OPERATIONAL EXCELLENCE ORGANIC GROWTH SHAREHOLDER RETURNS On the Road to a Million Ounces of Gold Per Year

Transcription

1 TSX: KL NYSE: KL ASX: KLA Q CONFERENCE CALL AND WEBCAST October 31, 2018 OPERATIONAL EXCELLENCE ORGANIC GROWTH SHAREHOLDER RETURNS On the Road to a Million Ounces of Gold Per Year

2 FORWARD LOOKING STATEMENTS Cautionary Note Regarding Forward-Looking Information This presentation contains statements which constitute forward-looking information within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of Kirkland Lake Gold with respect to future business activities and operating performance. Forward-looking information is often identified by the words may, would, could, should, will, intend, plan, anticipate, believe, estimate, expect or similar expressions and include information regarding: (i) the amount of future production over any period; (ii) assumptions relating to revenues, operating cash flow and other revenue metrics set out in the Company's disclosure materials; and (iii) future exploration plans (iv) the temporary suspension of operations at the Cosmo Mine and the anticipated effects thereof. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect KL Gold s management s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although Kirkland Lake Gold believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forwardlooking information are the following: the ability of Kirkland Lake Gold to successfully integrate the operations and employees of its Canadian and Australian operations, and realize synergies and cost savings, and to the extent, anticipated; the potential impact on exploration activities; the potential impact on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; the rerating potential following the consummation of the merger; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws; and compliance with extensive government regulation. This forward-looking information may be affected by risks and uncertainties in the business of Kirkland Lake Gold and market conditions. This information is qualified in its entirety by cautionary statements and risk factor disclosure contained in filings made by Kirkland Lake Gold, including Kirkland Lake Gold s annual information form, financial statements and related MD&A for the year ended December 31, 2017 and their interim financial reports and related MD&A for the quarters ended March 31, 2018, June 30, 2018, and September 30, 2018 filed with the securities regulatory authorities in certain provinces of Canada and available at Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although Kirkland Lake Gold 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. Kirkland Lake Gold does not intend, and do not assume any obligation, to update this forward-looking information except as otherwise required by applicable law. All dollar amounts in this presentation are expressed in U.S. Dollars unless otherwise noted. Use of Non-IFRS Measures This Presentation refers to average realized price, operating costs, all-in sustaining costs per ounce of gold sold, free cash flow and cash costs of production because certain readers may use this information to assess the Company s performance and also to determine the Company s ability to generate cash flow. This data is furnished to provide additional information and are non-ifrs measures and do not have any standardized meaning prescribed by International Financial Reporting Standards ( IFRS ). These measures should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and are not necessarily indicative of operating costs presented under IFRS. Refer to each Company s most recent MD&A for a reconciliation of these measures. Macassa 2

3 TSX: KL NYSE: KL ASX: KLA CEO REVIEW TONY MAKUCH October 31, 2018 OPERATIONAL EXCELLENCE ORGANIC GROWTH SHAREHOLDER RETURNS On the Road to a Million Ounces of Gold Per Year

4 Q3 2018: STRONG GROWTH COMPARED TO Q Net earnings $55.9M (EPS $0.27); Adj. net earnings 1 $60.6M (EPS $0.29) o Net earnings increase 28%; Adj. net earnings 71% higher Record net cash provided by operating activities 2 of $128.4M o 77% increase from $72.4M in Q Gold production 180,155 ozs, gold sales 184,517 ozs o 30% increase in production, 34% growth in gold sales Record low unit cost performance 1 o Op. cash costs/oz $351; AISC/oz $645 1) See Non-IFRS Measures sections in forward looking statements 2) Of continuing operations 4

5 Q3 2018: STRONG PRODUCTION GROWTH Production of 180,155 ozs, 30% increase from Q3 2017, 9% improvement from Q Fosterville: 90,618 ozs, 47% increase from Q3 2017, 17% growth from Q Macassa: 55,582 ozs, 15% growth from Q3 2017, compares to record production of 60,571 ozs in Q Holt: 20,609 ozs, 21% increase from Q3 2017, 50% higher than Q (21-day shutdown in Q2 2018) Taylor: 13,333, 20% growth from Q3 2017, 3% growth from previous quarter 190, , , , ,091 Production (ozs) 165, , , , ,000 90,000 70,000 Q Q Q Q Q ,305 5

