Kirkland Lake Gold Inc.: Fiscal 2013 Q3 Operational and Financial Results
KIRKLAND LAKE, ONTARIO -- (Marketwire) -- 03/11/13 -- Kirkland Lake Gold Inc. (the "Company") (TSX: KGI)(AIM: KGI), an operating and exploration gold mining company, announces financial and operational results for the third quarter of its fiscal year 2013 (November, December 2012, and January 2013).
Mr. Harry Dobson, Chairman commented, "The new service cage went into operation at the end of the quarter, a significant milestone for delivery of the Company's growth plans. With this in operation, hoisting capacity was expected to increase from 1,000 tons per day to 1,800 tons per day. Based on February trials this capacity has been achieved. Daily hoisting rates in excess of 1,800 tons per day (up to 2,160 tons per day in one day) were achieved on several days during the month. The average hoisting rate during February was 1,300 tons per day of ore and waste and this is expected to increase steadily going forward. Significant progress has also been made towards reducing the backlog of ore and waste waiting to be hoisted, towards reducing the backlog in material waiting to go underground and in slinging heavy equipment into the mine. The increased capacity will support the planned development of new stopes in the higher-grade areas of the mine."
KEY HIGHLIGHTS OF THE QUARTER
-- Net loss before income taxes for the quarter ended January 21, 2013 of
$5.7 million ($0.08 per share). This compares to net loss before taxes
of $0.8 million ($0.01 per share) in Q2/13 and a net income before taxes
of $13.6 million ($0.20 per share) for Q3/12.
-- Net loss and comprehensive loss for the quarter was $9.7 million ($0.14
per share) which compares to net loss and comprehensive loss of $0.8
million ($0.01 per share) for Q2/13 and net income and comprehensive
income $9.5 million ($0.14 per share) for Q3/12. Year to date net loss
and comprehensive loss was $10.1 million compared to net income and
comprehensive income of $41.0 million for the fiscal 2012.
-- The Company recorded a $4.0 million tax provision during the quarter
which contributed to the material difference between the reported net
loss and comprehensive loss. The $4.0 million charge for the quarter is
primarily driven by a change in the tax accounting treatment of costs
incurred in the acquisition of the property from Queenston (now part of
Osisko Mining Corporation) which closed during Q2/13.
-- In the quarter, 73,678 tons of ore were produced at a head grade of 0.32
ounces of gold per ton (opt) and a gold recovery rate of 95.66% to
produce 22,261 ounces of gold. Year to date, 214,679 tons of ore have
been produced at a head grade of 0.29 opt and a gold recovery rate of
95.57% to produce 60,015 ounces.
-- Gold poured for the quarter was 21,601 ounces, 3% lower than Q2/13
(22,349 ounces) and 15% lower than Q3/12 (25,295 ounces) primarily due
to grade and inventory fluctuations and the timing of pours. Only 17,340
ounces were sold in the quarter as a result of a delay in shipment of
the final gold bars poured (4,271 ounces). The delay was due to poor
weather conditions that resulted in road closures. This delay affected
both revenue and inventory accounts and increased the net loss in the
quarter by $1.8 million.
-- Operating costs for the quarter were $288 per ton of ore ($954 per ounce
of gold), compared with $360 per ton ($1,253 per ounce) in Q2/13, and
$291 per ton ($908 per ounce) in Q3/12.
-- This fiscal year, the Company expects to sell slightly more than 90,000
ounces, which is towards the lower end of the revised guidance range.
This projection assumes an increase in ore grade and ore tonnages over
the remainder of this fiscal year as expected higher grade ore comes on
line. As of the end of February, production was tracking plan very
closely. Work on our 2014 budget (fiscal year beginning May 1, 2013) is
well underway and is based on selling 150,000 - 180,000 ounces. The
target of the Expansion Project remains to realize an average production
rate of 2,200 tons per day.
-- The Service Cage went into operation near the end of the quarter, which
will free the main production hoist to increase the hoisting of both ore
and waste, and to increase the slinging activities required to bring
heavy equipment into the mine. This will work to reduce the development
shortfall in the higher-grade South Mine Complex ("SMC"), and to bring
more ore mining workplaces on line. Significant progress has been made
on all these fronts during the month of February.
-- The Company has decided to delay the replacement of the ten ton skips in
the existing shaft conveyance arrangement with newly designed 12.5 ton
skips until Q1 of fiscal year 2014. The new drive for the production
hoist will also be activated only in Q1 2014. This will allow the
Company to focus more efforts in Q4 on underground work required to
bring higher grade workplaces on line. Hoisting capacity beyond 1,800
tons per day is not required until Q2 of the 2014 fiscal year.
-- The new ball mill is currently being assembled in the fully constructed
new mill building. This new ball mill and other mill upgrades will
increase milling capacity from 1,450 tons per day to 2,200 tons per day.
This project is tracking to complete in the summer with the excess
capacity not required until Q3 of fiscal year 2014.
