Kirkland Lake Gold (KL)

[NYBob]

Kirkland Lake Gold Reports Record Results in Q4 & FY 2020
Download this Press ReleasePDF Format (opens in new window)
TORONTO, Feb. 25, 2021 (GLOBE NEWSWIRE) --

Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or the “Company”)
(TSX:KL) (NYSE:KL) (ASX:KLA) today announced the Company’s financial and
operating results for the fourth quarter (“Q4 2020”) and
full-year 2020 (“FY 2020”). For both periods,
the Company achieved record levels of production, revenue, net earnings
and adjusted net earnings.
The Company also released Mineral Reserve and Mineral Resource estimates
as at December 31, 2020.
The Company’s full financial statements and management discussion &
analysis are available on SEDAR at www.sedar.com and on the Company’s
website at

http://www.kl.gold.com

All dollar amounts are in U.S. dollars, unless otherwise noted.

https://www.kl.gold/news-and-media/press-release-details/2021/Kirkland-Lake-Gold-Reports-Record-Results-in-Q4--FY-2020/default.aspx


RECORD QUARTERLY RESULTS IN Q4 2020
Record production 369,434 oz, net earnings $232.6M or $0.86/share, adj. net earnings $265.8M or $0.98/share (after $0.03/share reduction for prior-period depreciation adjustments)
ACHIEVED ALL FULL-YEAR 2020 GUIDANCE
Production 1,369,652 oz (Guidance: 1.35-1.40M oz); Op. cash costs/oz(1) $404 ($410-$430), AISC/oz(1) $800 ($790-$810)
RECORD EARNINGS & CASH FLOW IN FY 2020
Net earnings $787.7M (2.91/share), adjusted net earnings(1) $922.9M (3.41/share), Op. cash flow $1,315.8M; free cash flow(1)$733.1M
RETURNED $848.3M TO SHAREHOLDERS IN 2020
Repurchased 18,925,900 shares for $732.4M and paid $115.9M in dividends, with two dividend increases during 2020
DETOUR LAKE: RIGHT DEAL AT THE RIGHT TIME
Detour Lake contributed >40% of free cash flow in 2020, achieved significant exploration success; Permit received to process up to 32.8M tonnes per year
EXPLORATION SUCCESS AT ALL OPERATIONS
Drill success at Detour Lake, Macassa and Fosterville in 2020 highlight value creation potential at all three assets
EXCELLENT PROGRESS WITH GROWTH PROJECTS
#4 Shaft at Macassa, exploration drive from Fosterville to Robbin’s Hill and multiple projects at Detour Lake advancing on schedule
TOTAL MINERAL RESERVES INCREASE 3%
Mineral Reserves at operating costs increased 3% as at December 31, 2020 to 20,118,000 ounces
SIGNIFICANT PROGRESS WITH ESG INITIATIVES
Multiple initiatives aimed at promoting responsible environmental management, equality and diversity, safety and community support
Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold commented: “2020 will go down as a year that no one will ever forget. Faced with the challenges of a global pandemic, our team rose to the occasion and effectively responded to the COVID-19 virus with there being no transmission of the virus at any of our sites during the year. At the same time that we were focusing on protecting our people, we also turned in our best year ever, achieving record levels of production, earnings and cash flows and meeting all of our consolidated FY 2020 guidance. In Q4 2020, we had our best quarter of the year, achieving record quarterly production and earnings, with all three operations reaching their highest production levels of 2020. Obviously, the high gold price environment was a key factor for both the full year and Q4, but so was the hard work of a lot of people at our company.

“In addition to record results, we also achieved a number of other important milestones in 2020. We completed the acquisition of Detour Gold Corporation on January 31, 2020, with Detour Lake contributing over 40% of our free cash flow for the year and significant production growth expected at the mine in 2021. We also achieved encouraging exploration results at all three of our cornerstone assets and made excellent progress with our key growth projects. Very importantly, we returned $848.3 million to shareholders through share repurchases and dividend payments, and in early January achieved our goal of repurchasing 20 million shares over a 12-to-24 month period. When we look at the quality of our assets, the progress being achieved and the tremendous upside that remains to be realized, we believe that the value creation potential for our company remains industry leading.”