6 Q3 2018: TWO HIGH-GRADE MINES PERFORMING VERY WELL Record results from Fosterville Fosterville 90, g/t Record month in August: 42, g/t Second gravity circuit resulting in over 50% gravity recovery Solid quarterly production at Macassa 55, g/t Production in line with target levels Macassa 6

7 Q3 2018: LOW OPERATING CASH COSTS KEY TO PROFITABILITY AND CASH FLOW Operating cash costs/oz sold 1 improve 27% from Q and 13% from Q Record operating cash costs at Fosterville of $189/oz, 36% better than Q3 2017, 21% improvement q-o-q Macassa operating cash costs/oz sold improve 16% from Q Operating cash costs at Taylor and Holt improve from previous quarter Operating Cash Costs ($/oz Sold) Q Q Q Operating Cash Costs/Oz Q Q Q Fosterville $ Macassa $ Taylor $ Holt Cosmo $2, Consolidated $482 $ ) See Non-IFRS Measures sections in forward looking statements 7

8 Q3 2018: STRONG QUARTER-OVER-QUARTER IMPROVEMENT IN AISC/OUNCE AISC/oz sold 1 improved 24% from Q3 2017, 15% from previous quarter Fosterville key driver of improvement, AISC of $416/oz reflects lower op. cash costs/oz, sustaining capex/oz AISC/oz sold improve at all three mines in Canada y-o-y 900 AISC ($/oz Sold) 1 AISC/Oz Q Q Q Fosterville $574 $538 $416 Macassa $841 $687 $ Taylor $1,054 $1, Holt $1,116 $1, Cosmo $2, Q Q Q Consolidated $845 $757 $645 1) See Non-IFRS Measures sections in forward looking statements 8

9 Q3 2018: REVENUE INCREASED 26% YEAR OVER YEAR, 4% FROM Q Revenue growth in Q reflects record golds sales: 184,517 ozs vs 137,908 ozs in Q3 2017, vs. 164,305 ozs in Q Average gold price $1,204/oz in Q3 2018: $1,282/oz Q and $1,301/oz Q $230 $220 Revenue ($ Millions) $214.7 $222.7 Q3 Revenue ($ Millions) vs. Q Vs. Q Prior Period Revenue $176.7 $214.7 $210 Change Volume $200 $190 $180 $170 $176.7 Change Rate (14.3) (17.9) Change F/X 0.5 (0.4) Q3 Revenue $222.7 $222.7 $160 $150 $140 Q Q Q ) See Non-IFRS Measures sections in forward looking statements 9

10 Q3 2018: SOLID FREE CASH FLOW WHILE FUNDING GROWTH Net cash provided by operating activities increased 77% from Q3 2017, 6% from Q Free cash flow 41% higher than Q3 2017, reduction from Q reflects increased capital expenditures $140 $120 $100 $80 Net Cash By Op. Activities 1 ($ Millions) $120.9 $128.4 $80 $60 $40 Free Cash Flow 2 ($ Millions) $60.7 $52.2 $60 $40 $72.4 $20 $37.1 $20 Q Q Q $0 Q Q Q $ Millions Q Q Q Exp. exploration $16.7 $15.8 $20.3 Cap. exploration $- $9.5 $5.3 Total exploration $16.7 $25.3 $25.6 $ Millions Q Q Q Sustaining capital $38.3 $44.1 $41.4 Growth capital $7.5 $20.5 $38.5 Total capital $45.8 $64.6 $79.9 1) Of continuing operations 2) See Non-IFRS Measures sections in forward looking statements 10

11 YTD 2018: STRONG PERFORMANCE AGAINST FULL-YEAR GUIDANCE Well positioned to achieve consolidated guidance $ millions unless otherwise stated 2018 Guidance YTD 2018 Actuals Both operating cash costs & AISC better than target range In Q Continued strong operating results Significant growth capital expenditures at Macassa Ongoing investment in exploration, additional news flow Production (kozs) Operating cash costs ($/oz) 2 $400 $425 $397 AISC ($/oz) 2 $750 $800 $738 Operating cash costs 2 $260 $270 $197.2 Sustaining capital expenditures 2 $150 $170 $127.6 Fosterville Growth capital expenditures 2 $85 $95 $48.9 Exploration (incl. capitalized) $75 $90 $69.5 Royalty cost $22 $27 $18.8 G & A 3 $20 $ (1) Consolidated 2018 production includes 47 ounces processed from the Holloway Mine. (2) See Non-IFRS Measures set out starting on page 35 of the Company s MD&A for the three and nine months ended September 30, 2018 for further details. The most comparable IFRS Measure for operating cash costs, operating cash costs per ounce sold and AISC per ounce sold is production costs as presented in the Consolidated Statements of Operations and Comprehensive Income, while total additions and construction in progress are the most comparable measures Macassa for sustaining and growth capital expenditures. Operating cash costs, operating cash cost per ounce sold and AISC per ounce sold in the Company s 2018 guidance reflect an average US$ to C$ exchange rate of 1.28 and a US$ to A$ exchange rate of Operating cash costs, operating cash cost per ounce sold and AISC per ounce sold for YTD 2018 reflect an average US$ to C$ exchange rate of 1.29 and a US$ to A$ exchange rate of (3) Includes general and administrative costs and severance payments. Excludes non-cash share-based payment expense. 11

