🕐16.03.11 - 08:27 Uhr
Kirkland Lake Gold (TSX/AIM: KGI) Q3 Results
Please find attached and below todays Q3 results statement for Kirkland
Lake Gold (TSX / AIM: KGI).
Kind regards,
Philippe
FINANCIAL RESULTS Q3 2011:
EXPLORATION PROGRAM ACTIVITY INCREASES &
MINE EXPANSION ON TRACK FOR 180,000 - 200,000 OUNCE ANNUAL RUN RATE BY
NOVEMBER 2011
Kirkland Lake Gold Inc.
(Kirkland Lake Gold or the Company), an
operating and exploration gold mining company located in Ontario,
Canada, announces its third quarter fiscal 2011 results for the three
months ended January 31, 2011.
All amounts are in Canadian dollars
unless otherwise noted.
Mr.
Harry Dobson, Chairman, commented, "The third quarter has not been
without its challenges with slightly lower than anticipated grades and
difficult choices being made affecting short term production to ensure
we remain on track to achieve the target rate of production by November
2011.
After meeting all operating costs, spending $16.0 million on
capital expenditures and $2.7 million on exploration, total cash
resources (including short-term investments) as at January 31, 2011 were
$47.4 million."
KEY HIGHLIGHTS:
* 20,231 ounces of gold were produced in the quarter - 58,394
ounces year to date; a record year to date production figure for the
Company.
* Net income for the quarter was $4.2 million or $0.06 per
share, and this was reduced by $1.0 million due to higher exploration
spending.
* Cash flow generated from operating activities during the
quarter was $6.2 million.
* The year to date head grade of 0.397 ounces per ton is higher
than the budgeted grade of 0.382 ounces per ton, and very close to the
long term average head grade target of 0.4 ounces per ton.
* Operating costs in Q3 2011 decreased to $258 per ton ($743 per
ounce) from $365 per ton ($809 per ounce) in Q2 2011; total cash costs
also decreased to $275 per ton ($794 per ounce) from $390 per ton ($866
per ounce) in Q2 2011.
* Year to date operating costs of $44.3 million are lower than
budgeted ($50.2 million).
* The number of ore mining faces available for production was
maintained at 28 while the number of ore mining faces in the development
and planning stages increased from 23 to 26.
* A record mill throughput of 635 tons of ore per day was
achieved.
* The total workforce increased by 48 to 648 employees.
DETAILS OF THE THIRD QUARTER
Mine Expansion and Production
* A total of 20,231 ounces of gold were produced in the quarter,
which was lower than that targeted and lower than that required to reach
the Companys production target for the year of 90,000 to 100,000
ounces.
This was due to a decision taken during the quarter to reduce
support for near term production activities due to hoisting constraints
in order to allow other higher priority longer term activities to
continue.
* The quarterly head grade of 0.362 ounces of gold per ton
("opt") was also lower than expected.
In some mining areas, lower grade
ore was unexpectedly encountered along with the known higher grade ore,
resulting in a blended grade being mined.
This is a very common
occurrence in this type of gold deposit, and is the main reason that the
Companys long term plans are based on an average long term head grade
of approximately 0.4 opt despite a blended reserve and resource grade of
over 0.5 opt.
The year to date head grade of 0.397 opt is very close to
target and slightly higher than the budgeted head grade of 0.382 opt.
The higher than expected gold price has reduced cut off grades in most
areas to below those budgeted.
* Work to increase the hoisting capacity of the No.
3 Shaft
continued in the quarter.
The new service hoist was commissioned by the
end of January after electrical design problems related to uneven input
voltages were overcome.
The working platform required to complete final
headframe work and carry out shaft upgrades was also installed by the
end of the quarter.
A decision was made in the quarter to move forward
and complete some shaft electrical and shaft air line installations
utilizing the working platform rather than the new cage due to better
working conditions.
As a result, installation of the new cage is now
targeted for June 2011.
Shaft upgrade work continued in the quarter
focused primarily on the headframe and the shaft services compartment
and the shaft stations and loading pockets.
However, this work was based
on the existing conveyances rather than the new hoist and working
platform and contributed significantly to the shaft overload.
Shaft
crews were also utilized on other shaft maintenance work that was
brought forward because of the delay.
This work also utilized the
existing conveyances.
* Excavation of the truck loading chutes and stations below the
5300 Level and the underground haulage ramp between the No.
3 Shaft and
the South Mine Complex (SMC) mining area continued.
Exploration
* More diamond drills moved to a seven day per week operating
schedule as the contractor added drillers to the workforce as requested
by the Company.
Exploration expenses increased by $1.0 million over the
previous quarter.
* An exploration drift has been advanced to the edge of the
Amalgamated Kirkland - Queenston joint venture property of the Company
and Queenston Mining Inc.
in preparation for driving a drift onto that
property in order to establish a central diamond drilling station in the
second quarter (Q2) of fiscal 2012.
The Company is awaiting
authorization from the Ministry of Northern Development, Mines, and
Forests to proceed with this development.
Financial Results
* Net income for the third quarter (Q3) ended January 31, 2011
was $4.2 million or $0.06 per share, which compares to a net income of
$8.6 million for the previous quarter (Q2) of fiscal 2011, and a
restated net loss of $4.9 million for Q3 of fiscal 2010.
* Operating costs were $258 per ton ($743 per ounce), compared
with $365 per ton ($809 per ounce) in the prior quarter, and $306 per
ton ($900 per ounce) in Q3 of fiscal 2010.
