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Kirkland Lake Gold Reports Record Production in Fourth Quarter and Full-Year 2021

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Kirkland Lake Gold Reports Record Production in Fourth Quarter and Full-Year 2021

 

 

 

 

 

Kirkland Lake Gold Ltd. (TSX:KL) (NYSE:KL) (ASX:KLA) announced record quarterly and full-year production for the fourth quarter of 2021 and full-year of 2021, respectively. Q4 2021 production totalled 380,472 ounces driven by record quarterly production at Detour Lake Mine of 210,980 ounces and a 33% increase in production at the Macassa Mine compared to the previous quarter to 61,336 ounces. For FY 2021, consolidated production totalled 1,432,616 ounces, which exceeded both the Company’s original FY 2021 production guidance issued on December 10, 2020 of 1,300,000 – 1,400,000 ounces as well as improved guidance for the year of 1,350,000 – 1,400,000 ounces issued on November 3, 2021. The outperformance versus guidance was largely driven by Fosterville Mine, where FY 2021 production of 509,601 ounces was significantly higher than original guidance of 400,000 – 425,000 ounces and compared favourably to improved guidance of approximately 500,000 ounces. The record 1,432,616 ounces of production in FY 2021 was 5% higher than 1,369,652 ounces for full-year 2020. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

 

Highlights of Q4 2021 and FY 2021 Production Results

 

  • Record consolidated production in Q4 2021 of 380,472 ounces, a 3% increase from both 369,434 ounces in the fourth quarter of 2020 (“Q4 2020”) and 370,101 ounces in Q3 2021; Record production of 1,432,616 ounces in FY 2021, a 5% increase from 1,369,652 ounces in FY 2020
  • Gold poured of 385,702 ounces in Q4 2021 versus 373,095 ounces in Q4 2020 and 370,487 ounces in Q3 2021; FY 2021 gold poured of 1,430,602 ounces, 5% higher than 1,364,412 ounces in FY 2020
  • Gold sales totalled 385,850 ounces in Q4 2021 at an average realized price(1) of $1,795 per ounce compared to gold sales of 371,009 ounces at an average realized price(1) of $1,875 per ounce in Q4 2020 and 372,100 ounces at an average realized price(1) of $1,791 per ounce the previous quarter; FY 2021 gold sales totalled 1,430,554 ounces at an average realized price(1) of $1,797 per ounce versus 1,388,944 ounces at an average realized price(1) of $1,772 per ounce in FY 2020
  • Record quarterly and full-year production at Detour Lake of 210,980 ounces in Q4 2021 and 712,824 ounces for FY 2021; Q4 2021 production increased 38% from 153,143 ounces in Q4 2020 and 12% from 189,233 ounces in Q3 2021; FY 2021 production increased 38% from 516,757 ounces for the 11 months in 2020 after Detour Lake was acquired on January 31, 2020 (included in the Company’s reported operating and financial results) and 27% from 563,253 ounces for FY 2020; FY 2021 production was near the top Detour Lake’s original FY 2021 guidance of 680,000 – 720,000 ounces and was in line with improved guidance of 700,000 – 720,000 ounces
  • Significant production outperformance at Fosterville in both Q4 2021 and FY 2021 with Q4 2021 production of 108,156 ounces and FY 2021 production totalling 509,601 ounces; Q4 2021 production compared to 164,008 ounces in Q4 2020 and 134,772 ounces in Q3 2021; FY 2021 production of 509,601 ounces was close to 100,000 ounces higher than the mid-point of the original FY 2021 guidance of 400,000 – 425,000 ounces and achieved improved guidance of approximately 500,000 ounces; FY 2021 production compared to production of 640,467 ounces in FY 2020
  • Strong production at Macassa in Q4 2021 totalling 61,336 ounces, a 17% increase from 52,283 ounces in Q4 2020 and 33% higher than 46,097 ounces in Q3 2021; Production in FY 2021 totalled 210,192 ounces, 15% higher than 183,037 ounces in FY 2020; FY 2021 production compared to original FY 2021 production guidance of 220,000 – 255,000 ounces and achieved the top end of revised guidance issued on November 3, 2021 of 190,000 – 210,000 ounces.

 

Other Highlights of Q4 2021

 

  • Shareholder approval received for proposed merger of equals (the “Merger”) with Agnico Eagle Mines Limited (“Agnico Eagle”), Merger targeted for completion between late January and mid-February 2022