12 REVISIONS TO FULL-YEAR 2018 GUIDANCE Revisions to Consolidated 2018 Guidance New Guidance 1 Prior Guidance Consolidated - gold production (kozs) Consolidated operating cash costs/oz ($/oz) Consolidated AISC/oz ($/oz) Consolidated growth capital expenditures ($ millions) Consolidated exploration spending Consolidated corporate G&A costs ($ millions) Macassa Taylor Holt Fosterville Production 2018 guidance (kozs) Guidance 1 Actuals Production YTD 2018 (ozs) 170,190 39,328 50, , ,484 2 Op. cash costs ($/oz) 1,3 $450 $470 $750 $775 $625 $650 $230 $250 $385 $410 Op. cash costs ($/oz) 1,3 $449 $767 $681 $231 $397 (1) Represents the Company s 2018 guidance as at September 30, (2) YTD 2018 consolidated production includes 47 ounces from the Holloway Mine. (3) See Non-IFRS Measures set out starting on page 35 of the Q MD&A for further details. The most comparable IFRS Measure for operating cash costs is production costs as presented in the Consolidated Statements of Operations and Comprehensive Income. YTD 2018 for operating cash costs per ounce sold reflects an average US$ to C$ exchange rate of 1.29 and a US$ to A$ exchange rate of Revised 2018 Guidance for operating cash costs per ounce sold reflects an average US$ to C$ exchange rate of 1.29 and a US$ to A$ exchange rate of

13 TSX: KL NYSE: KL ASX: KLA FINANCIAL REVIEW LISA ROSS DIRECTOR, FINANCE October 31, 2018 OPERATIONAL EXCELLENCE ORGANIC GROWTH SHAREHOLDER RETURNS On the Road to a Million Ounces of Gold Per Year

14 Q3 2018: STRONG QUARTERLY EARNINGS PERFORMANCE Net earnings growth from Q largely reflects higher revenue from record sales and improved unit costs Quarter-over-quarter change in net earnings reflects lower gold price, other loss of $5.8M versus other income of $4.3M in Q and higher expensed exploration costs in Q Adjusted net earnings in Q excludes pre-tax mark-to-market loss on fair valuing warrants, mainly Novo warrants $70 Net Earnings ($ Millions) $70 Adjusted Net Earnings ($ Millions) $60 $50 $40 $30 $20 $43.7 ($0.21/share) $61.5 ($0.29/share) $55.9 ($0.27/share) $60 $50 $40 $30 $20 $71.2 ($0.34/share) $35.4 ($0.17/share) $63.4 ($0.30/share) $60.6 ($0.29/share) $10 $0 $22.8 ($0.16/share) Q Q Q $10 $0 Q Q Q $ Millions Q Q Q Earnings from continuing ops. Loss on discontinued ops. $45.5 $61.5 $55.9 ($1.7)

15 Q3 2018: STRONG GROWTH IN EARNINGS FROM MINE OPERATIONS 57% increase from Q reflects revenue growth (higher sales offsets lower gold price) and reduced production costs Higher revenue and lower production costs also drive growth quarter over quarter improvement $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 Earnings from Mine Ops ($ Millions) $73.4 $109.5 $115.3 Q Q Q $ Millions Q Q Q Revenue $176.7 $214.7 $222.7 Production costs ($66.5) ($66.5) ($64.9) Depletion and depreciation ($31.7) ($32.5) ($36.0) Royalty expense ($5.1) ($6.2) ($6.6) Earnings from mine operations $73.4 $109.5 $ ) See Non-IFRS Measures sections in forward looking statements 15

