Mr. Mark Utting reports
KIRKLAND LAKE GOLD REPORTS SOLID SECOND QUARTER 2020 PRODUCTION
Kirkland Lake Gold Ltd. has provided production results for the second quarter and first half of 2020. Q2 2020 production totalled 329,770 ounces, an increase of 115,177 ounces or 54 per cent from 214,593 ounces for the second quarter of 2019. For year to date 2020, the company produced 660,634 ounces, 214,162 ounces or 48 per cent higher than the first half of 2019 (YTD 2019). All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
Highlights of Q2 2020 production results
Consolidated Q2 2020 production of 329,770 ounces, a 54-per-cent increase from 214,593 ounces in Q2 2019 and largely unchanged from 330,864 ounces the previous quarter (660,634 ounces in YTD 2020 versus 446,472 ounces in YTD 2019);
Gold poured in Q2 2020 totalling 338,573 ounces versus 216,166 ounces in Q2 2019 and 326,933 ounces in Q1 2020 (YTD 2020 gold poured of 665,506 ounces compared with 446,417 ounces for YTD 2019);
Q2 2020 gold sales totalling 341,390 ounces at an average realized price of $1,716 per ounce compared with gold sales of 212,091 ounces ($1,320 per ounce) in Q2 2019 and 344,586 ounces ($1,586 per ounce) the previous quarter (YTD 2020 gold sales of 685,976 ounces ($1,650 per ounce) versus gold sales of 445,020 ounces ($1,313 per ounce) for YTD 2019);
Production from Detour Lake mine totalling 131,992 ounces despite disruptions caused by COVID-19 (production from the closing of the Detour Gold Corp. acquisition on Jan. 31, 2020, to June 30, 2020, totalled 223,547 ounces);
Strong production at Fosterville of 155,106 ounces, a 10-per-cent increase from 140,701 ounces in Q2 2019 mainly reflecting higher tonnes processed; Q2 2020 production was similar to production of 159,864 ounces the previous quarter (YTD 2020 production of 314,970 ounces, 17 per cent higher than 269,145 ounces in YTD 2019);
Production at Macassa totalling 41,865 ounces compared with quarterly production of 49,196 ounces in Q2 2019 with the reduction largely related to a lower average grade; Q2 2020 production compared with 50,861 ounces the previous quarter reflecting a greater impact on tonnes processed from COVID-19 protocols as well as a lower average grade (YTD 2020 production of 92,726 ounces compared with YTD 2019 production of 121,972 ounces);
Operations at Holt complex were placed on temporary suspension effective April 2, 2020, with production for Q2 2020 totalling 807 ounces; production in Q2 2019 totalled 24,696 ounces, while production in Q1 2020 totalled 28,584 ounces (YTD 2020 production totalled 29,390 ounces versus 55,355 ounces for YTD 2019).
Encouraging exploration results at Macassa mine including the identification of a new, large corridor of high-grade mineralization in close proximity to the No. 4 shaft, currently under development, and also the continued expansion of the South mine complex (SMC);
Exploration success at Detour Lake mine with initial drilling intersecting broad zones of mineralization in the Saddle zone between the Main and West pits at attractive open-pit grades with higher-grade intervals supporting the possibility for underground mineral resources at depth; drilling at 58 North zone intersects high grades 175.0 metres west of the current underground mineral resource;
Ramp-up of reduced operations and suspended non-essential activities commenced in May; COVID-19 health and safety protocols remain in place: Workers at Detour Lake and Macassa began to be recalled starting in early May after both mines transitioned to reduced operations due to COVID-19 around the end of March; exploration drilling and work on key projects resumed early in Q2 2020 after being suspended in late Q1 2020 (exploration drilling to ramp up over the next few months); extensive health and safety protocols introduced in March remain in place, with many protocols relating to medical screening and social distancing expected to remain for the foreseeable future;
Cash position of $537-million with no debt at June 30, 2020; $133-million paid in Australia during Q2 2020 representing the final tax instalment for the 2019 tax year; $50-million used in Q2 2020 to repurchase 1,345,600 common shares through the company's normal course issuer bid (total YTD 2020 share repurchases of 11,059,100 common shares for $380-million).