    • The Merger was approved by both Kirkland Lake Gold and Agnico Eagle shareholders at special meetings of shareholders held on November 26, 2021, with approval from the Ontario Superior Court of Justice received on December 1, 2021; Closing of the Merger is expected between late January and mid-February, subject to approval by the Australian Foreign Investment Review Board (“FIRB”) and satisfaction or waiver of certain other customary closing conditions
    • Following the closing of Merger and the completion of consolidated budgets, the release of consolidated 2022 guidance for the combined company is targeted for the second half of February 2022
  • Continued exploration success: New high-grade mineralization was identified at Detour Lake both within and outside the new Mineral Resource pit shell established with the Mid-Year 2021 Mineral Resource estimates, which included a 10.1-million-ounce increase in open-pit Measured and Indicated Mineral Resources; At Fosterville, a revised drill assay result down-plunge of the Swan Zone significantly increased the grade of a previously-released intercept 500 metres (“m”) down-plunge of the deepest Mineral Reserves to 207 grams per tonne (“g/t”) over 2.6 m (estimated true width of 2.2 m) from 51.7 g/t over 2.6 m (estimated true width of 2.2 m) previously
  • Sinking phase of #4 Shaft project at Macassa completed: Sinking of the #4 Shaft reached 6,372 feet as of December 31, 2021 with completion of the sinking phase of the project, to 6,400 feet, completed as of January 12, 2022; Remaining work includes construction of the loading pocket and other infrastructure as well as additional development to connect the #4 Shaft to current mining operations, with full project completion on track for late 2022
  • Increased financial strength with cash of $940.0 million with no debt at December 31, 2021 versus $822.4 million at September 30, 2021 and $847.6 million at December 31, 2020; Increase in cash from December 31, 2020 achieved after returning $383.4 million to shareholders through share repurchases and dividend payments during FY 2021.

 

Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented: “We finished 2021 with a record quarter of performance, driven by record production at Detour Lake, a strong finish to the year at Macassa and higher than planned production at Fosterville as the mine continued to achieve favourable grade performance. At the same time that we generated record operating results and continued to build our financial strength, we also made significant progress towards completing the Merger with Agnico Eagle, through which we will create a new industry leader with low unit costs, the best risk profile, excellent financial strength, an extensive growth pipeline and leadership in key areas of environmental, social and governance. We received shareholder approval for the Merger near the end of November, followed by the approval of the Ontario Superior Court of Justice on December 1, 2021, and are now awaiting Foreign Investment Review Board approval in Australia. Based on expected timelines, we are targeting closing of the Merger between late January and mid-February, after which we plan to finalize the consolidated 2022 budget for the new Agnico Eagle and to release consolidated guidance to the market in the second half of February.

 

“Focusing on the Kirkland Lake Gold assets, on a preliminary basis, both Detour Lake and Fosterville entered 2022 well positioned to achieve production during the year in line with previously-issued guidance (included in three-year production guidance released on December 10, 2020). At Macassa, we are reviewing the operation to assess opportunities to incorporate Agnico Eagle’s Amalgamated Kirkland Zone into the mine plan, to address ongoing performance and supply chain issues related to batteries and our battery-powered haul fleet, and to evaluate future plans for the near-surface ramp and mineralized zones. Based on work to date, we expect a reduction in production in 2022 from levels included in our previously-issued three-year guidance.”

 

1) See “Non-IFRS Measures” beginning on page 37 of the Company’s MD&A for the three and nine months ended September 30, 2021.

 

COVID-19 Update

 

With the increase in COVID-19 cases in both Canada and Australia resulting from the spread of the Omicron variant, the Company is experiencing reduced workforce levels and some disruption to operations at all three of its operating mines. The Company’s top priority is the health and safety of its people and, as such, it is intensifying its testing and other protocols related COVID-19 while also working diligently to mitigate operational disruptions. At the present time, it is too early to determine what impact, if any, the current COVID-19 environment may have on production at Detour Lake, Macassa and Fosterville in the first quarter and full-year 2022.

 

Q4 and FY 2021 Production Results

 

  Q4 2021 Q4 2020 Q3 2021 FY 2021 FY 2020
Detour Lake1          
Ore Milled (tonnes) 6,303,150 5,829,230 6,197,915 24,084,722 21,091,938
Grade (g/t Au) 1.14 0.89 1.04 1.00 0.83
Recovery (%) 91.4 91.8 91.6 91.7 91.3
Gold Production (ozs) 210,980 153,143 189,233 712,824 516,757
Fosterville          
Ore Milled (tonnes) 153,124 183,635 180,255 677,899 593,343
Grade (g/t Au) 22.3 28.1 23.6 23.7 33.9
Recovery (%) 98.6 98.9 98.7 98.6 98.9
Gold Production (ozs) 108,156 164,008 134,772 509,601 640,467
Macassa          
Ore Milled (tonnes) 89,772 74,353 76,587 333,386 312,758
Grade (g/t Au) 21.6 22.4 19.1 20.0 18.6
Recovery (%) 98.2 97.7 98.2 98.1 97.7
Gold Production (ozs) 61,336 52,283 46,097 210,192 183,038
Holt Complex2          
Ore Milled (tonnes) 215,318
Grade (g/t Au) 4.5
Recovery (%) 93.6
Gold Production (ozs) 29,390
Total Consolidated Production (ozs)3 380,472 369,434 370,101 1,432,616 1,369,652
Total Consolidated Gold Sales (ozs) 385,850 371,009 372,100 1,430,554 1,388,944

 

1) The Detour Lake Mine was acquired on January 31, 2020. FY 2020 production represents output from that date to December 31, 2020.
2) The Holloway Mine, a component of 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. In July 2020, the Company announced that operations at the Holt Complex would remain suspended until further notice.
3) Production numbers may not add to totals due to rounding.

