25 May 2012

Kirkland Lake misses target

16/03/2011 Robert Tyerman

Canadian miner Kirkland Lake Gold (KGI) says technical constraints resulted in below-target third-quarter output of 20,231 oz of gold. Based in Ontario and listed in Toronto and on AIM, the company increased gold sales 215 per cent to 18,280 oz in the three months to January, taking the nine-month production total to 58,394 oz, and turned a C$4.9 million (£1.3 million) net loss into $4.2 million net profits.

However, Kirkland Lake says this level of production is below its target and means it will not meet its objective of producing 90,000 to 100,000 oz of gold for the full year to April. The company blames this on hoisting constraints, curbing short-term production to give priority to longer term objectives, and to lower than expected grades in some areas.

Such impediments are common in the type of gold deposit Kirkland Lake is mining, argues the company, which insists its overall expansion to an annual output rate of 180,000 to 200,000 oz by November, is going to plan. Entrepreneurial chairman Harry Dobson declares 'we remain on track to achieve the target rate of production' and points out the company had cash of C$47.4 million at the end of January.

Total cash costs in the third quarter were C$794 an ounce, down from C$866 in the second quarter, compared with a  current $1,400 gold price. Kirkland Lake shares, highlighted by Growth Company Investor at 517p last July, now trade at 835p, down 7.25p this morning (with a 30p spread).

Profit-taking looks prudent, with longer-term investors keeping a chunk for future improvement.

Tags: AIM market, Gold, Harry Dobson, Ontario

Sector: Mining

Companies: Kirkland Lake Gold

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