20:12:47 EST Thu 14 Nov 2019
Enter Symbol
or Name

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Kirkland Lake Gold Ltd
Symbol KL
Shares Issued 210,189,007
Close 2019-11-06 C$ 61.62
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Kirkland Lake earns $176.6-million in Q3 2019

2019-11-06 12:41 ET - News Release

Mr. Anthony Makuch reports


Kirkland Lake Gold Ltd. has released its financial and operating results for the third quarter and first nine months of 2019. The Q3 2019 results include record earnings and cash flows driven largely by strong growth in gold production and improved unit costs. The Company's cash position increased $146.6 million or 31% during Q3 2019, totaling $615.8 million at September 30, 2019. On November 6, 2019 the Company announced a $0.02 per share increase to the quarterly dividend, to $0.06 per share, commencing with the fourth quarter 2019 dividend payment to be paid in January 2020. The Company's full consolidated financial statements and management discussion & analysis are available on SEDAR at www.sedar.com and on the Company's website at www.klgold.com . All dollar amounts are in U.S. dollars, unless otherwise noted.

Key highlights of Q3 2019 results include:

Record net earnings: Net earnings of $176.6 million ($0.84 per basic share) more than triple net earnings of $55.9 million ($0.27 per basic share) in Q3 2018 and 69% higher than $104.2 million ($0.50 per basic share) the previous quarter; adjusted net earnings in Q3 2019 were the same as net earnings and increased 188% from $61.4 million ($0.29 per basic share) in Q3 2018 and 67% from $105.5 million ($0.50 per basic share) in Q2 2019.

Revenue grows 71%: Revenue totaled $381.4 million, 71% increase from $222.7 million in Q3 2018 and 36% higher than $281.3 million the previous quarter;

Significant growth in EBITDA1,2: EBITDA of $296.4 million, 148% higher than $119.6 million in Q3 2018 and 60% increase from $185.8 million in Q2 2019

Operating cash flow increases 145%: Net cash provided by operating activities of $316.8 million, 145% growth from $129.3 million in Q3 2018 and 76% higher than $179.7 million the previous quarter

Record free cash flow1: Free cash flow of $181.3 million, more than triple the Q3 2018 and Q2 2019 levels of $53.1 million and $54.4 million, respectively, with substantial growth in free cash flow being achieved at the same time that capital expenditures increased in support of advancing key growth projects

Growth projects ramp up: Growth capital expenditures1 totaled $50.2 million in Q3 2019 (excluding capitalized exploration), including $33.8 million at Macassa and $11.3 million at Fosterville; full-face sinking at Macassa #4 shaft project commenced in August 2019 and was advanced more than 600 feet by November 6, 2019

Continued focus on exploration: Exploration and evaluation expenditures in Q3 2019 totaled $43.6 million ($5.9 million expensed and $37.7 million capitalized), with $32.4 million relating to ongoing advanced exploration work in the Northern Territory.

Continued strong operating results

o Production of 248,400 ounces, 38% increase from 180,155 ounces in Q3 2018 and 16% higher than 214,593 ounces the previous quarter

o Production costs of $73.7 million compared to $64.9 million in Q3 2018 and $66.2 million in Q2 2019

o Operating cash costs per ounce sold1 averaged $287, 18% improvement from $351 in Q3 2018 and 8% better than $312 in Q2 2019

o AISC per ounce sold1 averaged $562, 13% better than $645 in Q3 2018 and 12% improvement from $638 the previous quarter.

Cash at September 30, 2019 totaled $615.8 million, 31% increase from $469.4 million at June 30, 2019 and 85% higher than $332.2 million at December 31, 2018.

Key highlights of YTD 2019 results include:

Record nine-month financial results

o Net earnings of $390.9 million ($1.86 per basic share), 134% increase from $167.4 million ($0.79 per basic share) for first nine months of 2018 ("YTD 2018")

o Adjusted net earnings of $394.2 million ($1.88 per basic share), 122% higher than $177.6 million ($0.84 per basic share) for YTD 2018

o Net cash provided by operating activities of $672.3 million, 97% growth from $341.5 million for YTD 2018

o Free cash flow totaling $330.2 million, double the YTD 2018 level of $163.1 million

o Revenue of $967.6 million, 52% growth from $635.6 million for YTD 2018

o EBITDA of $683.8 million, 99% increase from $343.9 million for YTD 2018.

