“Our top priority is the health and well-being of our people, their families and our communities. We have taken numerous steps to protect people from COVID-19, including shutting down Holt Complex and substantially reducing operations at Detour Lake and Macassa.”
President and Chief Executive Officer
Kirkland Lake Gold.
Kirkland Lake Gold Ltd today announced production for the first quarter of 2020 of 330,864 ounces, a staggering increase of 98,985 ounces or 43% from 231,879 ounces for the first quarter of 2019 (“Q1 2019”). Q1 2020 production included 91,555 ounces related to production in Q1 2020 from Detour Lake Mine, following the Company’s acquisition of Detour Gold Corporation on January 31, 2020. Excluding the impact of Detour Lake Mine, Q1 2020 production was 7,430 ounces or 3% higher than the same period in 2019, reflecting a 24% increase in production from Fosterville.
Highlights of Q1 2020 production results:
- Consolidated Q1 2020 production of 330,864 ounces, 43% increase from 231,879 ounces in Q1 2019 and 18% higher than 279,742 ounces in the previous quarter (239,309 ounces in Q1 2020 excluding impact of Detour Lake)
- Gold poured in Q1 2020 totaling 326,933 ounces, with total gold sold of 344,586 ounces (difference between sales and production largely relates to gold inventory at Detour Gold on January 31, 2020)
- Production from Detour Lake Mine from January 31, 2020 totaling 91,555 ounces despite disruptions caused by COVID-19
- Strong production at Fosterville of 159,864 ounces, 24% increase from 128,445 ounces in Q1 2019 reflecting a 46% improvement in the average grade to 42.4 g/t; Q1 2020 production compared to record quarterly production of 191,893 ounces in the fourth quarter of 2019 (“Q4 2019”), with the change mainly reflecting a record average grade of 49.3 g/t the previous quarter
- Production at Macassa totaling 50,861 ounces compared to record quarterly production of 72,776 ounces in Q1 2019, when an average grade of 29.6 g/t reflected significant grade outperformance in the South Mine Complex, and 56,379 ounces the previous quarter (lower mill throughput compared to previous quarter largely reflected disruptions caused by COVID-19)
- Production at Holt Complex of 28,584 ounces compared to 30,658 ounces in Q1 2019 and 31,469 ounces the previous quarter.
Other highlights of Q1 2020
- Completed acquisition of Detour Gold on January 31, 2020, adding a third cornerstone asset in one of the Company’s core jurisdictions, Canada, with substantial value creation potential through increased production, lower unit costs and exploration upside; 77,217,129 common shares were issued to Detour Gold shareholders as consideration for the transaction; Company gained $159 million of cash at closing of Detour Gold acquisition and, subsequently, used $100 million to repay Detour Gold’s outstanding debt and $30 million to close out Detour Gold’s hedge positions; Detour integration progressing well with annual synergies and value enhancement opportunities targeted at $75 – $100 million
- Repurchased 9.7 million common shares through normal course issuer bid (“NCIB”) for $329 million
- Extensive measures taken to protect employees from COVID-19 virus including reducing the number of people at mine sites by transitioning Detour Lake and Macassa mines to reduced operations, temporarily suspending operations at the Holt Complex and suspending all exploration drilling; Health and safety protocols introduced including remote work wherever possible, medical screening, enhanced cleaning and hygiene practices, increased food safety, social distancing of workers, increased reliance on technology such as hosting virtual meetings and the suspension of all non-essential work at, and visits to, the Company’s mine sites; Management Task Force meets daily to assess emerging developments and identify new measures required to protect the Company’s people, their families and communities
- Cash position of $530 million with no debt at March 31, 2020.
Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented: “Our top priority is the health and wellbeing of our people, their families and our communities. We have taken numerous steps to protect people from COVID-19, including shutting down Holt Complex and substantially reducing operations at Detour Lake and Macassa. A mine-by-mine review of our COVID-19 strategy is provided in the Review of Operations that follows. Overall, our people are doing a great job putting our health and safety protocols into practice and working together as a team. The hard work and cooperation they are giving and the initiative they are showing is very impressive and we are very grateful for all of their efforts. A clear example of the effectiveness of our team is our performance in the first quarter. Faced with the unprecedented challenges of the COVID-19 pandemic, our operations still turned in a very strong first quarter. We increased production year over year, even before adding in the contribution from Detour Lake Mine since January 31, 2020. Production growth was once again driven by Fosterville, where we continue to achieve strong grade performance from the Swan Zone.
“As part of our COVID-19 protocols, we have suspended exploration drilling at all sites. Notwithstanding, we fully expect to carry out extensive drill programs at Fosterville, Macassa and Detour Lake during 2020. All three of these mines have considerable exploration upside, which we believe will fuel strong growth in Mineral Reserves. Detour Lake already has a large Mineral Reserve base and mine life. Our goal is to significantly increase the current base of 14.8 million ounces, which will help drive production growth while also maintaining a long mine life. At Macassa, we had very encouraging exploration results in 2019, including large extensions to the South Mine Complex and the intersection of high-grade zones along the Amalgamated Break. At Fosterville, we succeeded in substantially extending the Phoenix System down-plunge of the Swan Zone, demonstrated the potential of Robbin’s Hill to be a second mining operation at Fosterville, and intersected the quartz with visible gold mineralization that largely comprises the Swan Zone in multiple areas across the mining lease. Based on our recent results, we are confident that both Macassa and Fosterville have the potential for significant Mineral Reserve growth through continued exploration success.”
Q1 2020 production totaled 330,864 ounces, an increase of 43% from 231,879 in Q1 2019. The main contributor to the strong growth compared to the same period in 2019 was the contribution of 91,555 ounces from Detour Lake, following the acquisition of Detour Gold on January 31, 2020. Excluding the contribution from Detour Lake, production in Q1 2020 increased 7,430 ounces or 3% from Q1 2019. Excluding the impact of Detour Lake, production growth was driven by Fosterville reflecting the favourable impact of a 46% improvement in the average grade year over year, to 42.4 g/t in Q1 2020.