Kirkland Lake Gold Reports Strong Earnings and Cash Flow in Q3 2018, Improves 2018 Production and Unit Cost Guidance

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Overig advies 31/10/2018 06:59
TORONTO, Oct. 30, 2018 (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 third quarter (“Q3 2018”) and first nine months (“YTD 2018”) of 2018. During Q3 2018, the Company achieved strong growth in revenue, net earnings and cash flow compared to the third quarter of 2017 (“Q3 2017”), and made significant progress with its key growth projects. The Company also announced today revisions to full-year 2018 guidance, including improved consolidated guidance for full-year 2018 production of 655,000 – 670,000 ounces, operating cash costs per ounce sold of $385 – $410 and all-in sustaining cost (“AISC”) per ounce sold of $735 – $760. The Company’s full financial statements and management discussion & analysis are available on SEDAR at and on the Company’s website at All dollar amounts are in U.S. dollars, unless otherwise noted.

Key highlights of Q3 2018 results include:

Strong year-over-year earnings growth: Net earnings totaled $55.9 million ($0.27 per basic share “/share”), while adjusted net earnings1 were $60.6 million ($0.29/share). (Adjusted net earnings exclude non-cash, mark-to-market loss related to fair valuing warrants.) Net earnings in Q3 2018 increased 28% from $43.7 million ($0.21/share) in Q3 2017 and compared to $61.5 million ($0.29/share) the previous quarter.

Increased free cash flow:1 Free cash flow of $52.2 million increased 41% from $37.1 million in Q3 2017 and compared to $60.7 million in Q2 2018.

Record quarterly cash flow from operations: Record cash provided by operating activities2 of $128.4 million, 77% increase from $72.4 million in Q3 2017 and 6% higher than $120.9 million the previous quarter.

Record gold sales drive revenue growth: ?Revenue totaled $222.7 million, 26% increase from $176.7 in Q3 2017 and 4% higher than $214.7 million in Q2 2018, reflecting record gold sales of 184,517 ounces, which more than offset reductions of $78/ounce and $97/ounce in the average realized gold price versus Q3 2017 and Q2 2018, respectively.

Solid year-over-year increase in EBITDA: 1,2,3 EBITDA of $119.6 million, 20% increase from $99.7 million in Q3 2017 and compared to record EBITDA of $123.7 million in Q2 2018.

Record low unit costs: ?Production costs totaled $64.9 million in Q3 2018. Operating cash costs per ounce sold1 averaged $351, a 27% improvement from $482 in Q3 2017 and 13% better than $404 in Q2 2018. AISC per ounce sold1 averaged $645, 24% better than $845 in Q3 2017 and 15% improvement from $757 the previous quarter.

Growth projects ramp up: Growth capital expenditures totaled $33.2 million, excluding capitalized exploration expenditures, compared to $7.5 million in Q3 2017 and $11.1 million the previous quarter. Of total growth capital expenditures, $21.5 million were incurred at Macassa, where work on the #4 Shaft project included shaft collaring and advancing hoist and headframe construction.

Continued exploration success: Exploration expenditures totaled $25.6 million ($69.5 million for YTD 2018), including capitalized exploration expenditures. Recent exploration results include exceptionally high-grade intersections from drilling in the Swan Zone at Fosterville and the South Mine Complex at Macassa, highlighting the potential for continued growth in Mineral Reserves and Mineral Resources.

Cash at September 30, 2018 of $257.2 million, 11% increase from $231.6 million at December 31, 2017.

Quarterly dividend increased on May 2, 2018 to C$0.03/share effective the second quarter 2018 quarterly dividend payment, paid on July 13, 2018, Q3 2018 quarterly dividend payment paid October 12, 2018.

1. See “Non-IFRS Measures” later in this press release and starting on page 35 of the Company’s MD&A for the three and nine months ended September 30, 2018.
2. Of continuing operations.
3. Refers to Earnings before Interest, Taxes, Depreciation , and Amortization .

Key highlights of YTD 2018 results include:

Record nine-month financial results:

o Net earnings of $167.4 million ($0.79/share), 83% increase from $91.4 million ($0.44/share) for YTD 2017

o Adjusted net earnings of $176.6 million ($0.84/share), 92% increase from $92.0 million ($0.44/share) for YTD 2017

o Net cash provided by operating activities of $338.9 million, 56% growth from $217.7 million for YTD 2017

o Free cash flow totaling $163.1 million, 29% higher than $126.8 million for YTD 2017

o Revenue of $635.6 million, 19% growth from YTD 2017, reflecting both higher sales and gold prices

o EBITDA of $343.9 million, 31% increase from $261.7 million for YTD 2017.

