Mr. Anthony Makuch reports
KIRKLAND LAKE GOLD ANNOUNCES RECORD QUARTERLY GOLD PRODUCTION IN Q3 2018
Kirkland Lake Gold Ltd. had record quarterly gold production of 180,155 ounces for the third quarter of 2018. Production in the third quarter of 2018 exceeded target levels for the quarter driven by record quarterly production from Fosterville of 90,618 ounces as well as from the company's Canadian operations, with Macassa, Holt and Taylor collectively producing 89,537 ounces. Production for the first nine months of 2018 totalled 492,484 ounces, with the company completing the third quarter well positioned to achieve the improved full-year 2018 consolidated production guidance of over 635,000 ounces. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
Highlights of the third quarter of 2018 and year to date 2018 production results include:
Third quarter 2018 production of 180,155 ounces, a 30-per-cent increase from 139,091 ounces in the third quarter of 2017 and a 9-per-cent increase from 164,685 ounces in the second quarter of 2018;Gold poured in the third quarter of 2018 totalling 187,331 ounces, with total gold sales of 184,509 ounces; Quarterly production at Fosterville totalling 90,618 ounces in the third quarter of 2018, an increase of 47 per cent from 61,535 ounces in the third quarter of 2017 and 17 per cent higher than 77,462 ounces in the second quarter of 2018; Production from Canadian operations in the third quarter of 2018 of 89,537 ounces, lead by Macassa, which produced 55,582 ounces, in line with target levels, production at Holt of 20,609 ounces and production at Taylor of 13,333 ounces;Year-to-date 2018 consolidated production totalling 492,484 ounces, an increase of 15 per cent from 429,822 ounces in the first nine months of 2017, with year-over-year production growth of 26 per cent at Fosterville, to 231,923 ounces, 19 per cent at Macassa, to 170,190 ounces, 8 per cent at Holt, to 50,996 ounces, and 15 per cent at Taylor, to 39,328 ounces; Year-to-date 2018 gold poured of 498,124 ounces, with year-to-date 2018 gold sales of 496,577 ounces.
Other key developments during the third quarter of 2018 include:
Significant exploration success:
Fosterville: infill drilling in the Swan zone intersects exceptionally high grades over solid widths up to 200 metres down plunge of current mineral resources; significant growth in Swan zone mineral reserve expected as part of year-end 2018 mineral reserve and mineral resource estimates;Macassa: high-grade intersections outside current mineral resources in South Mine complex (SMC) support continued resource growth; high-potential area identified within SMC with grades in excess of 30 grams per tonne and true widths greater than 3.0 metres.
Strong cash and cash flow:
Cash and cash equivalents totalling approximately $275-million at Sept. 30, 2018: During the third quarter of 2018, the company used $47.8-million ($62.5-million (Canadian)) to acquire 32.6 million common shares of Osisko Mining Inc., representing approximately 13.6 per cent of currently issued and outstanding common shares. In addition, the company repurchased 1,570,600 common shares during the third quarter of 2018 through its normal course issuer bid at an average price of $24.77 per share and a total cost of $30-million ($38.9-million (Canadian)).On Aug. 1, 2018, the company reported second quarter 2018 net earnings of $61.5-million (29 cents/share), cash flow from operating activities of $120.9-million and free cash flow of $60.7-million.
Continued focus on shareholder value:
Second quarter 2018 quarterly dividend of three Canadian cents per share was paid on July 13, 2018, with third quarter 2018 quarterly dividend payment of three Canadian centsper share to be paid on Oct. 12, 2018, to shareholders of record as of Sept. 28, 2018.
Tony Makuch, president and chief executive officer of Kirkland Lake Gold, commented: "The third quarter of 2018 was a record quarter for both Fosterville in Australia and our Canadian operations as a whole. At Fosterville, we commissioned a second gravity circuit during the third quarter of 2018 and saw an immediate spike in production, with the Fosterville mill processing over 18,000 ounces in the first week of the circuit's operation. This spike can largely be attributed to the gravity circuit's effectiveness in recovering gold previously contained in the recirculating load of the grinding circuit. We also mined and processed our first Swan zone stope during the quarter, which contributed over 7,500 ounces of production at an average grade of close to 40 g/t, in line with target levels.Turning to our Canadian operations, record production across our three mines reflected strong results at Macassa, where third quarter 2018 production was very much in line with target levels, our best quarter of production to date at Holt and a better production performance from Taylor mine compared to the previous quarter. Heading into the final quarter of the year, we are very well positioned to achieve our improved 2018 consolidated production guidance of over 635,000 ounces."