Summary of Performance

FY 2020 (? indicates growth from FY 2019)

Effective response to COVID-19, including introducing extensive health and safety protocols, reducing or suspending operations and/or work when required, and using remote work wherever possible; Nine workers (employees or contractors) tested positive for COVID-19 during FY 2020; In each case public health agencies determined that the infection was due to community spread and there was no transmission of COVID-19 at the Company’s operations with people coming in close contact with the infected workers all testing negative.
Record net earnings of $787.7 million or $2.91 per share (9% ?); Adjusted net earnings(1) of $922.9 million or $3.41 per share (24% ?).
Record cash flows including net cash provided by operating activities of $1,315.8 million (43%?) and free cash flow(1) of $733.1 million (58% ?).
Revenue growth of 78%, to $2,460.1 million, with a 42% increase in gold sales, to 1,388,944 ounces, contributing $575 million of the increase and a $367 per ounce or 26% improvement in the average realized gold price(1), to $1,772 per ounce, adding an additional $509 million to revenue growth in FY 2020.
Cash increased 20% during FY 2020 to $847.6 million at December 31, 2020 with no debt.
$848.3 million returned to shareholders with $732.4 million used to repurchase 18,925,900 shares through the Company’s normal course issuer bid (“NCIB”) and $115.9 million paid in dividends with two increases to the quarterly dividend during FY 2020.
Strong operating results – Consolidated guidance achieved:
° Production of 1,369,652 ounces (41% ?) (FY 2020 guidance: 1.35 – 1.40 million ounces)

° Production costs of $587.3 million vs $281.0 million in FY 2019 ($356.1 million at Detour Lake in FY 2020)

° Operating cash costs per ounce sold (1) of $404 ($264 excluding Detour Lake) versus $284 in FY 2019 (FY 2020 guidance: $410 – $430)

° All-in sustaining costs (“AISC”) per ounce sold (1) of $800 ($566 excluding Detour Lake) versus $564 in FY 2019 (FY 2020 guidance: $790 – $810).

Acquired Detour Lake Mine on January 31, 2020 with Detour Lake making a substantial contribution to FY 2020 results, including $308.0(2) million of free cash flow(2) (in 11 months), over 40% of the total free cash flow(1) for the year; Subsequent to year-end 2020, permit received to increase throughput to a maximum of 32.8 million tonnes per year.
Continued exploration success with encouraging drilling results achieved at all three of the Company’s cornerstone assets, including at Detour Lake where there is increasing evidence that a much larger and potentially higher-grade deposit may exist than is currently included in Mineral Reserves.
Excellent progress with key growth projects, including the #4 Shaft project at Macassa, the twin exploration drive from Fosterville to Robbin’s Hill and a number of projects at Detour Lake in support of future growth.
Q4 2020

Record net earnings of $232.6 million or $0.86 per share ($169.1 million or $0.81 in Q4 2019, $202.0 million or $0.73 in Q3 2020); Adjusted net earnings(1) of $265.8 million or $0.98 per share ($185.3 million or $0.88 in Q4 2019, $254.0 million $0.92 in Q3 2020).
Strong cash flows including net cash provided by operating activities of $420.9 million (247.1 million in Q4 2019, $431.1 million in Q3 2020) and free cash flow(1) of $232.4 million ($132.8 million in Q4 2019, $275.7 million in Q3 2020).
Revenue increased to $691.5 million, 68% ? vs Q4 2019 and 9% ? from Q3 2020.
Record quarterly production, solid unit cost performance
° Production of 369,434 ounces vs 279,742 ounces in Q4 2019, 339,584 ounces in Q3 2020

° Production costs of $148.3 million vs $71.2 million in Q4 2019, $136.0 million in Q3 2020 (Detour Lake contributed $95.1 million in Q4 2020 and $87.4 million in Q3 2020)

° Operating cash costs per ounce sold (1) of $396 ($245 excluding Detour Lake) versus $255 in Q4 2019 and $406 in Q3 2020 ($245 excluding Detour Lake)

° AISC per ounce sold (1) of $790 ($496 excluding Detour Lake) versus $512 in Q4 2019 and $886 in Q3 2020 ($622 excluding Detour Lake).

$279.5 million returned to shareholders, including $245.3 million used to repurchase 5,727,500 share through the NCIB and $34.2 million used for a quarterly dividend payment on October 14, 2020 to shareholders of record on September 30, 2020; 50% increase to quarterly dividend announced, to US$0.1875 per share, effective the Q4 2020 dividend payment on January 14, 2021 to shareholders of record on December 31, 2020.
(1) See “Non-IFRS Measures” in this press release and on pages 40 – 47 of the MD&A for the three and nine months ended September 30, 2020.
(2) Excludes $60.5 million of transaction and restructuring costs mainly related to Detour Gold acquisition.

Environment, Social and Governance (“ESG”) Progress in FY 2020

During FY 2020, the Company achieved significant advancements with its ESG program, both in terms of performance and reporting. Key milestones achieved during the year are summarized below.

