Investors looking to leverage their exposure to gold in a safe jurisdiction may want to give Kirkland Lake Gold (TSE:KGI) a look, says Seeking Alpha contributor Ben Kramer-Miller.
"The company's Kirkland Gold property is located near other significant gold deposits, which suggests that it has exploration potential," Kramer-Miller wrote on the influential financial blog site.
Kirkland operates on a high-grade gold site in Ontario's Southern Abitibi gold belt, a low-risk jurisdiction where it acquired five formerly-producing gold mines in 2001.
Kirkland is focused on expanding gold production from the Main/'04 Break, and a new discovery area, the South Mine Complex. In all, there is an estimated 4.5 million ounces of gold at 13 to 18 grams of gold per ton on the property.
Investors should pay particular attention to the South Mine Complex, Kramer-Miller writes. High-grade ore on the surface means it will be cheap to mine. Estimates suggest that this region has 800,000 ounces of gold reserves and 1.8 million ounces of gold resources.
In fiscal 2014, Kirkland expects to produce at least 150,000 ounces by increasing the total amount of ore milled to between 1,400 to 1,600 tons starting in Q2 from roughly 1,200 tons per day in April 2013.
Eventually, the company plans to increase the amount of milled ore to 2,200 tons per day, which translates to roughly 220,000 to 250,000 ounces of production annually.
Kirkland has been profitable in its past two fiscal years.
In light of weak bullion prices, Kirkland provides regional stability in a portfolio and investors should be willing to pay a premium for the company's shares, Kramer-Miller writes.
Shares have risen about 6.6 per cent in the past week.
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