Tony Makuch, president and chief executive officer of Kirkland Lake Gold, commented: "We had a very solid second quarter despite the impact of COVID-19 and the extensive measures we took to protect our workers, their families and our communities. In Australia, Fosterville continued to perform well, with tonnes processed increasing in the quarter and grades continuing to average around 40 g/t. At Detour Lake, the ramp-up of business activities after the mine was placed on reduced operations in March due to COVID-19 commenced in early May and has gone very well. Detour Lake produced over 130,000 ounces in Q2 2020 even with lower average grades during the period of reduced operations due largely to processing stockpiled material. With improving operating performance, strong free cash flow generation and very encouraging exploration results from early drilling, our acquisition of Detour Gold is already emerging as a very successful transaction, with substantial value creation potential. We have also benefited greatly from our decision to close out Detour Gold's hedge positions shortly after the acquisition, with Detour's gold hedges priced between $1,300 and $1,490 per ounce versus our average realized price in Q2 2020 of $1,716 per ounce. Turning to Macassa, our processing volumes were impacted by COVID-19 more than at other operations, which in combination with lower grades resulted in Q2 2020 production below planned levels. With our work force now back to pre-COVID-19 levels, recognizing that our social distancing protocols remain in place, we expect to see higher volumes and improved grades at Macassa during the second half of the year. We also continue to generate encouraging exploration results at Macassa, which highlight the potential for considerable growth in mineral reserves and mineral resources in the SMC and along both the Main/'04 and Amalgamated breaks."
Q2 AND YTD 2020 PRODUCTION
Production results Q2 2020 Q2 2019 Q1 2020 YTD 2020 YTD 2019
Ore milled (tonnes) 123,473 111,280 118,701 242,175 251,464
Grade (g/t Au) 39.5 39.9 42.4 40.9 33.8
Recovery (%) 99.0 98.7 98.8 98.9 98.5
Gold production (oz) 155,106 140,701 159,864 314,970 269,145
Ore milled (tonnes) 77,624 72,681 82,256 159,879 150,671
Grade (g/t Au) 17.2 21.5 19.7 18.5 25.7
Recovery (%) 97.6 97.9 97.7 97.6 98.1
Gold production (oz) 41,865 49,196 50,861 92,726 121,972
Detour Lake (1)
Ore milled (tonnes) 5,655,992 3,708,022 9,364,014
Grade (g/t Au) 0.79 0.84 0.81
Recovery (%) 91.7 90.9 91.4
Gold production (oz) 131,992 91,555 223,547
Holt complex (2)
Ore milled (tonnes) 6,192 185,398 209,126 215,318 386,184
Grade (g/t Au) 4.0 4.4 4.6 4.5 4.7
Recovery (%) 100.1 95.0 93.4 93.6 95.4
Gold production (oz) 807 24,696 28,584 29,390 55,355
Total consolidated production (oz) (3) 329,770 214,593 330,864 660,634 446,472
Total consolidated gold sales (oz) 341,390 232,929 344,586 685,976 445,020
(1) The Detour Lake mine was acquired on Jan. 31, 2020. Production in Q1 2020 represents output
from that date to March 31, 2020. YTD 2020 production represents output from that date to
June 30, 2020.
(2) The Holloway mine, a component of the Holt complex, was placed on care and maintenance in
March, 2020, with no plans for a resumption of operations. The remainder of the Holt complex
was placed on temporary suspension effective April 2, 2020, as part of the company's COVID-19
response. The complex remained on temporary suspension as at June 30, 2020.
(3) Production numbers may not add to totals due to rounding.
PERFORMANCE AGAINST FULL-YEAR 2020 PRODUCTION GUIDANCE
Macassa Holt complex Detour Lake Fosterville Consolidated
2020 guidance (000s oz) 210-220 29 520-540 590-610 1,350-1,400
YTD 2020 production (oz) 92,726 29,390 223,547 314,970 660,634
After withdrawing guidance for 2020 on April 2, 2020, due to uncertainties related to the COVID-19 pandemic, the company issued new guidance on June 30, 2020, including the production guidance provided in the "Performance against full-year 2020 production guidance" table. YTD 2020 production totalled 660,634 ounces, an increase of 48 per cent from 446,472 ounces for YTD 2019 and compared with full-year guidance of 1.35 million to 1.4 million ounces. The main contributor to the strong growth compared with the same period in 2019 was the contribution of 223,547 ounces from Detour Lake, following the acquisition of Detour Gold on Jan. 31, 2020. Partially offsetting the contribution from Detour Lake was lower production at the Holt complex (29,390 ounces for YTD 2020 versus 55,355 ounces for YTD 2019) as a result of the operation being placed on temporary suspension effective April 2, 2020. At June 30, 2020, Fosterville was tracking well against its full-year 2020 production guidance. Production at Detour Lake and Macassa is expected to increase in the second half of 2020 with production activities at both mines having ramped up after being placed on reduced operations near the end of March as part of the company's COVID-19 response. Production of 29,390 ounces from Holt complex in YTD 2020 is included in the company's reissued 2020 production guidance. This reissued guidance assumes no production from the Holt complex in the second half of the year.
Review of operations
The Fosterville mine produced 155,106 ounces in Q2 2020 based on processing 123,473 tonnes at an average grade of 39.5 grams per tonne and average mill recoveries of 99.0 per cent. Q2 2020 production increased 10 per cent from 140,701 ounces in Q2 2019, when the mine processed 111,280 tonnes at an average grade of 39.9 g/t and average recoveries of 98.7 per cent. Q2 2020 production compared with production of 159,864 ounces the previous quarter when the mine recorded an average quarterly grade of 42.4 g/t at average recoveries of 98.8 per cent. The higher average grade in Q1 2020 reflected mine sequencing in the lower Phoenix system.
