Kirkland Lake rises as 2016 acquisitions boost profit, initiates dividend

VANCOUVER (miningweekly.com) – The TSX-listed stock of Canadian midtier miner Kirkland Lake Gold on Wednesday gained 6.6% after the company reported significant growth in earnings for the three months ended December 31, boosted by two transformative acquisitions in 2016 that lifted output and lowered costs.

For the fourth quarter, the Toronto-based company reported adjusted earnings, excluding special items, of $27.91-million, or $0.19 a share, beating analyst forecasts for earnings of $0.12 a share. This was a significant rise on the adjusted earnings of $609 000 reported in the fourth quarter of 2015.

Net earnings for the period were $3.1-million, or $0.02 a share, compared with earnings of $609 000, or $0.01 a share a year earlier.

Consolidated revenue reached a record $134.2-million, while consolidated operating cash costs and all-in sustaining costs (AISC) per ounce sold remained low at $533/oz and $883/oz, respectively.

Kirkland Lake reported record quarterly gold output of 106 609 oz, including ounces produced in the month of December 2016 from the Australia operations following the acquisition of Newmarket on November 30. Production growth in the fourth quarter was led by Macassa, in Ontario, which produced 52 318 oz, at a run-of-mine grade of 21.6 g/t and mill recovery of 97.6%.

Kirkland Lake also in January 2016 acquired St Andrew Goldfields, which operated the Holt, Holloway and Taylor mines in the Timmins mining district, in Ontario.

Kirkland Lake reported that its Canadian mineral reserves increased by 20% between 2014 and 2016 to 2.75-million ounces of gold, while its Australian mineral reserves increased 24% from 2015 to 952 000 oz of gold as at December 31, outpacing depletion.

For the full year 2016, Kirkland Lake produced 314 495 oz of gold, beating the top range of guidance at 290 000 oz.

For 2017, the company is targeting gold output of 500 000 oz to 525 000 oz of gold, at an AISC of between $950/oz and $1 000/oz.

The combination of the high‐grade Macassa mine complex and the low‐cost Fosterville and Taylor gold mines, will form the production backbone of the company going into 2017 and in future. Kirkland Lake’s strong balance sheet provides financial flexibility to support its strategy and aggressively explore district-scale opportunities, the company stated.

The board has initiated a dividend policy, declaring a quarterly payment of $0.01 a share.

Kirkland Lake’s stock reached an intraday high of C$10.08 a share on Wednesday, having gained 42.59% in value since the start of the year.