Kirkland Lake beats earnings estimates; reissues 2020 production guidance

The Detour Lake gold mine in northeastern Ontario. Credit: Kirkland Lake Gold.

Kirkland Lake Gold (TSX, NYSE: KL; ASX: KLA) on July 30 reported strong financial and operating results for the second quarter of 2020, despite disruptions caused by Covid-19.

Adjusted net earnings came to US$219.3 million, or 79¢ per share, double the Q2 2019 level of US$109.8 million, or 52¢ per share, and 22% higher than the US$179.2 million, or 70¢ per share, recorded for the previous quarter.

The earnings of 79¢ per share surpassed Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was 74¢ per share.

Revenue for the three-month period also doubled to US$581 million from $281.3 million in Q2 2019 and was 5% higher than the previous quarter.

During the quarter, the company generated net cash of US$222.2 million and free cash flow of US$94.1 million from operations, resulting in total cash balance of $537.4 million, with no debt.

Gold production across Kirkland Lake’s operations reached 329,770 oz., a 54% improvement from 214,593 oz. in Q2 2019 and comparable to 330,864 oz. in the previous quarter.

Cash cost and all-in sustaining costs (AISCs) averaged US$374 and US$751 per oz., respectively. Operating cash cost was US$312 in Q2 2019 and US$440 in Q1 2020, while AISCs were $638 in Q2 2019 and $776 in Q1 2020.

At quarter-end, the company reissued guidance for 2020, recognizing the progress achieved in ramping up business activities that had been impacted by Covid-19, raising production from 1.35 to 1.4 million oz. gold, approximately 90% of the original 2020 production guidance.

Meanwhile, Kirkland Lake has also released new drilling results from the Fosterville mine in Australia, with higher than anticipated grades and visible-gold encountered near the intersection of the Swan Fault and the Swan Splay structure.

“The infill results confirm that the area where the Swan Fault and Swan Footwall Splay intersect contains more gold than currently modelled,” president and CEO Tony Makuch said in a press release.

Kirkland Lake Gold shares climbed more than 2% to a new 52-week high on July 30. The stock has risen 13% since the beginning of the year. The Toronto-based gold miner has a market capitalization of US$14.98 billion.

— A version of this article first appeared in our sister publication,


1 Comment on "Kirkland Lake beats earnings estimates; reissues 2020 production guidance"

  1. E M Ted Yates | August 4, 2020 at 11:56 am | Reply

    I have been reading the Northern Miner for years and its high quality articles never cease. Ted Yates

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