a leading senior gold producer: low costs, financial … · 2021. 7. 29. · andre leite, p.eng ,...

A Leading Senior Gold Producer:

LOW COSTS, FINANCIAL PERFORMANCE & STRENGTH, SHAREHOLDER RETURNSWITH EXPLORATION UPSIDESecond Quarter 2021 Conference Call and Webcast | July 29, 2021

FORWARD-LOOKING STATEMENTS

Cautionary Note Regarding Forward-Looking Information

The information in this presentation has been prepared as at July 29, 2021. This presentation contains “forward-looking statements” and "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of Kirkland Lake Gold with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and include information regarding: (i) changes in Mineral Resource estimates, potential growth in Mineral Resources, conversion of Mineral Resources to proven and probable Mineral Reserves, and other information that is based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management; (ii) the amount of future production over any period; (iii) assumptions relating to revenues, operating cash flow and other revenue metrics set out in the Company's disclosure materials; and (iv) future exploration plans.

Investors are cautioned that forward-looking information is not based on historical facts but instead reflect Kirkland Lake Gold's management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although Kirkland Lake Gold believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the future development and growth potential of the Canadian and Australian operations; the future exploration activities planned at the Canadian and Australian operations and anticipated effects thereof; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws; and compliance with extensive government regulation. Exploration results that include geophysics, sampling, and drill results on wide spacings may not be indicative of the occurrence of a mineral deposit. Such results do not provide assurance that further work will establish sufficient grade, continuity, metallurgical characteristics and economic potential to be classed as a category of mineral resource. A mineral resource that is classified as "inferred" or "indicated" has a great amount of uncertainty as to its existence and economic and legal feasibility. It cannot be assumed that any or part of an "indicated mineral resource" or "inferred mineral resource" will ever be upgraded to a higher category of resource. Investors are cautioned not to assume that all or any part of mineral deposits in these categories will ever be converted into proven and probable reserves. This forward-looking information may be affected by risks and uncertainties in the business of Kirkland Lake Gold and market conditions. This information is qualified in its entirety by cautionary statements and risk factor disclosure contained in filings made by Kirkland Lake Gold, including its annual information form for the year ended December 31, 2020, and the financial statements and related MD&A for the financial year ended December 31, 2020 and for the interim period ended June 30, 2021, which are filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although Kirkland Lake Gold has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Kirkland Lake Gold does not intend, and do not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

All dollar amounts in this presentation are expressed in U.S. dollars except as otherwise noted.

Use of Non-IFRS Measures

This Presentation refers to average realized price, operating costs, operating costs per ounce sold, all-in sustaining cost (“AISC”) per ounce of gold sold, free cash flow, sustaining capital expenditures and growth capital expenditure because certain readers may use this information to assess the Company’s performance and also to determine the Company’s ability to generate cash flow and meet its expenditure requirements. This data is furnished to provide additional information and are non-IFRS measures and do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”). These measures should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and are not necessarily indicative of operating costs presented under IFRS. Refer to each Company’s most recent MD&A for a reconciliation of these measures. The most comparable IFRS Measure for operating cash costs, operating cash costs per ounce sold and AISC per ounce sold is production costs as presented in the Consolidated Statements of Operations and Comprehensive Income, while total additions and construction in progress are the most comparable measures for sustaining and growth capital expenditures.

2

http://www.sedar.com/

OTHER CAUTIONARY DISCLOSURES

Qualified Persons

Natasha Vaz, P.Eng., Chief Operating Officer and Innovation is a "qualified person" as defined in NI 43-101 and has reviewed and approved disclosure of the Mineral Reserves technicalinformation and data for the Canadian Assets (excluding Detour) included in this presentation.

Eric Kallio, P. Geo., Senior Vice President, Exploration is a “qualified person” as defined in NI 43-101 and has reviewed and approved disclosure of the Mineral Resource technicalinformation and data for the Canadian Assets (excluding Detour) included in this presentation.

Andre Leite, P.Eng , AUSIMM CP (MIN), MEng, Vice President, Technical Services, is a "qualified person" as defined in NI 43-101 and has reviewed and approved disclosure of the MineralReserves and Mineral Resources technical information and data for Detour included in this presentation.

Cautionary Note to U.S. Investors - Mineral Reserve and Resource EstimatesAll resource and reserve estimates included in this presentation or documents referenced in this news release have been prepared in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the "CIM Standards"). NI 43-101 is a rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. The terms "mineral reserve", "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms as defined in accordance with NI 43-101 and the CIM Standards. These definitions differ materially from the definitions in SEC Industry Guide 7 ("SEC Industry Guide 7") under the United States Securities Act of 1933, as amended, and the Exchange Act.