Adopted World Gold Council’s Responsible Gold Mining Principles; Completed Year One External Assurance
Finalized policies and standards on Human Rights, Supplier Code of Conduct and Grievance Resolution
Finalized a gender diversity policy and established an Executive Leadership team to promote diversity, equality and inclusion
Verified that all active tailings facilities meet or exceed all MAC/CDA and ANCOLD guidelines
Received Tom Peters Memorial Mine Reclamation Award in recognition of Detour Lake Mine’s Progressive Reclamation Program aimed at reclaiming 10 hectares of land per year commencing in 2019
Achieved greenhouse gas (“GHG”) emissions well below industry averages, with Macassa continuing to have among the lowest GHG intensity rates in the industry
Macassa purchased five 50-tonne battery-powered underground haul trucks (first in industry), with the first delivered in Q1 2021
Launched donation program to support local health care agencies and community support groups in areas where the Company operates; A$1.0 million donated to support Australian bush fire relief and prevention.
Distribution of production in 2021

On December 10, 2020, the Company announced its full-year 2021 guidance, including production guidance of 1,300,000 – 1,400,000 ounces. The Company also provided guidance on the distribution of production during the year, with production targeted at 600,000 – 650,000 ounces in the first half of the year, and 700,000 – 750,000 ounces during the final six months of FY 2021. Within the first half of the year, production is expected to total 270,000 – 290,000 ounces in Q1 2020 and 330,000 – 360,000 ounces in the second quarter of the year. Based on the weighting of production, as well as the timing for sustaining capital expenditures, AISC per ounce sold are expected to average over $900 in the first six months of the year, and be highest in Q1 2020, improving to approximately $700 during the second half of 2021.

Consolidated Mineral Reserves and Mineral Resources as At December 31, 2020

On February 25, 2021, the Company released Mineral Reserve and Mineral Resource estimates as at December 31, 2020, with the comparison period being December 31, 2019. Mineral Reserve and Mineral Resource estimates are determined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects, issued by the Canadian Securities Administrators ("NI 43-101"). Additional details relating to the Company’s Mineral Reserve and Mineral Resource estimates as at December 30, 2020 are set out below.

The Company’s drilling program for the purpose of replacing Mineral Reserves and Mineral Resources during 2020 was significantly impacted by disruptions related to COVID-19. All drilling was suspended during the second quarter as part of the Company’s COVID-19 response. Drilling resumed later in the quarter and ramped up over the remainder of the year, following strict COVID-19 safety protocols. Of a total of 525,000 metres of drilling planned for the year, approximately 340,000 metres or 65% was completed.

For Kirkland Lake Gold assets as at December 31, 2020, Mineral Reserves were estimated using a long-term gold price of US$1,300/oz (C$1,700/oz; A$1,765/oz). These price assumptions are unchanged from the Mineral Reserve estimates as at December 31, 2019, with the exception of Detour Lake, where Mineral Reserve and Mineral Resource estimates as at December 31, 2019 were calculated using a long-term gold price of US$1,000/oz with an assumed exchange rate of US$1.0:C$1.10. All Mineral Resource estimates are provided exclusive of Mineral Reserves. Comparisons to previous Mineral Reserves and Mineral Resources in this press release are to estimates as at December 31, 2019. For more historical comparisons, Mineral Resource estimates for the Australian operations prior to the mid-year 2017 Mineral Reserve and Mineral Resource estimates for Fosterville, released in June 2017, were calculated inclusive of Mineral Reserves and, therefore, are not directly comparable to the December 31, 2019 and December 31, 2018 estimates. Detailed footnotes for the December 31, 2020 Mineral Reserve and Mineral Resource estimates are provided later in this press release.

Consolidated Mineral Reserves at operating assets as at December 31, 2020 totalled 20,118,000 ounces, after depletion of 1,451,000 ounces, a 3% increase from 19,618,000 ounces as at December 31, 2019. The increase in Mineral Reserves resulted from a 6% increase in Mineral Reserves at Detour Lake Mine mainly due to a lower average cut-off grade. Mineral Reserves at Macassa included 2,282,000 ounces at an average grade of 20.1 g/t, with an additional 86,000 ounces at an average grade of 8.7 g/t located in near-surface zones along the Amalgamated Break. These Mineral Reserves compared to Mineral Reserves as at December 31, 2019 of 2,360,000 ounces at an average grade of 22.1 g/t, with 93,000 ounces of Mineral Reserves in the near-surface zones at an average grade of 10.7 g/t. At Fosterville, Mineral Reserves as at December 31, 2020 totalled 1,790,000 ounces at an average grade of 15.4 g/t, with there being an additional 180,000 ounces at 5.3 g/t at Robbin’s Hill. During FY 2020, a total of 647,000 ounces were depleted at an average grade of approximately 33.0 g/t. The mine replaced 337,000 ounces of the depleted ounces despite completing approximately 52% of the planned drilling program during the year. The Company’s December 31, 2020 Mineral Reserve estimate does not include Mineral Reserves from non-operating assets.

CONSOLIDATED MINERAL RESERVE ESTIMATE (EFFECTIVE DECEMBER 31, 2020)

https://www.kl.gold/news-and-media/press-release-details/2021/Kirkland-Lake-Gold-Reports-Record-Results-in-Q4--FY-2020/default.aspx