Mr. Tony Makuch reports
KIRKLAND LAKE GOLD ANNOUNCES RECORD PRODUCTION OF 230,993 OUNCES IN Q4 2018 AND 723,477 OUNCES FOR FULL-YEAR 2018
Kirkland Lake Gold Ltd. had record levels of quarterly and annual gold production for the fourth quarter and full year of 2018, respectively. Production in the fourth quarter of 2018 totalled 230,993 ounces, 28 per cent higher than the previous record of 180,155 ounces achieved in the third quarter of 2018. Fourth quarter 2018 production was significantly above target levels for the quarter and was driven by record quarterly production at both Fosterville (124,307 ounces) and Macassa (69,936 ounces). Production in 2018 totalled 723,477 ounces, a 21-per-cent increase from 596,405 ounces for full year 2017. Three of the company's mines achieved record annual production in 2018, including 356,230 ounces at Fosterville, 240,126 ounces at Macassa and 58,633 ounces at the Taylor mine, with the Holt mine producing 67,770 ounces for the year. The company's cash position at Dec. 31, 2018, totalled approximately $332-million. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
Highlights of fourth quarter 2018 and 2018 production results include:
- Fourth quarter 2018 production of 230,993 ounces, 39-per-cent increase from 166,579 ounces in the fourth quarter of 2017 and 28 per cent higher than 180,155 ounces the previous quarter;
Gold poured in fourth quarter of 2018 totalling 224,770 ounces, with total gold sales of 225,692 ounces;
- Production at Fosterville totalling 124,307 ounces in the fourth quarter of 2018, increase of 57 per cent from 79,157 ounces in the fourth quarter of 2017 and 37 per cent higher than 90,618 ounces in the third quarter of 2018; production growth in the fourth quarter of 2018 reflected average grade of 39.7 grams per tonne (g/t), significantly above target levels;
Production at Macassa of 69,936 ounces in the fourth quarter of 2018, 36-per-cent increase from 51,608 ounces in the fourth quarter of 2017 and 26 per cent higher than 55,582 ounces in the third quarter of 2018; average grade in the fourth quarter of 2018 of 25.9 g/t;
Production from Holt complex in the fourth quarter of 2018 included record quarterly production of 19,305 ounces at Taylor and production of 16,774 ounces at the Holt mine (compared with 16,541 ounces at Taylor and 19,263 ounces at Holt in the fourth quarter of 2017 and 13,333 ounces at Taylor and record production of 20,609 ounces at Holt in the third quarter of 2018);
- 2018 consolidated production totalling 723,477 ounces, 21 per cent higher than 596,405 ounces in 2017, with increase reflecting production growth of 92,385 ounces or 35 per cent at Fosterville, 45,889 ounces or 24 per cent at Macassa, 7,869 ounces or 16 per cent at Taylor and 1,093 ounces or 2 per cent at Holt;
2018 gold poured of 722,894 ounces, with 2018 gold sales of 722,277 ounces.
Other key developments during the fourth quarter of 2018 include:
Continued exploration success at Fosterville, with infill drilling in Swan zone continuing to return intercepts containing exceptionally high grades, substantial widths and visible gold; company continues to target significant growth in Swan zone mineral reserves;
Increased financial strength with cash position increasing by approximately 29 per cent during the fourth quarter of 2018, with year-end 2018 cash totalling approximately $332-million;
- Quarterly dividend increased to four cents per share effective fourth quarter 2018 payment on Jan. 11, 2019, to shareholders of record on Dec. 31, 2018; company paid third quarter 2018 dividend payment of three cents per share on Oct. 12, 2018, to shareholders of record on Sept. 30, 2018;
Strong share price performance with Kirkland Lake Gold common shares closing on Dec. 31, 2018, at $35.60 per share on the Toronto Stock Exchange, representing share price increase of 85 per cent for full year 2018.
