TORONTO, Nov. 03, 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 third quarter (“Q3 2021”) and first nine months (“YTD 2021”) of 2021. The results included record quarterly earnings driven by strong operating results, including record quarterly production and all-in sustaining costs(1) at Detour Lake and continued grade outperformance at Fosterville. The Company also reported solid earnings growth in YTD 2021 compared to the first nine months of 2020 (“YTD 2020”), resulting largely from increased revenue. 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 www.kl.gold. All dollar amounts are in U.S. dollars, unless otherwise noted.

Tony Makuch, President and CEO of Kirkland Lake Gold, commented: “Q3 2021 was a quarter of substantial progress, highlighted by record quarterly earnings, solid year-over-year production growth as well as unit costs significantly better than full-year guidance. We also released encouraging exploration results at all three of our cornerstone assets and remained on track with our key growth projects, including the #4 Shaft project at Macassa. A clear demonstration of the success of our exploration programs came in early September when we announced an increase of 10.1 million ounces in open-pit Measured and Indicated (“M&I”) Mineral Resources at Detour Lake. Tripling the open-pit M&I Mineral Resources is a critical milestone for the operation and is expected to contribute to strong growth in Mineral Reserves as we make further progress towards transforming Detour Lake into one of the world’s largest and most profitable gold mines.

“On September 28, 2021, we announced an agreement to combine in a merger of equals with Agnico Eagle Mines Limited (“Agnico Eagle”). Through this transaction, we will create a new leader in the gold mining industry, with the lowest unit costs, best risk profile, leadership in key areas of ESG and an extensive project pipeline to drive future growth. The combined company, to continue under the name Agnico Eagle, will have the financial strength to fund its extensive list of internal growth projects and ESG initiatives, pursue additional external value-creation opportunities, while also continuing to return substantial amounts of capital to shareholders. The new Agnico Eagle will warrant a premium valuation, given its increased scale, low-cost and low-risk operations and superior financial performance and strength, and will be ideally positioned to generate superior long-term returns for shareholders going forward.”

RECORD NET EARNINGS AND EPS IN Q3 2021
Net earnings of $254.9M ($0.96/share), 26% increase from Q3 2020, 4% higher than Q2 2021; Adjusted EPS(1)of $241.3M ($0.91/share) in Q3 2021

SOLID PRODUCTION GROWTH FROM Q3 2020
370,101 oz in Q3 2021, up 9% from Q3 2020, similar to record production of 379,195 oz in Q2 2021

STRONG UNIT-COST PERFORMANCE IN Q3 2021
Op. cash costs(1) of 438/oz sold, AISC(1) of $740/oz

ON TRACK TO ACHIEVE FY 2021 GUIDANCE
Company targeting top half of production guidance (1.3 – 1.4M oz); On track to achieve op. cash costs/oz(1) guidance ($450 – $475/oz) and AISC per/oz(1) guidance ($790 – $810/oz)

STRONG CASH FLOW GENERATION IN Q3 2021
Op. cash flow of $323.0M ($861.7M YTD 2021) with free cash flow(1) of $141.8M ($315.7M YTD 2021)

RETURNED $333.9M TO SHAREHOLDERS (YTD 2021)
$183.6M used to repurchase 4,466,200 shares, $150.4M paid in dividends; $333.9M equates to $1.28/share and $317/oz produced

SIGNIFICANT EXPLORATION SUCCESS ACHIEVED
Results at all three cornerstone assets highlight potential for continued growth in Mineral Reserves

10.1M OZ INCREASE IN OPEN-PIT M&I MINERAL RESOURCES AT DETOUR LAKE
Open-pit M&I Mineral Resources tripled to 14,718,000 oz (572.0M tonnes @ 0.80 g/t); increase in Mineral Resources expected to drive strong growth in Mineral Reserves

PROGRESS WITH ESG INITIATIVES
Additional investments made in support of local communities; further progress achieved towards net-zero emissions by 2050 or earlier
STRONG TRACK RECORD FOR RETURNING CAPITAL TO SHAREHOLDERS