In addition, the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are defined in and required to be disclosed by NI 43-101 and the CIM Standards; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the U.S. Securities and Exchange Commission (the "SEC"). Investors are cautioned not to assume that all or any part of mineral deposits in these categories will ever be converted into reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in very limited circumstances. Investors are cautioned not to assume that all or any part of a mineral resource exists, will ever be converted into a mineral reserve or is or will ever be economically or legally mineable or recovered.

3

COVID-19 RESPONSE

• Completed more than 21,000 tests at Detour Lake since January 2021

• Outbreaks at Macassa and Detour Lake resolved within three weeks

• Tested more than 1,000 people in 36 hours

• Vaccination clinics held at both Macassa and Detour Lake

4

RESPONSIBLE GOLD MINING: ESG

• $12m Australian Community Partnership Program

• $4.1m commitment to fund multiple projects at the Kirkland Lake Hospital

• Completed third-party GHG audits

• Added a second Z-50 haul truck at Macassa

5

Q2 2021: EXCELLENT RESULTS

6

Production of 379,195 oz beat Guidance

• Op. cash costs: $431/oz (FY Guidance $450-$475)• AISC: $780/oz (FY Guidance $790-$810)

Unit costs beat FY 2021 Guidance

• Net earnings: $244.2M or $0.91/share• Adj. net earnings: $246.9M or $0.92/share

Record net earnings and earnings per share

• Operating cash flow 330.6M • Free cash flow $131.2M

Strong cash flow generation


7

Cash position $858.4M with no debt

Strong balance sheet

• $62M returned to shareholders

Returning capital to shareholders

• Eligible to repurchase up to 26,694,105 shares • Automatic share purchase plan introduced• Up to 5 million shares eligible for purchase

Renewed normal course issuer bid (“NCIB”)


8

• Confirming potential of Saddle Zone at Detour Lake

• Expanding SMC at Macassa

Continued exploration success

• Shaft #4 ahead of schedule• Multiple projects advancing at Detour Lake• Exploration drives at Fosterville on track

Excellent progress with growth projects

Production of 682,042 oz

• Op. cash costs: $482/oz• AISC: $810/oz

Unit costs

• Net earnings: $405.4M or $1.52/share• Adj. net earnings: $414.7M or $1.55/share

Record net earnings and earnings per share

• $100.3M for two dividend payments (both $0.1875/share)

• 2,320,100 shares repurchased for $96.0M, including 945,000 shares in July.

Returned $196.3M to shareholders

YTD 2021: STRONG RESULTS

9

Targeting a strong second half of 2021Poised for value creation

1. See Non-IFRS Measures section in forward-looking statements slide2. Includes general and administrative costs and severance payments. Excludes non-cash share-based payment expense

$ million unless otherwise states

2021 Guidance YTD 2021

AISC ($/oz)1 $790 – $810 $810

Operating cash costs1 $600 – $630 $324.1Royalty expense $82 – $88 $40.8Sustaining capital1 $280 – $310 $141.9Growth capital1 $250 – $275 $128.8Exploration $170 – $190 $88.1Corporate G&A2 $50 – $55 $30.4

