Kirkland Lake Gold Positioned for Strong Operating and Financial Results in 2021, Company Provides Three-Year Production Guidance

Dec 10, 2020

TORONTO, Dec. 10, 2020 (GLOBE NEWSWIRE) -- Kirkland Lake Gold Ltd. (“Kirkland Lake Gold” or the “Company”) (TSX:KL) (NYSE:KL) (ASX:KLA) today announced the Company’s full-year guidance for 2021, including production of 1,300,000 – 1,400,000 ounces, driven by strong growth at Detour Lake Mine, with all-in sustaining costs (“AISC”) per ounce sold on track to remain unchanged from 2020 levels. Guidance for 2021 includes increased capital spending largely in support of future production growth at Detour Lake, and a greater commitment to exploration to follow up on recent drilling success at all three of the Company’s cornerstone assets. All dollar amounts are expressed in U.S. dollars unless otherwise noted.

The Company also announced today three-year production guidance which demonstrates the sustainability of solid operating performance and includes growth to 1,405,000 – 1,545,000 ounces in 2023. During this period, the Company will continue to work towards achieving a number of significant, and potentially transformational, milestones. Among these milestones is completing the current $50 million dollar drilling program at Detour Lake and releasing a new mine plan in 2022. Drilling to date at Detour Lake provides increasing evidence that the Main, West and North pit locations involve one large, continuous deposit that can support the transition to a “super pit” concept and can lead to substantially higher levels of production. At Macassa, the #4 shaft project is continuing and remains on track for completion in late 2022, when production is expected to increase to 400,000 ounces at improved unit costs in 2023. In Australia, the Company is planning its largest exploration program at Fosterville since acquiring the mine in 2016, including $85 – $95 million of drilling and development. The primary objective of the program is to identify additional high-grades zones to provide future high-grade production. The 2021 exploration plan will largely follow up on existing drill results that included the intersection of quartz with visible gold, found in large concentrations and at exceptional grades in the Swan Zone, in multiple other locations.

Highlights of 20 21 guidance include:

Production of 1,300,000 – 1,400,000 ounces (2020 guidance: 1,350,000 – 1,400,000 ounces including 29,391 ounces from Holt Complex)
Operating cash costs per ounce sold 2 of $450 – $475 (2020 guidance: $410 – $430)
AISC per ounce sold 2 of $790 – $810 (2020 guidance: $790 – $810)
Sustaining capital expenditures 2 of $280 – $310 million (2020 guidance: $390 – $400 million)
Growth capital expenditures 2 of $250 – $275 million (2020 guidance: $95 – $105 million)
Exploration expenditures 4 of $170 – $190 million (2020 guidance: $130 – $150 million).

(1) Guidance numbers and statements provided in this press release are considered forward-looking statements and represent management’s best estimates and expectations of future results as at December 10, 2020.

(2) See the “Non-IFRS Measures” section starting on page 34 of the Company’s MD&A for the three and nine months ended September 30, 2020 filed on the Company’s profile on SEDAR at www.sedar.com .

(3) 2021 guidance does not include production, costs or expenditures from the Holt Complex in Northern Ontario or from the Company’s assets in the Northern Territory, which are currently on care and maintenance.

(4) Includes both expensed and capitalized exploration expenditures.

Tony Makuch, President and Chief Executive Officer, commented: “Our business plan for 2021 positions Kirkland Lake Gold for another year of strong operating and financial results and continued industry-leading financial strength. The plan also includes higher levels of investment, reflecting the significant growth potential and exploration upside at all three of our cornerstone assets, as well as the payment of over $200 million in dividends to shareholders. We have made significant progress returning capital to shareholders in 2020, and plan to continue this trend in the coming year at the same time as we build our cash position.

“Looking at our cornerstone assets, Detour Lake is set to significantly grow in 2021, with production for the year targeted at 680,000 – 720,000 ounces at AISC per ounce better than $900 per ounce. We regard the 2021 production level as a benchmark to be sustained and ultimately increased going forward. Under current assumptions, including receiving required permits and approvals, we expect production to grow to approximately 800,000 ounces in 2025 within the current mine plan. Having said that, we plan to present a new mine plan in 2022, following completion of the current drilling program, which we believe could transform and significantly improve the longer-term outlook for Detour Lake, with the establishment of a “super pit” concept based on the potential existence of a much larger, continuous deposit around the existing pit locations and Mineral Reserves.

“Production at Macassa is expected to ramp up over the next three years, reaching 400,000 ounces in 2023 following completion of the #4 Shaft. Production in 2021 is targeted at 220,000 – 255,000 ounces at AISC per ounce sold averaging below $750. With completion of the #4 Shaft on track for late 2022 and production commencing from near surface zones using a surface ramp, we anticipate production rising to 295,000 – 325,000 ounces in 2022 before increasing to 400,000 – 425,000 ounces in 2023.

“Production at Fosterville in 2021 will be lowered from the levels achieved in 2019 and 2020. We have a large orebody at Fosterville, but the high-grade components of the existing Mineral Reserve involve a short production life. When you consider that we have identified a number of large mineralized systems, all including intersections containing quartz with visible gold, we remain optimistic that additional high-grade zones can be identified. Our challenge is to maintain a sustainable and economic operation while we continue to drill to identify the next high-grade area for future mining. The result of our work is a production profile that includes 400,000 – 425,000 ounces in 2021, moving to a range of 325,000 – 400,000 ounces in 2022 and 2023. Longer term, we will work to sustain operations at that level of production for a number of years, subject to continued drilling success. Our budget for exploration at Fosterville in 2021 is $85 – $95 million, by far our largest commitment since we acquired the mine in November 2016.”

