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Kirkland Lake Gold has solid Q3 Production, increases cash to $848 Million and 50% dividend increase

Oct 13, 2020

There's nothing but good news for Kirkland Lake Gold as it announces 2020 Q3 numbers. The company has announced production results for the third quarter and first nine months of 2020. Q3 2020 production totaled 339,584 ounces, an increase of 91,184 ounces or 37% from 248,400 ounces for the third quarter of 2019.

“We continued to generate solid results in Q3 2020 and have entered the final quarter of year well positioned to achieve our full-year 2020 production guidance of 1,350,000 – 1,400,000 ounces," said Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold. 

"We also saw a large increase in our cash position during the quarter, to $848 million, further enhancing our already industry-leading financial strength. We are building our cash position at the same time that we are returning significant capital to shareholders, including repurchasing 14.0 million common shares through our NCIB year to date and announcing today a 50% increase in our quarterly dividend, to US$0.1875 per share, just two quarters after we doubled the dividend in Q1 2020. Looking at Q3 2020 production, the key driver of year-over-year production growth was the contribution of 140,067 ounces from Detour Lake Mine, which was obtained on January 31, 2020 through the acquisition of Detour Gold Corporation. This was clearly the right acquisition at the right time, with Detour Lake already making a significant contribution to both our production as well as our cash flow and earnings. We are also achieving very encouraging exploration results early in our drill programs at Detour Lake, which support our view that we can generate substantial growth in Mineral Reserves, which in turn will lead to higher production levels and improved unit costs going forward.

“Turning to Fosterville, the mine had another strong quarter in Q3 2020, which was driven by higher tonnage as we benefited from recent investments in ventilation and paste fill to increase mining rates and begin utilizing the excess capacity in the Fosterville mill. At Macassa, we were affected by a number of factors, some related to reduced operations earlier in the year, as well as the impact of health and safety protocols, including those related to COVID-19. We also saw reduced availability of mobile equipment, largely due to extremely high temperatures in the mine, as well as unscheduled downtime in the mill. We are already seeing higher grades at Macassa and expect improved overall results at the mine going forward.”

For YTD 2020, the Company produced 1,000,218 ounces, 305,345 ounces or 44% higher than the first nine months of 2019 (“YTD 2019”). The Company also announced today a 50% increase in the quarterly dividend, to US$0.1875 per shareeffective the fourth quarter of 2020 (“Q4 2020”) dividend payment. This increase follows a doubling of the quarterly dividend in the first quarter of 2020 (“Q1 2020”) to US$0.125 per share. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

The Company’s cash position increased 58% during Q3 2020 to $848 million at September 30, 2020 with no debt. The increase in cash reflected proceeds from the sale of 331,959 ounces of gold during Q3 2020 at an average realized price of $1,907 per ounce. Also contributing to the growth in cash during the quarter were proceeds of $109.1 million (C$145.2 million) from the sale of the Company’s 32.6 million shares of Osisko Mining Inc. and $75.0 million received from Newmont Canada FN Holdings ULC (“Newmont”) through a strategic alliance agreement.

During Q3 2020, a total of $141.9 million of cash was returned to shareholders. Of this amount, $107.4 million (C$143.0 million) was used to repurchase 2,139,300 common shares through the Company’s normal course issuer bid (“NCIB”) with the remaining $34.5 million used for the quarterly dividend payment of US$0.125 per share paid on July 13, 2020 to shareholders of record as of the close of business on June 30, 2020. As at October 8, 2020, the Company had repurchased a total of 14,029,500 common shares through the NCIB during 2020 for $526.6 million (C$709.5 million) and paid approximately $81.7 million in dividend payments (with an additional $34.2 million of cash to be used for payment of the Q3 2020 dividend of US$0.125 per share on October 14, 2020 to shareholders of record on September 30, 2020).

