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Kirkland Lake 2Q Income, Revenue Sharply Higher Than Year Ago

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(Kitco News) - Kirkland Lake Gold Ltd. (TSX, NYSE: KL; ASX: KLA) reported Tuesday that its second-quarter net income rose sharply from the same period a year ago, although it was down from the company’s record first quarter.

Revenue was boosted sharply year-on-year by higher gold sales, although higher prices also helped.

“During Q2 2019, we continued to generate strong growth in production, earnings and cash flows compared to the same period in 2018,” said Tony Makuch, president and chief executive officer.

Excluding special items, adjusted net earnings totaled $105.5 million, or 50 cents, during the April-June quarter. This was 66% higher than $63.4 million, or 30 cents, in the second quarter of 2018, although it backed off record adjusted net earnings of $112.1 million, or 53 cents, in the first quarter of 2019.

Net earnings were listed at $104.2 million, or 50 cents per share, an increase of 69% from $61.5 million, or 29 cents, in the second quarter of 2018. The income eased some from record earnings of $110.1 million, or 52 cents, in the first quarter of this year.

Revenue grew 31% year-on-year to $281.3 million from $214.7 million, although it was down from the quarterly record of $304.9 million in the first quarter of this year. The year-on-year increase was mostly the result of a jump in gold sales to 212,091 ounces from 164,305 ounces a year ago. The average realized gold price rose to $1,320 from $1,301.

The increase in gold sales was largely due to the Fosterville mine in Australia, with ounces sold increasing 78% from a year ago to 133,481 ounces, Kirkland Lake said. This more than offset lower sales at Macassa and the Holt Complex.

Consolidated production of 214,593 ounces was a 30% increase from 164,685 a year ago, although down from a quarterly record of 231,879 ounces in the previous quarter. All-in sustaining costs averaged $638 an ounce, which Kirkland Lake said was a 16% improvement from $757 in the second quarter of 2018.

“Fosterville achieved a record quarter and exceeded target production levels, driven by higher-than-expected grades,” Makuch said. “Even more encouraging, we are now positioned to significantly grow production at Fosterville during the second half of the year.

“In Canada, tonnage at Macassa was affected by water in the mine from the spring run-off, and we had lower-than-planned grades at the Holt Complex. We have already seen higher production levels at Macassa in July, with the mine remaining on track to achieve its full-year guidance of over 240,000 ounces. At the Holt Complex, we are ramping up production at Holloway, and continue to target approximately 20,000 ounces for the year. We are also expecting higher levels of mill throughput at the Holt mine and expect to achieve increased production from the mine in the final two quarters of 2019.”

The CEO said Kirkland Lake remains on track for its full-year guidance of 950,000 to 1 million ounces with AISC averaging $520 to $560.

The quarterly dividend remained at 4 cents per share and will be paid on July 12 to shareholders of record on June 28. Kirkland Lake also reported that it has repurchased 400,000 shares through a normal course issuer bid for total cost of $12.8 million.

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