Kirkland Lake lifts second quarter gold output by 54%

Kirkland Lake Gold ASX KLA Fosterville Detour mine Holt Complex Macassa production
Kirkland Lake produced 329,770oz gold in the June quarter.

Kirkland Lake Gold (ASX: KLA) has managed to increase overall gold output in the second quarter, compared with the same period in 2019, even with COVID-19 measures in place.

The Canadian-based company, which operates three mines in Ontario and the Fosterville mine near Bendigo in Victoria, produced 329,770oz in the three months to 30 June, an increase of 115,177oz (or 54%) on the second quarter in 2019 when output totalled 214,593oz.

There was a solid production for the first half of 2020, up 48% to 660,634oz compared with last year.

In fact, figures for the first two quarters of this year were almost the same: 330,864oz in the March quarter, and 329,770oz for the June period.

But financially, Kirkland did a lot better too: in the June quarter the realised price for gold sales was US$1,716/oz against US$1,586/oz in the three months to 31 March.

The Detour Lake mine in Ontario was hit by disruptions caused by the coronavirus pandemic, with production for the June quarter coming in at 131,992oz.

That mine was placed on reduced operations in March and was also processing lower grade stockpiled material.

Fosterville in Victoria produced 155,106oz in the second quarter, up 10% on the same time last year.

Another Ontario mine, Macassa, produced 41,865oz as production was impacted by COVID-19 protocols as well as by lower average grades.

The third Canadian mine, Holt Complex, saw output for the second quarter of just 807oz after the mine operations were suspended in April. In 2019 second quarter gold production was 24,696oz.

Closing hedge positions helped financial result

Kirkland president and chief executive officer Tony Makuch said it was a “very solid” second quarter result in spite of the COVID-19 problem and the extensive effort the company took to protect its workers.

He said the company had benefitted from closing out hedge positions taken by the former owner of the Detour Lake mine, Detour Gold, with those hedges priced between US$1,300/oz and US$1,490/oz.

Mr Makuch said the Macassa workforce is now back to pre-COVID levels and Kirkland was expecting higher volumes and improved grades during the second half of the year.

The company also highlighted in its latest report encouraging exploration results at Macassa with the identification of a new, large corridor of mineralisation in proximity to its No. 4 shaft.

Last month, the company re-issued its 2020 guidance in view of the effects of the pandemic and is now expecting total annual output between 1.35Moz and 1.4Moz.

At the end of June, Kirkland Lake had US$537 million in cash with no debt.

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