Mr. Anthony Makuch reports
KIRKLAND LAKE GOLD ANNOUNCES SECOND QUARTER 2019 PRODUCTION, RESULTS INCLUDE RECORD PRODUCTION AT FOSTERVILLE OF 140,701 OUNCES
Production for Kirkland Lake Gold Ltd.'s second quarter of 2019 was 214,593 ounces and for the first six months of 2019 was 446,472 ounces. Production in Q2 2019 was driven by record quarterly production at Fosterville totalling 140,701 ounces, bringing year-to-date production at the mine to 269,145 ounces at June 30, 2019. Production at Fosterville is expected to increase from Q2 2019 levels in each of the final two quarters of the year, with the mine remaining on track to achieve full-year 2019 guidance of 570,000 to 610,000 ounces. On a consolidated basis, the company continues to target full-year 2019 production of 950,000 to one million ounces. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
Highlights of Q2 2019 and H1 2019 production results:
Consolidated Q2 2019 production of 214,593 ounces compared with 164,685 ounces in the second quarter of 2018 and 231,879 ounces the previous quarter (H1 2019 consolidated production of 446,472 ounces, 43 per cent higher than 312,329 ounces in the first half of 2018);
Gold poured in Q2 2019 of 216,166 ounces, with consolidated gold sales totalling 212,091 ounces (H1 2019 gold poured of 446,417 ounces, with total gold sales of 445,020 ounces);
Record quarterly production at Fosterville totalling 140,701 ounces, an increase of 82 per cent from 77,462 ounces in Q2 2018 and 10 per cent higher than 128,445 ounces in Q1 2019 (H1 2019 production of 269,145 ounces, a 90-per-cent increase from 141,305 ounces in H1 2018);
Production at Macassa in Q2 2019 totalling 49,196 ounces compared with 60,571 ounces in Q2 2018 and record production of 72,776 ounces the previous quarter (H1 2019 production of 121,972 ounces, 6 per cent higher than 114,609 ounces in H1 2018);
Production at Holt complex of 24,696 ounces versus 26,652 ounces in Q2 2018 and 30,658 ounces in Q1 2019 (H1 2019 production of 55,355 ounces, similar to 56,415 ounces in H1 2018).
Other key developments during Q2 2019, include the following.
- Exploration success at Macassa:
Underground drilling expands high-grade mineralization in the South mine complex (SMC) to the east, west and to depth; two new areas of high-grade mineralization along the Amalgamated break identified;
Strong Q1 2019 net earnings and free cash flow:
On May 7, 2019, the company reported strong financial results for Q1 2019, including record adjusted net earnings per share of 53 cents and free cash flow of $93.1-million.
Cash and cash equivalents at June 30, 2019, totalled $469-million, an increase of $137-million or 41 per cent from $332-million at Dec. 31, 2018 (and an increase of $53-million or 13 per cent from $416-million at March 31, 2019).
- Continued focus on shareholder returns:
Quarterly dividend of four Canadian cents per share paid on April 12, 2019, to shareholders of record at March 31, 2019; Q2 2019 quarterly dividend of four cents per share announced on May 7, 2019, to be paid on July 12, 2019, to shareholders of record on June 28, 2019. The Q2 2019 dividend payment is the first time the company's quarterly dividend is being paid in U.S. dollars. (U.S.-dollar dividend payments are converted into Canadian dollars for Canadian shareholders using the spot price exchange rate on July 11, 2019, the date prior to the payment date.)
Common share price increased 36 per cent in Q2 2019 (55 per cent year to date) on the Toronto Stock Exchange, closing on Friday, July 5, 2019, at $55.03 (Canadian)/share ($42.07/share on the New York Stock Exchange and $61.54 (Australian) per share on the Australian Stock Exchange (July 4)).
