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Kirkland Lake Gold Inc.: Operational Update and Fiscal 2014 Third Quarter Operating Results

KIRKLAND LAKE, ONTARIO- Kirkland Lake Gold Inc. , an operating and exploration gold mining company, announces operational results for the third quarter of its fiscal year 2014 and provides an update on its mine optimization plan.

KIRKLAND LAKE, ONTARIO- Kirkland Lake Gold Inc. , an operating and exploration gold mining company, announces operational results for the third quarter of its fiscal year 2014 and provides an update on its mine optimization plan.

Mr Harry Dobson, Chairman commented "I am very pleased with operational improvements and the impact which these, together with some cost reductions will have on the financial performance of the Company. Work is ongoing but the full extent of these changes will be observed by all shareholders in the current quarter ending April 30, 2014."

Operational improvements include: -- In November, mining cut-off grades were raised to 0.22 ounces per ton ("opt") from 0.18 opt resulting in a head grade for January of 0.45 ounce per ton - a 46% increase compared to the year-to-date average.

-- On January 19, the Company hoisted a record 3,118 tons in a 24-hour period consisting of 1,738 tons of ore and 1,380 tons of waste.

-- On January 29, the Company poured 4,706.65 troy ounces at 85% fineness totalling 4,000 fine ounces - the Company's largest gold pour in a one week period.

-- Gold production in January was excellent with 13,483 ounces produced. Total gold production during the quarter was 31,022 ounces.

-- Dry commissioning of the new ball mill has started and will be completed in February.

-- Underground stope development and sustaining capital resources over the next 12 months will focus on increasing mining ratios from high grade workplaces on the 5,400' and 5,600' levels in the SMC. Significantly less stope development will take place in the '04/Main Break.

-- Revised full year guidance resulting from this new six-month mine-plan results in a reduction in fiscal 2014 (ending April 30, 2014) production guidance to 120,000 - 125,000 ounces. This nevertheless represents a 30% - 36% increase over fiscal 2013.

Mr. George Ogilvie, President and CEO commented, "The new mine plan focuses on raising head grades, requiring less tons and lowering cash costs per ounce produced. These changes began to reflect themselves in January's results; however material improvements in production and cost performance should be fully reflected in the fourth quarter and beyond. The Company is planning for a head grade of 0.38 opt throughout Q4/14."

Cost saving initiatives result in annual savings of approximately $23.3 million. The Company has also now completed its $95.0 million expansion capital spend. -- As of January 31, 144 employees had been released from employment saving the Company approximately $15.0 million annually and all contractors are now offsite.

-- The Company has also cancelled non-essential capital spending saving $6.0 million, ended its travel allowance policy saving $2.0 million and is retiring older inefficient equipment.

Mr. John Thomson, CFO, commented, " The migration away from a tonnage focussed strategy to a plan focussed on mining at historic reserve grades, together with the completion of all expansion projects, results in a business model focussed on a more sustainable and realistic increase in gold production at lower cash costs which is going to return the Company to profitability and free cash-flow in the near future. The operating cost metrics communicated at the start and throughout the expansion project remain very achievable."

The Company is also pleased to announce that a new reserve and resource update will be published in the Q1/15. This update will include a first-time official resource calculation on the Company's surface drilling program.

The Company's third quarter operating results are summarized in the below table: Nov'13                     Dec'13                           Jan'14 Tonnes Produced (short tons) 35,328                      31,909                           30,680 Gold Produced (Oz)                      8,427                         9,112                              13,483 Tonnes Milled (short tons)       27,895                       37,297                           30,420 Head Grade (Oz per short ton) 0.26                           0.29                                 0.45 Mill Recovery (%)                        94%                             95%                                 96% Gold Recovered (Oz)                  6,970                           10,110                            13,145 Gold Poured (Oz)                         9,903                            9,726                              14,162

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 mining to the reserve grade, generating profits and free cash flow 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 camp while the current reserve and resource provides for potentially 10 years of mining with significant exploration upside.