Kirkland Lake Gold Ltd.
Kirkland Lake Gold Announces Filing of Detour Lake Technical Report, Including New Life-Of-Mine Plan
TORONTO, March 31, 2021 (GLOBE NEWSWIRE) -- Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or the “Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today announced the filing of a technical report (the “ 2021 Detour Lake Technical Report” or the “Report”) for the Company’s Detour Lake Mine, entitled “Detour Lake Operation, Ontario, Canada, NI 43-101 Technical Report.” The Report was prepared in compliance with National Instrument 43-101 – Standards for Disclosure of Mineral Projects (“NI 43-101”) and is effective as at December 31, 2020. The Report is available under Kirkland Lake Gold’s profile on SEDAR at www.sedar.com and on the Company’s website at www.kl.gold. All dollar amounts in this press release are expressed in US dollars, unless otherwise indicated.
The 2021 Detour Lake Technical Report includes a new life-of-mine plan (“2021 LOMP”) that supports the scientific and technical disclosure in the updated Mineral Resource and Mineral Reserve estimates as at December 31, 2020 contained in the Company’s press release dated February 25, 2021. In addition, results published in the Report are consistent with, and confirm, the multi-year production guidance (2021 – 2023) and unit cost and capital expenditure guidance for 2021 included in the Company’s press release dated December 10, 2020. The Report does not include any of the exploration success achieved since the Company acquired Detour Lake Mine on January 31, 2020; nor does it include the full impact of business improvement initiatives undertaken since the acquisition. The results of the Company’s exploration program will be included in a new mine plan to be issued in 2022 (“2022 LOMP”), which the Company expects will lead to significant value enhancement opportunities for the Detour Lake operation.
Under the 2021 LOMP, production is expected to average 680,000 – 720,000 ounces from 2021 – 2024, before increasing to 800,000 ounces in 2025. Production would then decline for three years during a period of increased stripping before reaching over 900,000 ounces beginning in 2032. As the Company continues its exploration drilling and works to factor the significant drilling success it is achieving into the 2022 LOMP, an important objective will be to achieve growth in reserves and changes to the production profile such that there is not a drop off in production after 2025, and to achieve 900,000 ounces of production, or higher, as early in the mine life as possible, leading to further improvements in unit costs and free cash flow.
The Detour Lake Technical Report was prepared by following Kirkland Lake Gold employees, all of whom are qualified persons as defined in NI 43-101, Standards of Disclosure for Mining Projects and in compliance with Form 43-101F1: Mr. Andre Leite, P.Eng, Detour Lake Mine Technical Service Manager; Mr. Jean Francois Dupont, P.Eng, Detour Lake Chief Metallurgist; Dr. Veronika Raizman, P.Geo., Manager, Reclamation & Geochemistry; and Mr. Paul Andrew Fournier, P.Eng, Manager, Cost Accounting.
2021 Detour Lake Technical Report and LOMP
Among the key results included in the 2021 Detour Lake Technical Report and LOMP are the following:
- Significant production growth in first five years compared to previous results driven by a lower strip ratio and expanded levels of mill throughput, with production targeted at 680,000 – 720,000 ounces from 2021 – 2024 and reaching 800,000 ounces in 2025
- Low unit costs in the first five years (2021 – 2025) with operating cash costs per ounce sold(1)(2) averaging US$524 and all-in sustaining costs (“AISC”) per ounce per ounce sold(1)(2) averaging $775
- Long Production Life of 22 years based on 13.8 million ounces of Mineral Reserves (at or above a 0.50 g/t cut-off grade) and 2.0 million ounces of low-grade stockpile Mineral Reserves (below 0.50 g/t cut-off grade) to mainly be processed at the end of the mine life; potential exists for extended life with updated resource model incorporating 2020 and 2021 exploration drilling
- Capital expenditures that support expanded production levels and a long mine life; sustaining capital expenditure estimates based on actual operating experience; growth capital expenditure estimates reflect the impact of multiple new growth projects aimed at maximizing after-tax cash flow over the life of mine and positioning Detour Lake to take advantage of additional growth opportunities once the results of exploration drilling are factored into the mine plan.
(1) See “Non-IFRS Measures” in this press release and in the MD&A for the three and twelve months ended December 31, 2020.
(2) Unit costs determined using a gold price of $1,500/oz and an exchange rate of CAD/USD of 1.31.
Tony Makuch, President and CEO of Kirkland Lake Gold, commented: “The 2021 LOMP represents an important interim report on our progress advancing the Detour Lake Mine, defining a highly profitable operation that is well positioned to benefit from our ongoing exploration success and other value creation opportunities. Based on the new mine plan, Detour Lake is poised to become Canada’s largest gold producer and, with the potential for substantial growth in Mineral Reserves as our drilling programs continue, could very well become one of the largest and most profitable gold mines in the world.
