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Thursday, 22 August 2013
Kirkland Lake Gold announces record ore tonnage for Q1 14; reaffirmed guidance
Kirkland Lake Gold Inc. (TSE:KGI) (AIM:KGI), reaffirmed its guidance for the year in operational results released Wednesday that also included the new of record ore tonnage produced in the quarter -- and according to Ocean Equities, which stood behind its assessment of the company as “one of our top stock picks”, such record breaking results are set to become the new normal for the miner.
The Ontario-based miner and explorer, in its operational results for the three months of the company’s first quarter of fiscal 2014 (that is, May, June, July) recorded hoisting 97,788 tons of ore at a head grade of 0.3246 ounces per ton (opt), or roughly 9.2 grams per tonne (g/t) and an average recovery rate of 95.04 per cent to produce 30,316 ounces of gold.
Record ore tonnage was produced in the quarter, with the average daily ore tonnage rate of 1,063 tons also setting a company record.
Ounces sold in the quarter came to 30,253 at an average sales price of $1,426 per ounce.
Kirkland Lake stood behind its guidance for the fiscal year, saying in a company statement released with the figures that it “remains on track to produce 150,000 to 180,000 ounces of gold this fiscal year.”
During the most recent quarter the company increased its ore mining workplaces from 49 at the end of the previous quarter to 62. The number of workplaces currently being developed was also upped and thus stands at 32, up from 21. The company plans for the next year include increasing the number of active workplaces in the work cycle to approximately 100, to be bolstered with the hiring and training of new workers to staff these additional workplaces as they are developed and brought on line.
The quarter’s production was impacted by a number of planned shutdowns, related to increasing both the mine’s hoisting capacity and the capacity processing plant. These shutdowns came at the cost of 2-3 weeks of normal production over the quarter, slightly longer than forecast, and as a result production tonnage for the quarter came in at 4.6 per cent below planned production.
These shutdowns allowed the completion of work necessary to increase the average mine hoisting capacity to 2,200 tons per day, including replacing the 10.0 ton skips with 12.5 ton skips, and to optimize the existing mill grinding circuit and bring the new crushing circuit on line.
“Record-breaking will be a regular event for Kirkland as the full benefit of the freshly installed hoisting infrastructure becomes apparent,” wrote analyst Christopher Welch of London-based specialist natural resources brokerage Ocean Equitites in a note released Thursday, the day after the release of figures.
“Hoisting capacity will be greatly increased by the new skips installed (12.5 tons compared to the old 10 ton skips) and Kirkland is committed to gradually increasing its hoisting rates to properly bed-in the new equipment as well as the new team members operating down the historic mine. This gradual increase will help avoid unforced errors and overly exuberant production guidance errors going forward.”
The analyst advised that he expected average ore grade to climb “in tandem with ore hoisting rates over the next three quarters” with the expectation of at least 160, 000 ounces of gold to come in the company’s fiscal year 2014.
“While most junior miners are bunkered down in cash preservation mode Kirkland will pursue its growth strategy and we expect it to reap rewards.”