-- The overall project budget to complete the infrastructure upgrades
required to reach this target is $95.0 million, of which $79.5 million
had been spent by the end of January, 2013. The processing plant
upgrade, the hoisting capacity upgrade, and the remaining underground
mobile equipment purchases represent the largest segments of unspent
project capital. Project spending in some non-critical path Expansion
Project areas has been delayed where practicable to match progress on
the critical path. The Company has consistently stayed within budget
during all phases of the Expansion Project.
-- The Company workforce totalled 1,017 employees at the end of February,
up from 907 employees at year-end. Due to the varying employee
requirements for training and experience, hiring is expected to run
approximately six months to nine months on average ahead of the
corresponding ramp up in production. This has had a short term impact on
current operating costs, which will likely remain elevated until hiring
is completed in late Q2 or early Q3 of fiscal year 2014. The Company
expects to hire approximately 200 more people, taking the total
workforce to approximately 1,200. This employee head count is expected
to be sufficient to produce at a rate of 2,200 tons per day once
training and experience needs are met. At these ore production levels,
productivity is expected to double from current and historic rates due
to the completed infrastructure upgrades, which will be a significant
driver in reducing operating costs going forward.
-- The head grade of ore coming from the SMC in the quarter was 0.36 opt,
which was above the 0.33 opt grade realized year to date, but below the
normal grade of ore coming from that area in past years. The head grade
of ore coming from the Main Break in the quarter was 0.26 opt, which is
very consistent with prior years. The lower grade of ore coming from the
SMC this year was caused by a shortfall in the development of new
replacement ore mining workplaces in that area caused by the delay in
the Service Cage Project. With this now in operation, development in the
higher grade areas of the SMC can accelerate.
-- After meeting all operating costs, spending $22.8 million on
infrastructure and $4.1 million on exploration, total cash resources
(including short-term investments) as at January 31, 2013 were $87.9
million. As at March 8, 2013 this number had increased to $90.5 million.
The timing of gold sales and accounts receivables as well as accounts
payable payments also influence the cash balance between reporting
periods.
SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
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Financial Highlights Three months ended,
(All amounts in 000's of Canadian
Dollars, except shares and per share
figures)
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Jan 31, 2013 Oct 31, 2012 Jan 31, 2012
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Gold Sales (ounces) 17,340 22,345 25,245
Average Price (per ounce) 1,700 1,660 1,736
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Revenue 29,474 37,101 43,819
Production Expenses 26,587 30,042 25,410
Exploration Expenses 4,083 4,710 3,593
Other Expenses 4,669 3,175 1,255
Net (Loss) Income before Income Taxes (5,667) (826) 13,560
Net and Comprehensive (Loss) Income (9,710) (783) 9,514
Per share (basic and diluted) (0.14) (0.00) 0.14
Cash Flow from operating activities 1,989 10,454 20,071
Cash Flow from financing activities 70,017 3,945 1,618
Cash Flow used in investing
activities (19,037) (47,781) (22,681)
Net increase (decrease) in cash 52,969 (33,382) (993)
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Total cash resources 87,902 39,954 37,676
Other Current Assets 22,964 22,976 20,378
Current Liabilities 69,543 63,060 23,478
Working Capital 41,323 (130) 34,576
Total Assets 431,707 364,495 258,543
Total Liabilities 191,813 123,669 27,942
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Weighted average number of shares
outstanding 70,150,912 70,150,912 69,904,111
Dividends per share NIL NIL NIL
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About the Company
Kirkland Lake Gold's corporate goal is to create a self-sustaining and long-lived intermediate gold mining company based in the historic Kirkland Lake Gold Camp. The Company plans to do this by increasing production capacity to 2,200 tons of ore per day in several stages, and by decreasing production costs by realizing the economies of scale associated with that higher production capacity. At the same time, the Company is committed to maintaining a significant exploration program aimed at developing and maintaining a property wide reserve and resource base sufficient to sustain a mine life of more than ten years for as long as practicable.
Cautionary Note Regarding Forward-Looking Statements
This Press Release contains statements which constitute "forward-looking statements", including statements regarding the plans, intentions, beliefs and current expectations of the Company 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, are intended to identify such forward-looking statements. Investors are cautioned that forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the Company's expectations in connection with the projects and exploration programs being met, the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating gold prices, currency exchange rates (such as the Canadian dollar versus the United States Dollar), possible variations in ore grade or recovery rates, changes in accounting policies, changes in the Company's corporate mineral resources, changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, risks related to joint venture operations, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life,, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, and limitations on insurance, as well as those risk factors discussed or referred to in the Company's annual Management's Discussion and Analysis and Annual Information Form for the year ended April 30, 2012 filed with the securities regulatory authorities in certain provinces of Canada and available 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 except as otherwise required by applicable law.
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
+1 705 568-6444 (FAX)
lcarpenter@klgold.com
www.klgold.com
NOMAD: Panmure Gordon (UK) Limited
Callum Stewart
+44 (0) 20 7 8862500
callum.stewart@panmure.com
NOMAD: Panmure Gordon (UK) Limited
Adam James
+44 (0) 20 7 8862500
adam.james@panmure.com