Kirkland Lake Gold Ltd. (KL) Q1 2021 Results Earnings Conference Call May 6, 2021 2:00 PM ET
Mark Utting - Investor Relations
Tony Makuch - President and CEO
David Soares - Chief Financial Officer
Evan Pelletier - Vice President, Mining, for Kirkland Lake
Larry Lazeski - General Manager of Lake Mine
Ian Holland - Vice President and Co-lead of Australian Operations
Eric Kallio - Senior Vice President of Exploration.
Natasha Vaz - Chief Operating Officer
Conference Call Participants
Cosmos Chiu - CIBC
Ovais Habib - Scotiabank
Mike Parkin - National Bank
John Tumazos - John Tumazos Very Independent Research, LLC
Carey MacRury - Canaccord Genuity
Good afternoon, ladies and gentlemen. My name is Jason, and I will be your conference operator today. I would like to welcome everyone to the Kirkland Lake Gold conference call and webcast to discuss the company's first quarter 2021 financial and operating results. [Operator Instructions]
With that, I would now like to turn the call over to Senior Vice President of Investor Relations, Mark Utting.
Thanks very much, operator, and good afternoon, everyone. Welcome to Kirkland Lake Gold First Quarter 2021 Conference Call and Webcast. On the call today are many members of the Kirkland Lake Gold senior management team.
Speaking today will be Tony Makuch, our President and CEO; David Soares, our Chief Financial Officer; Natasha Vaz, our Chief Operating Officer; Larry Lazeski, our General Manager for Detour Lake Mine; Evan Pelletier, our Vice President of Mining for Kirkland Lake; Ian Holland, our Vice President and Co-lead of Australian Operations; and Eric Kallio, our Senior Vice President of Exploration. There are several other members of the management team on the phone as well.
After we go through the presentation, we'll open up the call to questions. [Operator Instructions] The slide deck that we'll be referring to is available on our website, both on the homepage and in the Events section.
Before I get started, I would like to direct everyone to the forward-looking statements on Slide 2 on our slide deck. Our remarks and answers to questions may and likely will contain forward-looking information about future events affecting our company. Please refer to Slide 2 as well as the forward-looking information section of our most recent Management discussion and analysis dated May 05, 2021, for more information.
Also, during today's call, we'll be making reference to non-IFRS performance measures. A reconciliation of these measures is also available in our most recent MD&A. Finally, all figures mentioned today will be in U.S. dollars unless otherwise stated.
With that, I'll now turn the call over to Tony Makuch, President and CEO of Kirkland Lake Gold.
Thanks, Mark. And thanks everybody for being on the call. I know, it's been trying times for people, but at the same time, it's a pleasure to get the opportunity to give a update on how much success we’ve had in Kirkland Lake in Q1 of this year. We're going to start on slide four, and actually getting back to just the thoughts of starting off with – I mean, these are challenging times. But there are also opportunities and you get to know us more and more as we go through this.
And I know we're all going through COVID fatigue and it's affecting a lot of people in a lot of different ways, but a lot of good is coming out of people and we really got to acknowledge the support we're receiving from shareholders, from communities, from even the support we received from the local health communities up in Kirkland Lake and [indiscernible] region in north-eastern Ontario, as well as the support from the people in Australia.
Also, we have to acknowledge the people that work for us. These are definitely trying times for the families that come into work and performing and putting in a good day's work this time and we really appreciate all the efforts been happening. And our main goal is to maintain a safe workplace and definitely there's things we’ve been constantly evolving and changing and it could be challenged, but because of the people and the support we're getting from all the people that work for us, I think, we're moving forward and we're winning the battle.
Anyways with this slide, I’ll begin to talk about COVID. And in terms of a COVID-19 protocols, we have a lot of protocols in fact and we continue to [indiscernible] quarter. And as well, we included new measures including much more rapid testing at Detour Lake. We can test basically anyone who come to our operation. I mean, anybody can get tested within 15 minutes. We will give you the result.
In terms of some of the impacts of COVID-19 during the quarter, we did have eight workers test positive, five at Macassa, and three at Detour. In every case, that this happened, the workers were fully recovered, and there's been no additional transmission of the virus on site.
The five cases at Macassa were all in early March, and they were deemed an outbreak as defined by the local health unit. In response, we shipped 64 rapid test kits and over 1200 swab kits in Macassa and tested the entire workforce. The outbreak was resolved quickly with no further transmissions on site.
Just over a week ago, we had another occurrence at Macassa. Again, classified as an outbreak by public health and involved our near surface ramp project at Macassa, where we're developing to that near surface or and we ended up here, overall, seven people tested positive. We did suspend the work on the project and tested all people during the period of time and project was halted for just under a week and I can’t tell you we had no further cases emerging. We have reason to work on this project last week here.
Turning to slide five. Q1 2021 was also a very important quarter for us in terms of our commitment to responsible mining. We released our 2021 sustainability report, and immediately, we highlighted a great deal of progress the company has made both in terms of the work we are doing, and our capability around reporting and disclosure of ESG issues.
Also, during Q1 we pledged to achieve net zero emissions by 2050 or earlier. We are well positioned to achieve this goal and we’re already being an industry leader in reducing and minimizing greenhouse gas emissions. During the quarter, as part of to follow our pledge, we made a commitment to invest $75 million per year for five years in technology and innovation at our sites in working towards looking at alternative fuels and supporting our efforts toward reducing our carbon footprint.