Strong YTD 2019 operating results

o Production of 694,873 ounces, 41% increase from 492,484 ounces for YTD 2018

o Operating cash cost per ounce sold of $296, 25% improvement from $397 for the same period in 2018

o AISC per ounce sold of $584, 21% better than $738 for YTD 2018.

Strong focus on shareholder returns in YTD 2019

o Common share price increased 67% for YTD 2019 to C$59.35 per share (on TSX) at September 30, 2019 from C$35.60 per share at December 31, 2018 (C$59.92 per share at November 5, 2019)

o Quarterly dividend increased to $0.04/share (from C$0.04/share) for second quarter 2019 dividend, paid on July 12, 2019 to shareholders of record on June 28, 2019; change to paying dividend in US dollars increases value of dividend by approximately 30%; Q3 2019 dividend of $0.04 per share paid on October 11, 2019 to shareholders of record on September 30, 2019

o Additional dividend increase of $0.02 per share or 50%, to $0.06 per share, commencing with Q4 2019 dividend payment to be paid in January 2020 to shareholders of record as of December 31, 2019.

2. Refers to Earnings before Interest, Taxes, Depreciation, and Amortization.

Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented: "Q3 2019 was our best quarter to date driven by exceptional results at Fosterville and a solid quarter of performance at Macassa. At Fosterville, production increased by almost 70,000 ounces from Q3 2018 largely reflecting a 75% improvement in the average grade, to 41.8 g/t. Grades of this level are rarely seen in our industry and resulted from the ramp up in production of the high-grade Swan Zone. We mined our first Swan stope during last year's third quarter, which contributed about 7,500 ounces of production. We have ramped up production since then and, in Q3 2019, mined 11 Swan Zone stopes, which contributed about 94% of the 158,327 ounces produced for the quarter. Substantially higher grades resulted in further improvement in unit costs which, combined with rising gold prices, led to significant margin expansion at Fosterville during the quarter. Turning to Macassa, the mine had a strong quarter in Q3 2019 with tonnes processed increasing 18% and the average grade improving to 23.3 g/t from 21.5 g/t in Q2 2019. We expect Fosterville and Macassa to finish 2019 with strong fourth quarters, which will position both mines to easily achieve their full-year 2019 production guidance of 570,000 {&#A A ; –} 610,000 ounces and 240,000 {&#A A ; –} 250,000 ounces, respectively. At the Holt Complex, we have lowered our production guidance for full-year 2019 based on results to date and are now assessing a future strategy for this operation.

"Turning to our growth programs, full-face sinking at the Macassa #4 shaft project commenced during August, with the shaft now having advanced to a depth of over 600 feet. Work is progressing well, with the project remaining on track for phase one completion during the second quarter of 2022. At Fosterville, our key growth projects are either complete or nearing completion. Our new water treatment plant was commissioned during the third quarter and is now in operation. Construction of our new paste fill plant is largely finished with commissioning to be completed by the end of the year. Work related to our new ventilation system is continuing and should be completed around year end, with commissioning to follow in early 2020. In the Northern Territory, advanced exploration work continues to accelerate, with initial processing of Lantern Deposit material at the Union Reefs Mill commencing in October. We continue to work towards a potential restart of operations in the Northern Territory as early as the beginning of next year."

Q3 2019 Financial Results and Conference Call Details

A conference call to discuss the Q3 2019 results will be held by senior management on Wednesday, November 6, 2019, at 4:00 pm ET (Thursday, November 7, 2019 at 8:00 am AEDT). Call-in information is provided below. The call will also be webcast and accessible on the Company's website at www.klgold.com .


Qualified Persons

Natasha Vaz, P.Eng., 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 Ltd. 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 {&#A A ; –} 1,000,000 ounces in 2019, 930,000 {&#A A ; –} 1,010,000 ounces in 2020 and 995,000 {&#A A ; –} 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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