Mr. Anthony Makuch reports
KIRKLAND LAKE GOLD REPORTS RECORD QUARTERLY PRODUCTION IN Q3 2019, COMPANY'S CASH POSITION REACHES $615 MILLION
Kirkland Lake Gold Ltd. had record production for the third quarter of 2019 of 248,400 ounces and for the first nine months of 2019 of 694,873 ounces. Production in Q3 2019 was driven by record quarterly production at Fosterville, totalling 158,327 ounces, bringing year-to-date (YTD) 2019 production at the mine to 427,472 ounces. Production at Fosterville is expected to increase from Q3 2019 levels in the final quarter of the year, with the mine on track to achieve its full-year 2019 guidance of 570,000 to 610,000 ounces. Production at Macassa in Q3 2019 totalled 62,945 ounces, with YTD 2019 production totalling 184,918 ounces. Macassa ended Q3 2019 well positioned to achieve its full-year 2019 guidance of 240,000 to 250,000 ounces. All dollar amounts are expressed in United States dollars, unless otherwise noted.
The company's cash position increased $146-million or 31 per cent during Q3 2019, with total cash and equivalents at Sept. 30, 2019, totalling $615-million. For YTD 2019, cash and equivalents increased $283-million or 85 per cent from $332-million at Dec. 31, 2018.
Highlights of Q3 2019 and YTD 2019 production results:
Record consolidated production of 248,400 ounces in Q3 2019, 38% increase from 180,155 ounces in third quarter of 2018 ("Q3 2018") and 16% higher than 214,593 ounces the previous quarter ("Q2 2019") (YTD 2019 consolidated production of 694,873 ounces, 41% increase from 492,484 ounces for first nine months of 2018 ("YTD 2018"))
Gold poured in Q3 2019 of 252,984 ounces, with consolidated gold sales totaling 256,276 ounces (YTD 2019 gold poured of 697,977 ounces, with total gold sales of 701,296 ounces)
Record quarterly production at Fosterville totaling 158,327 ounces, an increase of 75% from 90,618 ounces in Q3 2018 and 13% higher than 140,701 ounces in Q2 2019 (YTD 2019 production of 427,472 ounces, an 84% increase from 231,923 ounces in YTD 2018)
Production at Macassa in Q3 2019 totaling 62,945 ounces, 13% higher than 55,582 ounces in Q3 2018 and 28% increase from 49,196 ounces the previous quarter (YTD 2019 production of 184,918 ounces, 9% higher than 170,190 ounces in YTD 2018)
Production at Holt Complex of 27,128 ounces versus 33,955 ounces in Q3 2018 and 24,696 ounces in Q2 2019 (YTD 2019 production of 82,483 ounces compared to 90,371 ounces for YTD 2018).
Other key developments during Q3 2019 include:
Exploration success at Macassa;
Underground drilling intersected high-grade gold mineralization close to 300 metres to the west and 200 m to the east of the South mine complex (SMC), encouraging drilling results reported within a new high-grade zone along the amalgamated break;
Continued focus on shareholder returns;
- Q2 2019 quarterly dividend of four cents per share paid on July 12, 2019, to shareholders of record on June 28, 2019 (representing first quarterly dividend paid in U.S. dollars), with Q3 2019 quarterly dividend of four cents per share to be paid on Oct. 11, 2019, to shareholders of record on Sept. 30, 2019;
Common share price increased 67 per cent in YTD 2019 on the Toronto Stock Exchange, closing on Monday, Sept. 30, 2019, at $59.35 (Canadian) per share ($44.80 per share on the New York Stock Exchange; $69.38 per share on the Australian Securities Exchange).
Subsequent to end of Q3 2019:
Test processing commences in Northern Territory;
- Test processing of Lantern deposit mineralization commenced at the Union Reefs mill in early October as part of advanced exploration program to evaluate a potential resumption of operations in the Northern Territory of Australia.