And a big part of it is in supporting our communities. These are three key areas we will focus on in here. And one, as I talked about earlier was investing in alternative fuels and energy, looking for new ways to do work that reduces our carbon footprint, building the mines of the future by promoting automation and digitization, looking for alternative ways we understand the impact that we do at site, whether it be Macassa, or at Fosterville to find ways we can minimize that impact, we eliminate that impact or offset it in some ways.
And also, I think, a big thing what we've been doing is investing in communities and investing in community, especially during the times while our focus on mental health, homelessness and addiction, senior citizen care and a big area that we feel is important in youth training and development for a number of reasons.
Turning to slide six, we get into the results of the first quarter and we returned a solid performance. We previously indicated that the first quarter of this year was expected to be our lowest quarter production and the highest quarter of unit cost for the year. We even put out guidance for the quarter to drive that point home. We meet our guidance for use our production and within our own sustaining costs and the beat of our guidance and even you know our own our own budgets for the quarter really reflected a very strong, strong operating performance and from the people want to work done. We really came together a lot in March. And for the quarter we produced 302, 000 ounces. And operating cash cost of $542 an ounce and AISC $846 an ounce. I’m sure everybody can read that.
Looking at earnings and cash flow; the adjusted net earnings of $0.63 per share with free cash flow of $43 million in the quarter. Assuming current gold prices, we fully expect to see stronger numbers for the balance of the year on financial performance and that applies also our operating results. We also returned just under $100 million to shareholders. This included $50 million in dividend payments during the quarter following the 50% decrease in the quarterly dividend and $46 million related to our NCI share repurchases through our NCIB.
Moving to slide seven now, we had some key developments as well, in quarter. We achieved additional exploration success. And in fact, we issued a press release earlier this week with very encouraging total results in Detour Lake. And really this was – there’s been a number of very good results coming out at Detour in the [indiscernible]. We also continue to make excellent project with our growth projects during Q1. Our number 4 Shaft project at Macassa remained ahead of schedule. And the multiple projects at Detour Lake are going very well. And Larry and Natasha will talk a little bit about that later on in terms of some of the progress there.
Also, we issued a new technical report for Detour at the end of the quarter. It outlines a very attractive project that we expect to improve upon going forward, maybe supported by what we're going to live with the drilling and come up with an updated resource and reserve. But even if you go to that, look at that, just look at that report and our projection now for the next five years, production in 680,000 to 720,000 ounces a year and then growing to 800,000 ounces a year. That report does show in depth and then for -- while you go through a low grade cycle and extra stripping for a year and a bit, then grow production over 900,000 ounces a year in that report, part of what we're going to do.
We're going to work on with an updated resource and reserve estimate that we expect to come at the end of 2021 going into 2022 and updated mine plan, is working towards maintaining that and once we get the 800,000 ounces a year to try to minimize that trough or eliminate that trough and see a way to move forward. We have been permitted to process upto 20 million tonnes per year. In our current forecast, we just see ourselves getting up to 20 million tonnes per year.
Anyway, we’re still on slide seven. There’s also few things I believe I can emphasize as well. And I think, there's lots of excitement. But in terms of Kirkland Lake Gold, we think we're definitely uniquely positioned to perform very well going forward. And why was that? Why would I say that? Well, we haven't completed Q1, we are now poised to have three very strong quarters over the balance of 2021. We were on track to achieve all of our 2021 guidance. And we have a number of catalysts coming that we believe have rerate potential to our valuations. And to tell you a little bit more of that, what I mean by that.
Let’s start with Detour Lake on slide eight, I did give some discussions on the technical report. And in terms of what it was doing, and as I mentioned, part of us going forward as we see is not only is this a very good project now, and very definitely be positioned for significant cost reductions and significant levels of production for quite some time, quite a lot limelight. But as you can see, as I mentioned earlier, we expect to be able to come up with a definitely an improvement to this as we as we go forward into 2022.
On slide nine, value creation you see, and this is supported with some of the expiration results that continue to come out. And this slide here, as shown, is taken from that expiration press release. Eric will be able to give a little more color on it. But you can see what the drawing and what's happening both in terms of extending the resources, the sort of mineralization, both to the west through the Saddle zone between the potential – sorry, the current [indiscernible] future West pit.
But also, you can see that the mineralization we identified at depth, both current resources and reserves add to the common main pit and the resources and reserves that as the West pit, future West pit and then for the West and I can say on this on this long section, it also shows the bottom of the old mine workings from the Detour Lake underground mines. And this is basically demonstrating over four maybe four or five kilometres surface long section. And the potential for – we have seen 30 million and 40 million ounces of mineral inventory of mineral resources above 700 meters. They've been little to almost no testing below the 700 meter level, below the old underground mine that was at Detour Lake and we haven't even found the ore body yet. So, I don’t know -- I think there's lot of upside in terms of Detour.
Turning to slide 10, I've already mentioned that the number 4 shaft project at Macassa is going very well. Really the key point is that it will mean when the shaft would – what would have been when the shaft is done. We're talking, we've been talking for quite some time that this shaft will be very transformed into Macassa. Fundamentally, we're building a new mine at Macassa. And as we see going into – sort of by Q4 of next year of 2022, we'll be able to start taking advantage of the shaft. And with the new shaft now it will allow us to grow production, where we're targeting to grow production over 400,000 ounces by 2023.