 

Performance Against FY 2021 Production Guidance

 

  Detour Lake Fosterville Macassa Consolidated
Original 2021 Guidance (,000 ozs) (as at Dec. 10/2020) 680 – 720 400 – 425 220 – 255 1,300 – 1,400
Revised 2021 Guidance (,000 ozs) (as at Nov. 3/2021) 700 – 720 500 190 – 210 1,350 – 1,400
FY 2021 Production (ozs) 712,824 509,601 210,192 1,432,616

 

 

Review of Operations

 

Detour Lake

 

Detour Lake achieved record quarterly and annual production in 2021. Production in Q4 2021 totalled 210,980 ounces reflecting record levels of mill throughput, totalling 6,303,150 tonnes, and a record quarterly average grade of 1.14 g/t, with mill recoveries averaging 91.4%. Q4 2021 production increased 38% from 153,143 ounces in Q4 2020, based on processing 5,829,230 tonnes at an average grade of 0.89 g/t and average mill recoveries of 91.8%, and 189,233 ounces the previous quarter, resulting from processing 6,197,915 tonnes at an average grade of 1.04 g/t and average mill recoveries of 91.6%. The increase in production quarter over quarter mainly reflected a significant improvement in the average grade, with production in Q4 2021 focused on some of the highest-grade areas included in the Phase 2 mining plan, as well as increased tonnes processed largely due the favourable impact of mill enhancements completed during 2021.

 

Production at Detour Lake for FY 2021 totalled 712,824 ounces, which resulted from processing 24,084,722 tonnes at an average grade of 1.00 g/t and average recoveries of 91.7%. Production in FY 2021 increased 38% from 516,757 ounces for the 11 months following the acquisition of Detour Lake on January 31, 2020 to December 31, 2020 and was 27% higher than the 563,253 ounces produced for the full 12-month period ending December 31, 2020.

 

Fosterville

 

The Fosterville Mine produced 108,156 ounces in Q4 2021, which exceeded target levels for the quarter resulting mainly from a higher-than-expected average grade. The 108,156 ounces of production was based on processing 153,124 tonnes at an average grade of 22.3 g/t and average mill recoveries of 98.6%. Q4 2021 production compared to production of 164,008 ounces in Q4 2020 based on processing 183,635 tonnes at an average grade of 28.1 g/t and average mill recoveries of 98.9% and 134,772 ounces the previous quarter resulting from processing 180,255 tonnes at an average grade of 23.6 g/t and average recoveries of 98.7%.

 

Production at Fosterville for FY 2021 totalled 509,601 ounces based on processing 677,899 tonnes at an average grade of 23.7 g/t and average mill recoveries of 98.6%. FY 2021 production was well above the original guidance for the year of 400,000 – 425,000 ounces and achieved the revised guidance (issued on November 3, 2021) of approximately 500,000 ounces. FY 2021 production compared to production of 640,467 ounces in FY 2020 which resulted from processing 593,343 tonnes at an average grade of 33.9 g/t and average mill recoveries of 98.9%.

 

Macassa

 

Production at Macassa in Q4 2021 totalled 61,336 ounces based on processing 89,772 tonnes at an average grade of 21.6 g/t and average recoveries of 98.2%. Q4 2021 production was 17% higher than 52,283 ounces in Q4 2020 (74,353 tonnes processed at an average grade of 22.4 g/t and average mill recoveries of 97.7%) and increased 33% from 46,097 ounces the previous quarter (76,587 tonnes processed at an average grade of 19.1 g/t and average mill recoveries of 98.2%). Higher tonnes processed in Q4 2021 compared to both prior periods mainly reflected an increase in tonnes mined with the improvement in the average grade compared to the previous quarter largely due to mine sequencing.

 

Production at Macassa for FY 2021 totalled 210,192 ounces, based on processing 333,386 tonnes at an average grade of 20.0 g/t and average recoveries of 98.1%. FY 2021 increased 15% from 183,038 ounces for FY 2020 (312,758 tonnes processed at an average grade of 18.9 g/t and average mill recoveries of 97.7%) reflecting higher tonnes processed and an increase in the average grade. FY 2021 production compared to the original production guidance of 220,000 – 255,000 ounces and achieved the high-end of revised guidance of 190,000 – 210,000 ounces.

 

Holt Complex

 

Operations were suspended at the Holt Complex effective April 2, 2020. As a result, there was no production from Holt Complex during Q4 and FY 2021. For FY 2020, production from Holt Complex totalled 29,390 ounces, of which 28,584 ounces were produced during Q1 2020.

 

Qualified Person

 

Natasha Vaz, P.Eng., Chief Operating Officer, 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 low-cost senior gold producer operating in Canada and Australia that produced 1,432,616 ounces in 2021. The production profile of Kirkland Lake Gold 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, extensive management expertise and an overriding commitment to safe, responsible mining.

 

Posted January 17, 2022

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