Macassa Detour Lake Fosterville 2021Guidance

Production – 2021 guidance (kozs) 220 – 255 680 – 720 400 – 425 1,300 – 1,400

YTD 2021 Production (ozs) 102,759 312,611 266,672 682,042

Op. cash costs ($/oz)1 $450 – $470 $580 – $600 $230 – $250 $450 – $475

YTD 2021 Op. cash costs ($/oz) $639 $674 $192 $482

Kozs 2021 2022 2023

Macassa 220 – 255 295 – 325 400 – 425

Detour Lake 680 – 720 680 – 720 680 – 720

Fosterville 400 – 425 325 – 400 325 – 400

Consolidated 1,300 – 1,400 1,300 – 1,445 1,405 – 1,545

Three-Year Production Guidance

10

KL: ON TRACK TO ACHIEVE 2021 GUIDANCE

$50.0 $61.5 $55.9

$106.5 $110.1 $104.2

$176.7 $169.1$202.9

$150.2

$202.0$232.6

$161.2

$244.2

$0

$50

$100

$150

$200

$250

Q 1 2 0 1 8

Q 2 2 0 1 8

Q 3 2 0 1 8

Q 4 2 0 1 8

Q 1 2 0 1 9

Q 2 2 0 1 9

Q 3 2 0 1 9

Q 4 2 0 1 9

Q 1 2 0 2 0

Q 2 2 0 2 0

Q 3 2 0 2 0

Q 4 2 0 2 0

Q 1 2 0 2 1

Q 2 2 0 2 1

$150.2$0.54/share

$161.2$0.60/share

$244.2$0.91/share

Q 2 2 0 2 0 Q 1 2 0 2 1 Q 2 2 0 2 1

Q2 2021EARNINGS

Q2 2021 NET EARNINGS1 ($ MILLIONS)

Q2 2021 NET EARNINGS ($ MILLIONS)

Difference Between Net Earnings and Adjusted Net Earnings In Q2 2021

1. See Non-IFRS Measures section in forward-looking statements slide

Q2 2021 EPS $0.91

Exclude:

Gain on Warrants ($0.01)

Non-operating sites costs $0.01

Other $0.01

Q2 2021 Adjusted EPS $0.92

Record net earnings of $244.2M or $0.91 per share in Q2 2021

11

Adjusted net earnings of $246.9M or $0.92 per share in Q2 2021

Q2 2021 REVENUE

Q2 2020 Q1 2021 Q1 2021

Gold sales (kozs) 341.4 308.0 364.6

Gold price ($/oz) 1,716 1,788 1,814

CONSOLIDATED REVENUE ($ MILLIONSs)

Factors Driving Revenue Growth vs Q2 2020

Rate impact: +$36MVolume impact: +$40M

Factors Driving Revenue Growth vs Q1 2021

Volume impact: +$101MRate impact: +$10M

$581.0$551.9

$662.7

Q 2 2 0 2 0 Q 1 2 0 2 1 Q 2 2 0 2 1

12

$309.7$340.9

$451.3

Q2 2020 Q1 2021 Q2 2021

Q2 2021EBITDA1

Q2 2021 EBITDA vs Q2 2020

Growth in EBITDA driven by increase in revenues driven by higher volume and gold price.

EBITDA1 ($ MILLIONS)

1. See Non-IFRS Measures section in forward-looking statements slide.

Q2 2020 Q1 2021 Q2 2021

Net earnings 150.2 $161.2 239.8

Finance costs 1.9 0.8 0.8

Depletion & Depreciation 82.6 104.1 111.3

Current income taxes 59.0 43.0 45.3

Deferred income taxes 16.0 31.8 49.7

EBITDA 309.7 $340.9 451.3

* Numbers may not add due to rounding

Q2 2021 EBITDA vs Q1 2021

Change in EBITDA driven by impact on net earnings primarily driven by higher revenue and higher D&D expense.

13

Q2 2021 – CASH FLOW

$792.2 $858.4

$487.5

-$157.0$330.6

-$200.8-$62.0 -$2.3

$0.7

Mar. 31, 2021 Op. cash flowsbefore income

taxes

Income taxespaid

Operating Investing Return ofCapital

OtherFinancing

F/X Jun. 30, 2021

Change in Cash: Jun. 30/21 vs Mar. 31/21($ Millions)

14

STRONG OPERATING MARGINS DRIVE CASH GENERATION

$792.2$858.4

$395.3 $1.2

-$157.0-$82.5

-$45.7 -$14.0 -$17.0 -$11.9 -$50.1

$47.9

Mar. 31,2021

MiningOperations

NetInvestments

Cash taxespaid

GrowthCapital

Exploration Holt Complex& NT

G&A ShareRepurchases

Dividends Other Jun. 30, 2021

Change in Cash : Jun. 30/21 vs Mar. 31/21($Millions)

