TORONTO, Feb. 21, 2019 (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 2018”) and full-year (“2018”) 2018. For both periods, the Company achieved record levels of earnings and cash flows, driven by strong production growth and its best ever quarterly and annual unit-cost performance. The Company’s full consolidated financial statements and management discussion & analysis are available on SEDAR at www.sedar.com and on the Company’s website at www.klgold.com. All dollar amounts are in U.S. dollars, unless otherwise noted.

Key highlights of Q4 2018 results include:
• Strong earnings growth: Net earnings of $106.5 million ($0.51 per basic share) increased 160% from Q4 2017 and 91% from third quarter 2018 (“Q3 2018”); adjusted net earnings1 of $109.6 million ($0.52/share), 73% growth from Q4 2017 and 79% increase from Q3 2018

• Operating cash flow more than doubles: Net cash provided by operating activities3 of $204.1 million, 113% growth from Q4 2017 and 59% higher than $128.4 million in Q3 2018

• Free cash flow1 increases 69%: Free cash flow of $86.4 million, 69% increase from Q4 2017 and 66% higher than previous quarter

• Revenue growth driven by record gold sales: Revenue of $280.3 million, 32% increase from Q4 2017 and 26% higher than Q3 2018; record gold sales of 225,692 ounces, 36% higher than Q4 2017 and 22% increase from previous quarter

• Significant growth in EBITDA1,2,3: EBITDA of $187.8 million, 97% higher than Q4 2017 and 57% increase from Q3 2018

• Record operating results
-Production of 231,217 ounces, 39% increase from Q4 2017 and 28% higher than previous quarterly record of 180,155 ounces in Q3 2018

- Production costs of $64.6 million versus $68.3 million in Q4 2017 and $64.9 million in Q3 2018

- Operating cash costs per ounce sold1 averaged $286, 31% improvement from Q4 2017 and 19% better than previous quarter

- AISC per ounce sold1 averaged $567, 31% better than Q4 2017 and 12% improvement from Q3 2018

• Cash at December 31, 2018 of $332.2 million, 43% increase from $231.6 million at December 31, 2017, and 29% higher than $257.2 million at September 30, 2018.

Key highlights of 2018 results include:
• Record full-year financial results

1. Net earnings of $273.9 million ($1.30/share), 107% increase from $132.4 million ($0.64/share) in 2017

2. Adjusted net earnings of $287.2 million ($1.36/share), 93% higher than $149.1 million ($0.72/share) in 2017

3. Net cash provided by operating activities of $543.1 million, 73% growth from $313.6 million in 2017

4. Free cash flow totaling $249.5 million, 40% higher than $178.0 million in 2017

5. Revenue of $915.9 million, 23% growth from $747.5 million in 2017

6. EBITDA of $531.6 million, 49% increase from $356.9 million in 2017.

1. See “Non-IFRS Measures” later in this press release and on page 41 of the MD&A for the three and twelve months ended December 31, 2018.
2. Refers to Earnings before Interest, Taxes, Depreciation, and Amortization.
3. Of continuing operations.

• Record full-year operating results beat 2018 guidance
- Production of 723,701 ounces, 21% increase from 2017 (2018 Guidance: over 670,000 ounces)
- Operating cash cost per ounce sold of $362, 25% improvement from 2017 (2018 Guidance: $385 – $410)
- AISC per ounce sold of $685, 16% improvement from 2017 (2018 Guidance: $735 – $760)

• Strong focus on shareholder returns in 2018
- Common share price increased 85% (on TSX), to C$35.60 per share at December 31, 2018
- Quarterly dividend increased twice, to C$0.03 per share (from $0.02 per share) for second quarter 2018 dividend, paid on July 13, 2018, and to C$0.04 per share for Q4 2018 dividend, paid on January 11, 2019
- Repurchased 1.6 million common shares through Normal Course Issuer Bid (“NCIB”) at an average price of $18.79 (C$24.54) per share for a total cost of $30.8 (C$40.3) million.

Improvements to Guidance

The Company announced earlier today improvements in both production and cost guidance as follows:
•2019: Improved to 920,000 – 1,000,000 ounces from 740,000 – 800,000 ounces
•2020: Improved to 930,000 –1,010,000 ounces from 850,000 – 910,000 ounces
•2021: Improved to 995,000 – 1,055,000 ounces from 970,000 – 1,005,000 ounces.

The revision to consolidated production guidance largely resulted from an increase in production guidance for Fosterville in 2019 and 2020 to 550,000 – 610,000 ounces from 390,000 – 430,000 ounces and 500,000 – 540,000 ounces, respectively. The improvements result from changes to the mine plan to provide access to high-grade Swan Zone stopes earlier than previously expected, as well as the impact of increased average grades at the mine included in the December 31, 2018 Mineral Reserve and Mineral Resource estimates. Also contributing to the increase in consolidated production guidance was the decision to resume operations at the Holloway mine, which is expected to contribute approximately 20,000 ounces of production in 2019, increasing to approximately 50,000 ounces in 2021.