Total cash costs were $275
per ton ($794 per ounce), compared to $390 per ton ($866 per ounce) in
the prior quarter and $316 per ton ($930 per ounce) in Q3 of fiscal
2010.
The Companys target is to reduce the operating costs to less than
$250 per ton by upgrading mine infrastructure and increasing production.
* Cash flows generated from operating activities were $6.2
million in Q3 of fiscal 2011 compared to $16.0 million in Q2 of fiscal
2011 and a use of $6.3 million in Q3 of fiscal 2010.
* Gold poured in the quarter was 18,331 ounces, which compares
to 23,419 ounces for the previous quarter and 5,817 ounces for the same
period in the previous fiscal year.
* After meeting all operating costs, spending $16.0 million on
capital and $2.7 million on exploration, total cash resources (including
short-term investments) as at January 31, 2011 were $47.4 million.
As at
March 14, 2011 this number had increased to $51.0 million.
Health and Safety
* The Company completed calendar year 2010 with the lowest
accident frequency in the Province of Ontario in the Large Mines
category.
OUTLOOK
The production forecast for fiscal 2011 has been reduced to 80,000 to
85,000 ounces of gold because of the issues outlined above.
Higher
grades are expected in the fourth quarter and attaining those higher
grades is essential to meeting this forecast.
The Companys expansion activities will continue to take priority, and
the available resources will be managed accordingly.
The tonnage of ore
to be hoisted and mined will be managed to meet these targets, provided
higher priority activities are not hindered.
The Company will continue
to prioritize the work and investment required to meet our goals of
attaining five million ounces in total gold reserves and resources and
of reaching a profitable production rate of 180,000 to 200,000 ounces of
gold per year by November 2011.
The expected completion date of the current expansion project remains
November 2011, and that is the first month in the current plan in which
production is expected to exceed the 1,200 ton per day threshold.
The
Company is currently reviewing its plans as part of the 2012 fiscal year
budgeting exercise, but that target date still appears feasible with
some re-arrangement of activities and schedules.
Production is planned
to be in the range between 1,200 to 1,400 tons of ore per day after
November 2011.
Planning and engineering studies related to a potential
further production expansion will continue with no decision expected
until the latter part of fiscal year 2012.
There are some risks to the expansion project timeline that the Company
will attempt to manage, but which are not totally within its control.
These include risks related to:
1) late delivery of equipment from suppliers;
2) delays in commissioning equipment due to problems experienced by
suppliers or outside installers; and
3) recruiting and retaining skilled labour as activity in the mining
industry continues to pick up and competition for skilled, experienced,
and qualified workers and staff increases.
These issues may or may not act to extend the expansion project
timeline, but they will not affect the ultimate completion of the
project.
The near term impact of these problems to date has been to
reduce production while slowing overall spending and lowering operating
costs.
"Despite the delays with our hoisting capacity project resulting in our
annual guidance being reduced to 80,000 to 85,000 ounces, the long term
plan of reaching a profitable production rate of 180,000 to 200,000
ounces remains the Companys higher priority and is on track to be
completed by November 2011.
Fiscal 2012 production guidance is forecast
to be 120,000 to 140,000 ounces of gold," concluded Mr.
Dobson.
SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
Financial Highlights
(All amounts in 000s of Canadian Dollars, except shares and per share
figures)
Three months ended,
Jan 31, 2011
Oct 31, 2010
Jan 31, 2010
(restated)
Gold Sales (ounces)
18,280
23,392
5,803
Average Price (per ounce)
1,391
1,300
1,064
Revenue
25,426
30,418
6,177
Operating Expenses
17,998
20,536
8,977
Exploration Expenditure
2,709
1,792
1,261
Net Income (loss)
4,206
8,565
(4,896)
Per share (basic and diluted)
0.06
0.13
(0.08)
Cash Flow from (used in) operating activities
6,169
16,046
(6,292)
Cash Flow from financing activities
5,655
2,379
817
Cash Flow from (used in) investing activities
(953)
(5,635)
11,184
Net increase in cash
10,871
12,790
5,709
Cash at end of period
37,033
26,162
10,198
Short-term investments
10,381
25,347
25,228
Total cash resources
47,415
51,509
35,427
Total Assets
191,675
179,809
128,848
Total Liabilities
22,340
20,367
13,740
Working Capital
41,049
45,147
34,291
Weighted average number of shares outstanding
68,116,420
67,763,116
63,415,452
Dividends per share
NIL
NIL
NIL
About Kirkland Lake Gold Inc.
Kirkland Lake Gold Inc.
is an operating and exploration gold mining
company located in Ontario, Canada.
It purchased the Macassa Mine and
the 1,500 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 some 22 million ounces of gold, extend over seven kilometres
between the Macassa Mine on the west and Wright Hargreaves on 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.
The Companys corporate goal is to
expand its gold reserves and reduce its operating costs to become a
profitable gold producer.
The Companys common shares trade on the TSX (Toronto Stock Exchange)
and on the AIM (Alternative Investment Market) of the London Stock
Exchange.
The Companys senior management and Board of Directors have extensive
experience in the natural resource and mining sectors that include
exploration, mining and marketing, as well as experience in the legal
and corporate finance areas.
Philippe Polman
Account Manager
Direct line: +44 (0)20 7861 3921
Mobile: +44 (0)7841 672 830
Pelham Bell Pottinger
5th Floor, Holborn Gate, 330 High Holborn, London, WC1V 7QD
Tel: +44 (0)20 7861 3232 Fax: +44 (0)20 7861 3233
www.pelhambellpottinger.co.uk
.......................................
A CarbonNeutral(r) company
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