Kirkland Lake Gold YTD production up 44%

The Detour Lake Mine in northern Ontario.

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Kirkland Lake Gold Ltd. [KL-TSX, NYSE; KLA-ASX] is on track to meet its 2020 production targets after generating solid results in the third quarter, said Kirkland Lake President and CEO Tony Makuch.

The company reported consolidated production of 339,584 ounces of gold in the third quarter, an increase of 37% from 248,400 ounces in the third quarter of 2019.

That brought the company’s year to date production to just over one million ounces of gold, an increase of 44% in comparison to the first nine months of 2019.

The key driver of the company’s year-over-year production growth was the contribution from the Detour Lake Mine in northern Ontario, which the company picked up via the $4.9 billion acquisition of Detour Gold Corp. in January, 2020.

However, on Tuesday October 13, Kirkland Lake shares eased 2.5% or $1.69 to $65.48 on revenue of 584,137. The shares are currently trading in a 52-week range of $76.43 and $25.67.

Kirkland Lake Gold is a mid-tier gold producer with operations in Canada and Australia. The company expects to produce between 1.35 million and 1.4 million ounces of gold this year. In Canada, its portfolio includes the Macassa Mine and the suspended Holt Complex, which consists of three mines (Holt, Holloway and Taylor). All of its Canadian operations are located near Kirkland Lake, Ontario.

The Australian portfolio includes the Fosterville Mine in Victoria State, which produced 161,489 ounces of gold in the third quarter of 2020, up from 158,328 ounces in the third quarter of 2019.

Makuch said the company saw a large increase in its cash position during the third quarter to $848 million, enabling the company to announce a 50% increase in its quarterly dividend to US$0.1875 per share, effective in the fourth quarter of 2020.

The increase in cash reflected the proceeds from the sale of 331,959 ounces of gold during the third quarter of 2020 at an average realized price of US$1,907 per ounce.

Also contributing to the growth in cash during the quarter were proceeds of US$109.1 million from the sale of the company’s 32.6 million shares of Osisko Mining Inc. [OSK-TSX] and US$75 million received from a unit of Newmont Goldcorp Corp. [NGT-TSX; NEM-NYSE] through a strategic alliance agreement.

Under the agreement, Newmont has acquired an option on mining and mineral rights related to the Holt Mine property. It includes a commitment by the two companies to work together to identify additional regional exploration opportunities around their respective land positions where they may co-operate and advance projects.

The Holloway Mine, a component of the Holt Complex, was placed in care and maintenance in March 2020, with no plans for a resumption of operations. The remainder of the Holt Complex was placed on temporary suspension effective April 2, 2020, as part of the company’s COVID-19 response.

In July, 2020, the company announced that the operations at the Holt Complex would remain suspended until further notice.


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