Tony Makuch, president and chief executive officer of Kirkland Lake Gold, commented: "Fosterville achieved a record quarter in Q2 2019, with production exceeding planned levels largely due to strong grade performance in the Swan zone. We are targeting higher levels of production from Fosterville in both the third and fourth quarters of the year as ounces produced from the Swan zone increase, with the mine tracking well towards its full-year 2019 guidance of 570,000 to 610,000 ounces. At Macassa, we saw average grades more in line with expected levels in Q2 2019, which compared with Q1 2019 when the record average quarterly grade of 29.6 g/t was achieved mainly due to grade outperformance in the SMC. Tonnes processed during Q2 2019 were lower than expected, largely reflecting excess water from the spring runoff, which limited the use of the lower loading pocket at the No. 3 shaft. The impact of the water extended longer than anticipated, through to the end of the quarter. Water levels are receding, and we do not expect third and fourth quarter production to be impacted. Macassa remains on track to achieve its full-year 2019 guidance of 240,000 to 250,000 ounces."
Q2 AND H1 2019 PRODUCTION RESULTS
Q2 2019 Q2 2018 Q1 2019 H1 2019 H1 2018
Ore milled (tonnes) 111,280 121,342 140,1842 51,464 245,011
Grade (g/t Au) 39.9 20.6 29.0 33.8 18.7
Recovery (%) 98.7 96.2 98.3 98.5 96.0
Gold production (oz) 140,701 77,462 128,4452 69,145 141,305
Ore milled (tonnes) 72,681 89,781 77,990 150,671 176,442
Grade (g/t Au) 21.5 21.5 29.6 25.7 20.5
Recovery (%) 97.9 97.7 98.2 98.1 97.7
Gold production (oz) 49,196 60,571 72,776 121,972 114,609
Holt complex (3)
Ore milled (tonnes) 185,398 195,054 200,786 386,184 401,798
Grade (g/t Au) 4.4 4.5 5.0 4.7 4.6
Recovery (%) 95.0 94.1 95.7 95.4 94.6
Gold production (oz) 24,696 26,652 30,658 55,355 56,415
Total consolidated production (oz) 214,593 164,685 231,879 446,472 312,329
Total consolidated gold sales (oz) 212,091 164,305 232,929 445,020 312,068
* Numbers may not add due to rounding.
The Holt complex includes the Holt mine, Taylor mine and Hollowing mine, which all feed the Holt mill. On Feb. 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.
PERFORMANCE AGAINST FULL-YEAR 2019 PRODUCTION GUIDANCE
Macassa Holt complex Fosterville Consolidated
2019 guidance (000s oz) 240-250 140-150 570-610 950-1,000
H1 2019 production (oz) 121,972 55,355 269,145 446,472
H1 2019 production totalled 446,472, an increase of 43 per cent from 312,329 ounces in H1 2018. The main contributor to the strong growth compared with the same period in 2018 was record production at Fosterville, mainly due to a significant improvement in the average grade. Production from Fosterville is expected to increase significantly during the second half of the year, as is production from the Holt complex. Macassa ended H1 2019 well positioned to achieve its full-year 2019 production guidance, with production in the second half of the year expected to be similar to the H1 2019 total of 121,972 ounces. The company remains on track to achieve its full-year 2019 production guidance of 950,000 to one million ounces of gold production.
Review of operating mines
The Fosterville mine produced 140,701 ounces in Q2 2019, an increase of 82 per cent from 77,462 ounces in Q2 2018 and 10 per cent higher than 128,445 ounces the previous quarter. Production in Q2 2019 resulted from processing 111,280 tonnes at an average grade of 39.9 g/t and average mill recoveries of 98.7 per cent. The growth in production from both prior periods was due to a significant increase in the average grade, which was 94 per cent and 38 per cent higher than in Q2 2018 and Q1 2019, respectively. The strong grade performance in Q2 2019 resulted from increased mining of high-grade stopes in the Swan zone during the quarter compared with the previous quarter as the stoping front continued to progress deeper into the high-grade sections of the Swan zone. There were no production stopes from the Swan zone included in Q2 2018 production. Tonnes processed in Q2 2019 were largely in line with expected levels, with the reduction from both prior periods largely reflecting a focus on maximizing grade in the mine plan.
Production at Fosterville in H1 2019 totalled 269,145 ounces, an increase of 90 per cent from 141,305 ounces for the same period in 2018. H1 2019 production resulted from processing 251,464 tonnes at an average grade of 33.8 grams per tonne and average recoveries of 98.5 per cent. The increase from H1 2018 was mainly due to an 81-per-cent improvement in the average grade, largely reflecting the contribution from high-grade stopes in the Swan zone to H1 2019 production. Stope production from the Swan zone commenced during the third quarter of 2018. Mill throughput in H1 2019 averaged 1,390 tonnes per day, in line with expected levels and similar to the 1,350 tonnes per day average achieved in H1 2018.
