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TURNING AROUND THE HIGH GRADE
MACASSA GOLD MINE
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London Roadshow
September 2014
• Cautionary Note Regarding Forward Looking Statements
• This presentation contains statements which constitute ”forward-looking statements”, 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. Forward-looking statements used in this Press Release include, but may not be limited to, statements regarding the Company’s production capacity and its exploration program. 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, its ability to increase its production capacity and decrease its production cost. 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 resources, changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, risks related to joint venture operations, 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 April 30, 2014 and the Company’s Management's Discussion and Analysis for the interim period ended July 31, 2014 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.
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George Ogilvie, P.Eng., CEO
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“Build a sustainable mining company that is recognized as a safe and responsible intermediate gold producer. “We will provide exceptional stakeholder value by delivering operational and exploration excellence through empowering our people to act as owners.”
Major project capital investment completed and infrastructure in place
Located in Ontario, one of the safest and lowest risk mining jurisdictions globally
Insiders own 18.8% of Company
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Attractive NI43-101 high grade reserve and resource profile with a long mine life
Growing annual production, declining cost base and improving unit costs
Company returning to profitability and free cash flow
Highly leveraged to gold price and weakening Canadian dollar
Significant exploration potential with organic growth
OWNERSHIP
European Institutions 15% NA Institutions 45% Management & Founders 20% Retail 20%
MAJOR SHAREHOLDERS
Insiders 18.8% Sprott Asset Management 11.6% Equinox, 9.9% Van Eck Associates Corp 9.5% Columbia Wagner 7.8% Resolute Funds, 6.3% ABC Funds 4.9%
MARKET CAP
C$369 million (Sept, 18 2014, C$5.09) Issued Shares: 72,081,617 Fully Diluted: 84,986,448
CASH BALANCE
C$40.2 million (July 31, 2014)
52 WEEK RANGE
C$6.19 52 week high C$2.21 52 week low
DEBT
C$120 million convertible debentures (due 2H 2017) KGI.DB: 6% coupon, $15.00 strike KGI.DB.A: 7.5% coupon, $13.70 strike
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*Full director biographies are available at www.klgold.com
George Ogilvie, P.Eng, CEO John Thomson, CA, CFO
• 25 years management, operating, and technical expertise in the mining industry
• More than 9 years of operating experience in deep,
narrow-vein gold mines (Anglo Gold, South Africa)
• Former CEO of Rambler Metals and Mining, leading Company’s transition from explorer to free-cash flow generating producer
• More than 25 years experience in various senior level finance positions
• Variety of senior level positions with companies such as PepsiCo
• Chartered Accountant who studied at INSEAD
Chris Stewart, P.Eng, Vice President Operations *Non-Executive Board Members:
• More than 20 years experience operating mines in
Northern Ontario in various senior-level positions
• Former CEO of Liberty Mines where he implemented a successful turnaround strategy leading company to restart production on time and on budget
• Mining Engineering degree from Queen’s University
• Harry Dobson, Chairman • Barry Cooper, B.Sc., MBA (Head Analyst, CIBC, retired) • Jeff Parr, BA, MBA (CFO, Centerra Gold) • Barry Olsen, P.Eng, M.Sc. (Snr. VP Projects, Goldcorp) • Pam Klessig, P. Geo • Dawn Whittaker, LL.B
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description
The Kirkland Lake camp has been mining gold for over 100 years with almost 25M oz of gold produced during that time from seven mines and by grade is one of the richest gold camps in the world.
Kirkland Lake Gold Inc. is an operating and exploration gold company located in Kirkland Lake, Ontario, Canada in the prolific Southern Abitibi gold belt.
The Company owns five former producing high grade mines that produced 22 million ounces of gold at an average head grade of 0.44 opt (15.1 grams per tonne).
