KIRKLAND LAKE, ONTARIO -- (Marketwire) -- 03/11/13 -- Kirkland Lake Gold Inc. (the "Company") (TSX: KGI)(AIM: KGI), an operating and exploration gold mining company, announces financial and operational results for the third quarter of its fiscal year 2013 (November, December 2012, and January 2013).
Mr. Harry Dobson, Chairman commented, "The new service cage went into operation at the end of the quarter, a significant milestone for delivery of the Company's growth plans. With this in operation, hoisting capacity was expected to increase from 1,000 tons per day to 1,800 tons per day. Based on February trials this capacity has been achieved. Daily hoisting rates in excess of 1,800 tons per day (up to 2,160 tons per day in one day) were achieved on several days during the month. The average hoisting rate during February was 1,300 tons per day of ore and waste and this is expected to increase steadily going forward. Significant progress has also been made towards reducing the backlog of ore and waste waiting to be hoisted, towards reducing the backlog in material waiting to go underground and in slinging heavy equipment into the mine. The increased capacity will support the planned development of new stopes in the higher-grade areas of the mine."
KEY HIGHLIGHTS OF THE QUARTER
-- Net loss before income taxes for the quarter ended January 21, 2013 of $5.7 million ($0.08 per share). This compares to net loss before taxes of $0.8 million ($0.01 per share) in Q2/13 and a net income before taxes of $13.6 million ($0.20 per share) for Q3/12.-- Net loss and comprehensive loss for the quarter was $9.7 million ($0.14 per share) which compares to net loss and comprehensive loss of $0.8 million ($0.01 per share) for Q2/13 and net income and comprehensive income $9.5 million ($0.14 per share) for Q3/12. Year to date net loss and comprehensive loss was $10.1 million compared to net income and comprehensive income of $41.0 million for the fiscal 2012.-- The Company recorded a $4.0 million tax provision during the quarter which contributed to the material difference between the reported net loss and comprehensive loss. The $4.0 million charge for the quarter is primarily driven by a change in the tax accounting treatment of costs incurred in the acquisition of the property from Queenston (now part of Osisko Mining Corporation) which closed during Q2/13.-- In the quarter, 73,678 tons of ore were produced at a head grade of 0.32 ounces of gold per ton (opt) and a gold recovery rate of 95.66% to produce 22,261 ounces of gold. Year to date, 214,679 tons of ore have been produced at a head grade of 0.29 opt and a gold recovery rate of 95.57% to produce 60,015 ounces.-- Gold poured for the quarter was 21,601 ounces, 3% lower than Q2/13 (22,349 ounces) and 15% lower than Q3/12 (25,295 ounces) primarily due to grade and inventory fluctuations and the timing of pours. Only 17,340 ounces were sold in the quarter as a result of a delay in shipment of the final gold bars poured (4,271 ounces). The delay was due to poor weather conditions that resulted in road closures. This delay affected both revenue and inventory accounts and increased the net loss in the quarter by $1.8 million.-- Operating costs for the quarter were $288 per ton of ore ($954 per ounce of gold), compared with $360 per ton ($1,253 per ounce) in Q2/13, and $291 per ton ($908 per ounce) in Q3/12.-- This fiscal year, the Company expects to sell slightly more than 90,000 ounces, which is towards the lower end of the revised guidance range. This projection assumes an increase in ore grade and ore tonnages over the remainder of this fiscal year as expected higher grade ore comes on line. As of the end of February, production was tracking plan very closely. Work on our 2014 budget (fiscal year beginning May 1, 2013) is well underway and is based on selling 150,000 - 180,000 ounces. The target of the Expansion Project remains to realize an average production rate of 2,200 tons per day.-- The Service Cage went into operation near the end of the quarter, which will free the main production hoist to increase the hoisting of both ore and waste, and to increase the slinging activities required to bring heavy equipment into the mine. This will work to reduce the development shortfall in the higher-grade South Mine Complex ("SMC"), and to bring more ore mining workplaces on line. Significant progress has been made on all these fronts during the month of February.-- The Company has decided to delay the replacement of the ten ton skips in the existing shaft conveyance arrangement with newly designed 12.5 ton skips until Q1 of fiscal year 2014. The new drive for the production hoist will also be activated only in Q1 2014. This will allow the Company to focus more efforts in Q4 on underground work required to bring higher grade workplaces on line. Hoisting capacity beyond 1,800 tons per day is not required until Q2 of the 2014 fiscal year.-- The new ball mill is currently being assembled in the fully constructed new mill building. This new ball mill and other mill upgrades will increase milling capacity from 1,450 tons per day to 2,200 tons per day. This project is tracking to complete in the summer with the excess capacity not required until Q3 of fiscal year 2014.-- The overall project budget to complete the infrastructure upgrades required to reach this target is $95.0 million, of which $79.5 million had been spent by the end of January, 2013. The processing plant upgrade, the hoisting capacity upgrade, and the remaining underground mobile equipment purchases represent the largest segments of unspent project capital. Project spending in some non-critical path Expansion Project areas has been delayed where practicable to match progress on the critical path. The Company has consistently stayed within budget during all phases of the Expansion Project.-- The Company workforce totalled 1,017 employees at the end of February, up from 907 employees at year-end. Due to the varying employee requirements for training and experience, hiring is expected to run approximately six months to nine months on average ahead of the corresponding ramp up in production. This has had a short term impact on current operating costs, which will likely remain elevated until hiring is completed in late Q2 or early Q3 of fiscal year 2014. The Company expects to hire approximately 200 more people, taking the total workforce to approximately 1,200. This employee head count is expected to be sufficient to produce at a rate of 2,200 tons per day once training and experience needs are met. At these ore production levels, productivity is expected to double from current and historic rates due to the completed infrastructure upgrades, which will be a significant driver in reducing operating costs going forward.-- The head grade of ore coming from the SMC in the quarter was 0.36 opt, which was above the 0.33 opt grade realized year to date, but below the normal grade of ore coming from that area in past years. The head grade of ore coming from the Main Break in the quarter was 0.26 opt, which is very consistent with prior years. The lower grade of ore coming from the SMC this year was caused by a shortfall in the development of new replacement ore mining workplaces in that area caused by the delay in the Service Cage Project. With this now in operation, development in the higher grade areas of the SMC can accelerate.-- After meeting all operating costs, spending $22.8 million on infrastructure and $4.1 million on exploration, total cash resources (including short-term investments) as at January 31, 2013 were $87.9 million. As at March 8, 2013 this number had increased to $90.5 million. The timing of gold sales and accounts receivables as well as accounts payable payments also influence the cash balance between reporting periods.