Kirkland Lake Gold Inc.
TSX : KGI
AIM : KGI

Kirkland Lake Gold Inc.

October 05, 2011 02:00 ET

Kirkland Lake Gold Inc.: Fiscal 2012 First Quarter Financial Results; Gold Production Expansion on Track

KIRKLAND LAKE, ONTARIO--(Marketwire - Oct. 5, 2011) - Kirkland Lake Gold Inc. (TSX:KGI)(AIM:KGI) ('Kirkland Lake' or the 'Company'), an operating and exploration gold mining company located in Ontario, Canada, announces an operations update and its first quarter financial results for its fiscal 2012 year ended July 31, 2011. This was the Company's first reporting period under IFRS (International Financial Reporting Standards) and the impact of this conversion was relatively immaterial to its first quarter numbers.

Mr. Harry Dobson, Chairman commented, "The first quarter of the fiscal year progressed well with production of 25,061 ounces and grade coming in slightly ahead of budget. Our mine expansion remains on track and our forecast remains to deliver 110,000 – 130,000 ounces of gold this fiscal year. Tonnage is planned to steadily increase throughout the year, a key transition year to production targets of 180,000 – 200,000 ounces in the subsequent fiscal year. On the exploration front, drill hole 53-1685 intersected 8.16 ounces of gold per ton over 46.7 feet true width, a record result in the camp's 100 year history of gold discoveries."

KEY HIGHLIGHTS OF THE QUARTER

  • Net income before income taxes was $7.9 million or $0.11 per share, compared to $4.1 million or $0.06 per share (Q4 of fiscal 2011), an increase of 93%.
  • A total of 25,061 ounces of gold were produced from 57,500 tons of ore at a head grade of 0.45 ounces per ton (opt), which was ahead of the budgeted 22,800 ounces from 57,000 tons at a head grade of 0.42 opt.
  • During the quarter, the Company recognised the tax benefit of accumulated income tax losses which will be used against future taxable profits. This $14.2 million adjustment is a non-cash and one-time event. Accordingly, net income and comprehensive income for the quarter were both $22.2 million or $0.32 per share and this adjustment would be required under both Canadian GAAP (generally accepted accounting principles) and IFRS.
  • Cash flow generated from operating activities was $6.2 million, compared to $6.4 million (Q4 of fiscal 2011).
  • The 4% net smelter royalty agreement with Kinross Gold Corporation, part of the original purchase agreement, will terminate shortly before the end of the second quarter of fiscal 2012 following planned settlement of royalties due on first quarter gold sales.
  • The South Mine Complex contributed 75% of production for the quarter totalling 18,823 ounces from 31,984 tons at a head grade of 0.61 opt.
  • Record drill hole 53-1685 intersection at the South Mine Complex, announced in the Company's news release dated May 4, 2011, assayed 8.16 opt uncut (2.50 opt cut) over 46.7 feet true width.
  • Drill hole 53-1794 announced in the Company's news release dated June 1, 2011, intersected both the New South Zone and a related footwall zone. The New South Zone assayed 1.05 opt uncut (0.99 opt cut) over a true width of 37.5 feet with a footwall zone assaying 0.93 opt over a true width of 4.0 feet. These intersections are located 110 feet north of the above drill result.
  • The Company is not experiencing any difficulty in recruiting labour and hired an additional 71 people for a total of 765 employees in the quarter.

Production guidance for Fiscal Year 2013 remains estimated at 180,000 to 200,000 ounces of gold due to an allowance for a ramp-up in production between May 2012 and November 2012. Full production of 210,000 to 250,000 ounces is not currently being forecast until FY 2014 as a precaution against late completion of any critical portion of the Expansion Project and any delays on the commissioning of new equipment.

Financial Highlights
(All amounts in 000's of Canadian Dollars, except shares and per share figures)
Three months ended,
July 31, 2011 April 30, 2011 July 31, 2010
Gold Sales (ounces) 24,178 21,410 14,111
Average Price (per ounce) 1,476 1,392 1,252
Revenue 35,698 29,795 17,681
Production Expenses 24,320 21,697 12,507
Exploration Expenses 2,912 2,997 1,502
Net Income before Income Taxes 7,934 4,118 2,976
Net and Comprehensive Income 22,180 4,131 2,976
Per share (basic and diluted) 0.32 0.06 0.04
Cash Flow from operating activities 6,223 6,584 118
Cash Flow from (used in) financing activities 344 11,147 (3)
Cash Flow used in investing activities (17,499) (28,856) (16,066)
Net increase (decrease) in cash (10,932) (11,124) (15,951)
Total cash resources 40,292 51,231 48,608
Other Current Assets 14,983 13,256 14,338
Current Liabilities 19,131 21,809 16,130
Working Capital 36,143 42,678 46,816
Total Assets 230,712 209,372 168,295
Total Liabilities 23,384 26,020 20,320
Weighted average number of shares outstanding 69,805,611 68,282,898 67,728,645
Dividends per share NIL NIL NIL

About the Company

The Company purchased the Macassa Mine and the 1,450 ton per day mill along with four former producing gold properties – Kirkland Lake, Teck-Hughes, Lake Shore and Wright Hargreaves – in December 2001. These properties, which have historically produced approximately 22 million ounces of gold, extend over seven kilometres between the Macassa Mine to the west and Wright Hargreaves to the east and, for the first time, are being developed and explored under one owner. This camp is located in the Southern Abitibi Greenstone Belt of Kirkland Lake, Ontario, Canada.

Qualified Person

The results of the Company's diamond drilling program have been approved by the Company's Chief Exploration Geologist, Stewart Carmichael, P.Geo., a 'qualified person' for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators.

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.

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