Kirkland Lake Gold delivers record gold production for 9 months and record guidance fro 2018

  On October 9 Kirkland Lake Gold delivered it's report on 9  month gold production before it's Q3 financial performance report.There were some interesting highlights.The production of 180,155 ounces exceeded it's target levels and means that it will likely hit it's quite high annual guidance levels at 635,000 ounces.The big producer here was the Fosterville mine as was pointed out in a previous blog on Workathon.This blog feels that this is the engine driving Kirkland Lake and will continue to do so.KL has grown considerably since 2016.In 2016 KL bought Newmarket Gold the owner of Fosterville mine,Stawell mine and the Cosmo mine for $1 billion and Kirkland Lake Gold was valued at $2 billion. Now it's market capitalization is $6 billion.This while the price of gold has  largely gone sideways since 2016.
                     Production Levels
 The Fosterville mine produced 90,000 ounces of gold about half of  total production of 180,000 ounces.But the Cosmo mine was shut down for care and maintenance.Total production for 9 months was 492,500 ounces and Kirkland Lake is on track to hit it's guidance level of  635,000 ounces for 2018.This blog sees this as a little low and predicts 2018 production of 690,000 ounces as Q3 production was 30% higher than Q3 2017 and Q3 2018 was 10% higher than Q2 2018.
                New Production
  The Fosterville mine has two fault zones that are barely explored;the Lower Phoenix and the Eagle fault.The Lower Phoenix has very high grades of ore(40 to60 grams/tonne) and the Eagle fault has high grades.But KL has opened a new zone called the Swan Zone with ore at 30grams/tonne.And it is getting new production from the Swan Zone.As development moves south it is likely that the ore grade will rise as will production from the Fosterville mine (see details in Workathon 20/01/2018) .
     The Cosmo m ine is shut down nown in order to carry out care and maintenance and it appears that they have discovered a new vein off of the existing fault.This will increase the estimated size of the ore body.But the former owner Newmrket Gold discovered an ore body on the other side of the Cosmo basin.KL has yet to explore it.Cosmo production could probably double in size from  it's 2017 levels.
               What about the Price?
    A Workathon blog predicted at the start of 2018 that KL would hit $30 soon. It did hit $30 (almost $31) and then got caught in a market correction.Now it is trading around $28 per share.This blog does not like to predict the price based on production only;there is other important information in the quarterly report that is needed.But even if KL only hits it's target production of 635,000 ounces then it will still likely hit $31 again.But if production increases at it's new Swan zone and the Cosmo mine starts in production again then look for total production of 690,000 to 700,000 ounces for 2018.This might send the price of KL to $32 or $33 by January.Look for more production news in the fourth quarter on increased production in the Lower Phoenix and Eagle fault.KL needs to get more equipment into these areas.
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