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Kirkland Lake Gold Reports Strong Earnings for the Second Quarter of 2016 and Free Cash Flow Generation of $31.9 Million


/EINPresswire.com/ -- TORONTO, ONTARIO -- (Marketwired) -- 08/04/16 -- Kirkland Lake Gold Inc. (TSX: KGI) -

H1 and Q2 2016 Highlights


--  Pre-released gold production of 130,613 ounces (68,338 in Q2/16);
--  Sold 141,453 ounces of gold (72,144 ounces in Q2/16);
--  Realized an average price per ounce of gold sold of US$1,211 (US$1,271
    in Q2/16);
--  Operating costs per ounce of gold sold(1) of US$641 (based on total
    production expenses(1) of C$159,482) (US$667 based on total production
    expenses(1) of C$81,740 during Q2/16);
--  All-in sustaining costs per ounce of gold sold(1) ("AISC") of US$925
    (US$990 in Q2/16);
--  Generated $227.9 million in revenue ($118.1 million in Q2/16);
--  Realized net and comprehensive income of $26.3 million ($13.8 million in
    Q2/16) and $26.6million ($14.0 million in Q2/16) respectively, or $0.24
    per share ($0.12 per share in Q2/16);
--  Generated free cash flow(1) of $57.3 million ($31.9 million in Q2/16);
--  Ended the quarter with a cash balance of $157.5 million;
--  Subsequent to quarter end, closed a flow-through financing for proceeds
    of $15 million;
--  The Company remains on track to meet its production guidance of between
    270,000 to 290,000 ounces for 2016.

Kirkland Lake Gold Inc. ("Kirkland Lake Gold" or the "Company"), an intermediate gold producer with operations in Ontario, Canada, today announces second quarter financial results for the three ("Q2/16") and six months ("H1/16") ended June 30, 2016. All figures in this release are in Canadian dollars unless stated otherwise.

"Kirkland Lake delivered another quarter with positive earnings, free cash flow and a strengthened balance sheet," said Anthony Makuch, President & CEO. "With the recently closed flow-through financing of $15 million, we will become more aggressive in exploring our highly prospective land position in both the Kirkland Lake camp and along the Porcupine-Destor Fault Zone. We look forward to providing an update on our exploration programs as they become available."

Financial Summary

The Company changed its fiscal year from an April 30th year-end to a December 31st calendar year end effective January 1, 2016. As such, for comparative purposes, the current quarter results will be compared to a similar period in the previous year (see table below). The Company also reminds readers that since Q1/16, all measurements are in metric as opposed to its previous form of imperial measurements. The conversions are 1 short ton = 0.9072 tonnes; and 1 troy ounce per ton = 34.2857 grams per metric tonne ("g/t").

The following abbreviations are used to describe the periods under review throughout this press release.


Abbreviation Period                    Abbreviation Period
----------------------------------------------------------------------------
H1/16        January 1, 2016 - June    Q1/SY15      May 1, 2015 - July 31,
             30, 2016                               2015
Q2/16        April 30, 2016 - June     Q4/15        February 1, 2015 - April
             30, 2016                               30, 2015
Q1/16        January 1, 2016 - March   Q3/15        November 1, 2014 -
             31, 2016                               January 31, 2015
Q3/SY15      November 1, 2015 -        Q2/15        August 1, 2014 - October
             December 31, 2015                      31, 2014
Q2/SY15      August 1, 2015 - October
             31, 2015
----------------------------------------------------------------------------

The Company reported net and comprehensive income for the quarter of approximately $13.8 million and $14.0 million respectively, or $0.12 per share compared to $4.2 million or $0.05 per share for the quarter ended July 31, 2015 (Q1/SY15).

Free cash flow for the quarter was $31.9 million compared to $3.1 million during Q1/SY15, reflecting higher realized gold prices, lower AISC, and increased production and sales subject to the additional production from the Holt-Holloway and Taylor mines. With the free cash flow generation during the quarter, the Company had $157.5 million in cash and cash equivalents at quarter end compared to $81.14 million at July 31, 2015 (Q1/SY15).

(i)Comparative figures and consolidated results do not include results from the Holloway-Holt and Taylor mines prior to close of the transaction with St Andrew Goldfields Ltd. ("St Andrew"), on January 26, 2016.


