Kirkland Lake Gold Inc.: Operations Update and Fiscal 2011 Year End Results
KIRKLAND LAKE, ONTARIO -- (Marketwire) -- 07/06/11 -- Kirkland Lake Gold Inc. (TSX: KGI)(AIM: KGI), an operating and exploration gold mining company located in Ontario, Canada, announces an operations update and its year end results for its financial year ended April 30, 2011.
Fiscal 2011 was another year of significant progress towards Kirkland Lake Gold's goal of becoming a long term, sustainable, intermediate gold mining company, as the Company significantly advanced its development and hiring goals. During 2011 the Company produced 81,860 ounces of gold, delivering record yearly, quarterly and monthly (April) gold production figures at a record recovered grade. Cash flow from operations and net earnings were also at record levels. Significant operational progress was made on capital investment programs and the production expansion project. On the hiring front, 237 new employees were hired into the Company's training program. Most surface capital projects were completed, and a key underground expansion project - the trackless haulage ramp, development is nearing completion. In addition, Kirkland Lake Gold was the recipient of Workplace Safety North's Award of Excellence for 2010 for the Ontario mining company that has recorded the lowest total medical injury frequency for underground mines with over 250 employees.
'This year, we successfully increased yearly gold production to 81,860 ounces. After meeting all operating costs, spending $59.8 million on sustaining and expansion capital improvements, and $9.0 million on exploration, we turned a record net profit of $20.1 million. Cash flows have been positive for five consecutive quarters, demonstrating achievements in production and operational cash flow growth that the expansion project was designed to accomplish,' said Chairman Harry Dobson.
'Additionally on the strategic front, as a result of studies undertaken to evaluate the future potential of the mine, management revised its plan to increase phase two production levels in the near term. The second stage of the project is now increased from 1,300 tpd to 1,600 tonnes per day, therefore the timeline has been extended four months to April 2012,' concluded Mr. Dobson.
OPERATIONS UPDATE
Targets, timeline and budget for the second phase of its mine expansion program currently underway at the Kirkland Lake Mine have been revised. The second stage of the project is now targeted to achieve an average production rate of 1,600 tons per day. In order to complete the extra work required to achieve and sustain this higher production rate, the timeline for completion of the project has been extended by four months to April 2012. The budget for the overall project has been updated from $60 million to $75 million. Total expansion capital spent to date is $50.7 million or 67.6% of revised expansion capital budget.
Extension of the project by four months will result in a minor reduction of production guidance for fiscal 2012 to 110,000 to 130,000 ounces of gold per year from 120,000 to 140,000 ounces. Production guidance for Fiscal 2013 will remain at 180,000 to 200,000 ounces as the Company is planning for a ramp-up of production that year after the project work is completed. Production guidance for Fiscal 2014 to Fiscal 2016 has been raised to 210,000 to 250,000 ounces per year.
Harry Dobson, Chairman, commented, 'The improvements to the revised phase two production schedules should result in an annual production increase of 30,000 to 50,000 ounces, at a cost of an additional four months of work and an additional $15 million in capital. We remain on track to achieve our projected 180,000 to 200,000 ounces of annual gold production by the end of fiscal 2012, and continue to look for and evaluate further expansion opportunities.'
The original expansion project consisted of a two stage, 36 month program of work targeted for completion by January 2012. The work for the first stage, intended to increase production to 600 to 700 tons per day, was completed on time and on budget by July 2011. The mine has achieved and maintained that production rate on a quarterly basis since November 2010.
'This fiscal year will be an important transition year as we work to achieve the updated phase two production target of 210,000 to 240,000 ounces of gold per year, and target declining operating costs of less than $250 per ton. We have also doubled our exploration budget to $15.8 million, have 15 rigs turning, 12 underground and three on surface, and are exploring areas of the camp that to date have been largely unexplored. The exploration success we continue to demonstrate in the camp, increases in production, higher operational cash flows and lower costs supports management's belief that we are strongly positioned to build and grow a high grade, profitable, long life, and sustainable intermediate gold mining company,' concluded Mr. Dobson.
KEY HIGHLIGHTS OF THE YEAR
-- Net income for the year was $20.1 million or $0.29 per share, which
compares to a net loss of $12.3 million or $0.20 per share for the
previous year, a 63% increase from the previous year.
-- Cash flows generated from operating activities were $29.2 million for
the year.
-- Revenue for the year was $105.17 million, which compares to $51.23
million for the previous year, a 105% increase from the previous year.
-- A total of 81,860 ounces of gold were produced at a recovered grade of
0.39 ounces per ton (opt), a record production figure for the Company.
