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Kirkland Lake Gold expects strong 2021, releases 3-year guidance

Dec 11, 2020

“Our business plan for 2021 positions Kirkland Lake Gold for another year of strong operating and financial results and continued industry-leading financial strength," said Tony Makuch, President and Chief Executive Officer.

"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."

Kirkland Lake Gold Ltd. has announced the company’s full-year guidance for 20211, including production of 1,300,000 – 1,400,000 ounces, driven by strong growth at Detour Lake Mine, with all-in sustaining costs per ounce sold2 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 2021 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)3  
  • Operating cash costs per ounce sold2 of $450 – $475 (2020 guidance: $410 – $430)
  • AISC per ounce sold2 of $790 – $810 (2020 guidance: $790 – $810)
  • Sustaining capital expenditures2 of $280 – $310 million (2020 guidance: $390 – $400 million)
  • Growth capital expenditures2 of $250 – $275 million (2020 guidance: $95 – $105 million)
  • Exploration expenditures4 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.

“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.

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