But it's going to improve working conditions in the mine, improve ventilation in the mine, it will improve productivity. This shaft alone will be over 4000 tonnes a day. If we go back to the number three shaft by selling around 2000 tonnes a day capability, 2100 tonnes a day capability, but we’re at the 4000 tonnes a day with this new shaft. We still having the old shaft to help us in terms of doing that we see that. The combination of improved working conditions, improve shaft productivity, will improve our unit cost substantially, easily bring in all staining possible of $600 per ounce.
And very importantly, facilitate a whole new chapter, because we’re just going to create our own exploration platforms underground, if you go back and explore the Kirkland Lake camp. Kirkland Lake camp is 100 years old. And there’s been lot of working over the 100 years in terms of gold production, but when you look at in terms of what we have, it's just as exciting, it’s almost like we hit a new discovery in it.
Turning to slide 11 now. Many of you know we also make changes at Fosterville in terms of reducing the production in Swan zone and drilling throughout the mine while we executed drilling programs.
In terms of that, there's two key points I'd like to make. First, that anywhere between 525,000 ounces per year, with cash costs between $200 and$300 per ounce. Fosterville will still remain a very profitable mine and in fact we expect to continue to be one of the most profitable gold mines in Australia. And really, definitely intend to talk globally.
Second, and most importantly, we continue to believe that there is very attractive exploration upside if possible. That's why we're investing in our $90 million of exploration this year. Looking at a share price, we firmly believe that there is nothing in our valuation today for future exploration success, if possible. With the exploration program, we are completing in the multiple targets we have to drill, all containing [indiscernible] providing the – there still have been import system here. We think there's – we demonstrated creating value in Kirkland Lake Gold is past with expiration and with the diamond drilling. And we see going forward, that there's still lots of value creation to come from Fosterville.
Turning to slide 12 and just to summarize, before I turn the call over to David, we believe Kirkland Lake Gold is very well positioned right now to outperform. Number one, we are poised for three strong quarters of performance this year. And we expect to lead to a very strong 2022. We are on track to meet all of our 2021 guidance. We just issued an attractive technical report for Detour Lake and we'll be issuing a new one in 2022 that we believe will establish Detour Lake as one of the world's premium gold mines. We will effectively be opening a new mine in Macassa this year leading to higher production, lower unit costs, increased profitability and very attractive exploration upside. And we are drilling extensively at Fosterville and I believe the success we’re getting is very accretive to our share price.
We’ll now turn the call over to David Soares, Chief Financial Officer to give you a little bit of highlights on the financial results. Thanks
Thank you, Tony and good afternoon everyone. I will be starting on slide 13. In Q1 2021, adjusted net earnings totaled $167.8 million, or $0.63 per share. The difference between the adjusted net earnings per share of $0.63 and net earnings per share of $0.60 in Q1 2021 was mainly related to the exclusion of the hold complex asset impairment charge of $6.5 million and $5.7 million of non-cash foreign exchange gains reflecting the strengthening of the Australian dollar against the U.S. dollar during the quarter.
In addition, non-operating site costs of $4.2 million incurred at the [indiscernible] which are not reflective of our operations; and COVID banking-related costs of $2.9 million mainly at Detour Lake related to the introduction of rapid testing are also excluded from adjusted net earnings. Depreciation also had an impact on the quarter. We will go through depreciation and depletion expense in more detail in subsequent slides.
Turning to slide 14, in Q1 2021 the total revenue is $551.8 million, the change from Q4 2020 is mainly impacted by decreased sales volumes and the 87 per ounce decrease in the average gold price, compared with Q1 2020 of 202 pounds increase in average gold price from $1,586 to $1,788 accounted for $55 million of the revenue growth year-over-year offset by a decrease in the ounces sold.
Looking at the EBITDA on slide 15, Q1 2021 EBITDA totaled $340.9 million. The change from Q4 of 2020 primarily related to a 20% reduction in revenues impacted by lower volumes and lower gold price, higher production costs reflecting higher milling and consumable costs at Detour, an increased mining rates and milling costs on Macassa. Compared with Q1 2020, the change in EBITDA was largely driven by $72.9 million of foreign exchange gains in Q1 of 2020, resulting from a strengthening of the U.S. dollar -- as well as higher production costs, mainly reflecting three months results from Detour Lake in Q1 2021 versus two months in Q1 2020. All this is partially offset by $33.8 million of transaction costs related to the Detour acquisition last January 2020.
Depletion and Depreciation totaled $104 million in Q1 2021 compared to $121 million in Q4 2020. As discussed on our fourth quarter results call, depreciation in the fourth quarter of 2020 was impacted by a onetime adjustment of approximately $10 million resulting from purchase price allocation adjustments on inventory at Detour Lake.
The remainder of the change from the fourth quarter in deprecation is mainly due to lower sales volume. For the balance of the year, we expect depreciation to remain at levels similar to the last few quarters, excluding this onetime adjustment.
Turning to slide 16, to look at our cash balance and cash flow. On the slide you will see that our operating cash flow was strong. We generated $272 million of operating cash flow in the quarter before $64 million in cash taxes paid in the quarter.