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OLD •TONNAGE Focused (Quantity) Requirements •High gold price environment >$1600 •More manpower •100’s of stopes in production cycle •All mineralization into the ore pass Results •Grade continued to drop •Cost increased •Complex planning and logistics •Unprofitable •High cash burn •Multiple urgent financings
NEW •GRADE Focused (Quality) Requirements •Not dependent on high gold price •Less manpower •Fewer stopes •Strict ore / waste management and dilution control
Results •Grade has risen significantly •Cost reduced •Simplified planning and logistics •Return to profitability •Cash flow positive •Finance at company’s discretion
Mine Operator Location Gold Grade Reserves
g/t 000 oz Au
Turquoise Ridge Barrick USA 17.40 6,761
Macassa Kirkland Lake Gold Canada 17.10 1,385
Pogo Gold Sumitomo Corp. USA 15.20 2,932
Gosowong Newcrest Indonesia 12.00 1,235
Moab Khotsong AngloGold Ashanti South Africa 10.00 6,126
Mponeng AngloGold Ashanti South Africa 9.98 14,569
Red Lake Gold GoldCorp Canada 9.94 2,553
TauTona AngloGold Ashanti South Africa 9.06 1,389
Kupol/Dvoinoye Kinross Russia 8.73 2,081
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CATEGORY
(31st DEC 2013) TONS
GRADE (opt)
GRADE
(gpt) OUNCES
Proven
Probable
Total P+P
941,000
1,843,000
2,784,000
0.43
0.53
0.50
14.7
18.2
17.1
401,000
984,000
1,385,000
Measured
Indicated
Total M+I
1,133,000
3,019,000
4,152,000
0.39
0.54
0.49
13.4
18.5
16.8
436,000
1,619,000
2,055,000
Inferred
2,092,000
0.54
18.5
1,133,000
See Kirkland Lake news release dated April 28 2014, a copy of which has been filed on SEDAR for further particulars. The contents of the above slide have been verified and approved by the Company’s Chief Exploration Geologist, Stewart Carmichael, P.Geo, a “qualified person” for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral projects.
• Mining 100% of Reserves and 70% conversion of Resources @ 200,000 oz p.a. provides a 14 year Life of Mine
Reserves are not included in resources
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CATEGORY
(31st DEC 2013) TONS
GRADE (opt)
GRADE
(gpt) OUNCES
Proven
Probable
Total P+P
328,000
1,164,000
1,492,000
0.45
0.57
0.54
15.4
19.5
18.5
147.000
665,000
812,000
Measured
Indicated
Total M+I
24,000
1,440,000
1,464,000
0.30
0.70
0.69
10.3
24.0
23.7
7,000
1,005,000
1,012,000
Inferred
1,205,000
0.67
23.0
808,000
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5025 Level P+P 89,000 Tons @0.44 oz/ton 39,000O Ounces M+I 57,000 Tons @ 0.30 oz/ton 22,000 Ounces
• Previously only two mining horizons in the South Mine Complex, 5025L & 5300L • Third mining horizon on 5400L opened up in May 2014 with reserve grade @ 0.57 opt (19.5 gpt) • Stope 5417 reconciled grade @ 0.63 opt (21.6 gpt) • Developing to 5600L with reserve grade @ 0.70 opt (23.9 gpt) in time for FY2016 • Being on 5400L and 5600L allows delineation drilling of resources, especially below 5600L • Open at depth and across strike
5300 Level P+P 620,000 Tons @ 0.47 oz/ton 290,000 Ounces M+I 220,000 Tons @ 0.30 oz/ton 86,000 Ounces
5400 Level P+P 481,000 Tons @ 0.57 oz/ton 274,000 Ounces M+I 170,000 Tons @ 0.41 oz/ton 71,000 Ounces
5600 Level P+P 290,000 Tons @0.70 oz/ton 209,000 Ounces M+I 220,000 Tons @ 0.55 oz/ton 122,000Ounces
57 to 66 Level
M+I 768,000 Tons @ 0.91 oz/ton 703,000 Ounces
0.31
0.38
0.31 0.34
0.31 0.30
0.26 0.29
0.45
0.39
0.34 0.37
0.34
0.47 0.51
-
0.10
0.20
0.30
0.40
0.50
0
5,000
10,000
15,000
20,000
May 2013
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2014
Jun Jul
Ou
nce
s p
er
To
n
Go
ld O
un
ces
Oz Recovered Head Grade
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• Cut off grades raised from 0.18 opt to 0.22 opt. • Stopped practice of mining “incremental tonnage” • Implemented strict ore waste segregation UG • Increasing underground delineation drilling in SMC • Employing more underground geologist • Manning assay labortory 24/7
Ave 0.41 opt
• Starting to restructure organization • Implementing leadership training • Looking to upgrade MIS
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• Last four years 18% growth year over year • Guidance in FY12, FY13 and FY14 overly optimistic creating false expectations • Guidance for FY15, FY16 and FY17 more in tune with last four year growth • Guided grades for FY15, FY16 and FY17 are based on historic achievements • Calendar YTD actual head grade is 0.41 opt, Fiscal YTD actual head grade is 0.45 opt
{ Expectation Gap
Financial FY2014 FY2013 FY14 vs.