Tony Makuch, president and chief executive officer of Kirkland Lake Gold, commented: "Two thousand eighteen was an outstanding year for Kirkland Lake Gold. We achieved record production of 723,477 ounces and, just as important, embarked on a program of growth that could see the company achieve a million ounces of annual, low-cost gold production as early as 2021. A key part of our progress has been the continued transformation of Fosterville into one of the world's greatest gold mining operations. As clearly demonstrated in the fourth quarter of 2018, we continue to see much greater levels of high-grade quartz veins with visible gold at Fosterville than had previously been estimated, which was the main driver of the mine's substantial outperformance during the quarter and is a key reason why we expect a significant increase in Swan zone mineral reserves. Turning to Macassa, our grade performance in the South mine complex has been excellent, with many stopes outperforming in the fourth quarter of 2018, and our operations team continuing to perform very well in moving our production profile to the deeper, high-grade parts of the mine. Macassa is a very solid, consistent operation that is poised to achieve substantial production growth once our new No. 4 shaft is completed, with phase 1 completion on track for early 2022. In addition, we had record production at Taylor in the fourth quarter of 2018, reflecting both improved tonnage and higher grades, and also turned in a solid performance at Holt. Entering 2019, we are well positioned for continued growth, with three-year production guidance including 740,000 to 800,000 ounces in 2019, 850,000 to 910,000 ounces in 2020 and 945,000 to 1,005,000 ounces in 2021."
FOURTH QUARTER AND YEAR-TO-DATE 2018 PRODUCTION RESULTS
Q4 2018 Q4 2017 Q3 2018 2018 2017
Ore milled (tonnes) 98,797 118,877 113,101 456,909 547,476
Grade (g/t Au) 39.7 21.5 25.6 24.9 15.8
Recovery (%) 98.6 96.3 97.5 97.3 95.0
Gold production (oz) 124,307 79,157 90,618 356,230 263,845
Ore milled (tonnes) 85,523 119,129 92,503 354,468 409,064
Grade (g/t Au) 25.9 13.9 19.2 21.6 15.2
Recovery (%) 98.0 96.8 97.3 97.7 97.1
Gold production (oz) 69,936 51,608 55,582 240,126 194,237
Ore milled (tonnes) 118,347 127,494 135,849 471,819 462,987
Grade (g/t Au) 4.7 5.0 5.0 4.7 4.7
Recovery (%) 94.3 94.9 95.0 94.6 94.8
Gold production (oz) 16,774 19,263 20,609 67,770 66,677
Ore milled (tonnes) 103,793 89,297 94,092 382,059 292,003
Grade (g/t Au) 6.1 6.0 4.7 5.0 5.6
Recovery (%) 95.0 96.2 94.3 94.7 96.2
Gold production (oz) 19,305 16,538 13,333 58,633 50,764
Operations on care and maintenance (1)
Cosmo -- gold production (oz) - - - - 20,595
Holloway -- gold production (oz) 671 13 14 718 287
Gold production (excluding operations
on care and maintenance or sold in 2017) 230,322 166,566 180,141 722,759 575,523
Total consolidated production (oz) (2) 230,993 166,579 180,155 723,477 596,405
Total consolidated gold sales (oz) 225,692 165,715 184,517 722,277 592,674
The Cosmo mine was placed on care and maintenance effective June 30, 2017 (see news release dated May 4, 2017). The Holloway mine was placed on care and maintenance effective Dec. 31, 2016 (see news release dated Dec. 12, 2016).
Production numbers may not add to total due to rounding.
PERFORMANCE AGAINST FULL-YEAR 2018 PRODUCTION GUIDANCE
Macassa Holt Taylor Fosterville Consolidated
2018 guidance (000 oz) (1) 220-225 65-75 50-55 greater than 330 over 670
2018 production (oz) 240,126 67,770 58,633 356,230 723,477 (2)
(1) A number of changes were made to the company's full-year 2018 production guidance during
the fourth quarter of 2018. On Oct. 30, 2018, the company announced that consolidated
production guidance for full year 2018 had been improved from over 635,000 ounces to 655,000
to 670,000 ounces. At the same time, the company announced that production guidance for the
Fosterville was improved to 300,000 to 310,000 ounces from 275,000 to 300,000 ounces
previously, while production guidance for the Taylor mine was revised to 50,000 to 55,000
ounces from 60,000 to 65,000 ounces previously. On Dec. 11, 2018, the company announced that
production guidance for full year 2018 at the Fosterville mine was improved to over 330,000
ounces, reflecting higher-than-targeted grades in the first two months of the fourth quarter
of 2018 and the advancement of two additional Swan zone stopes into the fourth quarter 2018
mine plan. As a result, consolidated production guidance for the year was improved to over
(2) Includes 718 ounces related to the Holloway mine.