16 Q3 2018: STRONG GROWTH IN EBITDA FROM Q % increase from Q due to earnings growth, impact of adding back higher depletion and depreciation and deferred taxes in Q Change from previous quarter reflects reduced net earnings $92.3 $ Millions Q Q Q Net earnings $43.7 $61.5 $55.9 Loss from discontinued ops Earnings from continuing ops. $ $ Add back: Finance costs 2.3 $ Depletion and depreciation 31.7 $ Current income tax expense 12.0 $ Deferred tax expense 8.3 $ EBITDA $99.7 $123.7 $119.6 $98.2 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Q EBITDA 1 $119.6 EBITDA ($ Millions) 20% increase from Q ) See Non-GAAP Measures sections in forward looking statements 16

17 $257.2M OF CASH AT SEPTEMBER 30, 2018 $ Millions $ $257.2 Additions refers to additions to mining interests, plant and equipment, long-term assets 17

18 TSX: KL NYSE: KL ASX: KLA OPERATIONS & EXPLORATION REVIEW October 31, 2018 OPERATIONAL EXCELLENCE ORGANIC GROWTH SHAREHOLDER RETURNS On the Road to a Million Ounces of Gold Per Year

19 FOSTERVILLE: YTD 2018 PRODUCTION AHEAD OF PLAN 2018 production 1 : Q3: 90,618 ozs (113, g/t) YTD: 231,923 ozs (358, g/t) Operating cash costs ( OCC ) & AISC/oz sold Q3: OCC $189/oz, AISC $416/oz YTD: OCC $231/oz, AISC $498/oz 2018 guidance improved Production: kozs (previous: kozs) Op. cash costs: $230 $250/oz (previous: $250 $270/ozs) 2 YTD 2018 sustaining capital: $56.1M YTD 2018 growth capital 3 : $14.3M Key projects to ramp up over remainder of 2018 Ventilation: Raise boaring expenditures to increase in Q4 2018, raise completion targeted Q Paste fill: First surface pilot hole completed, permitting for plant construction progressing Water treatment plant: Construction progressing, commissioning Q ) See the Company s MD&A for the three and nine months ended September 30, 2018 for more information on Fosterville s operating performance. (See Slide 2 for information regarding Non-IFRS measures) 2) Operating cash costs per ounce sold guidance reflects an average USD to AUD exchange rate of ) Excludes capitalized exploration expenditures Q Grade Distribution >30 g/t stopes/development = 27% of tonnes, 70% of ounces for Q3 >30 g/t stopes/development = 27% of tonnes, 70% of ounces for Q3 19

20 MACASSA: SOLID PERFORMANCE IN Q production 1 : Q3: 55,582 ozs (92, g/t) YTD: 170,190 ozs (268, g/t) Operating cash costs ( OCC ) & AISC/oz sold Q3: OCC $439/oz, AISC $722/oz YTD: OCC $449/oz, AISC $739/oz 2018 guidance improved 2 Op. cash costs: $450 $470/oz (previous: $460 $480/oz) YTD 2018 sustaining capital: $43.2M Macassa #4 Shaft Project YTD 2018 growth capital: $29.1M Key projects to ramp up over remainder of 2018 Shaft collaring completed Concrete for headframe completed late October Q work focusing on hoist construction, internal steel construction for headframe Full-face sinking to commence in Q ) See the Company s MD&A for the three and nine months ended September 30, 2018 for more information on Macassa s operating performance. (See Slide 2 for information regarding Non-IFRS measures) 2) Operating cash costs per ounce 2018 guidance reflects an average USD to CAD exchange rate of

21 MACASSA: DRILL PROGRAM TARGETING RESOURCE GROWTH/CONVERSION 21

22 SWAN ZONE: SUCCESSFUL INFILL DRILLING POINTS TO FUTURE RESERVE GROWTH 22

23 SWAN ZONE: Q INFILL DRILL PROGRAM Blue - Q4 Forecast Drilling Swan Intercepts Anticipated Area of Inferred to Indicated Conversion - Dec 2018 Spacing down to ~25 x 25m 23

24 FOSTERVILLE: Q IN-MINE DRILLING PLAN 4 DRILLS AT HARRIER SOUTH BY YEAR END H4490 DD Development Current - Nov Southern East West Splay Drilling, Oct-Nov Upper Phoenix 5700 & 5950mN Drilling Nov-Dec Fosterville Anticline Drilling Oct - Nov Lower Px South mN Oct-Nov Harrier South 4550,4450 & 4350mN Drilling Nov-Dec Z-Swan, Audax 5150mN Current-Oct Cygnet 6450 & 6550mN Drilling Dec Fosterville Deeps 6750mN Oct-Dec Harrier South mN Drilling Dec Lower Phoenix 5850mN Drilling Oct - Nov Lower Phoenix 6000mN Drilling Nov - Dec 24

