Mr. Tony Makuch reports
KIRKLAND LAKE GOLD REPORTS STRONG YEAR-OVER-YEAR Q1 PRODUCTION GROWTH
Kirkland Lake Gold Ltd. had solid quarterly production in the first quarter of 2018. A total of 147,644 ounces were produced in Q1 2018, an increase of 13 per cent from the first quarter of 2017. Q1 2018 production exceeded target levels for the quarter, driven by record monthly production in March of 71,615 ounces, which largely reflected positive grade performance at both Fosterville and Macassa. The company remains on track to achieve its full-year 2018 production guidance of over 620,000 ounces, with production volumes to increase in the second half of the year, including at Fosterville with the commencement of stope production from the Swan zone. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
During Q1 2018, the company continued to build financial strength with cash and cash equivalents increasing $43.8-million or 19 per cent, to $275.4-million at March 31, 2018, compared with$231.6-million at Dec. 31, 2017.
Highlights of Q1 2018 production results:
Consolidated Q1 2018 production of 147,644 ounces, which compared with 130,426 ounces of production in Q1 2017 and record quarterly production of 166,579 ounces in the fourth quarter of 2017;Record quarterly production at Macassa totalling 54,038 ounces in Q1 2018, an increase of 11 per cent from 48,723 ounces in Q1 2017 and 5 per cent from 51,608 ounces produced in Q4 2017 (record monthly production in March, 2018, of 30,319 ounces at an average grade of 27.6 grams per tonne);Solid results at Fosterville in Q1 2018 with production totalling 63,843 ounces, 39 per cent higher than 46,083 ounces in Q1 2017 and compared with record quarterly production of 79,157 ounces in Q4 2017 (March, 2018, production of 29,463 ounces at an average grade of 20.4 g/t, Fosterville's second-best monthly production performance);Production at Holt of 16,675 ounces in Q1 2018, a 9-per-cent increase from 15,318 ounces in Q1 2017 and compared with record production of 19,263 ounces the previous quarter;Production at Taylor of 13,055 ounces compared with 10,942 ounces in Q1 2017 and record production of 16,541 ounces in Q4 2017.
Other key developments during Q1 2018, include:
Dec. 31, 2017, mineral reserve and mineral resource estimates released: Consolidated mineral reserves increased 36 per cent to 4,640,000 ounces at 11.1 grams per tonne.Fosterville mineral reserves increased 247 per cent year over year to 1.7 million ounces at 23.1 g/t, with a Swan zone mineral reserve of 1.16 million ounces at 61.2 g/t. Macassa mineral reserves at Dec. 31, 2017, totalled 2.03 million ounces at 21.0 g/t, with measured and indicated mineral resources increasing 58 per cent to 2.09 million ounces at 17.1 g/t and inferred mineral resources increasing 48 per cent to 1.37 million ounces at 22.2 g/t.Strong growth in earnings and cash flow for full-year 2017 reported:Earnings from continuing operations in 2017 totalled $157.3-million (76 cents per basic share), a 95-per-cent increase from 2016.Cash flow from operating activities of continuing operations totalled $309.8-million, a 66-per-cent increase from 2016, while free cash flow increased 56 per cent, to $178.0-million in 2017. Continued focus on shareholder returns: Quarterly dividend payment of two cents per share paid on Jan. 15, 2018.
Tony Makuch, president and chief executive officer of Kirkland Lake Gold, commented: "We had a solid start to 2018 and finished the first quarter with record monthly production in March of 71,615 ounces. In Canada, all our mines performed well in Q1 2018, with Macassa achieving record quarterly production and both Holt and Taylor exceeding target production levels for the quarter. In Australia, Fosterville finished the quarter ahead of plan, reflecting positive grade reconciliations, with production increasing 39 per cent from Q1 2017. Entering the second quarter, we are very much on track to achieve our consolidated production guidance for 2018 of more than 620,000 ounces. Based on our strong performance in Q1 2018, we continued to build financial strength, with our cash position increasing 19 per cent during the quarter to $275.4 million at March 31, 2018.
"Among other key catalysts in Q1 2018 was the release of our Dec. 31, 2017, mineral reserve and mineral resource estimates. The fact that we more than tripled mineral reserves at Fosterville and grew measured and indicated and inferred mineral resources at Macassa by 58 per cent and 48 per cent, respectively, in 2017 provides a powerful demonstration of the growth potential of our assets.Attractive organic growth is one of our key pillars of value creation. With our current business portfolio, we are poised for solid year-over-year production growth to a million ounces of annual production over the next five to seven years."