THIRD QUARTER AND YEAR-TO-DATE 2018 PRODUCTION RESULTSQ3 2018Q3 2017Q2 2018 YTD 2018 YTD 2017FostervilleOre milled (tonnes) 113,101143,326121,342358,112428,599Grade (g/t Au) 25.6 14.1 20.6 20.9 14.2Recovery (%) 97.5 94.7 96.2 96.6 94.4Gold production (oz) 90,618 61,535 77,462231,923184,688MacassaOre milled (tonnes)92,503 93,391 89,781268,945289,935Grade (g/t Au) 19.2 16.5 21.5 20.2 15.7Recovery (%) 97.3 97.4 97.7 97.5 97.2Gold production (oz) 55,582 48,206 60,571170,190142,628HoltOre milled (tonnes) 135,849124,394 95,343353,472335,493Grade (g/t Au)5.04.54.84.74.6Recovery (%) 95.0 94.5 94.2 94.7 94.7Gold production (oz) 20,609 16,995 13,712 50,996 47,414TaylorOre milled (tonnes)94,092 71,897 99,711278,266202,706Grade (g/t Au)4.75.04.34.75.5Recovery (%) 94.3 95.5 94.1 94.6 96.2Gold production (oz) 13,333 11,066 12,940 39,328 34,223Operations on care and maintenance (1)Cosmo -- gold production (oz) -1,290n/a- 20,595Holloway -- gold production (oz) 13-n/a 47274Gold production (excluding operationson care and maintenance or sold in 2017)180,142137,801164,685492,437408,953Total consolidated production (oz) (2)180,155139,091164,685492,484429,822Total consolidated gold sales (oz)184,509137,908164,305496,577427,017(1) The Cosmo mine was placed on care and maintenance effective June 30, 2017 (see news release dated May 4, 2017). The Holloway mine was placed on care and maintenance effective Dec. 31, 2016 (see news release dated Dec. 12, 2016).(2) Production numbers may not add to total due to rounding.PERFORMANCE AGAINST FULL-YEAR 2018 PRODUCTION GUIDANCEMacassaHoltTaylorFosterville Consolidated2018 guidance (000 oz)220-225 (1) 65-75 60-70275-300 (1) plus 635 (1)YTD 2018 production (oz)170,19050,99639,328231,923492,484 (2) (1) On Aug. 1, 2018, the company announced the following improvements to full-year 2018 production guidance: Consolidated production guidance was increased to more than 635,000 ounces from more than 620,000 ounces; Macassa's production guidance was revised to 220,000 to 225,000 ounces from 215,000 to 225,000 ounces; Fosterville's production guidance was revised to 275,000 to 300,000 ounces from 260,000 to 300,000 ounces.(2) Includes 47 ounces related to the Holloway mine.
Year-to-date 2018 production totalled 492,484 ounces, an increase of 15 per cent from 429,822 ounces for year to date 2017. Excluding production from mines currently on care and maintenance, total consolidated production of 492,437 ounces for year to date 2018 grew 20 per cent from 408,953 ounces for year to date 2017. Based on year-to-date results as at Sept. 30, 2018, the company entered the fourth quarter of the year well positioned to achieve its improved full-year 2018 consolidated production guidance of more than 635,000 ounces, which was increased from more than 620,000 ounces on Aug. 1, 2018, with the release of the company's second quarter 2018 financial results.
Review of operating mines
Fosterville
The Fosterville mine produced a record 90,618 ounces in the third quarter of 2018, based on processing 113,101 tonnes at an average grade of 25.6 g/t and average mill recoveries of 97.5 per cent. Third quarter 2018 production increased 47 per cent from 61,535 ounces in the third quarter of 2017, when the mine processed 143,326 tonnes at an average grade of 14.1 g/t and average recoveries of 94.7 per cent. Production in the third quarter of 2018 increased 17 per cent from 77,462 ounces in the second quarter of 2018, reflecting a 24-per-cent increase in the average grade. During the second quarter of 2018, a total of 121,342 tonnes was processed at an average grade of 20.6 g/t and average recoveries of 96.2 per cent. During the third quarter of 2018, the company commissioned a second gravity circuit at Fosterville, which resulted in a spike in production as gold previously contained in the recirculating load of the grinding circuit was recovered through the new gravity circuit. In addition, the first Swan zone stope was mined and processed during the quarter, which contributed over 7,500 ounces of production at an average grade of close to 40 g/t, in line with target levels.
Production at Fosterville for year to date 2018 totalled 231,923 ounces, a 26-per-cent increase from 184,688 ounces for year to date 2017. Year-to-date 2018 production resulted from processing 358,112 tonnes at an average grade of 20.9 g/t and average recoveries of 96.6 per cent, which compared with processing 428,599 tonnes at an average grade of 14.2 g/t and average recoveries of 94.4 per cent for year to date 2017. A 47-per-cent increase in the average grade compared with year to date 2017 mainly resulted from the continued transition to mining deeper, higher-grade stopes, which include quartz veins containing significant amounts of visible gold. The reduction in tonnes milled compared with the prior year reflected the mine's focus on extracting high-grade stopes at depth within the Lower Phoenix system. Mined and processed tonnes are expected to increase in the latter half of 2019 as major capital projects are completed, including new ventilation, a paste-fill plant, and capital and exploration development.