In YTD 2021, the Company continued its strong track record for returning capital to shareholders, returning a total of $333.9 million, representing $1.28 per share and $317 per ounce produced in YTD 2021. Of the $339.9 million returned, $183.6 million of cash was used for the repurchase of 4,466,200 shares through the Company’s normal course issuer bid (“NCIB”) (of which 3,392,100 shares were repurchased for $137.2 million through the Automatic Share Purchase Plan (“ASPP”)). An additional $150.4 million of cash was used for three quarterly dividend payments, each totalling $0.1875 per share, with the Q2 2021 dividend paid on July 14, 2021 to shareholders of record on June 30, 2021.

With the addition of share repurchases and dividend payments in YTD 2021, the Company has now returned a total of $1.36 billion to shareholders since the Company first introduced its NCIB in May 2017 and dividend policy in March 2017. Of this amount, $1.05 billion has been used to repurchase 31.5 million shares, while $315.2 million has been used to make 17 quarterly dividend payments, with the quarterly dividend having been increased seven times. In addition, since the middle of 2016, the Company has repaid or converted $190.4 million of debt, including repaying $98.6 million of debt held by Detour Gold Corporation shortly after its acquisition on January 31, 2020 and used $30.3 million to close out Detour Gold’s hedge positions relating to forward gold sales as well as hedges on currencies and diesel fuel. A substantial return was earned on the $30.3 million used to close out the hedge positions in 2020 given changes in gold and commodity prices and exchange rates during the year. The Company also repurchased a Net Smelter Return royalty at Macassa for $36.0 million. In aggregate, these uses of capital have provided over $1.60 billion of value to shareholders since the middle of 2016 at the same time that the Company has established one of the industry’s strongest and cleanest balance sheets, with cash at September 30, 2021 of $822.4 million and no debt.

SUMMARY OF PERFORMANCE

Q3 2021

Net earnings totalled a record $254.9 million ($0.96 per share), a 26% increase from $202.0 million ($0.73 per share) in Q3 2020 and 4% higher than the previous quarterly record of $244.2 million ($0.91 per share) in Q2 2021; Adjusted net earnings(1) totalled $241.3 million ($0.91 per share) compared to $254.0 million ($0.92 per share) in Q3 2020 and $246.9 million ($0.92 per share) the previous quarter.
Cash flows included net cash provided by operating activities of $323.0 million and free cash flow(1) of $141.8 million.
Revenue of $667.0 million, 5% increase from Q3 2020 and 1% higher than $662.7 million the previous quarter; Revenue of $667.0 million reflected gold sales of 372,100 ounces and an average realized gold price(1) of $1,791 per ounce.
EBITDA ( 1)(2) of $451.6 million, 18% higher than $384.3 million in Q3 2020 and unchanged from $451.3 million in Q2 2021.
Capital expenditures totalled $157.9 million (excluding capitalized exploration expenditures), with sustaining capital expenditures(1) accounting for $69.4 million and growth capital expenditures(1) totalling $88.5 million.
Exploration expenditures totalled $39.4 million in Q3 2021, including $31.5 million of capitalized expenditures and $7.9 million of expensed exploration expenditures.
Committed to returning capital to shareholders: $175.3 million returned to shareholders during Q3 2021 through share repurchases and dividend payments; 3,092,100 shares repurchased for $125.3 million through the Automatic Share Purchase Plan (“ASPP”), with $50.0 million being paid for the Q2 2021 quarterly dividend, paid on July 14, 2021 to shareholders of record on June 30, 2021; ASPP suspended on September 29, 2021 following the announcement of the Company’s planned merger of equals with Agnico Eagle.
Solid operating results
Production 370,101 ounces compared to 339,584 ounces in Q3 2020 and quarterly record production of 379,195 ounces the previous quarter
Production costs of $164.6 million
Operating cash costs per ounce sold ( 1) of $438 compared to $406 in Q3 2020 and $431 in Q2 2021
AISC per ounce sold ( 1) of $740, 16% improvement from $886 in Q3 2020 and 5% better than $780 the previous quarter.
(1) See “Non-IFRS Measures” in this press release and on pages 37 – 44 of the MD&A for the three and nine months ended September 30, 2021.
(2) Refers to Earnings before Interest, Taxes, Depreciation, and Amortization.

