Kirkland Lake Gold Inc.
TSX : KGI
AIM : KGI

Kirkland Lake Gold Inc.

July 09, 2015 02:00 ET

Kirkland Lake Gold Reports Fiscal 2015 Fourth Quarter and Year End Results Generating $30.7 Million in Free Cash Flow

TORONTO, ONTARIO--(Marketwired - July 9, 2015) - Kirkland Lake Gold Inc. ("Kirkland Lake Gold" or the "Company") (TSX:KGI)(AIM:KGI), an operating and exploration gold company with operations in Ontario, Canada, today announces financial results for the fourth quarter and year ended fiscal 2015 ("Q4/15" and "F2015", respectively). All figures in this release are in Canadian dollars unless stated otherwise.

Highlights2

  • Achieved a head grade of 0.42 ounces per ton ("opt"), or 14.4 grams per tonne ("g/t") in Q4/15; 0.43 opt or 14.7 g/t for F2015.
  • Produced 37,979 ounces of gold in Q4/15 and a total of 153,957 ounces at F2015.
  • Sold 39,109 ounces of gold at an average sales price per ounce of $1,481 (US$1,186) in Q4/15; F2015 sold 155,709 ounces at an average sales price per ounce of $1,412 (US$1,228).
  • Cash Operating Costs per Ounce of Gold Produced1 of $885 (US$709); and $831 (US$723) YTD.
  • All-In Cash Cost per Ounce of Gold Produced1 ("AICC") of $1,445 (US$1,157); F2015 AICC of $1,327 (US$1,152).
  • Income before taxes of $8.3 million in Q4/15; $25.5 million F2015.
  • Net and comprehensive income of $7.9 million or $0.11 per share during the quarter; $19.8 million or $0.27 per share in F2015.
  • Generated cash flow from operations during the quarter of $20.7 million; $78.2 million YTD.
  • Generated free cash flow1 of $7.8 million during the quarter; $30.7 million F2015.
  • Completed a successful bought deal public offering for total gross proceeds of $35 million.
  • Cash as at April 30, 2015 was $80.3 million.

Mr. John Thomson, Chief Financial Officer of the Company commented, "We are pleased with the improved financial performance and in particular, reporting a fourth consecutive quarter of profitability, positive cash flow from operations and free cash flow. We have also met and in certain instances exceeded our original guidance parameters for the year."

Mr. George Ogilvie, Chief Executive Officer of the Company also commented, "We are very proud of our accomplishments during fiscal 2015. Our business has made positive strides forward over the course of the last 12 months, and each and every one of our employees needs to be commended for the commitment they have shown in turning our business around. However, there are still challenges ahead that will require time and effort before the business is fully functioning at an optimum level. I am however, confident that we are on the right track and that the management team we have assembled, in conjunction with our motivated workforce, is qualified and capable of addressing these challenges."

1 The Company has included non-GAAP performance measures: average sales price per ounce, cash operating cost per ton produced, cash operating cost per ounce produced, AICC and free cash flow throughout this announcement. These are common performance measures in the mining industry that do not have any standardized meaning under IFRS. Refer to Appendix B of the MD&A for a reconciliation of these measures to reported production expenses.
2 All US dollar equivalents are converted at the average CAD to USD exchange rate during the reporting period.

Click on the link for a video interview with George Ogilvie, discussing the F2015 results.
http://brrmedia.co.uk/event/139311?popup=true

Financial and Operational Metrics

Q4/15 Q315 Q414 Q4/15
vs
Q3/15
Q4/15
vs
Q4/14
Production F2015
YTD
F2014
YTD
Y o Y
1,040 994* 949 1% 10% Tons per day ("tpd") 1,022 1,066 -4%
92,532 91,418 86,182 1% 10% Tons Produced 369,976 385,837 -4%
0.42 0.44 0.37 -5% 14% Head Grade 0.43 0.33 30%
37,979 39,158 30,350 -3% 25% Ounces Produced 153,957 122,309 26%
1,003 1,014 1,059 -1% -5% Headcount (manpower) 1,003 1,059 -5%
In CAD$
Q4/15 Q3/15 Q4/14 Q4/15
vs
Q3/15
Q4/15
vs
Q4/14
Financial F2015
YTD
F2014
YTD
Y o Y
39,109 39,722 30,771 -2% 27% Gold Sales (ounces) 155,709 125,274 24%
1,481 1,371 1,376 8% 8% Average Sales Price1 ($) (per ounce) 1,412 1,383 2%
57,934 54,471 42,357 6% 37% Revenue (000's) 219,888 173,258 27%
371 328 352 13% 5% Cash Operating Cost per Ton Produced1 346 342 1%
885 766 1,001 17% -10% Cash Operating Cost per Ounce Produced1 831 1,080 -23%
1,445 1,249 1,774 17% -18% AICC1 1,325 1,986 -33%
In US$ Equivalent2
1,186 1,175 1,245 1% -5% Average Sales Price1 ($) (per ounce) 1,228 1,304 -6%
291 281 319 6% -7% Cash Operating Cost per Ton Produced1 301 323 -7%
709 656 906 10% -21% Cash Operating Cost per Ounce Produced1 723 1,019 -29%
1,157 1,070 1,605 9% -27% AICC1 1,152 1,873 -38%
* The production rates ('tpd') achieved during Q4/15, Q3/15, Q4/14 and year-to-date do not include days on which production at the Company was temporarily shut down due to the annual December holidays. Accordingly, production rates for the quarter and the year are based on 89 days and 362 days respectively.