----------------------------------------------------------------------------
                                                       6 months    6 months
(i)All figures in CAD$ unless                             ended       ended
 otherwise stated                   Q2/16   Q1/SY15   Jun 30/16   Jul 31/15
----------------------------------------------------------------------------
Average CAD/USD for the period     1.2886    1.2481      1.3302      1.2483
----------------------------------------------------------------------------
Gold Sales (ounces)                72,144    39,109     141,453      80,313
Average Realized Price (US$ per
 Oz Sold)(1)                        1,271     1,187       1,211       1,194
Revenue (000's)                   118,143    61,723     227,931     119,657
Production Expense                 81,740    45,463     159,482      89,013
General and Administrative          6,433     1,541      10,675       3,717
Exploration                         4,129     2,196       6,710       3,995
Finance Expense                     5,172     6,094      10,720      10,033
Finance Income                     (1,309)   (1,016)     (1,549)     (2,808)
Income before Income Taxes         21,978     7,445      41,893      15,707
Provision for Income Taxes          8,214     3,216      15,610       3,604
----------------------------------------------------------------------------
Operating Cost per tonne(1)           208       407         234         400
Operating Cost (US$ per Oz
 Sold)(1)                             667       678         641         676
----------------------------------------------------------------------------
Capital Development Investment     18,755     9,498      35,482      20,395
Purchase of Property, Plant and
 Equipment                          2,266     1,366       5,633       3,368
----------------------------------------------------------------------------
AISC (US$ per Oz Sold)(1)             990       956         925         991
----------------------------------------------------------------------------

Operations Overview

Kirkland Lake Gold pre-released production results with a total of 68,338 ounces of gold production In Q2/16 and a total of 130,613 ounces for H1/16. The operations performed well during the quarter with grades, recoveries, and throughput all in line with expectations.

The cost per tonne of $208 achieved during the quarter was positively impacted by higher throughput which was mainly driven by the contribution of the Holt-Holloway and Taylor mines and higher tonnes from Macassa, as well as additional tonnes from the low grade stockpiles. As such, the cost per tonne was substantially lower when compared to a cost per tonne of $407 for the similar period in the previous year (Q1/SY15). The operating cost per ounce sold of US$667 was lower in Q2/16 when compared to an operating cost per ounce sold of US$691 in Q1/SY15 as a result of the Holt-Holloway and Taylor mines contribution.

For H1/16, the operating costs were slightly higher than the top end of guidance, but are expected to decrease in the second half of the year as production at Macassa moves into higher grade stopes, and throughput continues to increase at both Holt and Taylor.

A breakdown of operational performance at each operation is summarized in the table below.

(i)H1/16 results do not include results from the Holloway-Holt and Taylor mines prior to close of the transaction with St Andrew Goldfields Ltd. ("St Andrew"), on January 26, 2016.


----------------------------------------------------------------------------
Financial KPIs Q2/16       Macassa     Holt  Holloway   Taylor  Consolidated
----------------------------------------------------------------------------
Gold Sold (ounces)          41,344   13,407     5,080   12,313        72,144
Operating cost per tonne
 milled                        302      125       174      125           208
Operating cost per gold
 ounce sold (US$)              645      877     1,204      476           667
Capital Spending (000s)     13,091    5,171       631    2,114        21,007
AISC per ounce Sold (US$)    1,003    1,147     1,343      638           990
----------------------------------------------------------------------------
Financial KPIs 6 months
ended Jun 30/16 ("H1/16")  Macassa     Holt  Holloway   Taylor  Consolidated
----------------------------------------------------------------------------
Gold Sold (ounces)          82,159   26,815    10,139   22,340       141,453
Operating cost per tonne
 milled                        327      124       174      127           234
Operating cost per gold
 ounce sold (US$)              589      817     1,128      472           641
Capital Spending (000s)     27,206    8,707     1,010    4,192        41,115
AISC per ounce Sold (US$)      923    1,047     1,240      640           925
----------------------------------------------------------------------------

Exploration

During Q2/16 exploration programs continued to focus on underground drilling at the Macassa Mine Complex, regional surface drilling testing the easterly strike extension of the South Mine Complex ("SMC"), as well as underground drilling from the 4250' Level testing the up-dip extension of the '04 Break mineralization.

The Company released results from underground drilling from the 5300' Level exploration drift testing the SMC further to the south, which expanded the known zone of mineralization. Infill drilling was able to join two previous zones (the Hanging Wall Zone and the New South Zone) with three new intersections which returned similar grades and widths (see press release dated May 24, 2016, available on the Company website www.klgold.com).