Production at Fosterville for YTD 2020 totalled 314,970 ounces, a 17-per-cent increase from 269,145 ounces for YTD 2019. YTD 2020 production resulted from processing 242,175 tonnes at an average grade of 40.9 g/t and average recoveries of 98.9 per cent. The increase from YTD 2019 was mainly due to a 21-per-cent improvement in the average grade, to 40.9 g/t for YTD 2020. Mill throughput in YTD 2020 averaged 1,331 tonnes per day compared with 1,390 tonnes per day for YTD 2019.
Production at Macassa in Q1 2020 totalled 41,865 ounces compared with production of 49,196 ounces in Q2 2019. Production in Q2 2020 resulted from processing 77,624 tonnes at an average grade of 17.2 g/t and average recoveries of 97.6 per cent, which compared with 72,681 tonnes processed in Q2 2019 at an average grade of 21.5 g/t and average recoveries of 97.9 per cent. The change in production from Q2 2019 largely reflected a lower average grade and the impact of reduced operations due to COVID-19, which resulted in lower than planned tonnes processed in Q2 2020. Production in Q2 2020 compared with production of 50,861 ounces the previous quarter when the mine processed 82,256 tonnes at an average grade of 19.7 g/t and average recoveries of 97.7 per cent. The reduction in tonnes processed compared with Q1 2020 largely reflected a greater impact from the transition to reduced operations due to COVID-19 in Q2 2020 compared with the previous quarter.
Production at Macassa in YTD 2020 totalled 92,726 ounces, which resulted from processing 159,879 tonnes at an average grade of 18.5 g/t and at average recoveries of 97.6 per cent. YTD 2020 production compared with production of 121,972 ounces for YTD 2019, which resulted from processing 150,671 tonnes at an average grade of 25.7 g/t and at average recoveries of 98.1 per cent. YTD 2020 production was below expected levels largely reflecting lower than planned tonnes processed as a result of the transition to reduced operations due to COVID-19, as well as lower than expected grades. Both tonnes processed and average grades are expected to increase in the second half of 2020.
Production at Detour Lake in Q2 2020 totalled 131,992 ounces, which involved processing 5,655,992 tonnes at an average grade of 0.79 g/t at average recoveries of 91.7 per cent. Production in Q2 2020 compared with production for the two months from Jan. 31, 2020, the date the acquisition of Detour Gold was completed, to March 31, 2020, of 91,555 ounces, which resulted from processing 3,708,022 tonnes at an average grade of 0.84 g/t and at average recoveries of 90.9 per cent. Tonnes processed in Q2 2020 averaged 62,154 tonnes per day, largely unchanged from the average in February and March. The lower average grade in Q2 2020 compared with the two months ended March 31, 2020, was mainly due to feeding lower grade stockpiled material to the mill during reduced operations. Production at Detour Lake for the five months ended June 30, 2020, totalled 223,547 ounces, which resulted from processing 9,364,014 tonnes at an average grade of 0.81 g/t and at average recoveries of 91.4 per cent.
The assets included in the Holt complex (Holt, Holloway and Taylor mines, and Holt mill) were designated as non-core on Feb. 19, 2020, with the company planning to assess options for maximizing the value of these assets. In March, 2020, the Holloway mine was transitioned to care and maintenance with no plans for a future resumption of operations. Effective April 2, 2020, the remainder of the Holt complex was placed on temporary suspension effective April 2, 2020, as part of the company's COVID-19 response. As a result, there was almost no production from Holt complex in Q2 2020 (807 ounces produced). Production in Q2 2019 totalled 24,696 ounces, which resulted from processing 185,398 tonnes at an average grade of 4.4 g/t and average recoveries of 95.0 per cent. Production from the Holt complex in Q1 2020 totalled 28,584 ounces, which resulted from processing 209,126 tonnes at an average grade of 4.6 g/t and at average recoveries of 93.4 per cent. For YTD 2020, the Holt complex produced 29,390 ounces from processing 215,318 tonnes at an average grade of 4.5 g/t and average recoveries of 93.6 per cent.
At June 30, 2020, the Holt complex remained on temporary suspension while the company continued to assess options for the future of the Holt complex assets. YTD production of 29,390 ounces from Holt complex is included in the company's reissued 2020 production guidance, with no production assumed in the second half of the year.
Natasha Vaz, PEng, senior vice-president, technical services and innovation, 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 974,615 ounces in 2019. The production profile of the company is anchored by three high-quality operations, including the Macassa mine and Detour Lake mine, both 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 expertise.
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