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Kirkland aims for ‘well over half-a-billion’ free cash flow, designates Holt as noncore

Kirkland Lake CEO Tony Makuch

Kirkland Lake CEO Tony Makuch

20th February 2020

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Gold miner Kirkland Lake has raised its guidance for the year to between 1.47-million and 1.54-million ounces, to reflect the addition of the recently acquired Detour Lake mine, in northern Ontario.

The new mine will add between 520 000 oz and 540 000 oz to the group’s production for the year, with the balance coming from Macassa and Holt Complex, in Ontario, and Fosterville, in Australia.

Between the Macassa, Detour Lake and Fosterville mines, Kirkland will produce about 1.40-million ounces this year, at a unit cost and on a scale that will position the company to generate “well over half-a-billion dollars” of free cash flow in 2020, president and CEO Tony Makuch said on Wednesday.

Given the quality of Macassa, Detour Lake and Fosterville, Kirkland has designated the Holt Complex in and assets in the Northern Territory of Australia as noncore and would be considering strategic options, he added.

Kirkland produced a record 974 615 oz in 2019, which was a 35% increase from 2018, at an operating cash cost of $284/oz and an all-in sustaining cash cost of $564/oz.

The group generated net earnings of $560.1-million – double the $274-million of 2018 – and adjusted net earnings of $576.4-million, which were also double the previous year’s $273.9-million.

Kirkland Lake’s free cash flow totalled $463-million, which was 81% higher than the $255.2-million generated in 2018.

“We more than doubled our cash during the year at the same time that we incurred higher growth capital expenditures, reflecting significant progress at a number of key projects, including our #4 shaft project at Macassa. The #4 shaft project is advancing extremely well and we now have the potential to complete the project early at a lower total capital cost.

“We also put our cash to use in 2019 to reward shareholders through dividend increases and share repurchases. We plan to substantially increase these efforts, including doubling our quarterly dividend, to $0.125 per share, effective the second quarter of 2020, and committing to buying back 20-million shares over the next 12 to 24 months,” said Makuch.

The miner increased the quarterly dividend twice, to $0.04 a share, from C$0.04 a share, for second quarter 2019 dividend, then to $0.06 a share for fourth-quarter dividend.

Edited by Creamer Media Reporter

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