Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or
the “
Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today
announced production for the first quarter of 2019 (“Q1 2019”) of
231,879 ounces, an increase of 57% from 147,644 ounces in Q1 2018,
with the increase driven by record quarterly production at both
Fosterville and Macassa. The Company ended Q1 2019 well positioned
to achieve its improved full-year 2019 production guidance of
920,000 – 1,000,000 ounces of gold, with production at Fosterville
expected to be weighted to the second half of 2019 as development
advances to depth into the high-grade Swan Zone. All dollar amounts
are expressed in U.S. dollars, unless otherwise noted.
During Q1 2019, the Company continued to build
financial strength with cash increasing $78 million or 23%, to $410
million at March 31, 2019, compared to $332 million at December 31,
2018.
Highlights of Q1 2019 production
results:
- Consolidated Q1 2019 production of 231,879
ounces, which compared to 147,644 ounces of production in Q1 2018
and 231,217 ounces in the fourth quarter of 2018 (“Q4 2018”)
- Gold poured in Q1 2019 totaling 230,250
ounces, with total gold sold of 232,929 ounces
- Record production at Fosterville of 128,445
ounces, more than double the 63,843 ounces produced in Q1 2018 and
a 3% increase from the previous quarterly record of 124,307 ounces
the previous quarter (Strong production growth from Q1 2018
resulted from significantly higher average grades due mainly to the
advancement of the mine sequence in the Swan Zone during Q1
2019)
- Record production at Macassa totaling 72,776
ounces, an increase of 35% from 54,038 ounces in Q1 2018 and 4%
higher than the previous quarterly record of 69,936 ounces in Q4
2018, (record quarterly production in Q1 2019 reflected significant
grade outperformance in the South Mine Complex (“SMC”) from stopes
in or around the 5700 Level)
- Production at Holt and Taylor of 17,225 ounces
and 12,377 ounces, respectively, which compared to 16,675 ounces
and 13,055 ounces, respectively, in Q1 2018 and 16,774 ounces and
19,305 ounces, respectively, the previous quarter.
Other key developments during Q1 2019,
include:
- December 31, 2018 Mineral Reserve estimates
released
- Consolidated Mineral Reserves increased 24% to 5,750,000 ounces
@ 15.8 grams per tonne (“g/t”) (total additions of 1,860,000 ounces
before depletion of 750,000 ounces)
- Fosterville Mineral Reserves increased 1,020,000 ounces or 60%,
to 2,720,000 ounces @ 31.0 g/t, with the Swan Zone Mineral Reserve
doubling to 2,340,000 ounces @ 49.6 g/t (total additions of
1,386,000 ounces before depletion of 366,000 ounces)
- Macassa Mineral Reserves at December 31, 2018 increased 11% to
2,250,000 ounces @ 21.9 g/t (total additions of 464,000 ounces
before depletion of 244,000 ounces).
- Significant improvements to production and unit-cost
guidance announced
- Three-year production guidance increased to 920,000 – 1,000,000
ounces for 2019, 930,000 – 1,010,000 ounces for 2020 and 995,000 –
1,055,000 ounces for 2021; Fosterville’s production guidance for
2019 and 2020 improved to 550,000 – 610,000 ounces, with 2021
guidance remaining unchanged at 570,000 – 610,000 ounces.
- Operating cash cost per ounces sold guidance for 2019 improved
to $300 – $320 from $360 – $380 previously, with all-in sustaining
costs per ounce sold guidance improved to $520 – $560 from $630 –
$680 previously.
- Strong growth in earnings and cash flow for full-year
2018 reported
- Net earnings in 2018 totaled $273.9 million ($1.30 per basic
share), a 107% increase from 2018
- Net cash flow from operating activities of continuing
operations totaled $543.1 million, a 73% increase from 2017, while
free cash flow increased 40%, to $249.5 million in 2018.
- Continued focus on shareholder returns
- Quarterly dividend payment of C$0.04/share paid on January 11,
2019.
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold, commented: “Both Fosterville and
Macassa achieved record production in Q1 2019, largely reflecting
strong grade performance, as well as higher levels of mill
throughput at Fosterville. At Fosterville, we continued to
advance development and production from the Swan Zone, with stope
production advancing on multiple levels. As we develop deeper into
the zone, we are targeting higher levels of production from Swan,
particularly in the second half of the year. At Macassa, production
on the 5600 and 5700 levels continues to generate better than
planned grades. Production over the balance of the year will remain
largely focused on these areas. We ended the first quarter
well positioned to achieve our improved full-year 2019 production
guidance of 920,000 – 1,000,000 ounces.