Tony Makuch, president and chief executive officer of Kirkland Lake Gold, commented: "Record production in Q3 2019 resulted from strong results at our two high-grade mines, Fosterville and Macassa. At Fosterville, production continued to ramp up in the Swan zone, with both higher tonnage and improved grades being achieved compared to Q2 2019. Production at Fosterville has increased every quarter so far in 2019 and we expect this trend to continue, with the final quarter of 2019 targeted to be our strongest of the year. Turning to Macassa, tonnes processed increased substantially in Q3 2019 compared to the previous quarter. We also continued to achieve solid grade performance in stopes on the 5600, 5700 and 5800 levels of the South mine complex. The strong results at Fosterville and Macassa, combined with the impact of higher gold prices, drove a substantial build up in our cash position during Q3 2019, with cash and equivalents increasing over 30 per cent during the quarter to $615-million at Sept. 30, 2019."
Q3 AND YTD 2019 PRODUCTION RESULTS
Q3 2019 Q3 2018 Q2 2019 YTD 2019 YTD 2018
Ore milled (tonnes) 119,412 113,101 111,280 370,876 358,112
Grade (g/t Au) 41.8 25.6 39.9 36.4 20.9
Recovery (%) 98.6 97.5 98.7 98.6 96.6
Gold production (oz) 158,327 90,618 140,701 427,472 231,923
Ore milled (tonnes) 85,834 92,503 72,681 236,505 268,945
Grade (g/t Au) 23.3 19.2 21.5 24.8 20.2
Recovery (%) 97.8 97.3 97.9 98.0 97.5
Gold production (oz) 62,945 55,582 49,196 184,918 170,190
Ore milled (tonnes) 214,542 229,996 185,398 600,726 632,083
Grade (g/t Au) 4.2 4.9 4.4 4.5 4.7
Recovery (%) 94.2 94.7 95.0 95.0 94.7
Gold production (oz) 27,128 33,955 24,696 82,483 90,371
Total consolidated production (oz) 248,400 180,155 214,593 694,873 492,484
Total consolidated gold sales (oz) 256,276 184,517 212,091 701,296 496,585
Numbers may not add due to rounding
The Holt complex includes the Holt mine, Taylor mine and Holloway 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 (000 oz) 240 to 250 140 to 150 570 to 610 950 to 1,000
YTD 2019 production (oz) 184,918 82,483 427,472 694,873
YTD 2019 production totalled 694,873 ounces, an increase of 41 per cent from 492,484 ounces in YTD 2018. The main contributor to the strong growth compared with YTD 2018 was record production at Fosterville, mainly due to a significant improvement in the average grade reflecting the ramp up of production from the high-grade Swan zone. Production from Fosterville is expected to increase during the fourth quarter of 2019 compared with Q3 2019, with the mine remaining on track to achieve its full-year 2019 guidance of 570,000 to 610,000 ounces. Macassa produced 184,918 ounces for YTD 2019 and ended the third quarter well positioned to achieve its full-year 2019 production guidance of 240,000 to 250,000 ounces. The Holt complex produced 82,483 ounces in the first nine months of 2019, below expected levels, reflecting both lower-than-planned throughput levels and average grades. The company is currently reviewing future plans for the Holt complex operations. On a consolidated basis, the company continues to target 950,000 to one million ounces of production for full-year 2019.
Review of operating mines
The Fosterville mine produced 158,327 ounces, an increase of 75 per cent from 90,618 ounces in Q3 2018 and 13 per cent higher than 140,701 ounces in Q2 2019. Production in Q3 2019 resulted from processing 119,412 tonnes at an average grade of 41.8 g/t with average mill recoveries of 98.6 per cent. The growth in production from both prior periods reflected higher average grades and an increase in total tonnes processed. The average grade increased 63 per cent compared with the average grade of 25.6 g/t in Q3 2018, with the significant improvement resulting from the ramping up of production in the high-grade Swan zone over the last year. During Q3 2018, the first Swan zone stope was produced, contributing approximately 7,500 ounces to that quarter's production. By comparison, during Q3 2019, 11 Swan zone stopes were produced, which contributed approximately 59 per cent of total tonnes processed and 94 per cent of total ounces produced for the quarter. The increase in average grade from 39.9 g/t the previous quarter reflected mine sequencing, with higher average grades from Swan zone stopes mined during Q3 2019.