FIRST QUARTER 2018 PRODUCTION RESULTSQ1 2018Q1 2017Q4 2017FostervilleOre milled (tonnes) 123,669137,788118,877Grade (g/t Au) 16.8 11.1 21.5Recovery (%) 95.7 93.7 96.3Gold production (oz) 63,843 46,083 79,157MacassaOre milled (tonnes)86,661 91,460119,129Grade (g/t Au) 19.9 17.1 13.9Recovery (%) 97.6 97.1 96.8Gold production (oz) 54,038 48,723 51,608HoltOre milled (tonnes) 122,280105,629127,494Grade (g/t Au)4.54.85.0Recovery (%) 94.8 94.9 94.9Gold production (oz) 16,675 15,319 19,263TaylorOre milled (tonnes)84,464 63,289 89,297Grade (g/t Au)5.05.66.0Recovery (%) 95.5 96.7 96.2Gold production (oz) 13,055 10,942 16,541Operations on care and maintenanceCosmo -- gold production (oz) n/a9,092n/aHolloway -- gold production (oz) 33267 13Gold production (excluding operationson care and maintenance or sold in 2017)147,611121,067166,566Total consolidated production (oz)147,644130,426166,579
PERFORMANCE AGAINST FULL-YEAR 2018 PRODUCTION GUIDANCE MacassaHolt TaylorFostervilleConsolidated2017 guidance (000 oz) 215-225 65-7560-70260-300+620Q1 2018 production (oz) 54,03816,675 13,055 63,843 147,644
Q1 2018 production totalled 147,644 ounces, an increase of 13 per cent from 130,426 ounces in Q1 2017. Excluding production from mines currently on care and maintenance, total consolidated production for Q1 2018 grew by 22 per cent from 121,067 ounces in Q1 2017. Production in Q1 2018 compared with record quarterly production of 166,579 ounces in Q4 2017. The main contributor to the change in production from Q4 2017 was the impact of a greater proportion of high-grade stopes mined at the Fosterville mine during Q4 2017, consistent with the mine plan.
Review of operating mines
Fosterville
The Fosterville mine produced 63,843 ounces, based on processing 123,669 tonnes at an average grade of 16.8 g/t and average mill recoveries of 95.7 per cent. Q1 2018 production increased 39 per cent from 46,083 ounces in Q1 2017, based on processing 137,788 tonnes at an average grade of 11.1 g/t and average recoveries of 93.7 per cent. The increase in production compared with the same period in 2017 resulted from higher average grades, consistent with the trend at Fosterville toward improving grades at depth. Production in the Lower Phoenix system in Q1 2018 was approximately 80 metres lower than mining fronts for the same period in 2017. Q1 2018 production compared with record quarterly production of 79,157 ounces the previous quarter when a total of 118,877 tonnes were processed at an average grade of 21.5 g/t and at average recoveries of 96.3 per cent. The quarter-over-quarter change in production mainly reflected a greater proportion of high-grade stopes in the mine plan during Q4 2017, with both quarters benefiting from positive grade reconciliations.
Macassa
The Macassa mine achieved record quarter production in Q1 2018 of 54,038 ounces based on 86,661 tonnes milled at an average grade of 19.9 g/t and average mill recoveries of 97.6 per cent. Q1 2018 production was 11 per cent higher than the 48,723 ounces produced in Q1 2017, when a total of 91,460 tonnes were processed at an average grade of 17.1 g/t.The increase from Q1 2017 was primarily related to an improvement in the average grade, reflecting mining higher-grade stopes as well as the impact of favourable grade reconciliations in Q1 2018. A significant increase in the average grade more than offset reduced tonnes processed in accounting for a 5-per-cent increase in production compared with the previous quarter when Macassa produced 51,608 ounces of gold from processing 119,129 tonnes at an average grade of 13.9 g/t and with average recoveries of 96.8 per cent.
Holt
During Q1 2018, the Holt mine produced 16,675 ounces, representing an increase of 9 per cent from 15,319 ounces in Q1 2017, as higher mill throughput more than offset the impact of a slight reduction in the average grade year over year.Q1 2018 production compared with record quarterly production of 19,263 ounces in Q4 2017 with the change reflecting reduced tonnes processed and a lower average grade compared with the previous quarter. A total of 122,280 tonnes were processed in Q1 2018 at an average grade of 4.5 g/t and with average recoveries of 94.8 per cent, which compared with 105,629 tonnes at an average grade of 4.8 g/t and average recoveries of 94.9 per cent in Q1 2017 and 127,494 tonnes at an average grade of 5.0 g/t and average recoveries of 94.9 per cent the previous quarter.
Taylor
Gold production from the Taylor mine during Q1 2018 totalled 13,055 ounces, based on 84,464 tonnes processed at an average grade of 5.0 g/t and average recoveries of 95.5 per cent. Q1 2018 production was 19 per cent higher than the 10,942 ounces produced in Q1 2017, when a total of 63,289 tonnes were processed at an average grade of 5.6 g/t and average recoveries of 96.7 per cent, and compared with record quarterly production of 16,541 ounces in Q4 2017, which resulted from processing 89,297 tonnes at an average grade of 6.0 g/t and average recoveries of 96.2 per cent.
Qualified persons
Pierre Rocque, PEng, vice-president, Canadian operations, and Ian Holland, FAusIMM, vice-president, Australian operations, are qualified persons as defined in National Instrument 43-101 and have reviewed and approved disclosure of the technical information and data in this news release.
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold is a mid-tier gold producer with 2018 production targeted at over 620,000 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.
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