-- Operating costs for the year were $300 per ton ($759 per ounce) compared
with $321 per ton ($1045 per ounce) in the previous year. The company's
target is to reduce the operating costs to less than $250 per ton by
completing the expansion project and increasing production.
-- The number of ore mining faces increased to 31 over the year, with 24 of
these being actively mined and seven in development. Of the 31 stopes,
16 are the in the higher grade South Mine Complex.
-- Mill recovery for the year was 96.42%.
-- The Company's workforce grew by an additional 237 people to a total of
685 employees.
-- Trackless production haulage ramp is nearing completion. The first dump
at the top of the haulageway above the 5100 Level Loading Pocket is
complete, work on the second dump raise has begun. Excavation for the
ramp facilities has begun and pilot holes for the chute raises are being
drilled.
-- Most surface project work is complete, with the exception of the hoist
upgrade and the new mill upgrade. The pace of surface expansion projects
will slow considerable going forward.
-- Exploration activities more than doubled over the course of the year.
Property-wide proven and probable reserves, measured and indicated
resources increased by 5% net of production in a shortened geology year
(May 1, 2010 - December 30, 2010). Inferred resources increased by 4%
over the same period.
KEY HIGHLIGHTS OF THE QUARTER
-- Net income for the quarter was $4.0 million, or $0.06 per share,
compared to a net loss of $1.7 million in Q4 of fiscal 2010.
-- Cash flows generated from operating activities were $6.4 million.
-- Revenues for the quarter were $29.8 million, a 91% increase from the
previous year.
-- Gold production for the quarter totalled 23,466 ounces, with April
production of 10,175 ounces, both record production figures and the
first time the mine exceeded 10,000 ounces monthly production rate.
-- Recovered grade for the quarter was 0.43 opt, record quarterly recovered
grade.
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Financial Highlights
(All amounts in 000's of Canadian Year ended April 30,
Dollars, except shares and per share ----------------------------------
figures) 2011 2010 2009
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Gold Sales (ounces) 78,809 46,962 43,545
Average Price (per ounce) 1,333 1,091 1,000
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Revenue 105,177 51,232 43,542
Operating Expenses 74,409 53,953 47,536
Exploration Expenditure 9,001 5,285 3,652
Net Income (loss) 20,091 (12,262) (10,483)
Per share (basic and diluted) 0.29 (0.20) (0.19)
Cash Flow from (used in) operating
activities 29,220 (954) (5,138)
Cash Flow from financing activities 19,131 69,409 13,079
Cash Flow from (used in) investing
activities (51,766) (40,938) (21,737)
Net increase in cash (3,415) 27,517 (13,796)
Cash at end of period 25,909 29,323 1,806
Short-term investments 25,322 30,233 23,638
Total cash resources 51,230 59,556 25,444
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Total Assets 209,703 162,207 100,896
Total Liabilities 25,266 16,530 14,127
Working Capital 42,678 55,699 26,358
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Weighted average number of shares
outstanding 68,282,898 62,628,013 56,349,826
Dividends per share NIL NIL NIL
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Cautionary Note Regarding Forward-Looking Statements
This Press Release may contain statements which constitute forward-looking information, including statements regarding the plans, intentions, beliefs and current expectations of the Company, its directors, or its officers with respect to the future business activities and operating performance of the Company. The words 'may', 'would', 'could', 'will', 'intend', 'plan', 'anticipate', 'believe', 'estimate', 'expect' and similar expressions, as they relate to the Company, or its management, are intended to identify such forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future business activities or performance and involve risks and uncertainties, and that the Company's future business activities may differ materially from those in the forward-looking statements as a result of various factors. Such risks, uncertainties and factors are described in the periodic filings with the Canadian securities regulatory authorities, including the Company's Annual Information Form and quarterly and annual Management's Discussion & Analysis, which may be viewed on SEDAR at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements.
Neither the Toronto Stock Exchange nor the AIM Market of the London Stock Exchange has reviewed and neither accepts responsibility for the adequacy or accuracy of this news release.
Contacts:
Kirkland Lake Gold Inc.
Brian Hinchcliffe
President
1 705 567 5208
1 705 568 6444 (FAX)
bhinchcliffe@klgold.com
Kirkland Lake Gold Inc.
Lindsay Carpenter
Director of Investor Relations
1 416 840 7884
1 416 850 1617 (FAX)
lcarpenter@klgold.com
www.klgold.com
Pelham Bell Pottinger
Philippe Polman
44 (0) 20 7861 3921
ppolman@pelhambellpottinger.co.uk
Ocean Equities Ltd.
Guy Wilkes
44 207 786 4370
guy.wilkes@oceanequities.co.uk
NOMAD: Panmure Gordon (UK) Limited
Katherine Roe / Callum Stewart
44 20 7743 6675
katherine.roe@panmure.com