Kirkland Lake Gold prospers, as town celebrates 100th Anniversary
Kirkland Lake, the town that gold built, is celebrating its 100th anniversary in 2019.
In celebration of this northeastern Ontario historic town the mines that once stretched along the Mile of Gold readily come to mind, Lake Shore, Wright-Hargreaves, Sylvanite, Teck-Hughes, Toburn and of course the Macassa mine which is still in operation today.
The original mine owned by Macassa Mines Limited went into production in 1933. Over the years, the mine was owned by the likes of Lac Minerals, Barrick Gold Corporation and Kinross Gold before closing operations in 1999.
The Macassa property was purchased by Foxpoint Resources from Kinross Gold and changed its name to Kirkland Lake Gold (KL) in 2002. With the dewatering of Shaft #2 and Shaft #3, the Macassa mine was back in business.
Kirkland Lake Gold restarted Macassa mining operations in 2002. By February 2016 KL had poured its millionth ounce of gold from Macassa since it resumed operations.
KL has been a steady producer of gold with 175,000 oz. in 2016, 194,000 oz. in 2017 and 240,000 oz in 2018.
“Kirkland Lake Gold is poised to achieve substantial production growth and improved unit costs in 2019. We will also continue to invest in exploration and additional production growth, with our plan being to reach one million ounces of annual gold production as early as 2021,” said Tony Makuch, President and Chief Executive Officer of KL.
“While achieving one million ounces of production will be a significant milestone, it is more important that the growth we achieve continues to drive down unit costs, increases margins and positions us to generate substantial amounts of free cash flow going forward,” Makuch added.
Another reason for Macassa mine’s success is its low production cost. Operating cash costs per ounce sold averaged $439 in Q3 2018, a 16% improvement from $521 in Q3 2017. The all in sustaining costs (AISC) per ounce sold averaged $722, 14% better than $845 in Q3 2017.
The key to continued mining at Macassa is the development of Shaft #4 project at the South Mine Complex. A 216 ft. headframe for the Shaft #4 project was erected by Cementation in October 2018. With headframe in place, Kirkland Lake has commenced construction on a four-compartment shaft that will have a total hoisting capacity of 4,000 tonnes per day of ore and waste.
Production from Macassa is expected to be similar to the 240,000 ounces produced in 2018 until the shaft is completed early in 2022, when it will increase significantly.
The new shaft will increase Macassa’s output to 400,000 ounces per year. Once completed, Shaft #4 will support higher levels of production, lower unit costs and improve working conditions at the mine.
The first phase of the shaft construction will be to a depth of 5,450 feet and include a mid-shaft loading pocket. Completion of phase one is targeted for the second quarter of 2022 at a capital cost estimated at $240 million.
Completion of phase two of the project will extend the shaft to about 7,000 feet. Work on phase 2 will begin after the commencement of production from phase one. Completion of phase two is targeted for the end of 2023 at an estimated capital cost of approximately $80 million.
The new shaft will also enable more effective underground exploration to the east of the South Mine Complex. It will also help improve ventilation and general working conditions in the mine.
Today, one hundred years later, the town is still going strong and the Macassa Mine is a vital part of Kirkland Lake Gold’s operations.
KL also operates the Holt and Taylor mines just north of Kirkland Lake acquired through the purchase of St Andrew Goldfields in January 2016.
The mines out contributes to the overall KL gold production totals. The Holt mine has produced over 67,770 oz. (2018); 66,677 oz. (2017); and 57,086 oz. (2016). The grade of the gold has ranged between 4 and 5 g/t and the recovery rate has ranged between 94 and 95 percent.
The Taylor mine has contributed production of 58,633 oz. (2018); 50,764 oz. (2017), and 42,639 oz. (2016). The grade of gold has ranged from 5.6 g/t to 7.55 g/t. The recovery rate has ranged between 95.1 and 96.5 percent.
While Kirkland Lake Gold has a historical connection with it’s Northern Ontario operation, it also operates the Fosterville Mine in Victoria, Australia as a result of a merger with Newmarket Gold in 2016. KL also holds properties in Northern Territory of Australia where exploration activities are being undertaken at the Cosmo mine and Union Reefs area.
The Fosterville mine has an estimated 1.70 million oz. in reserve with an average grade of 23.1 g/t.
Fosterville has produced 356,230 oz. of gold (2018); 263,845 oz. (2017); and 151,755 oz. (2016). During that time the grade has ranged from 6.11 g/t in 2015, to 7.55 in 2016 and 15.8 in 2017.The recovery rate increased from 88 % in 2015 to 90.1% in 2016 and 95.0% in 2018.
The recent drilling results from the Swan Zone at the Fosterville site revealed a truly unique, high-grade zone that KL is bringing into production. The company continues to explore for more zones like Swan at Fosterville and is encouraged by the fact that similar mineralization has been intersected in multiple locations.
Looking to the future KL sees continued growth in its gold production based on higher production at both Fosterville and Macassa. KL has set its production guidance as follows:
Highlights of 2019 guidance include:
• Production growth to 740,000 – 800,000 ounces, driven largely by significantly higher production at Fosterville, as well as increased production at Macassa
• Operating cash costs per ounce sold to improve to $360 – $380
• All-in sustaining costs (“AISC”) per ounce sold to achieve significant improvement to $630 – $680
• Exploration expenditures estimated at $100 – $120 million, including capitalized exploration expenditures, with $85 – $100 million targeted for Fosterville and the Northern Territory in Australia
• Sustaining capital expenditures
of $150 – $170 million, with sustaining capital expenditures on a per ounce of gold sold basis expected to improve significantly from 2018 levels
• Growth capital expenditures of $155 – $165 million in 2019, largely reflecting expenditures for the Macassa #4 shaft project and growth projects at Fosterville.
KL projections over the next three years envision a consolidated production growth of 10 – 15% per year with production of 740,000 – 800,000 ounces in 2019 to be followed by production of 850,000 – 910,000 ounces in 2020 and 945,000 – 1,005,000 ounces in 2021.
The break down per mine is:
• Fosterville: Production to increase to over 500,000 ounces in 2020 and reach over 570,000 ounces by 2021 driven by higher grades and increased throughput in 2021
• Macassa: Production to reach 245,000 – 255,000 ounces in 2021, with output to increase substantially in 2022 with the commencement of production from the new #4 shaft
• Holt Complex: Production, including output from the Taylor and Holt mines using the Holt Mill, to total over 120,000 ounces in both 2019 and 2020, increasing to over 130,000 ounces in 2021 (additional production potential at Holloway Mine, where advanced exploration work is commencing ahead of possible resumption of operations)
• Northern Territory: Work at Cosmo Mine and Union Reefs is moving to the advanced exploration phase with a focus on evaluating a potential restart of operations as early as the second half of 2019 (no ounces from Northern Territory are included in 2019 or three-year production guidance).
For more info please visit www.klgold.com