Operations

During the fourth quarter, development at the South Mine Complex ("SMC") continued as planned. Infrastructure work including the haulage truck chute excavations and main refuge station progressed on schedule and the main ramp development continued to be advanced towards the 5600 level.

In addition, a fourth stope was brought into production on the 5400 level. With more stopes available on the 5400 level, the average head grade has trended upwards and has averaged 0.43 opt (14.7 g/t) for F2015, with recoveries of 96.5%. The Company anticipates having the fifth and sixth stopes in production from the 5400 level by the end of August. As more stopes come into production on the 5400 level and the 5600 level next year, the average head grades should continue to increase.

The average production rate achieved for FQ4 and F2015 was 1,040 tpd and 1,022 tpd, respectively. The Company plans to increase production over the next twelve months as additional equipment is expected in the second quarter. This new equipment includes two new 20 ton battery haulage trucks (the first truck is expected to arrive by the end of August with the second truck expected in Q1 2016) and three battery scooptrams expected to before the end of the first half of 2016. With these new units added to the fleet production crews will be able to take advantage of new headings coming online within the lower SMC zone. It is expected that production will ramp up throughout the year and that the first and second quarter will be in line with the levels achieved in F2015. With the new additions to the fleet, the production rate should trend upwards towards the 1,140 tpd level by mid-2016.

Exploration

During the quarter, the Company provided results from an underground drilling program on the '04 Break, to the east of Shaft 3 at the Mine Complex. Drilling returned significant intersections on elevations that were highest to date in the history of the Macassa Mine, and within a large unexplored area of the mine. Follow up drilling is planned during F2016 (see press release dated February 23, 2015, accessible at www.klgold.com).

The Company intends to provide an update on its exploration programs which include underground drilling on the SMC and the '04 Break, surface drilling on the near surface target, and plan to embark upon a regional exploration program during calendar 2015. This regional program will consist of initially $1.5 million in surface drilling to test the four contiguous properties to the east.

F2015 Key Performance Indicators1

After Q3/15 the Company was on track to meet and or exceed the stated guidance parameters and as such, revised ("R" indicates revised guidance), a number of the guidance figures as noted below.

FY2015 Guidance
CAD$
Metric Actual
$800 - 850 Cash operating cost per ounce $831
$1,250 - 1,350 AICC per ounce produced $1,327
R $50.0 million Sustaining capital expense (CAPEX) $47.5 million
R $218.0 - 222.0 million Revenue $219.9 million
R $70.0 - 75.0 million Cash flow from operations $78.2 million
R $30.0 - 35.0 million Free cash flow generation $30.7 million

Change in Year End

As previously announced the Company will change its year end from April 30, to December 31, effective January 1, 2016 (see press release dated May 19, 2015). As such the eight month period from April 30, 2015 to December 31, 2015, (the "Stub Year") will include two full quarters of reporting (May 1, 2015 to July 31, 2015 and August 1, 2015 to October 31, 2015). Results of the Stub Year will be released in March 2016.

Outlook

Production guidance for the Stub Year will be between 90,000 - 110,000 ounces as production guidance for the former twelve month period ending April 30, 2016, was between 150,000 to 170,000 ounces at an average grade of 0.43 opt (14.7 g/t) and an average production rate of 1,070 tpd.

Conference Call Details

The Company will hold a conference call to discuss its FQ4 and F2015 year-end results at 11:00am EDT (4:00pm BST). You are invited to participate via teleconference using the details below. A replay of the call will be posted on the Company's website (www.klgold.com).

Participant Dial-In Numbers
Toll-Free North America: +1 (877) 291-4570; Local and International: +1 (647) 788-4919
Local from Switzerland: (0-800) 835-354; Local from the United Kingdom: (0-800) 051-7107
Conference ID: 76350876
Replay Dial-In Numbers (Replay Available Until: August 9, 2015 at 11:59PM ET)
Local and International: +1 (416) 621-4642
Toll Free North America: +1 (800) 585-8367
Conference ID: 76350876

1 The Company has included non-GAAP performance measures: average sales price per ounce sold, cash cost per ton produced, cash cost per ounce produced, AICC per gold ounce produced and free cash flow throughout this announcement. This is a common performance measure in the mining industry but does not have any standardized meaning under IFRS. Refer to Appendix B of the MD&A for a reconciliation of these measures to reported production expenses.

The following abbreviations are used to describe the periods under review throughout this release.

