Kirkland Lake Gold Ltd. (TSX:KL) (NYSE:KL) (ASX:KLA) today announced the Company’s full-year guidance for 2019, which includes strong production growth, improved unit costs and a continued strong commitment to exploration and growth. The Company also announced today three-year production guidance, which includes the Fosterville Mine achieving over 500,000 ounces of production by 2020 and demonstrates the potential for consolidated production to reach one million ounces by 2021. All dollar amounts are expressed in U.S. dollars unless otherwise noted.
Highlights of 2019 guidance include:
(1) See the “Non-IFRS Measures” section starting on page 35 of the Company’s MD&A for the three and nine months ended September 30, 2018 filed on the Company’s profile on SEDAR at www.sedar.com.
Highlights of three-year production guidance include:
Tony Makuch, President and Chief Executive Officer, commented: “Kirkland Lake Gold is poised to achieve substantial production growth and improved unit costs in 2019. We will also continue to invest in exploration and additional production growth, with our plan being to reach one million ounces of annual gold production as early as 2021. While achieving one million ounces of production will be a significant milestone, it is more important that the growth we achieve continues to drive down unit costs, increases margins and positions us to generate substantial amounts of free cash flow going forward.
“Not surprisingly, the key driver of our three-year growth is Fosterville, where we expect to achieve over half a million ounces of annual gold production by 2020 and close to 600,000 ounces in 2021. As demonstrated from recent drilling and production results, the Swan Zone is a truly unique, high-grade zone that we are continuing to grow. We continue to explore for more zones like Swan at Fosterville and are encouraged by the fact that similar mineralization has been intersected in multiple locations. At Macassa, we expect to achieve incremental growth in production, with guidance for 2021 of 245,000 – 255,000 ounces, to be followed by a large step-up in output in 2022 with production commencing from the new #4 shaft. Elsewhere, we are transitioning both the Holloway Mine and Northern Territory assets from care and maintenance to advanced exploration with a focus on evaluating the potential to resume operations at both locations.
“Finally, turning to capital, based on our current growth plans we will see the peak level of growth capital expenditures in 2019, with these expenditures to be reduced starting in 2020. The Macassa #4 shaft project is advancing very well, with full-face shaft sinking set to commence in the second quarter of 2019. At Fosterville, our three key projects, new ventilation, a paste fill plant and water treatment plant, will be completed during 2019, as will additional initiatives that have been included in our 2019 plan, such as a new power transformer, new refinery and gold room and a thiocyanate destruction plant. We have also included in our guidance growth capital expenditures for the first half of the year related to the Northern Territory and Holloway Mine as we continue to assess these assets.”
|Gold production (kozs)1||230 – 240||50 – 55||70 – 75||390 – 430||740 – 800|
|Op. cash costs ($/oz)2||440 – 460||690 – 710||620 – 640||200 – 220||$360 – $380|
|AISC/ounce sold ($/oz)2||$630 – $680|
|Operating cash costs ($M)2||$270 – $280|
|Royalty costs ($M)||$25 – $30|
|Sustaining capital ($M)2||$150 – $170|
|Growth capital ($M)2,3||$155 – $165|
|Exploration ($M)||$100 – $120|
|Corporate G&A ($M)4||$26 – $28|
(1) Production and unit-cost guidance for 2019 does not include results for the Northern Territory or Holloway Mine.
(2) See “Non-IFRS Measures” set out starting on page 35 of the MD&A for the three and nine months ended September 30, 2018 for further details. The most comparable IFRS Measure for operating cash costs, operating cash costs per ounce sold and AISC per ounce sold is production costs, as presented in the Consolidated Statements of Operations and Comprehensive Income, and total additions and construction in progress for sustaining and growth capital. Operating cash costs, operating cash cost per ounce sold and AISC per ounce sold reflect an average US$ to C$ exchange rate of 1.33 and a US$ to A$ exchange rate of 1.39.
(3) Growth capital expenditure guidance includes planned expenditures for the Northern Territory and Holloway Mine during the first half of 2019, with additional expenditures for the second half of the year to be determined based on the results of current programs and other developments. Growth capital expenditures exclude $14.2 million of capital expenditures related to the Macassa #4 shaft project, which are expected to be recorded as capital expenditures in 2019, but have been paid in cash on an advanced basis in 2018.
(4) Includes general and administrative costs and severance payments. Excludes non-cash share-based payment expense.
(5) The Company’s full financial results for full-year 2018 will be released in late February 2019. As such, comparisons in this press release involving financial measures included in the Company’s 2019 guidance are made to existing 2018 guidance, as well as the Company’s nine-month 2018 results.
Review of 2019 Guidance
Three-Year Production Guidance1
|2019 (kozs)||230 – 240||120 – 130||390 – 430||740 – 800|
|2020 (kozs)||230 – 240||120 – 130||500 – 540||850 – 910|
|2021 (kozs)||245 – 255||130 – 140||570 – 610||945 – 1,005|
(1) Three-year production guidance does not include any production from the Northern Territory or Holloway Mine.
Macassa: Production at Macassa in 2019 is expected to increase from the target range for 2018 of 220,000 – 225,000 ounces, primarily due to increased mill throughput in 2019. Production in 2020 is targeted to be similar to 2019 before increasing to 245,000 – 255,000 ounces in 2021. Grades in 2021 are expected to average approximately 20.0 grams per tonne with mill throughput reaching close to 1,100 tonnes per day.
Holt Complex: Production from the Holt Mill (including mine production from the Holt and Taylor mines) is expected to remain largely unchanged during the next two years, with the anticipation of some production growth at Taylor in 2021. The potential to restart operations at Holloway Mine could lead to higher levels of production from the Holt Complex, with advanced exploration work being undertaken at Holloway in 2019.
Fosterville: Production at Fosterville is expected to grow significantly over the next three years from the current target for 2018 of over 330,000 ounces. Fosterville’s production is targeted to increase in 2019, to 390,000 – 430,000 ounces, driven primarily by a higher average grade in the coming year. Production at Fosterville is then targeted to grow to 500,000 – 540,000 ounces in 2020 and 570,000 – 610,000 ounces in 2021, with grades over this two-year period expected to average approximately 30 grams per tonne and throughput to increase in 2021 to approximately 1,700 tonnes per day.
Northern Territory: During the first half of 2019, the Company is moving forward with advanced exploration work to evaluate the potential of resuming operations in the Northern Territory of Australia. A decision on resuming operations in the Northern Territory is expected during 2019.
Pierre Rocque, 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 mid-tier gold producer with 2018 production targeted at over 670,000 ounces of gold from mines in Canada and Australia. The production profile of the Company is anchored by two high-grade, low-cost operations, including the Macassa Mine located in Northeastern 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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