During the quarter, we invest in key assets, spending $165 million capital as well as $1.6 million on strategic investments and receive $2.8 million from the sale of investments in the quarter.
Cash used for financing activities of $98.2 million reflected the $46.3 million we used to repurchase shares in Q1 as well as $15.3 million used for payment on the Q4 dividend.
Moving to slide 17, it looks at the change in cash in a slightly different way. You can see that the largest contributor to growth in cash was our operations, which generated about $294 million of cash, which is before income tax paid of $64 million. Growth capital investment of $46 million exploration spending $42 million. Other cash outflows include costs incurred at our non-operating sites at the NTN hold complex of $10.2 million and corporate G&A of $14.9 million.
As noted in the previous slide, during the quarter $96.6 million was returned to shareholders through share repurchases and dividend payments. The $56 million in other largely reflects payment of AP balances at year end.
Next, I’ll turn it over to Natasha Vaz, our Chief Operating Officer.
Thanks, David and hi everyone. Okay, so starting on slide 18. For the first quarter of 2021 Detour Lake produced 147,000 ounces, which actually exceeded our target levels because of higher than planned average grade for the quarter.
Also, the [Technical Difficulty] that we processed in Q1 2021 was a record level for first quarter content. On March 24, this year, we actually achieved a new day record at the processing plant of over 3000 tonnes yield. So, we're moving in the right direction.
Alright, so now looking at unit costs, operating cash costs average $748 an ounce for the quarter. This increase in operating cash costs per ounce sold compared to Q1 last year largely relates to a stronger Canadian dollar in Q1 2021 as well, we incurred highest stripping and milling costs this quarter.
The increase compared to Q4 last year, so that mainly reflects higher low maintenance cost and higher cost for consumables such as [Technical Difficulty] quarter. For all-in sustaining costs per ounce sold, Detour averaged $1,064 an ounce which was down from the previous quarter, reflecting lower different stripping costs in sustaining capital as well as lower expenditures relating to the trading management error.
I'll now call on Larry Lazeski our General Manager of Detour Lake lead the project growth in Q1
Thanks, Natasha. So looking at slide 19, as Tony mentioned earlier, we have an array of projects ongoing at Detour Lake which supports the vision for the mine. Growth capital expenditure in Q1 2021 stood at $27.8 million. This includes $14.9 million related to deferred stripping and phase 4 and the maintenance. The remaining $4.9 million is related to the procurement and mobile equivalents and projects involving Kirkland’s management area, process plants enhancements, as well as construction of the new assay lab and airfield. We’re fully mobilized and I've already done work on the tailings dam with an earlier start than in years.
As for the process plant enhancements, we're on track to accomplish our objectives for this year which supports our ramp-up plans and then finally mine plants. This year focuses on crushing CIP and detox circuits. Initial surface infrastructure projects including new core shaft, fuel maintenance contract, plant expansion, improved access roads and cell tower construction. The state-of-the-art communications improvements initiated this year will support our investments in technology for years to come.
So, with that I'll turn the call back to Natasha.
Thanks, Larry. Okay, so turning to Macassa I’m speaking to slide 20. Production in Macassa in Q1 2021, with just over 47,000 ounces at an operating cash cost of $699 an ounce and an defending cost of $947 an ounce. The change in production from Q1 of last year reflected lower time to progress while the change from Q4 2020s is mainly due to a lower plan grades during Q1 2021 as a result of mine sequencing.
The increase in operating costs compared to both prior periods, it largely reflected higher operating times mine in Q1 2021. And this is in terms of both ore and lease. We also had increased maintenance costs related to mobile mining equipment and processing. As well we have the impact of a strong dollar.
As mentioned AISC per ounce sold averaged $947 an ounce in Q1 2021, which was largely unchanged from the previous quarter or higher operating cash costs were offset by lower sustaining capital expenditures. The sustaining capital totaled about $9.3 million in Q1, reflecting the completion or near completion of the number of projects during Q4 2020.
We also had lower levels of capital development in this quarter and we also revised the timing of delivery of new mobile equipment. Okay, so I'll now ask Evan Pelletier, our VP, Mining, Kirkland Lake to look at our project for Macassa.
Thanks, Natasha. Looking at slide 21, we had a very good quarter in terms of our projects. As Tony mentioned earlier, we continue to make excellent progress on the shaft, for shaft advancing approximately 750 feet in Q1 and reaching a depth of 5000 feet by the end of March. Another project where we made good progress was in Q1 was our ventilation expansion involving the development of two new vent raises. The first raise is targeted for completion by the end of this quarter, with the second expected to be completed in the first half of 2022.
The two new raises will almost double the ventilation going into the mine, dramatically improving working conditions. We achieved a major milestone on the vent raises on Tuesday this week; we hope to resurface with the first raise. These raises are significant and that they will be two of the longest raises ever completed for mine in North and South America, extending over 3300 feet. So to provide some context on that, that's twice the height of the CN Tower.
I'll now pass the presentation over to Ian Holland, Vice President Co-lead of Australian Operations.
Thanks, Evan. Good evening and afternoon, everyone. I'll be speaking to slide 22. Fosterville produced just under 109,000 ounces in Q1 2021. That compared to approximately 160,000 ounces in Q1 2020 and 164,000 ounces the previous quarter.