Abbreviation Period Abbreviation Period
F2015 May 1, 2014 - April 30, 2015 F2014 May 1, 2013 - April 30, 2014
Q4/15 February 1, 2015 - April 30, 2015 Q4/14 February 1, 2014 - April 30, 2014
Q3/15 November 1, 2015 - January 31, 2015 Q3/14 November 1, 2014 - January 31, 2014
Q2/15 August 1, 2014 - October 31, 2014 Q2/14 August 1, 2013 - October 31, 2013
Q1/15 May 1, 2014 - July 31, 2014 Q1/14 May 1, 2013 - July 31, 2013

For a description of additional risk factors affecting the Company and 'Forward Looking Information', see the Company's Annual Information Form filed with certain securities regulatory authorities in Canada and available on SEDAR at www.sedar.com. For 'Forward Looking Information', as presented in the Management Discussion and Analysis ("MD&A") for the period ended April 30, 2015, see Appendix E in the MD&A for a description of other factors that may cause actual results to differ from those anticipated.

Qualified Persons

Production and processing at the Company's mining and milling facility are under the supervision of Mr. Chris Stewart, P.Eng., Vice President of Operations; and the exploration program is under the supervision of Mr. Stewart Carmichael, P.Geo., Manager of Exploration. Messrs. Stewart and Carmichael are 'qualified persons' for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators, and have reviewed and approved this news release.


Financial Highlights
(All amounts in 000's of Canadian Dollars, except Average Gold Price per ounce, shares and per share figures)

Year ended April 30,
2015 2014 2013
Gold Sales (ounces) 155,709 125,273 91,771
Average Gold Sales (CAD$ per ounce) 1,412 1,385 1,653
Revenue 219,888 173,258 151,692
Production Expenses 169,788 162,755 124,002
Exploration Expenditure 6,114 7,537 17,097
Other Expenses and Income 18,482 18,593 13,366
Net (Loss) Income before Income Taxes 25,505 (15,627 ) (2,773 )
Net and Comprehensive (Loss) Income 19,786 (11,077 ) (3,646 )
Per share (basic and diluted) 0.27 (0.16 ) (0.05 )
Cash Flow from operating activities 78,154 27,058 33,959
Cash Flow (used in) from financing activities 11,497 (5,461 ) 132,739
Cash Flow used in investing activities (47,429 ) (60,650 ) (105,739 )
Net (decrease) increase in cash 41,428 (37,890 ) 51,770
Total cash resources 80,322 38,897 76,966
Other Current Assets 26,536 23,732 30,719
Current Liabilities 35,854 45,361 71,565
Working Capital 71,004 17,268 36,120
Total Assets 467,259 409,385 448,782
Total Liabilities 165,272 126,363 201,423
Weighted average number of shares outstanding 73,334,778 70,150,912 70,150,912
Dividends per share NIL NIL NIL

About the Company

Kirkland Lake Gold Inc.'s corporate goal is to create a self-sustaining and long-lived intermediate gold mining company based in the historic Kirkland Lake gold camp, as well as to explore opportunities for growth in other safe mining jurisdictions. The Company plans to do this by mining to the reserve grade, generating profits and free cash flow with a view to maximising value for the shareholders. The Company will also look to take advantage of its increased infrastructure capacity in the appropriate gold price environment. 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.

Over the last several years the Company has invested significant capital to improve the infrastructure of the business including upgrading the production hoist, skips, mill, underground mobile equipment and capital development. From initial discovery to present day there have been over 24 million ounces of gold mined from the Kirkland Lake gold camp while the current reserve and resource provides for potentially 14 years of mining with exploration upside.

Neither the Toronto Stock Exchange nor the AIM Market of the London Stock Exchange has reviewed or accepts responsibility for the adequacy or accuracy of this news release.

Cautionary Note Regarding Forward Looking Statements

This news 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", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. Forward-looking statements used in this news release include, but may not be limited to: statements regarding the Company's change in year end, its development and exploration plans and production guidance for Stub Year 2015. Investors are cautioned that forward-looking statements are based on the opinions, assumptions and estimates of management which management considers reasonable at the date the statements are made such as, without limitation, opinions, assumptions and estimates of management regarding the Company's business, its ability to increase its production capacity and decrease its production costs. Such opinions, assumptions and estimates, 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), variations in ore grade or recovery rates, changes in accounting policies, changes in the Company's mineral reserves and resources, changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, 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 weather, 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 Management's Discussion and Analysis and Annual Information Form for the year ended April 30, 2014 and the Company's Management's Discussion and Analysis for the interim period ended January 31, 2015 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 to 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.

Contact Information

  • Kirkland Lake Gold Inc.
    George Ogilvie, P.Eng
    Chief Executive Officer
    +1 709 532 5716
    +1 705 568 6444 (FAX)
    gogilvie@klgold.com

    Kirkland Lake Gold Inc.
    Suzette N. Ramcharan, CPIR
    Director of Investor Relations
    +1 647-284-5315
    +1 705 568 6444 (FAX)
    sramcharan@klgold.com
    www.klgold.com

    NOMAD: Panmure Gordon (UK) Limited
    Dominic Morley / Adam James
    +44 (0) 20 7886 2500

    Blytheweigh
    Tim Blythe/Halimah Hussain/Camilla Horsfall
    +44 (0) 20 7138 3204