Exploration drilling commenced at the Taylor and Holloway mines during the quarter. At Taylor drilling targeted both the easterly and westerly strike extension of the West Porphyry Zone (which includes the 1004 lens; the area currently being mined). At Holloway drilling commenced west of the mine property, which will test for mineral potential associated with the mafic volcanic / ultramafic contact. A second drill is active on the Holloway property to test the easterly strike extension of the Deep Thunder Zone, which lies approximately 1 kilometre east of the Smoke Deep Zone.

Subsequent to quarter end, the Company closed a non-brokered flow-through financing for proceeds of approximately $15 million, to be spent before December 31, 2017. As such, the Company plans to increase its previous budget of $18 million to $24 million, which will include $6 million flow-through dollars. The focus will be to increase the Company's efforts on the regional exploration program in the Kirkland Lake Camp, and to drill test targets along the Porcupine-Destor Fault Zone.

H1/16 Key Performance Indicators

The 2016 guidance metrics issued on April 14, 2016, are summarized against the results for the six months ended June 30, 2016. The AISC(1) have been positively affected in Q2/16 due to the lower spend on Property, Plant & Equipment ("PP&E") which is attributable to the timing in the delivery of equipment. As such, the AISC(1) is expected to be higher over the next two quarters.


----------------------------------------------------------------------------
   2016 Guidance                 Guidance Metrics              H1/16 Results
----------------------------------------------------------------------------
 270,000 - 290,000           Gold Production (ounces)             130,613
----------------------------------------------------------------------------
        7.7                    Head Grade (g/t Au)                  8.2
----------------------------------------------------------------------------
   US$600 - $650         Operating Costs(1) (US$/Oz Sold)         US$641
----------------------------------------------------------------------------
                        All-In Sustaining Costs(1) (US$/Oz
 US$1,000 - $1,050                    Sold)                       US$925
----------------------------------------------------------------------------

For a description of risk factors affecting the Company and 'Forward Looking Information', see the Company's Annual Information Form for the year ended December 31, 2015, and the Company's MD&A for the period ended June 30, 2016, filed with certain securities regulatory authorities in Canada and available on SEDAR at www.sedar.com. For a description and reconciliation of Non-GAAP measures please see below and refer to Appendix B of the Company's MD&A for period ended June 30, 2016, as filed on SEDAR at www.sedar.com, or at the end of this release.

Q2/16 Earnings Call and Webcast (August 5, 2016)

The Company will hold a conference call to discuss these results tomorrow, Friday August 5, 2016, at 11:00am EDT. The Company invites you to participate via teleconference, the details of which are outlined below and are available on the Company's website at www.klgold.com.

Participant Dial-In Numbers

Toll-Free North America: +1 (877) 201-0168; Local and International: +1 (647) 788-4901

Conference ID: 56310259

Replay Dial-In Numbers

Local and International: +1 (404) 537-3406

Toll Free North America: +1 (855) 859-2056 / +1 (800) 585-8367

Conference ID: 93207658

Replay Available Until: November 5, 2016 at 11:59PM ET

Qualified Persons

Production at the various operations and processing at the Company's milling facilities are under the supervision of Mr. Chris Stewart, P.Eng, the Vice President of Operations. The Company's exploration programs are under the supervision of Mr. Doug Cater, P.Geo, the Vice President of Exploration.

Messrs. Stewart and Cater are 'qualified persons' for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators, and have reviewed and approved this news release. As the Vice President of Operations and Vice President of Exploration, Messrs. Stewart and Cater are not considered independent.

Selected Financial Information & Review of Overall Performance

(i)Comparative figures and consolidated results do not include results from the Holloway-Holt and Taylor mines prior to close of the transaction with St Andrew Goldfields Ltd. ("St Andrew"), on January 26, 2016.