25 KL: HIGHLY PROFITABLE, CASH-FLOW GENERATING OPERATIONS Production and unit costs ahead of plan for YTD 2018 Production and cost guidance improved Solid financial performance for YTD 2018 Strong earnings growth Record cash flow from operations $163M of free cash flow On track for significant organic growth Internally funding growth projects Achieving extensive exploration success High-grade intersections support growth at Fosterville & Macassa KL: Rewarding Shareholders and Creating Value 25

26 NI DISCLOSURE Kirkland Lake Gold Qualified Person and QA/QC All production information and other scientific and technical information in this presentation with respect to Kirkland Lake Gold and its assets were prepared in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument Standards of Disclosure for Mineral Projects ( NI ) and were prepared, reviewed, verified and compiled by Kirkland Lake Gold s mining staff under the supervision of, Pierre Rocque P. Eng., Kirkland Lake Gold s Vice President, Canadian Operations or Ian Holland, Vice President, FAusIMM, Australian Operations. The exploration programs across Kirkland Lake Gold s land holdings in Kirkland Lake were prepared, reviewed, verified and compiled by Kirkland Lake Gold s geological staff under the supervision of Doug Cater, P.Geo., the Company s Vice President of Exploration, Canadian Operations or John Landmark, Vice President, Exploration, Australian. All reserve and resource estimates for the Kirkland Lake Gold Properties as at December 31, 2017 have been audited and verified, and the technical disclosure has been approved. The QP s for the mineral reserves and resources outlined under the PDFZ Properties are Doug Cater, P. Geo, and, Pierre Rocque P. Eng., the Vice President of Technical Services respectively. Sample preparation, analytical techniques, laboratories used and quality assurance-quality control protocols used during the exploration drilling programs are done consistent with industry standards and independent certified assay labs. REFER TO KIRKLAND LAKE GOLD ANNUAL INFORMATION FORM DATED APRIL 2, 2018, AVAILABLE ON SEDAR ( FOR COMPLETE NI NOTES AND DISCLOSURE PERTAINING TO THE RESOURCE AND RESERVE STATEMENTS QUOTED HEREIN. All updated NI TECHNICAL REPORTS IN SUPPORT OF THE COMPANY S NEWS RELEASE ISSUED ON FEBRUARY 20, 2018, ENTITLED KIRKLAND LAKEK GOLD REPORTS STRONG GROWTH IN MINERAL RESERVES AND MINERAL RESOURCES, WHICH WAS FILED ON SEDAR AT AND IS AVAILABLE ON THE COMPANY S WEBSITE. Qualified Persons Pierre Rocque, P.Eng., Vice President, Canadian Operations is a "qualified person" as defined in National Instrument and has reviewed and approved disclosure of the Mineral Reserves technical information and data for all Kirkland Lake Gold assets included in the Company s news releases and presentations. Simon Hitchman, FAusIMM (CP), MAIG, Principal Geologist, Troy Fuller, MAIG, Geology Manger and Ion Hann, FAusIM, Mining Manager, are qualified person as such term is defined in National Instrument and has reviewed and approved the technical information and data from the Australian Assets included in the Company s news released and presentations. Doug Cater, P. Geo Vice President, Exploration, Canada is a "qualified person" as defined in National Instrument and has reviewed and approved disclosure of the Mineral Resources technical information and data for the Canadian Assets included in the Company s news releases and presentatons. Cautionary Note to U.S. Investors - Mineral Reserve and Resource Estimates All resource and reserve estimates included in this news release or documents referenced in this news release have been prepared in accordance with Canadian National Instrument Standards of Disclosure for Mineral Projects ("NI ") and the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the "CIM Standards"). NI is a rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. The terms "mineral reserve", "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms as defined in accordance with NI and the CIM Standards. These definitions differ materially from the definitions in SEC Industry Guide 7 ("SEC Industry Guide 7") under the United States Securities Act of 1933, as amended, and the Exchange Act. In addition, the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are defined in and required to be disclosed by NI and the CIM Standards; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the U.S. Securities and Exchange Commission (the "SEC"). Investors are cautioned not to assume that all or any part of mineral deposits in these categories will ever be converted into reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in very limited circumstances. Investors are cautioned not to assume that all or any part of a mineral resource exists, will ever be converted into a mineral reserve or is or will ever be economically or legally mineable or recovered. 26