The change from both prior periods, mainly the result of lower average grade consistent with our previous and standard playing to return production in the swan zone by increasing mining activities in other areas of the mine. The intention is to create a more sustainable operation over a longer period while I continue extensive exploration program.
Production in Q1 2021 exceeded plant levels mainly reflecting greater performance in the Swan Zone in March. The Swan Zone accounted for 42% of tonnes milled and 72% of ounces produced in Q1 2021, compare that to the 62% and 93% respectively in Q1 2020.
Looking at costs, operating cash costs in Q1 2021 were $228, while all-in sustaining costs of $423. Both measures were higher than in prior periods, with the key factor driving unit cost performance for an impact with a lower grade on sales volume.
In addition, compared to Q1 2020, we also had significantly higher tonnes mined and milled. Consistent with our plan, partly offset the reduced grades with increased throughput levels. So those are foreign exchange impact given the significant strengthening of the Australian dollar, which contributed to a higher cost, particularly versus last year's first quarter.
I’ll now pass the presentation over to Eric Kallio, Senior Vice President, Exploration.
Thank you very much, Ian, and good afternoon, everyone. Thanks, Ian, and good afternoon, everyone. My first slide today will be number 23 and related to Detour, where we're continuing to advance the large-scale program commenced in 2020 to evaluate resource potential surrounding the main and future West pits.
As previously announced, the program includes the minimum of 250,000 meters and aiming for an updated resource and potentially expanded mine plan for announcement in early 2022. In terms of progress to date, we believe it's been going very well, with close to 70,000 meters of drilling completed in 2020, another 60,000 in Q1 and things still proceeding very, very well.
Additional to this, we’ve now had, we’ve now already seen quite a large number of assets return and had five press releases, including one earlier this week with results that we believe are very, very urgent. Summarizing some of these results is the image on the current slide, which is a long section from the latest release, and is indicating 40 new zones, which are mainly from Saddle zones, but with a number of others from both under into the West and the future West pit.
Although all areas continue to look very good, we're especially happy with what we see in the Central and East part of the Saddle, where drilling continues to intersect broad zones in our addition, a very good open fifth grade with higher grade southern results.
Significant results further central in these areas are shown on the image with pink and green dots, and as indicated, include a number of outstanding intersections such as 1.13 over 155.1, 2.03 over 73, 9 over 13 and 31 over 5, all from the lower part of the current resource scale, as well as 1.08 or 56 and 0.9 over 103 meters from areas very close to surface. Additional to the block, we also saw some very good results nearby to the future Western, where again, the intersections not only demonstrated very good listing grades, but extension mineralization to depth and to the West.
Key results from all tests in the depth are shown on the image in blue, and include intercepts such as 2.94 over 51.9, 2.37 over 36 meters, which intersect the central part of the area between the 25-and 50-meter level below the current pit shell. We also have 2.26 over 21 and 1.04 over 46.9 on the East side of that pit area.
Key holes to the West are highlighted here in yellow, and as indicated, not only confirm strong validation up to 400 meters in this direction, but include a high level of 10.66 grams per tonne over 13 meters.
The summary work today at Detour continues to advance very well and I argue improving our initial theory that there's a much larger goal system here than previously thought.
So now turning to my next slide, Slide #24. You see an image for the Macassa mine, which outlines the overall exploration plan for 21 as well as progress for Q1. As announced in the past, we're aiming for a minimum of 150,000 to 300,000 ounces to replace ounces mined this year and it’s going to be from broad different areas, but strongly focuses of the efficacy of the current resource shown here in orange, as well as implemented break to the South. These are all high potential target areas, where we've always had a lot of success in the past and we're very optimistic again this year.
Additional to this, the plan includes work on a number of new areas on 34, 51 and 58 levels, where there has been not been any recent work, but in our view, have a lot of new potential to add.
Work on the 58 level will be done mainly from a new drift being developed for access to the number four shaft and targeting both the up dip extension of the SMC, as well as the West part of the main break at depth, where we announced high grade intercepts and the new high-grade corridor early last year.
Work on 34 will be from a drift just south of number two shaft and testing for extensions of the main break, which is shown here in the dark blue in the background, and as well as looking for new structures, which could be above in parallel to the South mine complex.
And the work on 51, which is on the far left side of the slide here will be from a new drift, which we're going to be developing this year and extending West from three shaft. So in this area, what we'll be targeting is really the down plunge extension of the main break. So again, the larger new structure, which you see on the slide here. And this area is going to bring us past the previous limit of path mining, where there's very little hefty.
Aside from this we have a small amount of work both on surface and in the new service ramp, where again, we still feel there's a lot of areas that have not been fully tested and a lot of untapped potential.
In terms of progress to date, I believe it's been going very well. The 46,000 meters of drilling completed in Q1. And while a lot of this focused on the SMC, but with some small amounts on 34 and 58 already started. We also accomplished about 450 meters of development with good portions of this being completed to gain access to the new targets on 34, 51 and 58. Although no results to report today, we see good progress being made so far and we've been confident for success in 2021.
So now turning to my next slide, which is #25. We should see an image for the Fosterville mine area and outlining the expiration plan and recent progress here in Q1 as well. And as with Macassa, program here is aiming to at least try and replace all ounces mined in 2021, which is in the order of both 450,000.
