Mr. Brian Hinchcliffe reports

KIRKLAND LAKE GOLD INC.; FINANCIAL RESULTS Q3 2011: EXPLORATION PROGRAM ACTIVITY INCREASES & MINE EXPANSION ON TRACK FOR 180,000-200,000 OUNCE ANNUAL RUN RATE BY NOVEMBER 2011

Kirkland Lake Gold Inc. has released its third quarter fiscal 2011 results for the three months ended Jan. 31, 2011.

Harry Dobson, chairman, commented: "The third quarter has not been without its challenges with slightly lower than anticipated grades and difficult choices being made affecting short-term production to ensure we remain on track to achieve the target rate of production by November, 2011. After meeting all operating costs, spending $16.0-million on capital expenditures and $2.7-million on exploration, total cash resources (including short-term investments) as at Jan. 31, 2011, were $47.4-million."

Key highlights

• The company produced 20,231 ounces of gold in the quarter -- 58,394 ounces year to date; a record year to date production figure for the company.
• Net income for the quarter was $4.2-million or six cents per share, and this was reduced by $1.0-million due to higher exploration spending.
• Cash flow generated from operating activities during the quarter was $6.2-million.
• The year to date head grade of 0.397 ounce per ton is higher than the budgeted grade of 0.382 ounce per ton, and very close to the long-term average head grade target of 0.4 ounce per ton.
• Operating costs in third quarter 2011 decreased to $258 per ton ($743 per ounce) from $365 per ton ($809 per ounce) in second quarter 2011; total cash costs also decreased to $275 per ton ($794 per ounce) from $390 per ton ($866 per ounce) in second quarter 2011.
• Year-to-date operating costs of $44.3-million are lower than budgeted ($50.2-million).
• The number of ore mining faces available for production was maintained at 28 while the number of ore mining faces in the development and planning stages increased from 23 to 26.
• A record mill throughput of 635 tons of ore per day was achieved.
• The total work force increased by 48 to 648 employees.

Details of the third quarter

Mine expansion and production

• A total of 20,231 ounces of gold were produced in the quarter, which was lower than that targeted and lower than that required to reach the company's production target for the year of 90,000 to 100,000 ounces. This was due to a decision taken during the quarter to reduce support for near-term production activities due to hoisting constraints in order to allow other higher-priority longer-term activities to continue.
• The quarterly head grade of 0.362 ounce of gold per ton was also lower than expected. In some mining areas, lower-grade ore was unexpectedly encountered along with the known higher-grade ore, resulting in a blended grade being mined. This is a very common occurrence in this type of gold deposit and is the main reason that the company's long-term plans are based on an average long-term head grade of approximately 0.4 ounce per ton despite a blended reserve and resource grade of over 0.5 ounce per ton. The year-to-date head grade of 0.397 ounce per ton is very close to target and slightly higher than the budgeted head grade of 0.382 ounce per ton. The higher than expected gold price has reduced cut-off grades in most areas to below those budgeted.
• Work to increase the hoisting capacity of the No. 3 shaft continued in the quarter. The new service hoist was commissioned by the end of January after electrical design problems related to uneven input voltages were overcome. The working platform required to complete final headframe work and carry out shaft upgrades was also installed by the end of the quarter. A decision was made in the quarter to move forward and complete some shaft electrical and shaft air line installations utilizing the working platform rather than the new cage due to better working conditions. As a result, installation of the new cage is now targeted for June, 2011. Shaft upgrade work continued in the quarter focused primarily on the headframe and the shaft services compartment and the shaft stations and loading pockets. However, this work was based on the existing conveyances rather than the new hoist and working platform and contributed significantly to the shaft overload. Shaft crews were also utilized on other shaft maintenance work that was brought forward because of the delay. This work also utilized the existing conveyances.
• Excavation of the truck loading chutes and stations below the 5300 level and the underground haulage ramp between the No. 3 shaft and the south mine complex (SMC) mining area continued.

Exploration

• More diamond drills moved to a seven-day-per-week operating schedule as the contractor added drillers to the work force as requested by the company. Exploration expenses increased by $1.0-million over the previous quarter.
• An exploration drift has been advanced to the edge of the Amalgamated Kirkland -- Queenston joint venture property of the company and Queenston Mining Inc. in preparation for driving a drift onto that property in order to establish a central diamond drilling station in the second quarter of fiscal 2012. The company is awaiting authorization from the Ministry of Northern Development, Mines and Forests to proceed with this development.