Highlights of Q3 2020 Production Results:

  • Consolidated Q3 2020 production of 339,584 ounces, 37% increase from 248,400 ounces in Q3 2019 and 3% higher than 329,770 ounces the previous quarter (1,000,218 ounces for YTD 2020 versus 694,873 ounces in YTD 2019)
  • Gold poured in Q3 2020 totaling 325,811 ounces versus 252,984 ounces in Q3 2019 and 338,573 ounces in Q2 2020 (YTD 2020 gold poured of 991,317 ounces compared to 699,401 ounces for YTD 2019)
  • Q3 2020 gold sales totaling 331,959 ounces at average realized price of $1,907 per ounce compared to gold sales of 256,276 ounces ($1,482 per ounce) in Q3 2019 and 341,390 ounces ($1,716 per ounce) the previous quarter (YTD 2020 gold sales of 1,017,935 ounces ($1,734 per ounce) versus gold sales of 701,296 ounces ($1,375 per ounce) for YTD 2019)
  • Production from Detour Lake Mine totaling 140,067 ounces, 6% increase from 131,992 ounces in Q2 2020 (Production from closing of Detour Gold Corporation acquisition on January 31, 2020 to September 30, 2020 totaled 363,614 ounces)
  • Strong production at Fosterville of 161,489 ounces compared to 158,328 ounces in Q3 2019 and 155,106 ounces the previous quarter (YTD 2020 production of 476,459 ounces, 11% higher than 427,472 ounces in YTD 2019)
  • Production at Macassa totaling 38,028 ounces compared to 62,945 ounces in Q3 2019 and 41,865 ounces the previous quarter; production in Q3 2020 was impacted by limited operating development resulting from reduced operations earlier in the year, ongoing health and safety protocols, including those related to Company’s COVID-19 response, and reduced equipment availability, all of which contributed to lower than planned mining rates and average grades; (YTD 2020 production of 130,755 ounces compared to YTD 2019 production of 184,918 ounces).

Other Highlights: 

  • Encouraging exploration results at Detour Lake Mine Saddle Zone provide increasing evidence that a broad and continuous corridor of mineralization extends between the Main and West pit locations extending to a depth of up to 820 m below surface; new results support Company’s view that a much larger deposit exists around the Main Pit and West Pit than is currently included in Mineral Reserves
  • Exploration success at Fosterville includes higher than expected grades with visible gold from infill drilling in the Swan Zone; results also confirmed substantial scale of mineralized systems at Cygnet, Robbin’s Hill and Harrier with high-grade mineralization intersected hundreds of metres from existing Mineral Resources and Mineral Reserves at all three locations
  • #4 Shaft project a month ahead of schedule advancing to a depth of over 3,300 feet as of September 30, 2020; project on track for completion in late 2020 at expected capital cost less than initial estimate of US$320 million
  • Strategic alliance entered into with Newmont with respect to exploration and development opportunities around Company’s Holt Complex and Newmont’s properties in Timmins, Ontario; through agreement, Newmont paid Company $75 million to acquire option on mining and mineral rights related to the Company’s Holt Mine property, with Company to invest proceeds in exploration activities around Holt Complex and at other regional targets; agreement also includes commitment by the two companies to work together to identify additional regional exploration opportunities around their respective land positions where they may cooperate to advance projects
  • Suspension of operations at Holt Complex extended until further notice with more than 220 employees at the Complex being re-assigned to new positions or offered new roles within the organization; Holt Complex designated as non-core in February 2020 with operations initially suspended in early April as part of Company’s COVID-19 protocols while strategic review was completed
  • COVID-19 health and safety protocols remain in place at all sites and offices throughout Q3 2020, mainly related to remote work, social distancing, medical screening and enhanced cleaning and sanitizing; COVID-19 testing for all workers traveling to Detour Lake introduced at end of September; Ramp up from reduced operations at Detour Lake and Macassa commenced in early May with workforce levels largely at pre-COVID levels by beginning of Q3 2020.


Tags: Northern Ontario / Operational Updates / Gold / All Articles