Production in 2018 was a record 723,477 ounces, an increase of 21 per cent from 596,405 ounces in 2017. Excluding production from mines currently on care and maintenance, total consolidated production of 722,759 ounces in 2018 grew 26 per cent from 575,523 ounces for the previous year. The company exceeded the 670,000-ounce minimum production target included in its current consolidated production guidance for 2018 by $53.5-million or 8 per cent. During 2018, the company improved its consolidated production guidance three times from the initial consolidated guidance of over 620,000 ounces, announced on Jan. 17, 2018. Improvement in consolidated production guidance during the year were primarily driven by Fosterville, where average grades consistently outperformed target levels during the year.
Review of operating mines
The Fosterville mine produced a record 124,307 ounces in the fourth quarter of 2018, based on processing 98,797 tonnes at an average grade of 39.7 g/t and average recoveries of 98.6 per cent. Fourth quarter 2018 production increased 57 per cent from 79,157 ounces in the fourth quarter of 2017, when the mine processed 118,877 tonnes at an average grade of 21.5 g/t and average recoveries of 96.3 per cent. Production in the fourth quarter of 2018 increased 37 per cent from 90,618 ounces in the third quarter of 2018, based on processing 113,101 tonnes at an average grade of 25.6 g/t and average mill recoveries of 97.5 per cent. The average grade in the fourth quarter of 2018 of 39.7 g/t was the highest ever quarterly average grade at Fosterville by a significant margin and far exceeded target levels for the quarter. The outperformance largely relates to increased operating development activity around the Swan zone and higher-than-planned grades from development tonnes processed. In addition, stope production in the fourth quarter of 2018 from both the Swan and Eagle zones achieved substantially higher-than-expected grades. Based on the completion of increased operating development metres, the company added two Swan zone stopes to the mine plan for the fourth quarter of 2018, which also is contributed to higher levels of production.
Production at Fosterville in 2018 totalled 356,230 ounces, a 35-per-cent increase from 263,845 ounces in 2017. Record production in 2018 resulted from processing 456,909 tonnes at an average grade of 24.9 g/t and average recoveries of 97.3 per cent, which compared with processing 547,476 tonnes at an average grade of 15.8 g/t and average recoveries of 95.0 per cent for YTD 2017. A 58-per-cent increase in the average grade compared with 2017 mainly resulted from the continued transition to mining deeper, higher-grade stopes in the Eagle and, as of the third quarter of 2018, the Swan zone, which include quartz veins containing significant amounts of visible gold. The reduction in tonnes milled compared with the prior year reflected the mine's focus on extracting high-grade stopes at depth. At current grades, the Fosterville mill's refining capacity is being fully utilized, with an expansion of the refinery and gold room planned for 2019. The company is also working to establish additional mining fronts, which is expected to contribute to higher throughput by 2021.
The Macassa mine produced a record 69,936 ounces in the fourth quarter of 2018, based on processing 85,523 tonnes at an average grade of 25.9 g/t and average recoveries of 98.0 per cent. Fourth quarter 2018 production was 36 per cent higher than 51,608 ounces in the fourth quarter of 2017, when 119,129 tonnes were processed at an average grade of 13.9 g/t and average recoveries of 96.8 per cent. The increase in production from the same period in 2017 reflected an 86-per-cent increase in the average grade, resulting from mining higher-grade stopes deeper in the South mine complex (SMC), as well as the impact of grade outperformance, particularly in SMC stopes around the 5,700-foot level, where mining commenced near the end of 2017. The significant increase in grade more than offset a reduction in tonnes processed. Lower tonnes processed in the fourth quarter of 2018 largely reflected increased selectivity in processing development material for the purpose of maximizing average grades. Fourth quarter 2018 production increased 26 per cent from 55,582 ounces in the third quarter of 2018, when the mine processed 92,503 tonnes at an average grade of 19.2 g/t and average mill recoveries of 97.3 per cent. The increase from the previous quarter resulted from higher average grades in the fourth quarter of 2018, mainly reflecting more favourable grade reconciliations compared with the third quarter of 2018.
