Kirkland Lake Gold Ltd. (“
Kirkland Lake
Gold” or the “
Company”) (TSX:KL)
(NYSE:KL) (ASE:KLA) today announced record annual and quarterly
production for the full-year and fourth quarter (“Q4 2017”) of
2017, respectively. Comparative information for the full-year and
fourth quarter ("Q4 2016") of 2016 includes results for the
Fosterville, Cosmo and Stawell mines prior to the merger between
Kirkland Lake Gold Inc. and Newmarket Gold Inc. on November 30,
2016 and results for the Holt and Taylor mines prior to the
acquisition of St. Andrew Goldfields Ltd on January 26, 2016. All
dollar amounts are expressed in U.S. dollars, unless otherwise
noted.
Highlights of 2017 and Q4 2017 operating
results:
- Consolidated full-year 2017 production of
596,405 ounces, beating improved guidance of 580,000 – 595,000
ounces
- Record full-year production at all operating
mines, including 263,845 ounces at Fosterville, 194,237
ounces at Macassa, 66,677 ounces at Holt and 50,764 ounces at
Taylor
- Consolidated quarterly production in Q4 2017
totaling 166,579 ounces, a 9% increase from Q4 2016 and 20% higher
than Q3 2017
- Record quarterly production in Q4 2017 at
Fosterville (79,157 ounces), Holt (19,263 ounces) and Taylor
(16,538 ounces), second best quarter ever at Macassa (51,608
ounces).
Other 2017 highlights:
- Strong growth in mineral reserves•
Fosterville mineral reserves more than doubled in 2017 to 1,030,000
ounces at an average grade of 17.9 grams per tonne (“g/t”)•
Macassa mineral reserves increased 37% to 2,010,000 ounces at an
average grade of 20.8 g/t
- Improved balance sheet
strength• Cash and cash equivalents of approximately
$230 million at December 31, 2017• Debt eliminated: 6.0%
convertible debentures repaid June 30, 2017; 7.5% convertible
debentures matured December 31, 2017 (converted into 4,505,393
commons shares)
- Industry-leading
shareholder returns• KL top performing stock on
S&P/TSX Composite Index in 2017 with share price increasing
174.5% (for full-year 2017)• Quarterly dividend payment
announced in March, doubled to $0.02/share for January 15, 2018
payment• 5.4 million common shares repurchased for C$76.5
million through normal course issuer bid
Tony Makuch, President and Chief Executive
Officer of Kirkland Lake Gold, commented: “We had a successful year
in 2017, achieving record results at all of our operating mines,
beating our improved consolidated production guidance, which had
been increased three times during the year, and reporting solid
growth in mineral reserves. Particularly encouraging was our strong
finish to the year, with Q4 2017 being our best quarter ever for
production. Leading the way was Fosterville, where full-year
production increased 74% from the previous year, and record fourth
quarter results reflected an average grade of 21.5 g/t, by far the
highest quarterly average ever achieved by the mine. Over the last
year, Fosterville has joined our Macassa mine as one of the world’s
highest-grade gold producers, with mineral reserve ounces and the
average reserve grade more than doubling and annual production
capacity increasing to over a quarter million ounces per year, with
more growth to come.
“Looking ahead, we plan to keep building
momentum through additional production growth, improved unit costs,
as well as further increases to mineral reserves and resources
based and continued exploration success. We will also remain
focused on generating shareholder returns through continued
operational effectiveness, strong financial performance and
disciplined investment for future growth. In addition, we offer a
competitive quarterly dividend, with growth potential, and will be
opportunistic when it comes to future share repurchases. Supporting
all of our activities is a strong balance sheet, with cash and cash
equivalents of approximately $230 million at December 31, 2017 and
no debt.”
