operations. Key areas of focus for exploration work in
2019 at Fosterville include the Lower Phoenix and Harrier systems,
Robbin’s Hill, as well as a number of regional targets. In the
Northern Territory, exploration expenditures will focus on Mineral
Resource growth and definition at the Lantern Deposit and the
continued evaluation of targets at Union Reefs. In Canada,
exploration expenditures will be largely focused on the continued
growth and conversion of Mineral Resources at Macassa and
Taylor.
- Corporate G&A expense in 2019 is targeted
at $26 – $28 million, slightly higher than the current target for
full-year 2018 of $25 million ($18.3 million for YTD 2018).
Three-Year Production
Guidance1
|
Macassa |
Holt Complex |
Fosterville |
Consolidated |
2019 (kozs) |
230 – 240 |
120 – 130 |
390 – 430 |
740 – 800 |
2020 (kozs) |
230 – 240 |
120 – 130 |
500 – 540 |
850 – 910 |
2021 (kozs) |
245 – 255 |
130 – 140 |
570 – 610 |
945 – 1,005 |
(1) Three-year production guidance does not include any
production from the Northern Territory or Holloway Mine.
Macassa: Production at Macassa in
2019 is expected to increase from the target range for 2018 of
220,000 – 225,000 ounces, primarily due to increased mill
throughput in 2019. Production in 2020 is targeted to be similar to
2019 before increasing to 245,000 – 255,000 ounces in 2021. Grades
in 2021 are expected to average approximately 20.0 grams per tonne
with mill throughput reaching close to 1,100 tonnes per
day.
Holt Complex: Production from
the Holt Mill (including mine production from the Holt and Taylor
mines) is expected to remain largely unchanged during the next two
years, with the anticipation of some production growth at Taylor in
2021. The potential to restart operations at Holloway Mine could
lead to higher levels of production from the Holt Complex, with
advanced exploration work being undertaken at Holloway in
2019.
Fosterville: Production at
Fosterville is expected to grow significantly over the next three
years from the current target for 2018 of over 330,000 ounces.
Fosterville’s production is targeted to increase in 2019, to
390,000 – 430,000 ounces, driven primarily by a higher average
grade in the coming year. Production at Fosterville is then
targeted to grow to 500,000 – 540,000 ounces in 2020 and 570,000 –
610,000 ounces in 2021, with grades over this two-year period
expected to average approximately 30 grams per tonne and throughput
to increase in 2021 to approximately 1,700 tonnes per day.
Northern Territory: During the
first half of 2019, the Company is moving forward with advanced
exploration work to evaluate the potential of resuming operations
in the Northern Territory of Australia. A decision on resuming
operations in the Northern Territory is expected during 2019.
Qualified Persons
Pierre Rocque, 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 mid-tier gold
producer with 2018 production targeted at over 670,000 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.
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 and nine months ended September
30, 2018, dated October 30, 2018, for the Q3 and YTD 2018 non-IFRS
reconciliations.
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; (iii) future exploration plans;
(iv) changes in Mineral Resources and conversion of Mineral
Resources to proven and probable reserves; and (v) other
information that is based on forecasts of future operational or
financial results and estimates of management.
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. 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.
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 September 30, 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.
Cautionary Note to U.S. Investors – Mineral Reserve and
Resource Definitions
The terms "Mineral Resource" and "measured
Mineral Resource" are defined in and required to be disclosed 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").
However, these terms are not defined terms under SEC Industry Guide
7 under the United States Securities Act of 1933, as amended, and
the Exchange Act, 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.
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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