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Wednesday, 3 April 2013
Kirkland Lake Gold authorizes full man loads on newly completed service hoist as company delivers on promise of growth
With its newly completed service hoist now in operation,Kirkland Lake Gold (TSE:KGI) (LON:KGI) is moving full steam ahead on increasing its hoisting capacity and has recently authorized full man loads in order to meet its targets, with analysts predicting a boost in output in the near-term.
Prior to the installation of the service cage, the company was forced to use the two production shaft compartments to move ore and waste, as well as moving crews in and out of the mine and transporting equipment.
“It is not possible to transport people in the same cage compartment at the same time that it is moving rock or equipment,” explains CEO Brian Hinchcliffe.
“Prior to the service cage installation, we were working with a very tight schedule that limited it to only 8 hours per day of hoisting rock.
“By moving man loads to their own compartment, we can now use the two production hoist compartments for only production and waste development and can skip rock 14 hours per day.”
With the service cage installed, Kirkland Lake Gold says that full man loads - or crews of 63 – can now enter the mine in their own compartment in one hour, versus the two hours it was taking previously. This provides the company the ability to move ore and waste for 14 hours a day, for a capacity to move 2,275 tons per day.
The service cage project, completed in early February, was used initially to clear a heavy backlog in material waiting to go underground, and to free up the main production hoist to reduce a heavy backlog of ore and waste ready to be hoisted to surface, and of equipment waiting to be slung underground.
By mid month, the planned production ramp up began, with Kirkland Lake Gold’s target of between 1400 to 1600 tons per day expected to be reached in the second quarter of fiscal 2014, the months of August, September and October 2013.
Last week, Dundee Capital Markets put out a research note on the company, with a “buy” rating and an $11 price target, noting that it expects the hoist expansion to help lift production in the quarters ahead.
Analyst Joseph Fazzini visited Kirkland Lake Gold's (KGI) Macassa Mine on March 14, alongside Hinchcliffe and COO Mark Tessier.
The analysts said their tour focused on three key aspects: the upgraded service cage and hoist, ongoing underground development and the mill expansion.
“As hoisting capacity had been the bottleneck in the past, we were pleased to see that this is no longer an issue and the remaining hoist upgrades appear to be on track for full-year 2014 completion,” Fazzini noted in his report.
“In our opinion, the site visit confirmed that the pieces are in place for the Macassa mine to deliver on Kirkland Lake Gold's promise of growth and we believe the targets set are achievable.”
The analyst also said that he sees Kirkland Lake Gold’s full-year 2014 production guidance of 150,000 to 180,000 gold ounces as achievable.
“In addition, hoisting capacity has repeatedly achieved greater than 1,800 tpd of ore plus waste and should rise further in the months ahead; hence, hoisting should not be a constraint,” said Fazzini.
“As delays in completing the service cage project represented the major choke point for production, we consider the completion of this project to be a key development.”
Earlier this month, upon releasing its results for the third quarter, Kirkland Lake Gold’s chairman, Harry Dobson, touted the new service cage as “a significant milestone” for delivery of the company’s growth plans.
He added that daily hoisting rates in excess of 2,000 tons per day were seen on several days during the month of February, with an average daily hoisting rate of 1,300 tons of ore and waste that 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,” Dobson said in a statement.
“The increased capacity will support the planned development of new stopes in the higher-grade areas of the mine.”