Fourth Quarter and Full-Year 2017 Operating
Results
|
Q4 2017 |
Q4 2016 |
Q3 2017 |
FY 2017 |
FY 2016 |
Fosterville |
|
|
|
|
|
Ore Milled (tonnes) |
118,877 |
176,242 |
143,326 |
547,476 |
693,066 |
Grade (g/t Au) |
21.5 |
8.5 |
14.1 |
15.8 |
7.6 |
Recovery (%) |
96.3 |
92.4 |
94.7 |
95.0 |
90.1 |
Gold Production (ozs) |
79,157 |
44,406 |
61,535 |
263,845 |
151,755 |
Macassa |
|
|
|
|
|
Ore Milled (tonnes) |
119,130 |
102,288 |
93,391 |
409,065 |
396,633 |
Run-of-Mine |
119,130 |
74,745 |
92,377 |
387,054 |
331,353 |
Low-Grade |
n/a |
27,543 |
1,014 |
22,011 |
65,280 |
Grade (g/t Au) |
13.9 |
16.3 |
16.5 |
15.2 |
14.1 |
Run-of-Mine |
13.9 |
21.6 |
16.6 |
16.0 |
16.5 |
Low-Grade |
n/a |
2.3 |
2.0 |
1.6 |
2.0 |
Recovery (%) |
96.8 |
97.6 |
97.4 |
97.1 |
97.1 |
Gold Production (ozs) |
51,608 |
52,318 |
48,206 |
194,237 |
175,167 |
Holt |
|
|
|
|
|
Ore Milled (tonnes) |
127,493 |
113,499 |
124,394 |
462,987 |
416,048 |
Grade (g/t Au) |
5.0 |
4.6 |
4.5 |
4.7 |
4.5 |
Recovery (%) |
94.9 |
94.5 |
94.5 |
94.8 |
94.5 |
Gold Production (ozs) |
19,263 |
15,761 |
16,995 |
66,677 |
57,086 |
Taylor |
|
|
|
|
|
Ore Milled (tonnes) |
89,297 |
48,254 |
71,897 |
292,003 |
199,231 |
Grade (g/t Au) |
6.0 |
6.7 |
5.0 |
5.6 |
6.9 |
Recovery (%) |
96.2 |
96.1 |
95.5 |
96.2 |
96.5 |
Gold Production (ozs) |
16,538 |
10,048 |
11,066 |
50,764 |
42,639 |
Operations on Care & Maintenance2 |
|
|
|
|
|
Cosmo – Gold Production (ozs) |
n/a |
13,307 |
1,290 |
20,595 |
55,765 |
Holloway – Gold Production (ozs) |
13 |
9,825 |
n/a |
287 |
28,135 |
Stawell – Gold Production (ozs) |
n/a |
6,971 |
n/a |
n/a |
32,204 |
Gold Production (excluding operations on care and maintenance or
sold in 2017) |
166,566 |
122,533 |
137,801 |
575,523 |
426,647 |
Total Consolidated Production (ozs) |
166,579 |
152,636 |
139,091 |
596,405 |
542,751 |
- 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). The Company’s Stawell Mine in Australia
was put on care and maintenance effective December 13, 2016 (see
News Release dated December 12, 2016) and was subsequently sold on
December 21, 2017 (see News Release dated December 11, 2017).
- Production numbers may not add to total due to rounding.
Performance Against Full-Year 2017 Production
Guidance
|
Canadian Mines |
Australian Mines |
|
|
Macassa |
Holt |
Taylor |
Fosterville |
Cosmo |
Consolidated |
2017 Guidance (,000 ozs) |
190 – 195 |
65 – 70 |
50 –55 |
250 – 260 |
20 |
580 – 595 |
2017 Production (ozs) |
194,237 |
66,677 |
50,764 |
263,845 |
20,595 |
596,405 |
Full-year 2017 production from currently
operating mines totaled 575,523 ounces, an increase of 35% from
comparable full-year 2016 levels. Including production from mines
currently on care and maintenance, including the Stawell mine,
which was sold on December 21, 2017, total consolidated production
for 2017 totaled 596,405 ounces, 10% higher than the 542,751 ounces
produced in 2016. Total production from mines on care and
maintenance (including Stawell prior to its sale) totaled 20,882
ounces in 2017 compared to 116,104 ounces in 2016.
Production in Q4 2017 from operating mines
totaled 166,566 ounces, an increase of 36% from comparable
production of 122,533 ounces in Q4 2016 and 21% higher than the
137,801 ounces produced the previous quarter. Including production
from Cosmo, Holloway and Stawell, total consolidated production in
Q4 2017 totaled 166,579 ounces, a 9% increase from Q4 2016 and 20%
higher than Q3 2017.