YTD 2021

Net earnings totalled $660.3 million ($2.48 per share), a 19% increase from $555.1 million ($2.06 per share) in YTD 2020; Adjusted net earnings(1) of $656.0 million ($2.46 per share) versus $657.1 million ($2.43 per share) in YTD 2020.
Cash flows included net cash provided by operating activities of $861.7 million and free cash flow(1) of $315.7 million.
Revenue of $1,881.6 million, an increase of $113.0 million or 6% from $1,768.6 million in YTD 2020; Revenue of $1,881.6 million reflected gold sales of 1,044,704 ounces and an average realized gold price(1) of $1,798 per ounce.
EBITDA ( 1)(2) of $1,243.8 million, 15% higher than $1,085.5 million in YTD 2020.
Capital expenditures of $428.6 million (excluding capitalized exploration expenditures), with sustaining capital expenditures(1) accounting for $211.2 million and growth capital expenditures(1) totalling $217.3 million.
Exploration expenditures totalled $127.5 million, including $107.1 million of capitalized expenditures and $20.4 million of expensed exploration expenditures.
Solid YTD 2021 operating results versus full-year 2021 guidance
Production 1,052,143 ounces, a 5% increase from YTD 2020 (Full-year 2021 guidance: 1,300,000 – 1,400,000 ounces).
Production costs of $494.4 million
Operating cash costs per ounce sold ( 1) of $466 compared to $407 in YTD 2020 (Full-year 2021 guidance: $450 – $475 per ounce sold)
AISC per ounce sold ( 1) of $785 versus $804 in YTD 2020 (Full-year 2021 guidance: $790 – $810 per ounce sold).
(1) See “Non-IFRS Measures” in this press release and on pages 37 – 44 of the MD&A for the three and nine months ended September 30, 2021.
(2) Refers to Earnings before Interest, Taxes, Depreciation, and Amortization.

Q3 2021 – Other Key Highlights

Significant exploration success at all three of its cornerstone assets


Detour Lake: New drill results provided additional evidence of a broad and continuous corridor of mineralization extending from the Main Pit through the Saddle Zone to the planned West Pit to a depth of at least 800 metres.

Macassa: New drill results highlighted the potential to add significant new Mineral Reserves and Mineral Resources in the South Mine Complex (“SMC”), with high-grade intersections reported outside of the existing deposit to the east, south and north, as well as up and down dip; The new results also included high-grade intersections in the area where the SMC merges with the Amalgamated Break, as well as the identification of potential new high-grade lenses to the southeast and in the footwall of the main SMC structure.

Fosterville: New exploration results demonstrated the substantial potential to discover new high-grade mineralized areas and extensions; The results included the intersection of high-grade quartz with visible gold (“VG”) down-plunge of the Swan Zone up to 500 metres from existing Mineral Reserves in the Lower Phoenix system, as well as at Cygnet 150 metres footwall to Swan Zone, and 1,000 metres down-plunge of existing Mineral Reserves at Robbin’s Hill.
10.1-million-ounce increase in Measured and Indicated (“M&I”) Mineral Resources at Detour Lake*: Open-pit, M&I Mineral Resources at Detour Lake increased 10,061,000 ounces or 216% to 14,718,000 ounces as at July 26, 2021 (572.0 million tonnes at average grade of 0.80 g/t) as part of a Mid-Year 2021 Mineral Resource update; New open-pit M&I Mineral Resource estimates include 12,214,000 ounces (386.5 million tonnes at an average grade of 0.98 g/t) at a cut-off grade of 0.50 g/t, with an additional 2,505,000 ounces (185.5 million tonnes at an average grade of 0.42 g/t) of low-grade Mineral Resources at a cut-off grade of 0.35 g/t/; The significant increase in Mineral Resources is expected to drive solid growth in Mineral Reserves as part of the December 31, 2021 Mineral Reserve and Mineral Resource statement to be released in the first quarter of 2022.
* Readers are referred to the Company’s Press Release dated September 2, 2021 and the Company’s NI 43-101 Technical Report entitled “Detour Lake Operation, Ontario, Canada, NI 43-101 Report” effective as of July 26, 2021 as filed with the applicable regulatory authorities and the detailed Mineral Reserve and Mineral Resource estimates and footnotes set out therein.