Following completion of H1 2019, Fosterville was on track to achieve the mine's full-year 2019 production guidance of 570,000 to 610,000 ounces. Production levels in H2 2019 are expected to be significantly higher than during the first half of the year, reflecting increased production from the Swan zone.
The Macassa mine produced 49,196 ounces in Q2 2019, which compared with 60,571 ounces in Q2 2018 and record production of 72,776 ounces the previous quarter. Production in Q2 2019 resulted from processing 72,681 tonnes at an average grade of 21.5 g/t and average recoveries of 97.9 per cent. The change in production from Q2 2018 reflected lower tonnes milled largely reflecting the impact of excessive water in the mine during the spring runoff, which limited the use of the lower loading pocket at the No. 3 shaft. The change in production from the previous quarter resulted from a reduction in the average grade from the record quarterly grade of 29.6 g/t in Q1 2019, as well as reduced tonnes milled.
Production at Macassa in H1 2019 totalled 121,972 ounces, an increase of 6 per cent from 114,609 ounces for the same period in 2018. The increase in production in H1 2019 reflected a 25-per-cent improvement in the average grade, to 25.7 g/t, reflecting significant grade outperformance from stopes on the 5,700 level of the SMC during Q1 2019. The impact of a higher average grade compared with H1 2018 more than offset a reduction in tonnes milled in H1 2019 versus the same period a year earlier.
At June 30, 2019, Macassa was well positioned to achieve the mine's full-year 2019 production guidance of 240,000 to 250,000 ounces, with tonnes milled expected to increase in H2 2019 from levels achieved in the first half of the year.
During Q2 2019, the Holt complex produced 24,696 ounces based on processing 185,398 tonnes at an average grade of 4.4 g/t and at average recoveries of 95.0 per cent. Production in Q2 2019 compared with production of 26,652 ounces in Q2 2018 and 30,658 ounces the previous quarter. The change in production from Q2 2018 largely reflected lower production at Taylor mine (10,204 ounces versus 12,940 ounces in Q2 2018) as the favourable impact of a higher average grade was more than offset by reduced mill throughput. Compared with the previous quarter, production at Holt mine of 12,928 ounces in Q2 2019 compared with 17,225 ounces in Q1 2019 with the reduction reflecting lower average grades (3.9 g/t in Q2 2019 versus 4.8 g/t the previous quarter). Q2 2019 production at Taylor compared with production of 12,377 ounces in Q1 2019 with the change reflecting both a lower average grade (5.2 g/t versus 5.4 g/t the previous quarter) and reduced tonnes milled (64,186 tonnes in Q2 2019 versus 75,085 tonnes process in Q1 2019). At Holloway, 1,564 ounces were produced in Q2 2019 versus nil in Q2 2018 and 1,056 ounces the previous quarter.
For H1 2019, the Holt complex produced 55,355 ounces, similar to the 56,415 ounces produced for the same period in 2018. Production at Holt mine of 30,153 ounces was largely unchanged from 30,387 ounces in H1 2018. The Taylor mine produced 22,581 ounces in H1 2019 compared with 25,995 ounces in H1 2018, as reduced levels of mill throughput more than offset an increase in the average grade year over year. The Holloway mine produced 2,621 ounces in H1 2019 versus 33 ounces while on care and maintenance in H1 2018.
The company is targeting higher levels of production from the Holt complex in H2 2019 compared with the first half of the year. Production at Holloway is expected to ramp up with full-year 2019 production targeted at approximately 20,000 ounces. The company's full-year 2019 production guidance for the Holt complex remains unchanged at 140,000 to 150,000 ounces.
Natasha Vaz, 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 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 950,000 to one million ounces in 2019, 930,000 to 1.01 million ounces in 2020 and 995,000 to 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.
Filing of full-year 2018 financial statements and management's discussion and analysis
The company's 2018 annual report, including the consolidated financial statements and management's discussion and Analysis, was filled with the Securities and Exchange Commission and on SEDAR on Feb. 21, 2019, and are available on the company's website. In addition, the company makes available, and will provide to all shareholders, upon request, hard copies of these documents free of charge.
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