Kirkland Lake Gold Inc.

Kirkland Lake Gold Inc.

July 05, 2012 02:00 ET

Kirkland Lake Gold Inc. Fiscal 2012 Year End Results

KIRKLAND LAKE, ONTARIO--(Marketwire - July 5, 2012) - Kirkland Lake Gold Inc., ('Kirkland Lake' or the 'Company') (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 the year ended April 30, 2012.

Mr. Harry Dobson, Chairman commented, "Fiscal 2012 was another year of excellent progress with production of 100,275 ounces as well as on the mine expansion and exploration fronts. A significant strategic achievement was the agreement to acquire Queenston Mining's joint venture properties, where drilling has commenced both underground, targeting the extension of the high grade South Mine Complex to both the east and west, and on surface, looking for new ore zones. We are now less than one year from realizing the expansion project's 2,200 tons per day of ore target, which should position the Company to earn very compelling profit margins. This fiscal year 2013, we will start to see the significant results of the expansion program take effect, with tonnage ramping up steadily beginning in the second quarter. The next two years will be transformational for Kirkland Lake Gold, and following our recent $50 million convertible debenture announcement, we are well funded and very excited about the next stages in the Company's growth and evolution as an intermediate gold mining company."


Key Highlights of the Year:

  • Net income before income taxes for the year ended April 30, 2012 was $41.3 million or $0.58 per share, more than double the previous fiscal year's results of $19.9 million or $0.29 per share.

  • Cash flows generated from operating activities were $51.2 million for the year compared to $29.2 million in the previous fiscal year.

  • At the end of the fiscal year, the Company had lease financing in place for $8.5 million in mining equipment of an approved $15.0 million facility. Subsequent to year end our bankers had increased this facility to $40.0 million.

  • Operating costs for the year were $287 per ton of ore ($804 per ounce of gold) compared to $292 per ton ($739 per ounce of gold) in the previous fiscal year. Cost per ton figures are anticipated to drop to less than $250 per ton of ore once planned ore production levels of 2,200 tons per day are achieved. The Company expects to achieve these production levels by May 2013.

  • A gold sale price of $1,633 per ounce was realized for the year versus a gold sale price of $1,350 per ounce budgeted.

  • Total capital required to finance the mine expansion from 300-400 to 2,200 tons per day is expected to be approximately $95.0 million of which $68.5 million had been spent as at April 30, 2012.

  • Subsequent to year-end, the Company raised $50.0 million proceeds by way of a private placement. The Underwriters have been granted an option to purchase up to an additional 15% of the Offering, exercisable in whole or in part at any time up to 48 hours before the closing of the Offering, which is scheduled to occur on or about July 19, 2012. These debentures will mature on June 30, 2017 unless converted to common shares at a conversion price of $15.00 and will bear interest at a rate of 6%. (See Company news release dated June 28, 2012).

  • After meeting all costs and expenses, investing $68.5 million in infrastructure and equipment, $14.2 million on exploration, and spending $10 million on the Queenston joint venture acquisition, total cash resources (including short-term investments) as at April 30, 2012 were $30.2 million. As at July 3, 2012 this number had decreased to $23.7 million.

  • A 4% net smelter royalty payable to Kinross Gold Corporation was terminated during the year upon aggregate payments by the Company to Kinross totalling $15.0 million.

  • The Company's fiscal 2012 employee retention rate was 94%. At year end, the Company had 907 employees.

  • During the fiscal year, 281,364 tons of ore were produced at a head grade of 0.37 ounces of gold per ton and a recovery of 96.1% to produce 100,275 ounces of gold.

  • Fiscal 2013 production is expected to range from 180,000 - 200,000 ounces of gold. This reflects the eleven days lost due to forest fire activity in May. The percentage of planned yearly production tonnage to be achieved each quarter is expected to ramp up from roughly 12% of the total in Q1, to 20% in Q2, to 31% in Q3, and to 37% in Q4 of the annual total.