FY13 Q1/14 Q4/14 Q1/15
Q1/15 vs.
Q1/14
Q1/15 vs.
Q4/14 Comments
Gold Sales (ounces)
125,273 91,771 +37% 30,253 30,771 38,543 +27% +25%
Average Price ($)
(per ounce) 1,383 1,653 -16% 1,435 1,376 1,401 -2% +2%
Revenue (000’s)
173,258 151,692 +14% 43,421 42,356 54,000 +24% +27%
Cash Operating Cost per
Ton Produced
343 335 +2% 344 352 340 -1% -3%
Cash Operating Cost per Ounce
Produced
1,078 1,109 -3% 1,113 1,000 788 -29% -21%
AICC per Ounce
Produced 1,986 2,432 -18% 2,094 1,774 1,250 -40% -30%
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All amounts stated are in Canadian dollars
10,903 Ounces Gold sold to September end @ $1,419 Tons expected to increase in 2H15 by +10% to +1,100 – 1,250 tpd which will drive down cost per ton Aim is to push cost per ton to or below $300 in 2H15 Guidance this year is to push cash cost per ounce below $800 consistently Guidance this year is to push AICC below $1250 consistently
$1,127 $1,307
$956 $1,156 $1,112 $1,052
$1,403 $1,187
$839 $1,073 $1,119
$836
$1,244
$720 $614
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
MAY 2013
JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY 2014
JUN JUL
Ou
nce
s
C$
pe
r O
un
ce
Production Capital Development PP&E Corporate Exploration Royalties Oz Produced
Ounces Produced
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• 16% reduction in labour force (i.e. 213 less employees on payroll) • Incentive programs cancelled (e.g. home loan assistance and travel) • Major capital projects (PP&E) completed in January 2014 • Shift schedules altered (i.e. maintenance department, mill placed on 5 & 2)
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-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
$-
$500
$1,000
$1,500
$2,000
$2,500
FEB MAR APR MAY 2014
JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR
Ou
nce
s
C$
pe
r o
un
ce
Production Capital Development PP&E Corporate Exploration Royalties Oz Produced
Ounces Produced
Estimated
$1,350
• Projection is based on assumptions of 1,150 tpd, 0.37 opt and 96% mill recovery • Company beginning to generate free cash flow • Likely high degree of variability until more high grade stopes online
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• Hoisting system capable of hoisting 3,600 tons per day • Mary-Anne Compartment installed in Shaft providing service cage • Mill upgraded to handle 2,200 tons per day • Underground infrastructure and battery equipment in place for SMC 17
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• Project capital was completed in January 2014 • $9M in capital development of 5400L and SMC main decline to 5600L in FY15
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• Near surface mineralization is within 2 Km’s of mill • Mill has excess capacity of +/- 1,000 tons per day • Mineralization from 100’ to 1,000’ below surface • Open across strike and at depth • M&I 310,000 tons @0.34opt (11.7gpt) 104,000 oz. • Infer. 131,000 tons @0.36opt (12.3gpt) 48,000 oz. • 3 drills drilling to expand resource and infill drill
UG DRILLING
SURFACE
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• SMC continues to be expanded • Multi-ounce intersections • 3 drills turning underground • Open in multiple directions
TSX /AIM: KGI
CONTACT FOR FURTHER INFORMATION PLEASE CONTACT:
George Ogilvie President, CEO and Director +1-705-567-5208 ext. 3225 [email protected] John Thomson CFO and Director +1-705-567-5208 [email protected] Tim Blythe / Halimah Hussain (Blytheweigh) Investor Relations / PR +44-207-138-3204 [email protected] / [email protected]
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