“The 2021 LOMP includes significant production growth and improved unit costs compared to past operating experience. Production growth is driven by higher levels of mill throughput, reflecting increased ore tonnes mined, lower stripping ratios, better ore fragmentation and improved productivity in the mill based on a number of key business improvement initiatives. Sustaining capital estimates, which account for about half of total capital expenditures in the first five years, are based on actual experience over the last several years and extensive engineering work. Growth capital expenditures over this period mainly relate to new growth projects aimed at maximizing returns and positioning the operation to benefit fully from additional value creation opportunities.
“A key factor driving our interest in acquiring Detour Lake Mine was the belief that we could substantially grow Mineral Reserves through extensive drilling. Results to date support our view that there is a large, continuous corridor of mineralization along the Detour Mine Trend that extends from the Main Pit, through the Saddle Zone and continues beyond the West Pit location. With continued drilling success, we anticipate transitioning to a much larger pit design as we grow our Mineral Reserve base leading to further increases in production at better unit costs.”
Key Assumptions
The Economic analysis of the operation was completed using a gold price of US$1,500 per ounce and a CAD$/US$ exchange rate of 1.31. The current gold price provided for Mineral Reserve estimation is US$1,300/oz, with US$ 1,500/oz being used for Mineral Resource estimation. Both Mineral Resource and Mineral Reserve estimates use an exchange rate assumption of CAD/US $1.31. The project start date is January 1, 2021 with mining conducted over a period of 18 years and processing activities extending over 22 years, with the final three years of processing reflecting the milling previously stockpiled low-grade Mineral Reserves.
Review of Operations
During the Life of Mine (“LOM”), a total of 14,499,000 ounces of gold is produced at an average grade of 0.82 g/t and an average recovery rate of 91.9%. The production profile assumes the mining of 593.9 million tonnes of ore with an average strip ratio of 1.90 and an ex-pit ore grade of 0.82 g/t over a period of 18 years, including 1,954,000 ounces of low-grade stockpiled Mineral Reserves, which will mainly be processed over a four year period at the end of the mine life. Over the first five years of operation, starting at January 1, 2021, 3,618,000 ounces of gold are produced in aggregate (an average of 723,600 ounces per year) from processing 132.8 million tonnes at an average grade of 0.92 g/t and at an average recovery rate of 92.0%. A total of 186.4 million tonnes of ore is projected to be mined during this five-year period at an average grade of 0.78 g/t and at an average strip ratio of 2.08.
On a per ounce sold basis, average unit costs over the LOM are expected to include operating cash costs per ounce sold of $619 and AISC per ounce sold of $821. Unit costs in the first five years of the operation are expected to be better than the LOM averages and clearly establish Detour Lake Mine as a low-cost gold mining operation with operating cash costs of $524 and AISC per ounce sold of $775.
Table 1. Operating Summary1
(1) Tonnes and ounces are based on Mineral Reserves and Mineral Resources as at December 31, 2020.
(2) Note: See “Non-IFRS Measures” set out below and as further set out on page 40 of the Company’s MDA for the three and twelve months ended December 31, 2020 for further details.
Figure 1. 2021 LOMP Gold Production
Figure 2. Total Mined Tonnes, Stripping Ratio
Figure 3. Historical & Near-Term Production
(1) For the twelve months ended December 31, 2020; Reduction from 2019 largely related to impact reduced operations and other components of the Company’s COVID-19 response
(2) Included in Company’s production guidance for 2021 (see press release dated December 10, 2020)
Figure 4. Operating Cash Costs Per Ounce Sold
Figure 5. AISC Per Ounce Sold
Figure 6. Operating Cash Costs & AISC Per Ounce Sold Over 2021 LOMP
Review of Economic Analysis
The economic analysis included a discounted cash flow assessment using a gold price of US$1,500 per ounce and a discount rate of 5%. The currency used to calculate cash flow in the 2021 Detour Lake Technical Report is the Canadian dollar. For the purpose of this press release, amounts have been converted to US dollars using an exchange rate of CAD/US 1.31. Operating costs were prepared based on recent operating history and technical assumptions associated with the production profile. Capital expenditures were prepared based on engineering estimates, vendor quotes, maintenance strategies, or estimated long-term requirements based on current asset value. The economic evaluation assumes the continued payment of a 2% net smelter royalty to Franco-Nevada Corporation and the continuation of existing payment obligations to First Nations groups.
As outlined in Table 2 below, the pre-tax cumulative cash flow is estimated at $8,505 million. The post-tax cumulative cash flow is estimated at $6,377 million. At a 5% discount rate, the Net Present Value of pre-tax cash flows is $5,049 million and of post-tax cash flows is $3,792 million.