Review of Operating Mines
Fosterville
The Fosterville Mine achieved a record quarter
in Q4 2017, producing 79,157 ounces of gold, an increase of 78%
from 44,406 ounces in Q4 2016 and 29% from 61,535 ounces the
previous quarter. The average grade for the quarter of 21.5 g/t was
the highest average quarterly grade ever reported by the mine, and
compared to average grades of 8.5 g/t in Q4 2016 and 14.1 g/t in Q3
2017. A total of 118,877 tonnes were processed during Q4 2017
with average recoveries of 96.3%, which compared to 176,242 tonnes
and average recoveries of 92.4% in Q4 2016 and 143,326 tonnes at
average recoveries of 94.7% the previous quarter. The lower total
tonnes compared to both prior periods reflected a focus on
maximizing the extraction of higher-grade stopes within the Lower
Phoenix system during Q4 2017.
For full-year 2017, Fosterville produced a
record 263,845 ounces, a 74% increase from full-year 2016
production of 151,755 ounces. A total of 547,476 tonnes was
processed in 2017 at an average grade of 15.8 g/t and average
recoveries of 95.0%, which compared to 693,066 tonnes at an average
grade of 7.6 g/t and average recoveries of 90.1% the prior year.
During 2017, underground mineral reserves more than doubled at
Fosterville, to 1,030,000 ounces, with the average underground
mineral reserve grade increasing to 17.9 g/t, which compared to
490,000 ounces at an average grade of 9.8 g/t as at December 31,
2016.
Macassa
The Macassa Mine produced 51,608 ounces of gold
in Q4 2017, the mine’s second-best quarter of production ever.
Production at Macassa in Q4 2017 compared to record quarter
production of 52,318 ounces in Q4 2016 and 48,206 ounces in Q3
2017. A total of 119,130 tonnes were milled during Q4 2017 at an
average grade of 13.9 g/t with average recoveries of 96.8%, which
compared to 102,288 tonnes at an average grade of 16.3 g/t and
recoveries of 97.6% in Q4 2016 and 93,391 tonnes at an average
grade of 16.5 g/t and average recoveries of 97.4% the previous
quarter. The improvement in production from Q3 2017 reflected
higher run-of-mine tonnes processed, which more than offset the
impact of lower average grades as a small number of high-grade
stopes did not perform as expected.
For full-year 2017, production at Macassa was a
record 194,237 ounces, a 11% increase from full-year 2016
production of 175,167 ounces. A total of 409,065 tonnes was
processed in 2017 at an average grade of 15.2 g/t and average
recoveries of 97.1%, which compared to 396,633 tonnes at an average
grade of 14.1 g/t and average recoveries of 97.1% the prior year. A
17% increase in run-of-mine tonnes processed more than offset a
significant reduction in tonnes processed from low-grade stockpiles
in accounting for the increase in total mill throughput. The higher
volume of run-of-mine tonnes also accounted for the improvement in
the average grade year over year.
Holt
During Q4 2017, the Holt mine achieved record
quarterly production of 19,263 ounces, representing increases of
22% from Q4 2016 and 13% from the previous quarter, mainly
reflecting a combination of higher throughput and an improved
average grade compared to both prior periods. A total of 127,493
tonnes at an average grade of 5.0 g/t was processed from the Holt
Mine at the Holt Mill during Q4 2017, compared to 113,499 tonnes at
an average grade of 4.6 g/t for the same period a year earlier and
124,394 tonnes at an average grade of 4.5 g/t in Q3 2017.
Recoveries averaged 94.9% in Q4 2017, which compared to average
recoveries of 94.5% for both Q4 2016 and Q3 2017.
Production at Holt for full-year 2017 was a
record 66,677 ounces, based on processing a total of 462,987 tonnes
at and average grade of 4.7 g/t and average recoveries of 94.8%.
Production in 2017 increased 17% from 57,086 ounces in 2016, when
416,048 tonnes were processed at an average grade of 4.5 g/t and
average recoveries of 94.5 g/t. Higher production reflected a
significant increase in tonnes processed due primarily to improved
stope productivity, a new mining horizon being accessed in Zone 6
and favourable sequencing.