Macassa
The Macassa mine produced 55,582 ounces in the third quarter of 2018 based on processing 92,503 tonnes at an average grade of 19.2 g/t and average mill recoveries of 97.3 per cent. Third quarter 2018 production was 15 per cent higher than the 48,206 ounces produced in the third quarter of 2017, when 93,391 tonnes were processed at an average grade of 16.5 g/t and average mill recoveries of 97.4 per cent.The increase from the same quarter in 2017 resulted from a 16-per-cent improvement in the average grade, largely reflecting mining higher-grade stopes due to mine sequencing and the impact of improvements in grade control practices. The strong grade performance related mainly to stope production on or around the 5,700-foot level, where mining commenced at the end of last year and which represents the deepest production recorded to date in the SMC. Third quarter 2018 production at Macassa compared with record quarterly production of 60,571 ounces in the second quarter of 2018, when the mine processed 89,781 tonnes at an average grade of 21.5 g/t and average recoveries of 97.7 per cent. The change from the previous quarter related to a higher average grade in the second quarter of 2018, mainly reflecting the mining of higher-grade stopes and a greater impact from positive grade reconciliations during the previous quarter.
Production at Macassa for year to date 2018 totalled 170,190 ounces, a 19-per-cent increase from 142,628 ounces for year to date 2017. Year-to-date 2018 production resulted from processing 268,945 tonnes at an average grade of 20.2 g/t and average recoveries of 97.5 per cent. All tonnes processed in year to date 2018 were from mine production. For year to date 2017, a total of 289,935 tonnes were processed at an average grade of 15.7 g/t. Of tonnes processed for year to date 2017, 267,924 tonnes related to mine production and averaged 16.9 g/t, with the remaining 22,011 tonnes being drawn from low-grade stockpiles and averaging 1.6 g/t.The 20-per-cent increase in the average grade from mine production for year to date 2018 compared with the previous year resulted from mining higher-grade stopes deeper in the SMC during year to date 2018, as well as the impact of favourable grade reconciliations and improved grade control practices.
Holt
During the third quarter of 2018, the Holt mine achieved record quarterly production of 20,609 ounces, a 21-per-cent increase from 16,995 ounces in the third quarter of 2017 and 50 per cent higher than 13,712 ounces the previous quarter.The increase in production from both prior periods resulted from a combination of higher tonnage and improved average grades. Production in the third quarter of 2018 resulted from processing 135,849 tonnes at an average grade of 5.0 g/t and average recoveries of 95.0 per cent, which compared with 124,394 tonnes being processed at an average grade of 4.5 g/t and average recoveries of 94.5 per cent in the third quarter of 2017 and 95,343 tonnes being processed at an average grade of 4.8 g/t and average recoveries of 94.2 per cent in the second quarter of 2018. During the second quarter of 2018, the mine had a 21-day planned shutdown in order to replace approximately 700 guides on the Holt shaft, which impacted both tonnes processed and ounces produced for the quarter.
For year to date 2018, Holt produced 50,996 ounces, an 8-per-cent increase from 47,414 ounces for year to date 2017. The increase in production mainly reflected a 5-per-cent improvement in mill throughput, to 353,472 tonnes at and average grade of 4.7 g/t and average recoveries of 94.7 per cent, which compared 335,493 tonnes processed at an average grade of 4.6 g/t and average recoveries of 94.7 per cent for year to date 2017.
Taylor
Gold production from the Taylor mine during the third quarter of 2018 totalled 13,333 ounces, based on processing 94,092 tonnes at an average grade of 4.7 g/t and average recoveries of 94.3 per cent. Third quarter 2018 production increased 20 per cent from the third quarter of 2017, when production totalled 11,066 ounces based on 71,897 tonnes processed at an average grade of 5.0 g/t and average recoveries of 95.5 per cent. Production in the third quarter of 2018 was 3 per cent higher than the previous quarter, when a total of 99,711 tonnes were processed at an average grade of 4.3 g/t and average recoveries of 94.1 per cent.
For year to date 2018, Taylor produced 39,328 ounces from processing 278,266 tonnes at an average grade of 4.7 g/t and average recoveries of 94.6 per cent. Year-to-date2018 production compared with year-to-date 2017 production of 34,223 ounces, which resulted from processing 202,706 tonnes at an average grade of 5.5 g/t and average recoveries of 96.2 per cent.
Third quarter and year-to-date 2018 financial results and conference call details
The company will release its financial and operating results for the third quarter of 2018 and year to date 2018 after the market closes on Tuesday, Oct. 30, 2018. The company will then host a conference call to review the results the next morning (Wednesday, Oct. 31, 2018) at 8 a.m. Eastern Time. Those wishing to join the call can do so using the telephone numbers listed below. The call will also be webcast and available on the company's website.
Date: Wednesday, Oct. 31, 2018
Conference ID: 6592814
Time: 8 a.m. ET
Toll-free number: 833-241-7254
International callers: 647-689-4218
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. 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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