15


FOSTERVILLE:Q2 and YTD 2021 RESULTS

Q2 2021: $353 vs $273 in Q2 2020

ProductionQ2 2021: 158 kozs vs 155.1 kozs in Q2 2020

Operating Cash Costs Per Ounce Sold1

2021 Guidance

AISC Per Ounce Sold1

Production: 400 – 425 kozsOp. cash costs: $230 – $250/oz

Q2 2021: $162 vs $129 in Q2 2020

16

Q2 2021 Tonnes: 170,315Grade: 29.2 g/t Recovery: 98.7%Recovered: 158.0 kozs

Q2 2020Tonnes: 123,473Grade: 39.5 g/t Recovery: 99%Recovered: 155.1 kozs

Q1 2021Tonnes: 174,206Grade: 19.8 g/t Recovery: 98.2%Recovered: 108.6 kozs

YTD 2021: 266.7 kozs vs 315 kozs in 2020

YTD 2021: $192 vs $127 in 2020

YTD 2021: $385 vs $293 in 2020

16


DETOUR LAKE:Q2 and YTD 2021 RESULTS

Q2 2021: $996 vs $1,090 in Q2 2020

ProductionQ2 2021: 165.9 kozs vs 132 kozs in Q2 2020


2021 Guidance



Q2 2021: $610 vs $573 in Q2 2020

YTD 2021: 312.6 kozs vs 223.5 kozs in 2020

YTD 2021: $674 vs $628 in 2020

YTD 2021: $1,027 vs $1,098 in 2020

Q2 2021 Tonnes: 5,881,953Grade: 0.96 g/t Recovery: 91.5%Recovered: 165.9 kozs

Q2 2020Tonnes: 5,655,992Grade: 0.79 g/t Recovery: 91.7%Recovered: 132 kozs

Q1 2021Tonnes: 5,701,704Grade: 0.87 g/t Recovery: 92.2%Recovered: 146.7 kozs

17

DETOUR LAKE: MAJOR PROGRESS ON CAPITAL PROJECTS

• Major Projects:• Mill Enhancements • Tailings Expansion (Cell 2)• Air Strip• Camp Expansion• Cell Tower Construction• Assay Lab• Welding Shop• Surface Infrastructure• Mobile Equipment Procurement

1. See Non-IFRS Measures section in forward-looking statements slide.

18

DETOUR GOLD: THE RIGHT ACQUISITION AT THE RIGHT TIME


MACASSA:Q2 and YTD 2021 RESULTS

Q2 2021: $848 vs $841 in Q2 2020

ProductionQ2 2021: 55.3 kozs vs 41.8 kozs in Q2 2020


2021 Guidance



Q2 2021: $586 vs $547 in Q2 2020

19

YTD 2021: 102.8 kozs vs 92.7 kozs in 2020

YTD 2021: $639 vs $541 in 2020

YTD 2021: $895 vs $846 in 2020

Q2 2020Tonnes: 77,624 Grade: 17.2 g/t Recovery: 97.6%Recovered: 41.8 kozs

Q1 2021Tonnes: 76,231Grade: 19.8 g/t Recovery: 97.9%Recovered: 47.4kozs

Q2 2021Tonnes: 90,796 Grade: 19.3 g/t Recovery: 97.9%Recovered: 55.3 kozs

19

MACASSA:EXCELLENT PROGRESS WITH MAJOR PROJECTS

• Shaft #4 Work Completed Q2 2021:

• Sinking advanced 600’ to 5,600’

• 5360L station completed

• On target for completion in late 2022

• Currently one month ahead of schedule

• Underground Infrastructure

• Ventilation Upgrades

• New Shop

• Mill Enhancements

• Near-Surface Ramp20

20

FOSTERVILLE Q2 2019 MINE PLAN

DETOUR LAKE: CONTINUED FOCUS ON SADDLE ZONE

21


MACASSA: TARGETING SMC, AMALGAMATED AND MAIN BREAKS MACASSA MINERALIZED ZONES

22


FOSTERVILLE – TARGETING LOWER PHOENIX, CYGNET, ROBBIN’S HILL

Growth Development Budget 2021 – 5,683mGrowth Drilling Budget 2021 – 231,861m

23

1. See Non-IFRS Measures section in forward-looking statements slide2. Includes general and administrative costs and severance payments. Excludes non-cash share-based payment expense

KL: POISED FOR A STRONG SECOND HALF OF 2021

24

RECORD EARNINGS IN Q2 2021

STRONG CASH FLOW GENERATION

ON TRACK TO ACHIEVE FULL-YEAR 2021 GUIDANCE

WELL-POSITONED TO OUTPERFORM GOING FORWARD• CONTINUED EXPLORATION SUCCESS AND PROGRESS AT DETOUR LAKE• ON TRACK TO COMPLETE #4 SHAFT AT MACASSA IN LATE 2022• EXPLORATION PROGRAMS ADVANCING AT FOSTERVILLE

KL: MULTIPLE CATALYST TO DRIVE FUTURE VALUE

a leading senior gold producer: low costs, financial … · 2021. 7. 29. · andre leite, p.eng ,...

Documents