Kirkland Lake's Macassa mine.
A strong first-half performance from the Fosterville and Macassa mines has provided Toronto-based Kirkland Lake Gold with enough confidence to increase its consolidated full-year production guidance by 15 000 oz to more than 635 000 oz.
The miner produced 312 329 oz in the first six months of the year, which is a 7% improvement on the same period last year. The Macassa mine, in Canada’s Ontario, produced 114 609 oz and the Fosterville mine, in Australia’s Victoria, produced 141 305 oz. The Holt and Taylor mines, in Canada produced the balance.
Kirkland increased its Fosterville guidance to between 275 000 oz and 300 000 oz from 260 000 oz to 300 000 oz previously. The Macassa mine’s production guidance was improved to between 220 000 oz and 225 000 oz, from 215 000 oz to 225 000 oz previously.
The positive grade performance at Fosterville and Macassa was the main driver behind the company’s record first-half financial results, president and CEO Tony Makuch said in a news release.
“At Fosterville, our average grade for the second quarter of 2018 of 20.6 g/t was well ahead of expected levels, with the mine benefiting from a record month in June, producing 31 710 oz at 30.4 g/t.
“At Macassa, our stopes around the 5 700-ft level, the deepest mining done to date in the South Mine Complex, are high-grade stopes that have outperformed, which resulted in record quarterly production in the second quarter of 60 571 oz at an average grade of 21.5 g/t,” he said.
Kirkland Lake more than doubled its net earnings from $47.7-million to $111.5-million in the six months.
Cash flow from operating activities jumped 45% from $145.3-million to $210.5-million, with free cash flow totalling $110.9-million.
Operating cash cost for each ounce sold improved by 19% to $424. Based on the year-to-date results, the full-year 2018 operating cash costs guidance has been adjusted to between $400/oz and $425/oz, from a previous forecast of $425/oz and $450/oz.
Turning to the firm’s growth plans, Makuch reported that the level of work at its key projects was picking up. At Macassa, surface excavation for the Number 4 shaft was advancing and on track to start shaft collaring, headframe construction and hoist installation during the second half of the year. He affirmed that full face shaft sinking would start by the second quarter of 2019, with the completion of Phase 1 of the shaft project to be achieved in early 2022.
At Fosterville, the rate of underground development related to the ventilation project increased during second quarter, while construction of a new water treatment plant continued to progress, as did the drilling of the surface holes for a new paste plant, with plant construction to start shortly.
“We have also completed installation of a second gravity circuit at our Fosterville mill, with the circuit becoming operational as of the end of July. Our growth projects at Fosterville remain on track for completion on or close to the original target dates, in support of our goal to reach over 400 000 oz of annual gold production at Fosterville by 2020.”