As indicated, the plan includes work on a number of different targets, with most of the focus being on the lower part of the Fosterville mine and the Robbin’s Hill area, with remainder being on a series of new what we believe are very interesting targets line to the South.
Work at Fosterville will be all from underground and involve drilling with a strongly focused down plunge of the Swan zone to both convert and expand the current resource. As you know, this is a very high potential area where we already have - we already have widely spaced drilling indicating that the system extends for at least another 900 meters down plunge and with locally higher grades and visible gold. So we're putting a lot of emphasis on this.
Some of the work is planned from existing drifts near the upper part of the zone and already in progress in Q1. But the largest part of this will actually be from a new hanging wall drive, which is being developed near the 3900 level and aiming for completion in mid-June. So as such, most of the new results from this drilling, which we believe will be quite positive will only become available to us later this year.
Work at Robbin’s Hill will be done mainly from drilling from surface, but expecting to do at least some drilling from underground platforms in our new exploration drive, starting sometime in Q3. And as with Fosterville, the drilling will be strongly focused on the area down plunge of the current reserve. We already have seen some good success, but believe there's a lot more potential for ounces and higher grades.
In terms of progress to date, work has been proceeding well against and include over 39,000 meters of drilling into key targets at both Fosterville and Robbin’s Hill. We also have 1.8 kilometres of development on our two main exploration drives at North Phoenix and Robbin’s Hill.
So in summary, I think we had a pretty good overall quarter for exploration, and still be feeling very confident on achieving our goals for 2021.
With that, I will now pass the call back to Tony.
Hey, thanks. Thanks, Eric, and thanks to Natasha and Larry Lazeski and Ian and Mark for supporting this call, I hope may be by giving you a variety of speakers, we keep every interested.
Anyway, I'm just going to summarize on one Slide 26 and maybe want again no, I think if we just keep things in and very shortened, that's in terms of what the highlights are for the quarter. It wasn’t very strong solid quarter from our perspective. We've beaten any of our own targets for the quarter. We are now placed the three very strong quarters over the balance of the year and we're on track to achieve all of our full-year 2021 guidance.
And we see, where projects coming on this year in 2022, being very strong. The year 2023, having a lot of developments and maybe you'd see a lot of upside as we continue with the company forward. But very importantly, we are well-positioned and coming out of end of Q2 to outperform a peer group in the coming months and really based upon a number of two, three points. One is we've had - we continue to have significant success at Detour lake.
And we really believe that Detour we're going to be a benefit -- Detour is one of the premium deferral amount in Auckland in North America and definitely in the world. And we'll be demonstrating that over the next while. Number two, we have continued progress with our #4 shaft at Macassa, combine that with exploration operating and success and operating growth where we are going to be creating a new mine with significant upside.
So, we see Macassa as being coming into 2023 being one of the most - one of the top 10 in terms of largest underground gold mines and probably one - again, one of the most profitable gold mines in the world. And #3, with our extensive exploration program at Fosterville, we see we have an attractive exploration upside wind. And in terms - be able to demonstrate it. Fosterville is already one of the best gold mines in the world.
With the exploration success and new discoveries IN mineralization in Fosterville, which there's all things clean to it, we'd be able to demonstrate long-term sustainability at Fosterville as well. So, we have three solid projects, very profitable company, cash flow generating and we're focused on responsible mining and really being able to be leaders in terms of moving forward, in terms of in a change and supporting a lot of change and lots of support for the communities that we work in.
So - and we thank you again for participating in today's call, and we're happy to take any questions.
[Operator Instructions] Your first question comes from the line of Cosmos Chiu from CIBC. Your line is open.
Hi, thanks, Tony and team. Maybe my question is on cost. There’s nowadays some concerns about inflationary cost in the mining sector. With a big project like shaft #4, are you seeing any kind of impact in terms of higher input cost and how are you managing that risk? And I guess, if we can talk about the strengthening Canadian dollar as well. In this case, it might actually help if you're making any purchases in U.S. dollars. But could you talk about inflation and how do you manage that risk for big project like Shaft #4?
Yes. I'll start and I’ll probably let Natasha and Larry give this a little bit of color in terms of some of the things they're seeing and same as Ian and Evan in terms of being in Macassa. But first off, at Shaft #4, I mean that project has been ongoing for quite some time. Lot of the procurement it's been done. We - you're correct that there is inflationary effects and there is extra cost associated with a lot of things coming out and learning how to live within this pandemic-type environment and these processes.
But for the most part, the #4 Shaft since the scope is defined, since the - there is a lot of low cuts in the project is where you find, we don’t see ourselves going over budget at all at Macassa in terms - and schedule in terms of completing that. We are seeing impacts in fuel costs et cetera. But we'd be better if I let Larry and Ian and Evan give some color there. I don’t know, Larry you want to give a little bit of thoughts on where you see some costs happening?
Yes. We're seeing an impact, I guess with some of our consumables. Fuel, in particular, we’re seeing increased price of fuel. It's fairly material on Detour, obviously, because a high volume when as we move. We're seeing a slight, I guess, increase on maybe some things like steel and in parts like that.