Financial results

• Net income for the third quarter ended Jan. 31, 2011, was $4.2-million or six cents per share, which compares with a net income of $8.6-million for the previous quarter of fiscal 2011, and a restated net loss of $4.9-million for third quarter of fiscal 2010.
• Operating costs were $258 per ton ($743 per ounce), compared with $365 per ton ($809 per ounce) in the prior quarter, and $306 per ton ($900 per ounce) in the third quarter of fiscal 2010. Total cash costs were $275 per ton ($794 per ounce), compared with $390 per ton ($866 per ounce) in the prior quarter and $316 per ton ($930 per ounce) in the third quarter of fiscal 2010. The company's target is to reduce the operating costs to less than $250 per ton by upgrading mine infrastructure and increasing production.
• Cash flows generated from operating activities were $6.2-million in the third quarter of fiscal 2011 compared with $16.0-million in the second quarter of fiscal 2011 and a use of $6.3-million in the third quarter of fiscal 2010.
• Gold poured in the quarter was 18,331 ounces, which compares with 23,419 ounces for the previous quarter and 5,817 ounces for the same period in the previous fiscal year.
• After meeting all operating costs, spending $16.0-million on capital and $2.7-million on exploration, total cash resources (including short-term investments) as at Jan. 31, 2011, were $47.4-million. As at March 14, 2011, this number had increased to $51.0-million.

Health and safety

• The company completed calendar year 2010 with the lowest accident frequency in the province of Ontario in the large mines category.

Outlook

The production forecast for fiscal 2011 has been reduced to 80,000 to 85,000 ounces of gold because of the issues outlined above. Higher grades are expected in the fourth quarter, and attaining those higher grades is essential to meeting this forecast.

The company's expansion activities will continue to take priority, and the available resources will be managed accordingly. The tonnage of ore to be hoisted and mined will be managed to meet these targets, provided higher-priority activities are not hindered. The company will continue to prioritize the work and investment required to meet its goals of attaining five million ounces in total gold reserves and resources and of reaching a profitable production rate of 180,000 to 200,000 ounces of gold per year by November, 2011.

The expected completion date of the current expansion project remains November, 2011, and that is the first month in the current plan in which production is expected to exceed the 1,200-ton-per day threshold. The company is currently reviewing its plans as part of the 2012 fiscal year budgeting exercise, but that target date still appears feasible with some rearrangement of activities and schedules. Production is planned to be in the range between 1,200 to 1,400 tons of ore per day after November, 2011. Planning and engineering studies related to a potential further production expansion will continue with no decision expected until the latter part of fiscal year 2012.

There are some risks to the expansion project timeline that the company will attempt to manage, but which are not totally within its control. These include risks related to:

1. Late delivery of equipment from suppliers;
2. Delays in commissioning equipment due to problems experienced by suppliers or outside installers;
3. Recruiting and retaining skilled labour as activity in the mining industry continues to pick up and competition for skilled, experienced, and qualified workers and staff increases.

These issues may or may not act to extend the expansion project timeline, but they will not affect the ultimate completion of the project. The near-term impact of these problems to date has been to reduce production while slowing overall spending and lowering operating costs.

"Despite the delays with our hoisting capacity project resulting in our annual guidance being reduced to 80,000 to 85,000 ounces, the long-term plan of reaching a profitable production rate of 180,000 to 200,000 ounces remains the company's higher priority and is on track to be completed by November, 2011. Fiscal 2012 production guidance is forecast to be 120,000 to 140,000 ounces of gold," concluded Mr. Dobson.

        SELECTED FINANCIAL INFORMATION AND REVIEW OF OVERALL PERFORMANCE
             (In thousands except shares and per share figures)
                                                                       Three months ended,
                                     Jan. 31, 2011       Oct. 31, 2010       Jan. 31, 2010
                                                                                (restated)

Gold sales (ounces)                        $18,280             $23,392              $5,803
Average price (per ounce)                    1,391               1,300               1,064
Revenue                                     25,426              30,418               6,177
Operating expenses                          17,998              20,536               8,977
Exploration expenditure                      2,709               1,792               1,261
Net income (loss)                            4,206               8,565             (4,896)
Per share (basic and diluted) (loss)          0.06                0.13              (0.08)
Cash flow from (used in)
operating activities                         6,169              16,046             (6,292)
Cash flow from financing activities          5,655               2,379                 817
Cash flow from (used in)
investing activities                          (953)            (5,635)              11,184
Net increase in cash                        10,871              12,790               5,709
Cash at end of period                       37,033              26,162              10,198
Short-term investments                      10,381              25,347              25,228
Total cash resources                        47,415              51,509              35,427
Total assets                               191,675             179,809             128,848
Total liabilities                           22,340              20,367              13,740
Working capital                             41,049              45,147              34,291

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