----------------------------------------------------------------------------
Financial
 Highlights
(All amounts in
 000's of
 Canadian
 Dollars, except
 gold price per    3 months    3 months    3 months    6 months    6 months
 ounce, shares       ended        ended       ended       ended       ended
 and per share      Jun 30,     Mar 31,     Jul 31,     Jun 30,     Jul 31,
 figures)              2016        2016        2015        2016        2015
----------------------------------------------------------------------------
Gold Sales
 (ounces)            72,144      69,309      41,204     141,453      80,313
(i)Average
 Realized Gold
 Price (per
 ounce)               1,638       1,584       1,498       1,611       1,490
----------------------------------------------------------------------------
Revenue             118,143     109,788      61,723     227,931     119,658
Production
 Expenses            81,740      77,742      45,463     159,482      89,014
Exploration
 Expenditure          4,129       2,581       2,196       6,710       3,995
Other Expenses       10,296       9,550       6,619      19,846      10,943
Income before
 Income Taxes        21,978      19,915       7,445      41,893      15,707
Comprehensive
 Income              14,016      12,601       4,229      26,617      12,103
Comprehensive
 Income per
 share (basic &
 diluted)              0.12        0.12        0.05        0.24        0.15
----------------------------------------------------------------------------
Cash flow from
 operations          52,958      43,712      14,920      96,660      35,646
Cash flow (used
 in) from
 financing
 activities          (4,676)     (7,581)     (3,391)     (3,609)     25,365
Cash flow from
 (used in)
 investing
 activities         (21,023)      1,057     (10,865)    (28,604)    (23,764)
Net increase in
 cash                27,018      36,784         797      63,802      37,100
----------------------------------------------------------------------------
Total cash
 resources          157,529     130,511      81,119     157,529      81,119
Other Current
 Assets              38,146      46,568      28,454      38,146      28,454
Current
 Liabilities        111,435      56,172      31,974     111,435      31,974
(i)Working
 Capital             82,240     120,907      77,601      82,240      77,601
Total Assets        735,251     713,063     471,593     735,251     471,593
Total
 Liabilities        227,731     221,962     164,563     227,731     164,563
----------------------------------------------------------------------------
Basic weighted
 average number
 of shares
 outstanding    115,571,565 105,281,126  80,366,408 110,481,088  79,499,011
Dividends per
 share                  NIL         NIL         NIL         NIL         NIL
----------------------------------------------------------------------------

Non-GAAP Financial Measures

The Company has included non-GAAP performance measures throughout this document. These include: cash inflows from operations per share, free cash flow, free cash flow per share, operating cost per tonne of ore produced, operating cost and AISC per ounce of gold sold, average realized sales price and working capital. Operating cost per tonne of ore produced and operating cost and AISC per ounce of gold sold are common performance measures in the mining industry but do not have any standardized meaning. The guidance provided by the World Gold Council for calculating AISC was reviewed and followed. Total operating costs include mine site operating costs (mining, processing and refining, in-mine drilling expenditures, administration, and production taxes), but are exclusive of other costs (royalties, depreciation and depletion, off-site corporate costs, reclamation, capital, long-term development and exploration). The Company considers all capital spending to be sustaining in nature with the exception of development towards the Ghost zone at the Holt mine. During Q2/16, $1.0 million in development costs ($1.1 million in H1/16) were related to development towards Ghost and as such have been removed from AISC. These measures, along with sales, are considered by the Company to be indicators of the Company's ability to generate operating earnings and free cash flows from its mining operations. The Company believes that certain investors use this information to evaluate the Company's performance and ability to generate cash flows. These should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and are not necessarily indicative of production costs presented under IFRS. The following tables provide reconciliation of such costs to the Company's financial statements for the periods as noted:


----------------------------------------------------------------------------
Free Cash Flow
(All amounts in 000's of
 Canadian Dollars, except         Three       Three
 shares and per share            months      months  Six months  Six months
 figures)                         ended       ended       ended       ended
                              30-Jun-16   31-Jul-15   30-Jun-16   31-Jul-15
----------------------------------------------------------------------------
Cash Inflows from Operations $   52,958  $   13,982  $   96,660  $   35,761
Mineral Property Additions      (18,755)     (9,499)    (35,482)    (20,395)
Property, Plant & Equipment      (2,254)     (1,366)     (3,882)     (3,369)
----------------------------------------------------------------------------
Free Cash Flow               $   31,949  $    3,117  $   57,296  $   11,997
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Operating Costs
All amounts in 000s of
 Canadian Dollars except
 tons ore produced,
 ounces of gold sold and
 unit costs or unless   Three months Three months   Six months   Six months
 otherwise stated              ended        ended        ended        ended
                           30-Jun-16    31-Jul-15    30-Jun-16    31-Jul-15
----------------------------------------------------------------------------
Production Expense         $  81,740    $  45,463    $ 159,482    $  89,013
Amortization and
 Depletion                   (14,937)      (8,962)     (29,645)     (17,830)
Stock-based compensation         (60)        (113)        (129)        (293)
Royalties                     (4,730)      (1,512)      (9,062)      (3,083)
Operating Costs            $  62,013    $  34,876    $ 120,646    $  67,807
----------------------------------------------------------------------------
Tonnes of Ore Produced       297,645       85,671      520,959      169,616
Ounces of Gold Sold           72,144       39,109      141,453       80,313
----------------------------------------------------------------------------
Operating Cost per Tonne   $     208    $     407    $     232    $     400
Operating Cost per Ounce   $     860    $     846    $     853    $     844
Average CAD/USD exchange
 rate                         1.2886       1.2481       1.3302       1.2483
Operating Cost per Ounce
 (US)                    US$     667  US$     678  US$     641  US$     676
----------------------------------------------------------------------------