Production at Macassa in 2018 totalled 240,126 ounces, an increase of 24 per cent from 194,237 ounces in 2017. Production in 2018 resulted from processing 354,468 tonnes at an average grade of 21.6 g/t and average recoveries of 97.7 per cent. All tonnes processed in 2018 were from mine production. For 2017, a total of 409,064 tonnes were processed at an average grade of 15.2 g/t and average recoveries of 97.1 per cent. Of tonnes processed in 2017, 387,053 tonnes related to mine production and averaged 16.0 g/t, with the remaining 22,011 tonnes being drawn from low-grade stockpiles and averaging 1.6 g/t. The 35-per-cent increase in the average grade from mine production in 2018 compared with the previous year resulted from mining higher-grade stopes deeper in the SMC during year to date 2018, as well as the impact of favourable grade reconciliations and improved grade control practices.
During the fourth quarter of 2018, production at the Holt mine totalled 16,774 ounces, based on processing 118,347 tonnes at ane average grade of 4.7 g/t and average recoveries of 94.3 per cent. Fourth quarter 2018 production compared with production of 19,263 ounces in the fourth quarter of 2017, which resulted from processing 127,494 tonnes at an average grade of 5.0 g/t and average recoveries of 94.9 per cent, and record quarterly production of 20,609 ounces in the third quarter of 2018, based on processing 135,849 tonnes at an average grade of 5.0 g/t and average recoveries of 95.0 per cent. Lower average grades compared with both prior periods reflected mine sequencing, while a reduction in tonnes processed largely reflected some stockpiling of ore from Holt in favour of processing high-grade ore from the Taylor mine during the quarter.
In 2018, Holt produced 67,770 ounces, a 2-per-cent increase from 66,677 ounces in 2017. The small increase in production resulted from a 2-per-cent increase in tonnes processed, with the average grade of 4.7 g/t unchanged from the comparable 2017 level. Production in 2018 was based on 471,819 tonnes processed at and average grade of 4.7 g/t and average recoveries of 94.6 per cent, which compared with 462,987 tonnes processed at an average grade of 4.7 g/t and average recoveries of 94.8 per cent in 2017.
In the fourth quarter of 2018, the Taylor mine achieved record production of 19,305 ounces, a 17-per-cent increase from 16,541 ounces in the fourth quarter of 2017 and 4 per cent higher than 13,333 ounces the previous quarter. Fourth quarter 2018 production resulted from 103,793 tonnes at an average grade of 6.1 g/t and average recoveries of 95.0 per cent, which compared with 89,297 tonnes processed at an average grade of 6.0 g/t and average recoveries of 96.2 per cent in the fourth quarter of 2017 and 94,092 tonnes at an average grade of 4.7 g/t and average recoveries of 94.3 per cent in the third quarter of 2018. The increase from the fourth quarter of 2017 was mainly related to a 16-per-cent increase in tonnes processed, while a 30-per-cent improvement in the average grade, reflecting both mine sequencing and grade outperformance in the fourth quarter of 2018, was the key driver of the increase compared with the previous quarter.
For full year 2018, Taylor produced 58,633 ounces from processing 382,059 tonnes at an average grade of 5.0 g/t and average recoveries of 94.7 per cent. Production in 2018 increased 15 per cent from 50,764 ounces in 2017, when a total of 292,003 tonnes were processed at an average grade of 5.6 g/t and average recoveries of 96.2 per cent.
Pierre Rocque, PEng, 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 is a mid-tier gold producer with 2018 production targeted at over 620,000 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.
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