Kirkland Lake Gold Inc. has reported a net loss of CAD$11.1 million on revenue of CAD$173.3 million for fiscal 2014, but expects to operate at a cash flow positive rate during the second quarter of 2015 as further improvements from its mine optimization plan and cost cutting programs are realized.
Revenue was up 14 per cent over 2013 with 33,503 more ounces being sold compared to the previous year. However, increased volume was offset by a 16 per cent decrease in the average sale price.
"Fiscal year 2014 was a year of change for the company,” said Kirkland Lake Gold chairman Harry Dobson. “Following the appointment of George Ogilvie as CEO … a new lower tonnage, higher-grade mine plan was put in place along with a concurrent cost-cutting program to reduce the rate of cash burn…
“The effects of these changes were demonstrated in the fourth quarter results, when all-in sustaining cash costs were further reduced to CAD$1,776 per ounce,” said Dobson.
All-in sustaining costs fell even further to CAD$1,466 per ounce in April - within striking range of the average sales price of CAD$1,422 per ounce for the same month.
“The company is now operating at very close to breakeven and expects at current gold prices to become consistently profitable and cash flow positive during the second fiscal quarter 2015,” said Dobson.
Grades have also significantly improved with a calendar year-to-date grade of 0.39 ounces per ton and fiscal year-to-date grades of 0.42 ounces per ton.
The company claims to be on track to meets its fiscal year 2015 guidance of 140,000 - 155,000 ounces.
Consistent with the new mine plan that shifts away from the lower grade Main Break areas and focuses more heavily on the higher grade South Mine Complex (SMC), underground capital development remains focused on new zones in the SMC, in particular the development of new high grade workplaces on the 5,400-foot and 5,600-foot levels.
The company has reduced headcount from 1,250 to 1,059 employees to trim costs and better align the cost structure of the business to the anticipated revenues from the new mine plan. The cost saving initiatives, and estimated go-forward annual savings totalled CAD$24.7 million.
The CAD$95.0 million mine expansion project was completed on budget during the fiscal year. Key expansion projects included a hoist system upgrade, mill expansion, plant equipment purchases, including battery powered scoops and trucks, and underground capital development. The final element of the project was the dry commissioning of a new ball mill in February.
The company entered into a 2.5 per cent net smelter return royalty with
Franco-Nevada Corporation on October 31, 2013 for proceeds of US$50 million and made the final payment of $30 million to Osisko Mining Corp for the remaining 50 per cent share in the former joint venture properties acquired in fiscal 2013.
Exploration spending was cut by CAD$9.7M to CAD$7.5M during the year to reduce expenses. At year-end, eight diamond drills were active including one on surface.