Strong consolidated YTD production and unit-cost performance leads to improved full-year 2018 guidance

o YTD 2018 production of 492,484 ounces, 15% increase from YTD 2017

o Operating cash cost per ounce sold averaged $397, 22% improvement from YTD 2017

o AISC per ounce sold averaged $738, 9% improvement from same period in YTD 2017

o Improvements to full-year 2018 guidance for consolidated production and unit costs were announced today and are listed below. Additional revisions to full-year 2018 guidance are reviewed in the section, “Revisions to Full-Year 2018 Guidance,” later in this press release.

•Consolidated production guidance increased to 655,000 – 670,000 ounces from over 635,000 ounces
•Operating cash cost per ounce sold guidance improved to $385 to $410, from $400 – $425
•Consolidated AISC per ounce sold guidance improved to $735 – $760 from $750 – $800.

Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented: “During Q3 2018, our team turned in a strong performance and our mines continued to show their quality and ability to generate profitability and cash flow. Based on our performance year to date, we have been able to announce significant improvements to our 2018 consolidated production and unit cost guidance for a second time during the year. In addition, Q3 2018 provided a clear demonstration of our company’s ability to internally fund the growth projects needed to reach our goal of a million ounces per year of production. We generated over $50 million of free cash flow during the quarter at the same time that gold prices declined and we ramped up growth capital expenditures. At Macassa, work on our #4 shaft project included sinking the shaft collar and completing the headframe foundation in preparation for the concrete work to establish the 215-foot headframe, which commenced in early October and was completed later in the month. We remain on track to commence full-face shaft sinking of the #4 shaft by the second quarter of next year. We also advanced the ventilation, paste-fill plant and water treatment projects at Fosterville during Q3 2018, which resulted in higher growth capital expenditures compared to the previous quarter. In addition, we installed and commissioned a new gravity circuit at the Fosterville Mill during Q3 2018 and have since seen our recovery of gravity gold increase to well over 50% of total ounces produced.

“Entering the fourth quarter, we are positioned for a strong finish to 2018. Our operations are poised to deliver another quarter of solid production, cost and financial results. We will also continue our exploration programs and anticipate releasing additional drill results before year end, building on the encouraging results we have already announced from Fosterville, Macassa, the Northern Territory and Taylor. While still finalizing our budgets, we can look ahead to 2019 as another year of strong results and progress, including higher levels of production, continued low unit costs and solid financial performance. We also expect additional growth in Mineral Reserves and Mineral Resources, particularly at Fosterville, and will continue to accelerate progress with our growth projects.”

Q3 2018 production of 180,155 ounces was a quarterly record, increasing 30% from 139,091 ounces in Q3 2017 and 9% from 164,685 ounces in Q2 2018. The increase in production was driven by Fosterville, which produced a record 90,618 ounces in Q3 2018, based on processing 113,101 tonnes at an average grade of 25.6 gram per tonne and average mill recoveries of 97.5%. Q3 2018 production increased 47% from 61,535 ounces in Q3 2017 and 17% from 77,462 ounces in Q2 2018. In early August 2018, a second gravity circuit was commissioned at Fosterville, which resulted in a spike in the flotation concentrate grade reflecting the recovery of coarse-grain gold from low velocity zones of the grinding circuit. Production from the Company’s Canadian operations in Q3 2018 was a record 89,537 ounces. Macassa produced 55,582 ounces, a 15% increase from 48,206 ounces in Q3 2017 and compared to record quarterly production of 60,571 ounces the previous quarter. Holt and Taylor produced 20,609 ounces and 13,333 ounces, respectively, in Q3 2018, representing increases of 21% and 20% from Q3 2017 and 50% and 3%, respectively, from Q2 2018.

Review of Financial and Operating Performance

The following discussion provides key summarized consolidated financial and operating information for the three and nine months ended September 30, 2018 and 2017. Results for the three and nine months ended September 30, 2017 include production and costs related to the Northern Territory operations in Australia, which were placed on care and maintenance effective June 30, 2017. Also, results for Q3 and YTD 2017 have been restated to exclude discontinued operations, related to the sale of the Stawell Mine.

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