A number of other components of the Company’s full-year 2019 guidance were revised as a result of the increase in target production. Operating cash costs per ounces sold in 2019 are now targeted at $300 –$320 compared to $360 - $380 previously. Fosterville’s operating cash costs per ounce sold guidance is revised to $170 – $190 from $200 – $220. New full-year 2019 guidance for operating cash costs per ounces sold at Holloway is introduced at $760 – $780 as a result of the restart of operations at the mine. Full-year 2019 operating cash costs on a consolidated basis is revised to $290 – $300 from $270 – $280 to reflect the addition of close to $20 million of operating cash costs related to production at the Holloway mine. AISC per ounce sold guidance for full-year 2019 is also improved, to $520 – $560 compared to $630 – $680 in the initial guidance released on December 11, 2018. The significant improvement in AISC per ounce guidance mainly reflects the increase in target production at Fosterville.

Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented: “2018 was a year when Kirkland Lake Gold clearly established itself as one of the most profitable companies in our industry, driven by strong production growth and very low unit operating costs. We also demonstrated an ability to generate substantial amounts of operating and free cash flow, which resulted in a rapid buildup in our cash position. Very importantly, we can see that the best is yet come. Based on recent revisions to our business plan, we expect to reach around one million ounces of annual gold production starting this year, with the value of each ounce increasing as unit costs show further improvement and margins increase. It is important to emphasize that we remain well positioned to achieve additional growth beyond our three-year outlook through the completion of the Macassa #4 shaft and through other opportunities, such as the potential to resume operations in the Northern Territory and to increase output from our Holt Complex. We have previously talked about reaching one billion dollars of cash by the end of 2021. We now believe that, at current gold prices and assuming existing business plans, we could reach that milestone sooner.

“Looking at Q4 2018, we achieved record quarterly revenue, earnings and cash flows. Production for the quarter was also a record, totaling 231,217 ounces, which compared to the previous high of 181,155 ounces in Q3 2018, and our lowest ever unit-cost performance. Fosterville had its best quarter since the underground mine opened, by a wide margin, with an average grade of just under 40 grams per tonne. Fosterville has clearly emerged as one of the world’s greatest gold mines, one that we believe is not yet close to reaching its full potential. Also contributing to our strong fourth quarter was record production at Macassa, where the average grade reached over 25 grams per tonne based largely on favourable grade reconciliations. We also had record production at Taylor, where the average grade reached 6.1 grams per tonne, the highest quarterly average grade for the year. Looking to 2019, all of our mines are off to a good start and performing well, which supports our view that Kirkland Lake Gold is headed for another year of strong earnings, cash flow and cash accumulation.”

Review of Financial and Operating Performance

The following discussion provides key summarized consolidated financial and operating information for the three and twelve months ended December 31, 2018 and 2017. Results for the twelve months ended December 31, 2017 include production and costs related to the Northern Territory operations in Australia, which were placed on care and maintenance effective June 30, 2017.

Table 1. Financial Highlights
(in thousands of dollars, except per
share amounts) Three Months Ended
December 31, 2018 Three Months Ended December 31, 2017(1) Year Ended
December 31, 2018 Year Ended December 31, 2017
Revenue $280,320 $212,364 $915,911 $747,495
Production costs 64,604 68,283 267,432 288,315
Earnings before income taxes 149,336 46,088 394,310 196,079
Loss from discontinued operations — 17,154 — 24,904
Net earnings $106,535 $40,980 $273,943 $132,426
Basic earnings per share from continuing operations $0.51 $0.28 $1.30 $0.76
Basic earnings per share $0.51 $0.20 $1.30 $0.64
Diluted earnings per share $0.50 $0.20 $1.29 $0.63
Cash flow from operating activities of continuing operations $204,144 $95,907 $543,076 $313,612
Cash investment on mine development and PE $117,712 $44,746 $293,590 $135,640

1. To reflect the sale of Stawell in December 2017 as a discontinued operation.

Table 2. Operating Highlights

Three Months Ended
December 31, 2018 Three Months Ended December 31, 2017(1) Year Ended
December 31, 2018 Year Ended December 31, 2017
Tonnes milled 412,260 454,897 1,671,401 1,974,093
Grade (g/t Au) 17.8 11.8 13.9 9.8
Recovery (%) 97.8 % 96.3 % 96.9 % 95.7 %
Gold produced (oz) 231,217 166,579 723,701 596,405
Gold Sold (oz) 225,692 165,715 722,277 592,674
Averaged realized price ($/oz sold)(2) $1,237 $1,278 $1,263 $1,261
Operating cash costs per ounce ($/oz
sold)(2) $286 $412 $362 $481
AISC ($/oz sold)(2) $567 $816 $685 $812
Adjusted net earnings from continuing
operations(2) $109,611 $63,403 $287,162 $149,133
Adjusted net earnings per share from
continuing operations(2) $0.52 $0.31 $1.36 $0.72
1. To reflect the sale of Stawell in December 2017 as a discontinued operation.
2. Non-IFRS - the definition and reconciliation of these Non-IFRS measures are included on pages 41 - 47 of the MD&A for the three and twelve months ended December 31, 2018