“Turning to our financial performance, we have
consistently been an industry leader in per share profitability and
expect this trend to continue when we report our Q1 2019 financial
results on May 7th. We also continued to generate substantial
amounts of cash flow during the quarter, with our cash position
increasing by $78 million or 23%, to $410 million at March 31,
2019. Our rapidly growing financial strength is a key
differentiator for Kirkland Lake Gold and provides us with a great
deal of flexibility in terms of financing our growth and examining
additional opportunities for value creation, including returning
capital to shareholders.”
Q1 2019
Production Results |
Q1
2019 |
Q1 2018 |
Q4 2018 |
Fosterville |
|
|
|
Ore Milled (tonnes) |
140,184 |
123,669 |
98,797 |
Grade (g/t Au) |
29.0 |
16.8 |
39.7 |
Recovery (%) |
98.3 |
95.7 |
98.6 |
Gold Production (ozs) |
128,445 |
63,843 |
124,307 |
Macassa |
|
|
|
Ore Milled (tonnes) |
77,990 |
86,661 |
85,523 |
Grade (g/t Au) |
29.6 |
19.9 |
25.9 |
Recovery (%) |
98.2 |
97.6 |
98.0 |
Gold Production (ozs) |
72,776 |
54,038 |
69,936 |
Holt |
|
|
|
Ore Milled (tonnes) |
117,876 |
122,280 |
118,347 |
Grade (g/t Au) |
4.8 |
4.5 |
4.7 |
Recovery (%) |
95.6 |
94.8 |
94.3 |
Gold Production (ozs) |
17,225 |
16,675 |
16,774 |
Taylor |
|
|
|
Ore Milled (tonnes) |
75,085 |
84,464 |
103,793 |
Grade (g/t Au) |
5.4 |
5.0 |
6.1 |
Recovery (%) |
95.6 |
95.5 |
95.0 |
Gold Production (ozs) |
12,377 |
13,055 |
19,305 |
Holloway1 |
|
|
|
Gold Production |
1,056 |
33 |
895 |
Total Consolidated Production (ozs)2 |
231,879 |
147,644 |
231,217 |
Total Consolidated Gold Sales (ozs) |
232,929 |
147,763 |
225,692 |
- The Company’s Cosmo mine in Australia was placed on care and
maintenance effective June 30, 2017 (see News Release dated May 4,
2017). The Company’s Holloway mine in Canada was transitioned to
care and maintenance effective December 31, 2016 (see News Release
dated December 12, 2016). 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.
- Production numbers may not add to total due to rounding.
Performance Against Full-Year 2019 Production
Guidance
|
Macassa |
Holt |
Taylor |
Holloway |
Fosterville |
Consolidated |
2019 Guidance (,000 ozs) |
230 –
240 |
70 –
75 |
50 –
55 |
~20 |
550 –
610 |
920 – 1,000 |
Q1 2019 Production (ozs) |
72,776 |
17,225 |
12,377 |
1,056 |
128,445 |
231,879 |
Q1 2019
production totaled 231,879, an increase of 57% from 147,644 ounces
in Q1 2018. The main contributor to the strong growth compared to
the same period in 2018 was record production at Fosterville and
Macassa, mainly due to significant improvements in average grades,
as well as the impact of higher processing volumes at
Fosterville. The Company’s Holloway mine, which resumed
commercial operations as at February 21, 2019, contributed 1,056
ounces of production in Q1 2019 versus 33 ounces in Q1 2018 and 895
ounces in Q4 2018. Production at Holloway is expected to ramp up
over the balance of the year. No production was recorded from the
Company’s Northern Territory assets, which are currently on care
and maintenance, in Q1 2019, or during either of the prior
periods.
Review of Operating Mines
Fosterville
The Fosterville Mine produced a record 128,445
ounces in Q1 2019, based on processing 140,184 tonnes at an average
grade of 29.0 g/t and average mill recoveries of 98.3%. Q1 2019
production more than doubled from 63,843 ounces in Q1 2018, when
the mine processed 137,788 tonnes at an average grade of 11.1 g/t
and at average recoveries of 93.7%. The increase in production
compared to the same period in 2018 resulted from a 73% increase in
the average grade, reflecting the commencement of production from
the high-grade Swan Zone during the second half of 2018. Q1
2019 production compared to production of 124,307 ounces the
previous quarter when the mine recorded its higher ever average
quarterly grade. A total of 98,797 tonnes were processed in Q4 2018
at an average grade of 39.7 g/t and at average recoveries of 98.6%.