  • In March 2012, the Company agreed to acquire Queenston's 50% interest in the seven joint venture properties that the Company owned with Queenston in the Kirkland Lake camp. (See Company news release dated March 28, 2012). The acquisition price is $60.0 million of which $10.0 million has been paid, with $20.0 million due on the August 30 closing date and $30.0 million on December 30.

  • As of December 31, 2011 proven and probable reserves were 2,884,000 tons at 0.51 ounces/ton for 1,473,000 contained ounces, measured and indicated resources were 3,433,000 tons at 0.47 ounces per ton for 1,623,000 contained ounces, and inferred resources were 1,971,000 tons at 0.51 ounces per ton for 1,003,000 contained ounces. (See Company news release dated May 30, 2012). The foregoing disclosure of these mineral reserves and resources was approved by the Company's Chief Exploration Geologist Stewart Carmichael P. Geo. Produced ounces were replaced by a factor of 3.8 times in the South Mine Complex and by a factor of 4.8 times in the Main Break area.

Key Highlights of the Quarter

  • Net income before income taxes for the quarter ended April 30, 2012 was $9.0 million ($0.13 per share), which compares to net income before taxes of $4.1 million ($0.06 per share) for Q4 of fiscal 2011 and $13.6 million ($0.19 per share) for the previous quarter (Q3 of fiscal 2012). Net income in Q4 was reduced by a temporary rise in gold in inventory caused by an electrical power outage affecting the mill in March.

  • Cash flows generated from operating activities were $11.4 million for the quarter compared to $20.1 million in the previous quarter and $6.4 million in Q4 of fiscal 2011.

  • Operating costs for the quarter were $249 per ton of ore ($735 per ounce of gold), compared with $291 per ton of ore ($908 per ounce of gold) in the prior quarter, and $324 per ton ($761 per ounce) in Q4 of fiscal 2011.

  • Production for the quarter was 27,496 ounces at a recovered grade of 0.34 ounces of gold per ton, an increase over the previous quarter due to higher grade ore and higher ore tons produced. Produced ounces increased over the previous year due to an increase in the ore tonnage produced and include increases in gold ounces held in inventory. A total of 23,702 ounces of gold were sold.

Financial Highlights Year ended April 30,
(All amounts in 000's of Canadian Dollars, except gold price per ounce, shares and per share figures)
2012 2011 2010
Gold Sales (ounces) 97,888 78,809 46,962
Average Gold Price (per ounce) 1,633 1,333 1,091
Revenue 159,824 103,319 51,232
Production Expenses 98,328 72,635 53,953
Exploration Expenditure 14,241 9,001 5,285
Net Income (loss) before Income Taxes 42,328 18,982 (12,262 )
Net and Comprehensive Income 41,270 19,895 (12,262 )
Per share (basic and diluted) 0.58 0.29 (0.20 )
Cash Flow from (used in) operating activities 51,200 29,219 (954 )
Cash Flow from financing activities 11,812 19,131 69,409
Cash Flow used in investing activities (63,907 ) (51,764 ) (40,938 )
Net increase (decrease) in cash (895 ) (3,414 ) 27,517
Total cash resources 30,172 51,231 59,556
Other Current Assets 22,086 13,256 9,449
Current Liabilities 25,013 21,808 13,306
Working Capital 27,245 42,679 55,699
Total Assets 270,329 209,372 162,207
Total Liabilities 37,674 26,019 16,530
Weighted average number of shares outstanding 71,528,490 68,292,898 62,628,013
Dividends per share NIL NIL NIL

Corporate News

The Company also announces the appointment of Investec Bank plc as its joint broker, together with Panmure Gordon (UK) Ltd and Ocean Equities Ltd., for the AIM Market of the London Stock Exchange. The appointment is effective immediately.

In accordance with AIM Rule 20, the Company announces that it will shortly be posting its annual report and accounts to shareholders. The annual report and accounts are also available at

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.

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 statement. 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 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.

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