But again, a lot of the activities and repairs that we have ongoing for this year are at fixed prices. And unfortunately, we have Northern truck boxes and things. We had contracts in place. So, it won't be impacted that way. But there is some pressure, but I don’t think it's material Detour.
Yes. And I think, definitely, the strength in both Canadian and Australian dollar has offset some of the impacts in some of these areas. Any color, Ian, from Australia?
Yes. Thanks, Tony. Look, we haven’t really seen strong per share across the board in Australia at this stage. And much the same with Larry, we've got a number of long-term contacts in place for a lot of our consumables. And our budgets and therefore, our guidance were based on slightly conservative numbers in those areas. Anyway, we’re actually tracking slightly under in some of them. So that’s - it's not a major concern of ours at this stage.
Certainly, from a labor point of view, we are not seeing any significant increases in terms of sort of labor price indexes or anything like that?
Great. Thanks, Stephan. Sorry Tony.
I'm just to say and for the most part, like as you can see, we're not really adjusting any of our cost guidance. So, we see things being manageable as we progress throughout the year.
Okay, understood. That's the only question I have. Now should keep Mark happy. So, thanks again.
Your next question comes from the line of Ovais Habib from Scotiabank. Your line is open.
Thanks for bringing in. Hi, Tony and production team and thanks for taking my questions. A couple of questions from me. Just starting off with the performance you had in March, and obviously it was a pretty strong performance that you've been talking about. Any color you guys can provide on whether this performance has continued into April?
Natasha, you want to give some color there if that's okay?
Yes. Sure, sure. Sure, no problem. So, with respect to March, we had a pretty strong March into areas of Detour, like I had mentioned, the throughput was up. And that's the function of the commissions we had a pretty mild winter, so we were able to operate both the mine and the mill better than expected than last time. So, that helped on that. And then Fosterville, I think, you mentioned it, but we had a stope that outperformed what we had originally planned. So that was a very positive consideration on that end.
In terms of April, in the Q2, we expect, like I mentioned, I think, we had a weak - we were playing to have a Q1 that was a weak quarter. The next three quarters are expecting to be better. It's going to be more weighted to the second half of the year. So, we expect to have a strong H2.
In terms of Macassa, we’re seeing good productivity rates there this month and some good reconciliation like I said.
Perfect. Thanks, Natasha. And just kind of follow-up on that regarding Detour. Detour's grade was higher than average in Q1, or what we were expecting in Q1. Was this due to faster reconciliation or was this just the fact that you moved into a higher-grade areas during the quarter? Essentially, what I'm asking is, have you moved into Phase 3 from Phase 2?
We’re in Phase 2 right now, but we actually mined more. We took more out of the pit than what we had planned and actually milled more. So we were able to - it's a bit of both, I would honestly say. I would take 50/50. We had a very positive reconciliation, but we also were able to bring up higher-grade material that we had forecasted for a little bit later on in the year.
Okay, thanks, Natasha. I'll stick with my two questions and jump back into the group.
Your next question comes from the line of Mike Parkin from National Bank. Your line is open.
Hey, guys, thanks for taking my questions. One would be on the new vent raises at Macassa, –is that now in a situation where the challenge you had last summer with high ambient temperature inside limiting where you could access safely underground from a heat perspective? Is that kind of a thing of a past? So you’ve got that Q3 kind of de-risked?
Go ahead, Evan.
It’s definitely going to help. It’s helping, as we speak. Yes, it’s absolutely going to provide more air and cooler air down there. So the raise actually extends all the way down to 5,600, so it’s just two legs, but the longest leg is 3,300 feet.
And there is a parallel raise that’s ongoing right now, too. So hopefully, we get that done. And when that’s done, that’s another step change. And then once the shaft is connected, that’s our third and major step change as well.
Right. Okay, super. I appreciate it. And then, just on the investments being made on the ESG front with the goals moving towards net zero, is there any thoughts around Detour maybe using an in-pit conveyor to limit the amount of trucks you’re using? Is that something that might be considered for the new line-of-mine plant? Especially, as you -- if you’re going into the West Detour pit, you’re moving further away from the pits, it seems like it could be a big OpEx savings tip?
Yes, I mean, a good point. We’re looking at variety of alternatives and that’s one. And Natasha and Larry can even provide some supporting commentary on that.
Yes. As part of that initiatives, we’re looking at a number of things. We’re looking at railway, we’re looking at conveyors, we’re looking at trolley assisted mines. Yes, so we’re in there - we’re just starting off, so there is still a lot of the work we need to do on our end. Yes, Larry, do you want to add anything to it?
Yes, for sure. All those things looking at, can we put in more material in pits and not have to haul it to the spoils and other period energies.
Yes, that’s one area where it’s going to be sequenced to pit where at a point in time when you start putting back filling back into the pit as you move from East or West. But there is a number of - the initiative - one big initiative for this year is getting a private area network, the partnership we have with Rogers Communication up in the region and being able to start advancing access, use of technologies and be able to look at lot of ways to really transform out of the operations at Detour over the next mile.
Great. Just one last question. The $75 million you’re planning to spend on those ESG initiatives for the next several years, how should we think about that flowing through? Will it be all capitalized? Will it go into different buckets on the financial statements?
Well, go ahead, David. I mean, it’s in a variety of areas. Some of it -- the large portions of that are already in our budgets. But David, you can answer that.
