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Kirkland Lake Gold Reports Record Tonnage As Expansion Plans Near Completion

Kirkland Lake Gold Inc. (TSE:KGI) (AIM:KGI), a gold miner and explorer operating around Ontario's Kirkland Lake, reported both record quarterly and average daily ore tonnage produced, with the company reaffirming it is on track to make its gold sales guidance for fiscal year 2014 of between 150,000 and 180,000 ounces of gold.

During the Ontario-based miner's first fiscal quarter of 2014, that is the months of May, June and July of this calendar year, the company reported a net loss before income taxes of $0.8 million, compared to the net loss before taxes of $0.3 million recorded a year ago.

Net and comprehensive loss for the quarter was $1.8 million or $0.03 per share, compared to income of $413,000 or flat earnings on a per share basis a year ago, with the company noting that costs associated with increases in the amount of waste being hoisted and with the training of additional manpower, as well as a lower gold price, were contributing factors.

Revenue for the quarter was $43.4 million, up from the $32.6 million posted a year ago.

Cash flow from operating activities, a crucial metric for miners, came in at $14.7 million for the quarter, well up on the year ago figure of $2.4 million.

Operating costs for the quarter came to $1,013 per ounce of gold, compared to $1,276 per ounce a year ago. These figures correspond to $313 per ton, compared to $316 per ton last year, with the company's goal being to lower operating costs to less than $250 per ton with the completion of its expansion project.

The expansion project itself, to complete the infrastructure upgrades required to reach capacity of 2,200 tons per day, had seen $89.3 million spent by the end of July, with a budget of $95 million allotted.

For the quarter, production of gold came in at 30,316 ounces, a result of a total of 97,788 tons mined - a quarterly record -- at a head grade of 0.3246 ounces per ton (opt) with a recovery rate of 95.04 per cent. The average daily ore tonnage rate of 1,063 tons was also a record.

Sold ounces recorded came in at 30,253, with an average sales price of $1,426 per ounce.

The expansion plans - the company's campaign to increase both the mine hoisting capacity and the capacity of the processing plant -- resulted in a number of planned shutdowns during the latest period, thus impacting production for the quarter. The scheduled shutdowns came at a cost of 2 to 3 weeks of normal production over the quarter, marginally longer than planned. Accordingly, the production tonnage for the quarter was 4.6 per cent lower than initially expected.

The remainder of the year will be impacted by several planned shutdowns, the company said, of the processing plant required to bring other new equipment on line, with head grade for the year anticipated to fluctuate between 0.30 opt and 0.40 opt depending on the availability of higher grade ore mining workplaces in the mining sequence. Recovery in the first quarter was also low due to unexpected power disruptions caused by outside factors, and due to issues related to working with new equipment.

"Considering that the first quarter had a planned shutdown in order to successfully install a new hoist drive and replace the 10 ton skips with the 12.5 ton skips, we are pleased with the production results," said chairman Harry Dobson in a statement released with the figures.

"We are on track to focus on driving up gold production for the remainder of the fiscal year. The elevated levels of capital spending are now largely behind us so capital and exploration spending will fall by approximately $30 million dollars this year compared to the previous fiscal year."

Kirkland Lake Gold was the trading up the day of the release of figures, adding 8 cents to previous close to hit $4.41 per share. Its stock has surged over 36 per cent in the last month.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.