TURNING AROUND THE HIGH GRADE MACASSA GOLD MINE

Transcription

1 TURNING AROUND THE HIGH GRADE MACASSA GOLD MINE London Roadshow September

2 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 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. 2 The Company does not intend, and does not assume any obligation, to update these forward-looking statements except as otherwise required by applicable law. 2

3 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. George Ogilvie, P.Eng., CEO 3

4 Located in Ontario, one of the safest and lowest risk mining jurisdictions globally Insiders own 18.8% of Company Attractive NI 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 Major project capital investment completed and infrastructure in place Significant exploration potential with organic growth 4

5 MARKET CAP CASH BALANCE C$369 million (Sept, , C$5.09) Issued Shares: 72,081,617 Fully Diluted: 84,986,448 C$40.2 million (July 31, 2014) 52 WEEK RANGE C$ week high C$ 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 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% OWNERSHIP ABC Funds 4.9% European Institutions 15% NA Institutions 45% Management & Founders 20% Retail 20% 5

6 George Ogilvie, P.Eng, CEO 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 Chris Stewart, P.Eng, Vice President Operations John Thomson, CA, CFO 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 *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 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 Mining Engineering degree from Queen s University *Full director biographies are available at 6

7 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). 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. description 7

8 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 8

9 Mine Operator Location Gold Grade Reserves g/t 000 oz Au Turquoise Ridge Barrick USA ,761 Macassa Kirkland Lake Gold Canada ,385 Pogo Gold Sumitomo Corp. USA ,932 Gosowong Newcrest Indonesia ,235 Moab Khotsong AngloGold Ashanti South Africa ,126 Mponeng AngloGold Ashanti South Africa ,569 Red Lake Gold GoldCorp Canada ,553 TauTona AngloGold Ashanti South Africa ,389 Kupol/Dvoinoye Kinross Russia ,081 9

10 CATEGORY (31 st DEC 2013) TONS GRADE (opt) GRADE (gpt) OUNCES CATEGORY (31 st DEC 2013) TONS GRADE (opt) GRADE (gpt) OUNCES Proven Probable Total P+P 941,000 1,843,000 2,784, , ,000 1,385,000 Proven Probable Total P+P 328,000 1,164,000 1,492, , ,000 Measured Indicated Total M+I 1,133,000 3,019,000 4,152, ,000 1,619,000 2,055,000 Measured Indicated Total M+I 24,000 1,440,000 1,464, ,000 1,005,000 1,012,000 Inferred 2,092, ,133,000 Inferred 1,205, ,000 Mining 100% of Reserves and 70% conversion of 200,000 oz p.a. provides a 14 year Life of Mine Reserves are not included in resources See Kirkland Lake news release dated April , 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 , Standards of Disclosure for Mineral projects. 10

11 5025 Level P+P 89,000 oz/ton 39,000O Ounces M+I 57, oz/ton 22,000 Ounces 5300 Level P+P 620, oz/ton 290,000 Ounces M+I 220, oz/ton 86,000 Ounces 5400 Level P+P 481, oz/ton 274,000 Ounces M+I 170, oz/ton 71,000 Ounces 5600 Level P+P 290,000 oz/ton 209,000 Ounces M+I 220, oz/ton 122,000Ounces 57 to 66 Level M+I 768, oz/ton 703,000 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 0.57 opt (19.5 gpt) Stope 5417 reconciled 0.63 opt (21.6 gpt) Developing to 5600L with reserve 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 11

12 Gold Ounces Ounces per Ton 20,000 15, Ave 0.41 opt , , May 2013 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2014 Oz Recovered 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 Head Grade Jun Starting to restructure organization Implementing leadership training Looking to upgrade MIS Jul - 12

13 Expectation Gap { 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 13

14 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, % 30,253 30,771 38, % +25% 10,903 Ounces Gold sold to September $1,419 Average Price ($) (per ounce) Revenue (000 s) Cash Operating Cost per Ton Produced 1,383 1,653-16% 1,435 1,376 1,401-2% +2% 173, , % 43,421 42,356 54, % +27% % % -3% 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 Cash Operating Cost per Ounce Produced 1,078 1,109-3% 1,113 1, % -21% Guidance this year is to push cash cost per ounce below $800 consistently AICC per Ounce Produced 1,986 2,432-18% 2,094 1,774 1,250-40% -30% Guidance this year is to push AICC below $1250 consistently All amounts stated are in Canadian dollars 14

15 C$ per Ounce Ounces $3,000 $2,500 Ounces Produced 18,000 16,000 14,000 $2,000 12,000 $1,500 10,000 8,000 $1,000 6,000 $500 $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 4,000 2,000 $- MAY 2013 JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY 2014 JUN JUL - Production Capital Development PP&E Corporate Exploration Royalties Oz Produced 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) 15

16 C$ per ounce Ounces $2,500 18,000 16,000 $2,000 Ounces Produced 14,000 12,000 $1,500 10,000 $1,350 $1,000 8,000 6,000 $500 4,000 2,000 $- FEB MAR APR MAY 2014 JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR Estimated - Production Capital Development PP&E Corporate Exploration Royalties Oz Produced 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 16

17 Hoisting system capable of hoisting 3,600 tons per day Mary-Anne Compartment installed in Shaft providing service cage 17 Mill upgraded to handle 2,200 tons per day Underground infrastructure and battery equipment in place for SMC 17

18 Project capital was completed in January 2014 $9M in capital development of 5400L and SMC main decline to 5600L in FY15 18

19 SURFACE 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 (11.7gpt) 104,000 oz. Infer. 131,000 (12.3gpt) 48,000 oz. 3 drills drilling to expand resource and infill drill UG DRILLING SMC continues to be expanded Multi-ounce intersections 3 drills turning underground Open in multiple directions 19 19

20 CONTACT FOR FURTHER INFORMATION PLEASE CONTACT: George Ogilvie President, CEO and Director ext John Thomson CFO and Director Tim Blythe / Halimah Hussain (Blytheweigh) Investor Relations / PR Tim.blythe@blytheweigh.com / halimah.hussain@blytheweigh.com TSX /AIM: KGI 20