Taylor
Gold production from the Taylor Mine during Q4
2017 totaled 16,538 ounces, based on 89,297 tonnes processed at an
average grade of 6.0 g/t and average recoveries of 96.2%. Q4 2017
production compared favourably to production of 10,048 ounces in Q4
2016, based on processing 48,254 tonnes at an average grade of 6.7
g/t and average recoveries of 96.1%, and production of 11,066
ounces in Q3 2017, based on 71,897 tonnes processed at an average
grade of 5.0 g/t and average recoveries of 95.5%. The increase in
total tonnes processed from Q4 2016 largely reflected the addition
of a number of stopes to the mine plan for the second half of 2017,
while average grades reflected mine sequencing. The increase in
production from the previous quarter was mainly due to higher
tonnes, which more than offset a reduction in the average
grade.
Production at Taylor for full-year 2017 totaled
50,764 ounces, an increase of 19% from the 42,639 ounces produced
in 2016. A total of 292,003 tonnes were processed in 2017 at an
average grade of 5.6 g/t and average recoveries of 96.2%, which
compared to total tonnes processed of 199,231 tonnes at an average
grade of 6.9 g/t and average recoveries of 96.5% in the prior year.
The significant increase in tonnes processed reflected a higher
number of stopes available for mining, while the reduction in the
average grade was consistent with planned stope grades.
Cosmo
On June 30, 2017, Kirkland Lake Gold suspended
operations at the Cosmo Mine with the Mine being placed on care and
maintenance. No production was recorded from Cosmo in Q4 2017,
which compared to production of 13,307 ounces in Q4 2016 (from
processing 157,770 tonnes at an average grade of 2.8 g/t and
average recoveries of 94.5%) and 1,290 ounces in Q3 2017 (from
processing 15,243 tonnes of stockpiled material at an average grade
of 2.8 g/t and average recoveries of 94.9%).
For full-year 2017, a total of 20,595 ounces was
produced at Cosmo from processing 259,729 tonnes at an average
grade of 2.6 g/t and average recoveries of 95.0%, which compared to
production of 55,765 ounces in 2016 from processing 646,848 tonnes
at an average grade of 2.9 g/t and average recoveries of 93.6%.
Sale of Stawell Gold Mines Pty Ltd.
On December 21, 2017, the Company completed a
transaction to sell to an affiliate of Arete Capital Partners Ltd.
(“Arete”) all the issued and outstanding common shares of its
indirectly held wholly owned subsidiary, Stawell Gold Mines Pty
Ltd., which holds the Stawell mine. Pursuant to the terms of the
transaction, the Company received $6.25 million in cash
consideration upon closing and retains a 2.5% net smelter return
royalty on the Stawell mine.
Normal Course Issuer Bid
(“NCIB”)
During Q4 2017, the Company invested
C$26,263,786 related to the purchase 1,553,500 Kirkland Lake Gold
common shares under the Company’s NCIB. Since the commencement of
the NCIB program in May 2017, the Company has purchased a total of
5,443,400 common shares for cancellation at an average price of
C$14.05 for a total of C$76,479,700. Under the NCIB, a maximum of
15,186,571 Kirkland Lake Gold shares can be purchased for
cancellation. Accordingly, the Company may purchase an additional
9,743,171 common shares for cancellation through the NCIB until the
program’s expiry in May 2018.
7.5% Convertible Debentures
The C$61.0 million in 7.5% unsecured convertible
debentures of Old Kirkland Lake Gold matured on December 31, 2017.
In accordance with the terms of the trust indenture, during Q4
2017, debenture holders elected to convert approximately
C$61,724,000 at a conversion price of $13.70 per share, being a
conversion rate of 72.9927 common shares for each $1,000 in
principal held. As a result, the Company issued an aggregate of
4,505,393 common shares with respect to the conversion of the
debentures. In addition, the Company paid an aggregate amount of
C$324,116 in cash with respect to the outstanding debentures not
converted and interest totaling C$2,139,968 with respect to all of
the debentures. The debentures formerly traded on the TSX
under the symbol KLG.DB.A.
Qualified Persons
Pierre Rocque, P.Eng., Vice President, Canadian
Operations 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.
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold Ltd. is a mid-tier gold
producer with total production in 2017 of 596,405 ounces of gold
from mines in Canada and Australia. The production profile of the
company is anchored from 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
ability of Kirkland Lake Gold to successfully integrate the
operations and employees of its Canadian and Australian 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 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, 2016 and the financial statements
and related MD&A for the third quarter ended September 30,
2017, 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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