The quarter-over-quarter change in production mainly reflected a
42% increase in total tonnes processed, reflecting the advancement
of the mine sequence in the Lower Phoenix system, including the
Swan Zone, and a drawdown in the surface stockpile over the
quarter.
Macassa
The Macassa Mine achieved record quarterly
production in Q1 2019 of 72,776 ounces based on processing 77,990
tonnes at an average grade of 29.6 g/t and average recoveries of
98.2%. Q1 2019 production increased 35% from 54,038 ounces in Q1
2018, which resulted from processing 86,661 tonnes at an average
grade of 19.9 g/t and average mill recoveries of 97.6%. The
increase from Q1 2018 was primarily related to a 49% improvement in
the average grade, largely reflecting the impact of favourable
grade reconciliations in stopes around the 5700 Level of the SMC.
Q1 2019 production increased 4% from 69,936 ounces in Q4 2018, with
a higher average grade more than offsetting the impact a lower
volume of tonnes processed in Q1 2019. Q4 2018 production resulted
from processing a total of 85,523 tonnes at an average grade of
25.9 g/t and at average recoveries of 98.0%.
Holt
During Q1 2019, the Holt mine produced 17,225
ounces based on processing 117,876 tonnes at an average grade of
4.8 g/t and at average recoveries of 95.6%. Q1 2019 production
compared production of 16,675 ounces in Q1 2018, when a total of
122,280 tonnes were processed at an average grade of 4.5 g/t at
average recoveries of 94.8%, and 16,774 ounces the previous quarter
when 118,347 tonnes were processed at an average grade of 4.7 g/t
and at average recoveries of 94.3%. The change in production from
both prior periods mainly reflected improvements in the average
grade and average recovery rate, which more than offset the impact
of a small reduction in tonnes processed.
Taylor
Gold production from the Taylor Mine during Q1
2019 totaled 12,377 ounces based on processing 75,085 tonnes at an
average grade of 5.4 g/t and at average recoveries of 95.6%. Q1
2019 production compared to 13,055 ounces in Q1 2018, when 84,464
tonnes were processes at an average grade of 5.0 g/t and at average
recoveries of 95.5%, and record production of 19,305 ounces in Q4
2018 when 103,793 tonnes were processed at an average grade of 6.1
g/t and average recoveries of 95.0%. The change in production
from Q1 2018 reflected reduced tonnes processed, which was
partially offset by the impact of higher average grades during Q1
2019. The change from the previous quarter reflected both lower
tonnes processed and reduced average grades, with lower grades
largely related to mine sequencing.
Holloway
On February 21, 2019, the Company announced
plans to resume operations at the Holloway mine following the
completion of a revised royalty with Franco Nevada Corporation. A
total of 1,056 ounces were produced at Holloway and processed at
the Holt million during Q1 2019, which resulted from processing
7,826 tonnes at an average grade of 4.4 g/t and average recoveries
of 95.4%. Production at Holloway is expected to ramp up during 2019
and total approximately 20,000 ounces for the full year.
Qualified Persons
Henry Heidrich, P.Eng., Director, Technical
Services and Ian Holland, FAusIMM, Vice President Australian
Operations 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.
Technical Reports
Scientific and technical disclosures supporting the December 31,
2018 Mineral Reserve estimates are provided in the technical
reports (the “Reports”) entitled, “Updated NI 43-101 Technical
Report Fosterville Gold Mine in the State of Victoria, Australia”
and “Macassa Property, Ontario, Canada, Updated NI 43-101 Technical
Report.” The Reports are effective December 31, 2018, are dated
April 1, 2019 and are available on SEDAR at www.sedar.com and on
the Company’s website at www.klgold.com.
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
920,000 – 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.
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, 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.
This press release makes reference to certain
non-IFRS measures including all-in sustaining costs (“ASIC”) and
AISC per ounce sold and operating cash cost per ounce sold. These
measures are not recognized measures under IFRS, do not have a
standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other issuers; however,
the Company believes that these measures are useful to assist
readers in evaluating the total costs of producing gold from
current operations. The Company’s definition of AISC conforms to
the definition of AISC as set out by the World Gold Council in its
guidance note dated June 27, 2013. For more information regarding
the non-IFRS measures used by the Company, see the information
under the headings “Non-IFRS Financial Measures”, “AISC and AISC
per Ounce Sold”, “Operating Cash Costs and Operating Cash Costs per
Ounce Sold” and “Total Cash Costs and AISC Reconciliation” in the
Company’s MD&A for the year ended December 31, 2018. The
financial statements and MD&A of the Company are available on
SEDAR at www.sedar.com.
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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