Canadian Mining Journal

News

GOLD: Kirkland Lake posts strong results; details ‘value enhancement’ plan


Kirkland Lake Gold's Fosterville mine, in Australia. Credit: Kirkland Lake Gold

Kirkland Lake Gold’s Fosterville mine, in Australia. Credit: Kirkland Lake Gold

TORONTO – Kirkland Lake Gold has reported strong growth in production and revenue in 2019 based on the performance of its Fosterville mine in Australia. And after closing the acquisition of the Detour Lake gold mine in Ontario at the end of January 2020, the company expects the growth to continue.

For 2019, the company produced 974,615 oz. of gold, up 35% from the previous year and meeting its guidance. All-in sustaining costs (AISC) were US$564 per oz., 18% lower than 2018.

The company reported net earnings of US$560.1 million (US$576.4 million adjusted) on revenue of US$1.4 billion (51% higher than the previous year). Free cash flow totalled US$463 million, an increase of 81%.

Kirkland Lake also announced a value enhancement program that will see it repurchase 20 million shares over the next one to two years, a move that will cost roughly US$750 million, and double its quarterly dividend to $0.125 per share. The acquisition of the Detour Lake mine, which was completed on Jan. 31, is also expected to add value with its 600,000 oz. of annual production and 14.8 million oz. in reserves and through a significant addition to the company’s cash flow. Kirkland Lake plans to invest $25-30 million this year on exploration drilling to grow reserves, increase production and drive down unit costs.

The company also says it will consider “strategic options” for maximizing value at assets it has deemed non-core: the Holt Complex in northern Ontario and the Cosmo mine in Northern Territory, Australia.

“Following completion of the Detour Gold acquisition, Kirkland Lake Gold is a company with three high-quality, free cash flow generating assets: Fosterville, Macassa and Detour Lake,” said president and CEO Tony Makuch in a release. “The three operations together will produce around 1.4 million ounces of gold this year, and all three have substantial growth potential. We are also an industry leader in profitability and have the strongest balance sheet among our peers.”

Makuch added that the Detour Lake acquisition could be transformational from the standpoint of value creation.

“Results at Detour this year should be similar to the mine’s performance in 2019,” Makuch said. “Looking ahead, through the work we are planning, we see the potential for Detour Lake to reach over 700,000 ounces of annual production at all-in sustaining costs of approximately $850 per ounce as early as 2021.”

For more details, visit www.klgold.com.