Over the first five years of the project total pre-tax cumulative cash flow is estimated at $1,602 million, for an average of $320.3 million per year. The post-tax cumulative cash flow is estimated at $1,299 million over the five-year period.
Table 2. Cash Flow Analysis1
Note: See “Non-IFRS Measures” set out below and as further set out on page 40 of the Company’s MDA for the three and twelve months ended December 31, 2020 for further details.
Capital Expenditures
Total capital expenditures for the project $3,621 million over the LOM and $1,510 million from 2021 – 2025, for an average over the first five years of $302.0 million. Contributing to the level of capex in the first five years are a number of key projects, including $65 – $75 million for projects aimed at increasing throughput in the mill to 28 million tonnes per year. Capital expenditures for mining includes equipment replacement, planned component replacements, and capitalized maintenance of 795 haul trucks. Expenditures related to the tailings management areas (“TMA”) include construction of Cell 2 and Cell 3, while G&A costs are largely related to environmental permitting for the West Detour project and the Mine Water Pond.
Figure 7. Capital Expenditures (2021 – 2025)
Mineral Reserves and Mineral Resources
Mineral Reserve estimates included in the 2021 Detour Lake Technical Report and LOMP are as at December 31, 2020 and were previously reported in a press release dated February 25, 2021. Mineral Reserves at Detour Lake as at December 31, 2020 were estimated at 13,821,000 ounces at an average grade of 0.96 g/t at an average cut-off grade at or above 0.50 g/t. In addition, the Company also established low-grade Mineral Reserves of 1,954,000 ounces at an average grade of 0.41 g/t. These Mineral Reserves will mainly be processed at the end of the mine life and, under previous mine planning, would have been mined as waste. Measured and Indicated (“M&I”) Mineral Resources as at December 31, 2020 were estimated at 5,191,000 ounces at an average grade of 1.21 g/t. Inferred Mineral Resources totaled 1,606,000 ounces at an average grade of 0-.94 g/t.
Table 3. Mineral Reserve Estimates
Table 4. M&I Mineral Resource Estimates
Table 5. Inferred Mineral Resource Estimates
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold Ltd. is a senior gold producer operating in Canada and Australia that is targeting 1,300,000 – 1,400,000 ounces of production in 2021. The production profile of the Company is anchored by three high-quality operations, including the Macassa Mine and Detour Lake Mine, both located in Northern Ontario, and the Fosterville Mine located in the state of Victoria, Australia. Kirkland Lake Gold’s solid base of quality assets is complemented by district scale exploration potential, supported by a strong financial position with extensive management expertise.
For further information on Kirkland Lake Gold and to receive news releases by email, visit the website www.kl.gold.
Source: https://www.kl.gold/news-and-media/press-release-details/2021/Kirkland-Lake-Gold-Announces-Filing-of-Detour-Lake-Technical-Report-Including-New-Life-Of-Mine-Plan/default.aspx
ASSET PROTECTION CONTROL ROOM GUARD
Based at the Detour Lake Mine site, we currently have an exciting opportunity for a Asset Protection Control Room Guard to join our Asset Protection team reporting to the Asset Protection Supervisor.
SHAREPOINT DEVELOPER
We currently have an exciting opportunity for a SharePoint Developer to join our Business Intelligence Team.
MINE PLANNING TECHNICIAN TRAINEE
Based at the Detour Lake Mine site, we currently have an exciting opportunity for a Mine Planning Technician Trainee to join our Technical Services team reporting to the Mine Planning Superintendent.
SENIOR MINE GEOLOGIST
Based at the Canadian Operations Centre in Timmins, ON, we currently have an exciting opportunity for a Senior Mine Geologist to join our Geology team reporting to the Geology Superintendent.
PROCESS PLANT RELIABILITY ENGINEER
Based at the Detour Lake Mine site, we currently have an exciting opportunity for a Process Plant Reliability Engineer to join our Process Plant Maintenance team reporting to the Reliability Supervisor.
CORE TECHNICIAN
The Core Technician will be responsible to support the Geology departments by processing and sampling/cutting of diamond drill core.
ASSAYER 1
The Assayer 1 processes Mine Production and Exploration samples for grade control providing vital information in a timely method to assist in key decision making relating to mining/geology activity and reconciling samples entering and exiting the Mill Process.
MINE PLANNER/EIT
The Mine Planner/EIT will be responsible for mine planning within the 3 - 6 month planning interval.
ASSAYER 2
The Assayer 2 processes Mine Production and Exploration samples for grade control providing vital information in a timely method to assist in key decision making relating to mining/geology activity and reconciling samples entering and exiting the Mill Process.
ASSAYER 3
The Assayer 3 processes Mine Production and Exploration samples for grade control providing vital information in a timely method to assist in key decision making relating to mining/geology activity and reconciling samples entering and exiting the Mill Process.