Kirkland Lake loses $10.48-million in fiscal 2009

2009-07-21 06:07 ET - News Release

Mr. Brian Hinchcliffe reports

KIRKLAND LAKE GOLD INC.: FOURTH QUARTER NET INCOME OF $2.3 MILLION AND YEAR END RESULTS, FISCAL 2009

Kirkland Lake Gold Inc. has released its results for the financial year ended April 30, 2009.

Operational highlights: 

A strong fourth quarter saw gold production increase 102 per cent to 20,411 ounces compared with the previous quarter (third quarter of 2009: 10,081) and a 45-per-cent increase compared with fourth quarter of 2008 (14,089 ounces), due to increased production from the South mine complex (SMC);
As a consequence of the decision to fast track the SMC into production, capital development increased by 93 per cent to 5,960 feet (2008: 3,083 feet). This trend will continue in fiscal 2010 with a further 10,000 feet of development planned for the SMC;
During fiscal 2009 and in advance of the anticipated increase in development and mining activity in the SMC, the company invested $5.3 million in plant and machinery;
The exploration programme completed 139,000 feet of exploration drilling during the year on the SMC. Proven and probable reserves, and measured and indicated resources in the SMC both increased by 28 per cent and now stand at 1.41 million tons at a grade of 0.71 ounce of gold per ton for a total of 998,000. Inferred resources increased 6 per cent to 704,000 tons at a grade of 0.84 ounce of gold per ton or 590,000 ounces. The number of feet drilled was 16 per cent lower than budgeted in order to expedite capital development required to increase ventilation.

Harry Dobson, Kirkland Lake's chairman, commented: "Fiscal 2009's pivotal highlight was the hiring of new production leadership. Over 150 miners and underground workers were hired and put to work in the last two months of fiscal 2009 achieving successive monthly gold production records of 7,377 ounces in March and 8,916 ounces in April as mining commenced on the South mine complex. Expansion of the underground work force will continue over the next fiscal year and will ensure the company is well positioned for a successful 2010 fiscal year in terms of target production of 90,000 to 100,000 ounces of gold, increased exploration and resulting stronger financial performance."

Financial highlights: 

Ounces sold in the fourth quarter increased 80 per cent to 16,045 generating $18.2-million in revenues, $2.3-million of net income and $2.2-million in operating cash flow. The ounces produced in the fourth quarter and not sold will be sold in the first quarter of fiscal 2010;
Gold revenues achieved during the fiscal year were $43.5-million, 5 per cent higher than previous year (2008: $41.4-million);
Operating expenses increased to $47.5-million (2008: $39.6-million), an increase of 18 per cent, primarily due to increases in mining costs, due to doubling of company mining personnel ($5.0-million), and materials ($2.4-million) required for the expanded mining plan in the main break and SMC. At the same time, contractor personnel utilized in mining were reduced from 50 to none;
The number of employees rose 83 per cent to 400 compared with fiscal 2008. This was due to a larger work force needed in order to expedite development and production from the SMC and to the replacement of contractors. The company received the Angus Campbell Award for Safety for the second consecutive year, and also received the MASHA Award of Excellence for Safety in 2008.
For the fiscal year, the company incurred a net loss for the year of $10,483,055 or 19 cents per share, which compares to a net loss of $3,345,980 or six cents per share in fiscal 2008;
Cash resources (including short term investments) as at April 30, 2009, were $25.4-million and are expected to be sufficient to finance the company's planned exploration and development activities for the next 12 months. As at July 17, 2009, the company had cash resources of $30.4-million.

"Further to the company's news release issued in Stockwatch of July 7, where it reported an obstruction in the paste fill borehole, a three-inch diamond drill hole has successfully been drilled through the plug and the hole is now free draining," said Brian Hinchcliffe, company president. "Additional steps will be taken to remove the remnants of the plug and return the borehole to operating condition, which if all goes well, the hole could be cleared, back in operating condition by the end of July, but we are still evaluating the financial impact of this brief interruption to production and will update the market in due course."

   SELECTED FINANCIAL INFORMATION AND REVIEW OF OVERALL PERFORMANCE
                         Year ended April 30 
                       (thousands of dollars)

                                            2009         2008         2007

Gold sales (ounces)                       43,545       52,019       50,890
Average price (per ounce)                 $1,000         $797         $720
Revenue                                   43,542       41,436       36,656
Operating expenses                        47,536       39,609       38,459
Exploration expenditure                    3,652        3,877        4,860
Net income (loss)                        (10,483)      (3,346)      (8,383)
Per share (basic and diluted)              (0.19)       (0.06)       (0.16)
Cash flow from (used in) 
operating activities                      (5,138)       2,158       (7,051)
Cash flow from financing activities       13,079       12,341       31,329
Cash flow (used in) 
investing activities                     (21,737)     (25,171)      (7,415)
Net increase (decrease) in cash          (13,796)     (10,672)      16,863
Cash at end of period                      1,806       15,603       26,275
Total assets                             100,896       91,521       80,769
Total liabilities                         14,127       10,053        9,143
Working capital                           26,358