Revenue

Revenue for 2018 totaled $915.9 million, an increase of $168.4 million or 23% from $747.5 million for the same period in 2017. The $168.4 million increase in revenue in 2018 was almost entirely related to a $163.4 million favourable impact from a 22% increase in gold sales, to 722,277 ounces from 592,674 ounces for the same period in 2017. In addition, a $2.0 per ounce or increase in the average realized gold price per ounce, to $1,263 in 2018 versus $1,261 in 2017, increased revenue by $1.4 million in 2018 versus 2017. The difference in revenue after changes in volume and average realized gold price resulted from functional versus reporting currency. The increase in gold sales in 2018 mainly resulted from strong sales growth at both Fosterville and Macassa. Gold sales at Fosterville totaled 352,094 ounces, a 36% increase from 258,315 ounces in 2017. At Macassa, 2018 gold sales totaled 241,278 ounces, 23% higher than 196,119 ounces in 2017. The increases in gold sales at both Fosterville and Macassa reflected strong production growth at both mines due to significantly higher average grades for 2018 versus 2017.

Revenue in Q4 2018 totaled $280.3 million, an increase of $67.9 million or 32% from $212.4 million in Q4 2017. Compared to Q4 2017, higher gold sales in Q4 2018 increased revenue by $76.7 million, with a total of 225,692 ounces sold in Q4 2018 versus 165,715 ounces being sold in Q4 2017. The increase in gold sales was largely attributable to Fosterville, where ounces sold grew by 49%, to 118,955 ounces from 80,000 ounces in Q4 2017, driven by record quarterly production of 124,307 ounces in Q4 2018. Gold sales at Macassa increased 34%, to 71,087 ounces from 52,865 ounces in Q4 2017, while ounces sold at the Taylor increased 23%, to 17,777 ounces in Q4 2018. Gold sales at Holt of 17,212 ounces in Q4 2018 compared to 18,404 ounces for the same period in 2017. Partially offsetting the favourable impact of higher gold sales was a $41 per ounce or 3% decline in the average realized gold price per ounce, to $1,237 in Q4 2018 from $1,278 in Q4 2017, which reduced revenue by $9.3 million in Q4 2018 compared to Q4 2017.

Q4 2018 revenue increased $57.6 million or 26% from $222.7 million in Q3 2018. A 22% increase in gold sales, from 184,517 ounces in Q3 2018 to 225,692 ounces in Q4 2018, had a $49.6 million favourable impact on revenue compared to the previous quarter. In addition, a 3% increase in the average realized gold price per ounce (to $1,237 from $1,204) had a $7.4 million favourable impact on Q4 2018 revenue compared to Q3 2018.

Earnings from Mine Operations

Earnings from mine operations in 2018 totaled $488.3 million, a $199.2 million or 69% increase from $289.1 million in 2017. The increase reflected revenue growth of 23%, as well as lower production costs and depletion and depreciation costs. Lower production costs in 2018 largely reflected the inclusion of $37.4 million of production costs related to the Northern Territory operations 2017. A $14.9 million reduction in depletion and depreciation expense resulted from the increase in Mineral Reserves and Mineral Resources included in the December 31, 2017 Mineral Reserve and Mineral Resource estimates. Royalty costs for YTD 2018 totaled $26.4 million compared to $21.4 million in 2017, with the increase reflecting higher sales volumes in 2018.

Earnings from mine operations in Q4 2018 totaled $170.8 million, an increase of $78.6 million or 85% from $92.3 million in Q4 2017 and $55.5 million or 48% higher than $115.3 million the previous quarter. The increase from the same period in 2017 mainly reflected the $67.9 million increase in revenue in Q4 2018 versus Q4 2017. Production costs in Q4 2018 totaled $64.6 million, compared to production costs of $68.3 million in Q4 2017. The year-over-year reduction mainly related to foreign exchange rate changes between the two periods, reflecting the impact of a stronger US dollar on converting Australian and Canadian dollar denominated costs. Depletion and depreciation costs in Q4 2018 totaled $37.3 million, which compared to $45.6 million in Q4 2017 as the impact of higher gold production was partially offset by a significant increase in the level of Mineral Reserves and Mineral Resources at the Company’s operations following the release of the Company’s December 31, 2017 Mineral Reserve and Mineral Resource estimates on February 20, 2018. Royalty expense in Q4 2018 totaled $7.6 million versus $6.2 million in Q4 2017, with the increase mainly reflecting higher sales volumes. The growth in earnings from mine operations from the previous quarter was entirely related to the $57.6 million increase revenue on a quarter-over-quarter basis.

Unit Cost Performance (See Non-IFRS measures)

see & read more on
https://www.klgold.com/news-and-media/news-releases/press-release-details/2019/Kirkland-Lake-Gold-Reports-Record-Earnings-and-Cash-Flow-in-Q4-and-Full-Year-2018/default.aspx