Yes. A lot of the – Tony is correct. A lot of that is already incorporated into our guidance numbers. There is a margin lock in the technology and business optimization that’s focused on growth. And so, I’d say a little bit in each of the buckets, but with a focus on growth. Yes.
Okay. Super. Thanks, that’s it for me here.
Your next question comes from the line of John Tumazos from John Tumazos Very Independent Research. Your line is open.
Congrats Tony Makuch and the gang on the good work. I got to stick to two questions, so I can move from the Jersey Shore to Detour camp and be safe. First, thank you for disclosing the breakdown of tonnes and ounces by zone at Fosterville. It looks like Harrier and Lower Phoenix more than doubled their tonnes from a year ago and their grade rose from 9.4% 7% - to 9.6% or 9.8%, so some real goods happening in the new stopes at Fosterville, I’d like you to elaborate on that first?
And second, the hole number 103, that was the first line of the press release Tuesday, I understand the great result that there was 9 grams over 13 meters. The other 141.6 meters, the algebra works out 0.397 grams to get to the 1.13 grams over 155 meters, so was the 146.1 a mistake? Or do you have to take that out at 0.397 grams because it’s between 350 meters and 400 meters in the pit and you’re going to have the world’s biggest stock power from 2040 to 2045 or 2050 of 0.4 gram material?
Eric? Yes, that’s…
Yes, John, the 9 over 30 meters is not in hole 103.
I might have the numbers wrong. It’s the first sentence of Tuesday’s release.
Well, no, it’s not an including. The 103 is - that is 1.13 over 155 meters and node, and then that’s in 103. The 9 over 13 is in hole 79 being W.
So it’s not inclusive, there are all different intercepts and there is no smearing?
Yes, it’s right. That’s a separate intercept altogether.
Thank you. Excuse me, I thought it was something else.
Sure. I can probably tackle the first part of that question when it comes to the cost productions. We've got a number of zones in Lower Phoenix that they contributed for the quarter. For instances, as well for the first time, we mined stopes in the Raptor area, that certainly has proven to be a solid contributor for the quarter and we did have well work there. We did have some console contribution from the Harrier and we saw some higher grades in Harrier higher than we historically have seen. So we are trying to balance the entire mining production currently.
Thank you. It’s working good at Fosterville.
[Operator Instructions] Your next question comes from the line of Carey MacRury from Canaccord Genuity. Your line is open.
Good afternoon, everyone. Maybe just a question on Detour just with the daily limit lifted there, just how should we think about throughput over the balance of the year, I assume it's going to increase from here?
I think when we gave out our guidance for the year, we expect this year to be about 24.5 million tonnes total, give or take the few percent process this year. And then by 2025 in the forecast that’s in our technical reports gets up to 28 million tonnes a year. And that's based on a number of project initiatives as we progress. But I don’t know, Natasha, anyone or Larry, you want to give your support for that?
Yes. I think you mentioned that in 2021, we're planning on hitting 24.5 million tonnes, so that hasn't changed. So on average for the year would be about 50,000 tonnes per day and then slowly growing that to 20, 25 to 28 million tonnes and doing with just over 25 million tonnes. And then slowly as the other projects come online, we get to 27 and then 27, 28 and then...
And then maybe – go ahead. I’m sorry.
Well, I think, one of the things that’s going to -- and that’s where - as the year progresses, Larry has been working on alternative feeds, et cetera. But I think the biggest two projects we have that going on this year would be the installing the screen decks, the feed before the - between the primary Crusher and the secondary Crusher, on both secondary crusher sides. We'll be doing one and then the other one. And meantime, there's an alternate feed system being put in place to try to keep the mills - to be able to keep the mills running. On the one piece, inside running during it during this period of construction and then that leads into further increases in 20 - as we progress in future years, right? So okay?
Okay, great. And then in Q2 last year, there was a pretty big cash tax payment, just wondering if there's something similar that we should look out for this year for Q2.
Yes. Thanks Tony. Yes, last year, there was a large tax payment in June that was really related to the filing of our Australian tax returns. And so, we're still working through the tax returns this year. And we probably will see an increase from Q1 because Q1 was just the right moment. But as we close out the year, we had a very strong year last year in Australia and probably expect an increase from what we gain in Q1.
But I’m assuming nothing near the magnitude of last year?
Well, it could be. It could be. Last year was again a record year I expect, the taxable income to be significantly higher. Last year was the previous year, our installments - keep in mind, our installments are based on not last year taxable income, the year before, so 2019. And so, I'm expecting - so our installments not really enough to cover what the full taxes in Australia. And so how you see a bit of a cap in Q2, because we're not repaying of taxes, right?
So when we file our tax returns, all that teed up, and we – but we get a better idea on what, like sometime in Q2 when the tax returns are finalized.
Okay, great. Thank you.
That concludes our Q&A for today. I would now like to turn the call back over to the senior Vice President of Investor Relations, Mark Utting, for closing comments.
Thanks very much, operator, and again thanks, everyone, for participating in the call today. As you've heard, we've got a lot going on. We've got a lot going to look forward to and a lot -- we're going to have a lot to talk about over the balance of 2021 and into next year. So we look forward to our next call to update you on how much more progress we’ve made. Thanks very much. Have a good day.
That concludes today's conference call. You may now disconnect.