----------------------------------------------------------------------------
AISC per Ounce Sold
All amounts in 000s of
 Canadian Dollars except           Three       Three
 ounces sold and unit costs       months      months  Six months  Six months
 or unless otherwise stated        ended       ended       ended       ended
                               30-Jun-16   31-Jul-15   30-Jun-16   31-Jul-15
----------------------------------------------------------------------------
Operating Costs                 $ 62,013    $ 34,876    $120,646    $ 67,807
PPA Inventory Fair Value
 Adjustment                            -           -      (4,426)          -
Royalties Expense                  4,730       1,512       9,062       3,083
Stock Based Compensation             971         393       1,314       1,353
Exploration Expense (no
 Surface)                          1,377         581       2,279       1,320
Corporate Expense (no
 financing costs)                  3,017         918       5,048       2,000
Capital Development
 (Sustaining)                     17,717       9,499      34,444      20,395
Property, Plant & Equipment
 Purchases                         2,254       1,366       5,633       3,368
----------------------------------------------------------------------------
AISC                            $ 92,079    $ 49,145    $174,000    $ 99,326
----------------------------------------------------------------------------
Gold Sales (Ounces)               72,144    $ 39,109     141,453      80,313
----------------------------------------------------------------------------
AISC per Ounce Sold             $  1,276    $  1,257    $  1,230    $  1,237
Average CAD/USD exchange rate     1.2886      1.2481      1.3302      1.2483
AISC per Ounce Sold (US)      US$    990  US$  1,007  US$    925  US$    991
----------------------------------------------------------------------------

About the Company

Kirkland Lake Gold Inc. is a Canadian focused, intermediate gold producer with assets in the historic Kirkland Lake gold camp, and east of the Timmins gold camp along the Porcupine-Destor Fault Zone, both in northeastern Ontario. The Company is currently targeting annual gold production of between 270,000 to 290,000 ounces from its cornerstone asset, the Macassa Mine Complex and the recently acquired East Timmins Operations.

The Company is committed to building a sustainable mining company that is recognized as a safe and responsible gold producer with quality assets in safe mining jurisdictions.

The Toronto Stock Exchange has neither reviewed nor accepts responsibility for the adequacy or accuracy of this news release.

Cautionary Note Regarding Forward-Looking Statements

This Press Release contains statements which constitute "forward-looking statements" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to the future business activities and operating performance of the Company. The words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. Investors are cautioned that forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made such as, without limitation, opinion, assumptions and estimates of management regarding the Company's business, including but not limited to; the continued development of the operations (Macassa, Holt-Holloway and Taylor) and the anticipated timing thereof, estimated production results including ounces and head grade, the ability to lower costs and gradually increase production across all the operations; and the anticipated timing and commencement of exploration programs along the Porcupine-Destor Fault Zone. Such opinions, assumptions and estimates, are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.

These factors include the Company's expectations in connection with the projects and exploration programs being met, the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating gold prices, currency exchange rates (such as the Canadian dollar versus the United States Dollar), possible variations in ore grade or recovery rates, changes in accounting policies, changes in the Company's corporate mineral reserves and resources, changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, and limitations on insurance, as well as those risk factors discussed or referred to in the Company's annual Management's Discussion and Analysis and Annual Information Form for the year ended December 31, 2015, and the Company's Management's Discussion and Analysis for the interim period ended June 30, 2016, filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements except as otherwise required by applicable law.

(1) The Company has included the following non-GAAP performance measures in this press release; average realized price per ounce of gold sold, operating cost per tonne and operating cost per ounce sold, AISC per ounce sold, and free cash flow. These are common performance measures in the mining industry but do not have any standardized meaning. Refer to the end of this press release or Appendix B of the MD&A for a reconciliation of these measures to the accompanying financial statements.

Contacts:
Kirkland Lake Gold Inc.
Anthony (Tony) Makuch
Chief Executive Officer
+1 416-840-7884 or Toll Free: 1-866-384-2924
tmakuch@klgold.com

Kirkland Lake Gold Inc.
Suzette N Ramcharan, CPIR
Director of Investor Relations
Direct: +1 647-361-0200; Mobile: +1 647-284-5315
sramcharan@klgold.com
www.klgold.com


Distribution channels: Mining Industry


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