MERGER OF EQUALS AGREEMENT WITH AGNICO EAGLE MINES LIMITED

On September 28, 2021, Kirkland Lake Gold and Agnico Eagle announced that the two companies had entered into an agreement to combine in a merger of equals (the “Merger”), with the combined company to continue under the name Agnico Eagle Mines Limited. The Merger is expected to create an industry leader among senior gold producers with low unit costs, high margins, the most favourable risk profile and industry-leading best practices in key areas of environmental, social and governance (“ESG”). Upon closing of the Merger, the new Agnico Eagle is expected to have $2.3 billion of available liquidity, a mineral reserve base of 48 million ounces of gold (969 million tonnes at 1.53 grams per tonne), which has doubled over the last 10 years, and an extensive pipeline of development and exploration projects to drive sustainable, low-risk growth.

The Merger will result in consolidation within one of the world’s leading gold regions, the Abitibi-Greenstone Belts of northeastern Ontario and northwestern Quebec, which will provide the new Agnico Eagle with significant value creation opportunities through synergies and other business improvement initiatives. Additionally, the Company will be uniquely established as the only gold producer in Nunavut and will also be well positioned internationally with profitable and prospective assets in Australia, Finland, and Mexico.

The combination of Agnico Eagle and Kirkland Lake Gold brings together two leading producers in growing per share value in key metrics such as production, mineral reserves, cash flow and net asset value. Both companies also share a strong commitment to returning capital to shareholders, with a total of $1.6 billion being returned through dividend payments and share repurchases since the beginning of 2020 (on a pro forma basis).

The Merger will be effected by way of a plan of arrangement (the “Arrangement”). At closing, all Kirkland Lake Gold common shares will be exchanged for the 0.7935 of an Agnico Eagle common share, for each Kirkland Lake Gold common share held, with existing Agnico Eagle and Kirkland Lake Gold shareholders expected to own approximately 54% and 46% of the combined company, respectively. The joint management information circular dated October 29, 2021 has been posted to the Company’s website and filed on its profile on SEDAR. The Arrangement will require the approval of at least 66 2/3% of the votes cast by the shareholders of Kirkland Lake Gold voting at a special meeting of shareholders on November 26, 2021. The issuance of shares by Agnico Eagle under the Merger is subject to the approval of a simple majority of votes cast by Agnico Eagle shareholders at a special meeting of shareholders, also to be held on November 26, 2021.

Canadian Competition Act approval was received on October 4, 2021. Additionally, Agnico Eagle and Kirkland Lake Gold have received relief from the Australian Securities and Investments Commission from compliance with the prospectus and secondary sale requirements of Part 6D.2 and Part 6D.3 of the Australian Corporations Act. The Merger is also subject to other closing conditions customary in transactions of this nature, including receipt of Foreign Acquisitions and Takeovers Act 1975 (Cth) (Australia), Ontario court approval and applicable stock exchange approvals. Subject to shareholder approval and the satisfaction of all other conditions, the Merger is expected to close either in December 2021 or in the first quarter of 2022.

REVIEW OF FINANCIAL AND OPERATING PERFORMANCE

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