Three-year production guidance

Consolidated: Production targeted at 1,300,000 – 1,400,000 ounces in 2021, 1,300,000 – 1,445,000 ounces in 2022 and 1,405,000 – 1,545,000 ounces in 2023.
Detour Lake: Production targeted at 680,000 – 720,000 ounces in 2021, 2022 and 2023.
Macassa: Production to total 220,000 – 255,000 ounces in 2021, 295,000 – 325,000 ounces in 2022 and 400,000 – 425,000 ounces in 2023
Fosterville: Production targeted at 400,000 – 425,000 ounces in 2021 and 325,000 – 400,000 ounces in both 2022 and 2023.

Distribution of production in 2021

Production in 2021 is expected to be weighted to the second half of the year largely reflecting mine sequencing, with lower grades expected at all three cornerstone assets early in the year, particularly in the first quarter. For the first half of 2021, production is targeted at 600,000 – 650,000 ounces, which is expected to increase to 700,000 – 750,000 ounces during the final six months 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, improving to approximately $700 during the second half of 2021.

Review of 2021 Guidance

Consolidated gold production in 2021 is targeted at 1,300,000 – 1,400,000 ounces, which compares to current full-year 2020 production guidance of 1,350,000 – 1,400,000 ounces. Production guidance in 2020 includes 29,391 ounces of production at Holt Complex, where operations were suspended effective April 2, 2020. Production in 2021 will be led by Detour Lake, which is targeting 680,000 – 720,000 ounces compared to current guidance of 520,000 – 540,000 ounces for 11 months in 2020. In addition to the impact of a full year of operations at Detour Lake in 2021, the increase in production in the coming year is expected to be driven by a higher average grade and increased mill throughput. Production is also expected to increase at Macassa in 2021, with guidance for the year of 220,000 – 255,000 ounces. Production at Fosterville is targeted to decline as the mine transitions to a lower-grade profile, with the impact of reduced grades to be only partially offset by higher tonnes processed. Production at Fosterville in 2021 is targeted at 400,000 – 425,000 ounces.
Operating cash costs per ounce sold are expected to average $450 – $475, which compares to current full-year 2020 guidance of $410 – $430. The increase from full-year 2020 guidance mainly reflects the impact of higher tonnes mined and lower grades at Fosterville, which is expected to more than offset improved operating cash costs per ounce sold at both Detour Lake and Macassa.
AISC per ounce sold are targeted to average $790 – $810, unchanged from full-year 2020 guidance. AISC per ounce sold at Detour Lake and Macassa are targeted to improve in 2021 to better than $900 and $750, respectively, while AISC per ounce sold at Fosterville are expected to increase reflecting a lower average grade and higher sustaining capital expenditures.
Operating cash costs for 2021 are estimated at $600 – $630 million, which compares to the current guidance for full-year 2020 of $560 – $580 million, with the increase mainly related to a full year of results for Detour Lake versus 11 months in 2020.
Royalty costs in 2021 are estimated at $82 – $88 million, similar to re-issued full-year 2020 guidance.
Sustaining capital expenditures in 2021 are targeted at $280 – $310 million compared to guidance for full-year 2020 of $390 – $400 million. The reduction in 2021 from 2020 is mainly related to lower deferred stripping costs at Detour Lake being included in sustaining capital expenditures, with the majority of deferred stripping costs in 2021 included in growth capital expenditures. Higher sustaining capital expenditures at Fosterville in 2021, largely reflecting increased mobile equipment procurement, are expected to be largely offset by lower sustaining capital expenditures at Macassa.
Growth capital expenditures are estimated at $250 – $275 million in 2021 compared to current guidance for 2020 of $95 – $105 million, with the increase largely reflecting higher growth capital expenditures at Detour Lake. Of planned growth capital expenditures in 2021, Detour Lake accounts for $160 – $170 million, with approximately $90 million relating to deferred stripping and the remainder to a number of growth capital projects, including investments in mill improvements, increased tailings capacity, completion of an assay lab (construction commenced in 2020) and other enhancements to site infrastructure. Deferred stripping costs at Detour Lake in 2021 mainly relate to a significant stripping campaign as part of Phase 4, which will support production in future years. Growth capital expenditures at Macassa are targeted at $85 – $95 million, with the #4 Shaft project expected to account for $55 – $60 million and the remainder largely related to completion of a ventilation upgrade project, mill improvements and increased development to support future mine production. Growth capital expenditures at Fosterville in 2021 are targeted at $5 – $10 million reflecting the completion of a number of key projects during 2020.
Exploration expenditures in 2021 are estimated at $170 – $190 million. Of total exploration expenditures, approximately $85 – $95 million are targeted for Fosterville, where drilling will continue to focus on identifying new high-grade zones at key targets, including Lower Phoenix, Cygnet, Robbin’s Hill and Harrier, as well as drilling to replace Mineral Reserves. Exploration expenditures in Canada are also expected to total $85 – $95 million, with expenditures of $45 – $50 million at Macassa and $40 – $45 million at Detour Lake.
Corporate G&A expense in 2021 is estimated at $50 – $55 million, unchanged from re-issued 2020 guidance.

About Kirkland Lake Gold Ltd.

Kirkland Lake Gold Ltd. is a growing gold producer operating in Canada and Australia that is on track to produce 1,350,000 – 1,400,000 ounces of gold in 2020. 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 at www.kl.gold.

Source: https://www.kl.gold/news-and-media/news-releases-archive/default.aspx

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Kirkland Lake Gold Positioned for Strong Operating and Financial Results in 2021, Company Provides Three-Year Production Guidance