Production at Fosterville for YTD 2019 totalled 427,472 ounces, an 84-per-cent increase from 231,923 ounces for YTD 2018. YTD 2019 production resulted from processing 370,876 tonnes at an average grade of 36.4 g/t and average recoveries of 98.6 per cent. The increase from YTD 2018 was mainly due to a 74-per-cent improvement in the average grade, largely reflecting the ramp up of production from the Swan zone since the end of Q3 2018. Mill throughput for YTD 2019 averaged 1,359 tonnes per day, in line with expected levels and higher than the 1,312 tonnes per day average achieved in YTD 2018.
The Macassa mine produced 62,945 ounces in Q3 2019, a 13-per-cent increase from 55,582 ounces in Q3 2018 and 28-per-cent higher than 49,196 ounces the previous quarter. Production in Q3 2019 resulted from processing 85,834 tonnes at an average grade of 23.3 g/t with average recoveries of 97.8 per cent. The change in production from Q3 2018 reflected a higher average grade (19.2 g/t in Q3 2018) resulting from increased mining of high-grade stopes around the 5600, 5700 and 5800 levels of the SMC. The increase compared with the previous quarter reflected both an increase in the average grade and higher tonnes processed. Tonnes processed in Q3 2019 averaged 933 tonnes per day versus 799 tonnes per day in Q2 2019, when production levels were reduced by 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. Also contributing to increased tonnage in Q3 2019 was the addition of stopes on the 3400 level to the production plan for the quarter.
Production at Macassa for YTD 2019 totalled 184,918 ounces, an increase of 9 per cent from 170,190 ounces for the same period in 2018. The increase in production for YTD 2019 reflected a 23-per-cent improvement in the average grade, to 24.8 g/t from 20.2 g/t for YTD 2018. The impact of a higher average grade compared with YTD 2018 more than offset a reduction in tonnes milled in the first nine months of 2019 versus the same period a year earlier. Tonnes processed during YTD 2019 averaged 866 per day versus 985 per day for the same period in 2018.
During Q3 2019, the Holt complex produced 27,128 ounces based on processing 214,542 tonnes at an average grade of 4.2 g/t with average recoveries of 94.2 per cent. Production in Q3 2019 compared with production of 33,955 ounces in Q3 2018 when a total of 229,997 tonnes were processed at an average grade of 4.9 g/t with average recoveries of 94.7 per cent. The change from Q3 2018 reflected lower production at both the Holt and Taylor mines. At Holt, lower production levels compared with Q3 2018 resulted from a reduction in both tonnes processed and average grades. Lower production at Taylor resulted from reduced tonnes processed, which more than offset the impact of higher average grades in Q3 2019. Production in Q3 2019 of 27,128 ounces compared with production of 24,696 ounces the previous quarter when a total of 185,398 tonnes were processed at an average grade of 4.4 g/t with average recoveries of 95 per cent. The increase from Q2 2019 reflected higher production at Holloway as mining continued to ramp up following the resumption of operations in the first quarter of 2019. Production at Holloway in Q3 2019 totalled 3,792 ounces compared with 1,560 ounces the previous quarter. Production from the Holt and Taylor mines was largely unchanged quarter over quarter.
For YTD 2019, the Holt complex produced 82,483 ounces from processing 600,726 tonnes at an average grade of 4.5 g/t with average recoveries of 95 per cent. YTD 2019 production compared with 90,371 ounces for YTD 2018 when a total of 632,083 tonnes at an average grade of 4.7 g/t with average recoveries of 94.7 per cent. The reduction versus YTD 2018 reflected lower tonnes processed and average grades at Holt mine, and reduced tonnes processed at Taylor. The Holloway mine produced 6,413 ounces in YTD 2019 compared with 47 ounces for the same period in 2018 (resulting from the processing of stockpiled material) when the mine was on care and maintenance.
Test processing of mineralization from the Lantern deposit at the Cosmo mine commenced in early October, 2019. The processing of Lantern mineralization is being undertaken as part of an advanced exploration program aimed at evaluating a potential resumption of operations in the Northern Territory of Australia. The company's advanced exploration activities are focused on drilling and development at the Cosmo mine to evaluate both the Lantern and Cosmo deposits, as well as the drilling of a number of targets at Union Reefs, the location of the company's milling facility, and at Pine Creek.
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 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.
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