Q2 2021 Kirkland Lake Gold Ltd Earnings Call
Excuse me, ladies and gentlemen, this is the operator today's call is scheduled to begin on materially until that time. Your lines will again be placed back on a music hold thank you for your patience.
[music].
Good afternoon, ladies and gentlemen, my name is brandy and I will be your conference operator today.
I would like to welcome everyone to the Kirkland Lake Gold.
Gold conference call and webcast to discuss the company's second quarter, 2021 financial and operating results.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press Star then.
1 on your telephone keypad.
If you would like to withdraw your question press the pound key.
With that I would now like to turn the call over to your senior Vice President Investor Relations Mark adding.
Thank you very much operator, and good morning, everyone.
Welcome to our second quarter 2021 conference.
Call on webcast.
With me today are most members of Kirkland Lake Gold senior executive team.
<unk> speaking.
During the presentation, we'll be Tony Macoute, our president and Chief Executive Officer.
David Soares, our Chief Financial Officer.
Ian Hahn, Vice President of Australia.
Ryan operations led.
Larry Lazarski, our general manager for Detour Lake mine.
Evan Pelletier <unk>, Vice President mining for Kirkland Lake.
And Eric Kallio, our senior Vice President of exploration.
As mentioned there are also several other members of the executive team participating on on the line as well.
After our presentation. We will then open up the call to questions.
We ask each person to limit themselves to 2 questions today.
The slide deck that we'll be referring to is on our website both on the homepage in the events section.
Before I get started I would like to direct you to the slides on the.
Show and on the website.
Relating to forward looking statements.
Our remarks and answers to questions may contain and likely will contain forward looking information about future events relating to our company. Please refer to slide 2 as well as forward looking information section of our MD&A dated July 28.2021.
Free and 6 months ended June 32021.
Also during today's call, we'll be making reference to non <unk> performance measures. A reconciliation of these measures is available.
In our Q2 and 6 month, a press release on M. DNA.
Finally, I will just.
Besides that all dollars mentioned today will be on U S dollars, unless otherwise stated and with that I'll turn the call over to Tony Macoutes, President and CEO of Kirkland Lake Gold.
Okay. Thanks, Mark and thanks, everybody for being on the call know a nice a nice.
Summer day in Canada here.
Yeah.
We don't get a lot of these basically got London garden. So we'll try to be efficient. We appreciate you guys being on the call and.
Give me some time after we get through this presentation day.
A question and answer to enjoy some of the Sunshine that you've seen out there anyway before they start on slide 4 but no I think.
Non.
We did put out a press release you do look at the results for free.
For the quarter net.
Very solid solid quarter with record record record results and earnings throughput of detour et cetera, and I'll give more detail on that later, but we again we are on this call and we get the.
The benefit of being able to talk about about these results, but it's really.
The results of work up a lot of people within within within Kirk on my gold and our suppliers.
Their efforts in the communities in every day that support system.
We would be remiss, if we didn't say thanks, everybody for your hard work, it's not easy on a business that.
That we do is 1 of the board recognizes some of the times when you look at all day.
The challenges that we face in terms of trying to mine gold at depth in <unk>.
Or extract bits gold.
Rockets, it's not an easy business, but you've got a lot of people that are working really hard that makes it book.
They can make it look.
So anyway, thanks for their efforts.
Part of it.
And acknowledging that.
Within that within our operations both in Canada on a state in Australia, where our mines are located on non traditional lands.
Numerous indigenous communities.
<unk>.
Kirkland Lake and we have an IV.
Kirkland Lake or impacts on agreement in a very good working relationship with both the Walgreens with first nation and Natasha on first nation, just outside of court to make over a detour we we.
We occupy the traditional lands of the boost Kris based on that New factory Island on.
So on the Hudson jeans, they cost us.
As well as.
<unk> move first nation basin.
That's outside of Cochrane, Ontario, and the AR and the.
Obviously first nation as well.
Yes.
Really you know we do have exploration agreements, we are working sort of open to Quebec border.
And the land there.
So.
Part of the traditional lands of the Cree nation of Quebec.
And over in Australia, whether it's on it's down in Victoria at Fosterville with.
More wrong as well as up and up on the Northern territory in Australia, where we're working on doing some hearings to.
The land is.
The log on and you're all in groups.
Aboriginal groups. So we have lots of respect.
And we really appreciate the opportunity to be partners and to be able to operate on these traditional lands.
Just going through a period of time here in Canada has been a lot of developments in terms.
So on.
When the truth and reconciliation happening in Canada.
Yes.
From our perspective, we we as a company.
We support people we recognize.
Maybe sometimes we up to whole recognized truth of things that happened in the past.
We can't we can't do things to correct. The past that we can we can demonstrate as we go forward what we do what we do and how we want to work on these lands in and working with our partners in these areas anyway, maybe I'll get into our results and before I do that.
Slide 4 talks about give you an update on our COVID-19 response.
This is COVID-19, we were talking about here, but it is in 2021, we're hoping it doesn't become a COVID-19.2021 on Covid 2022, but we are encouraged by the developments on Ontario.
We do know that now that the new Lockdowns on Australia.
But.
In terms of everything happening from a COVID-19 perspective, and the impact on our site. It has minimal impact at this point in time.
Maybe over the last year and a half 2 years that people in Kirkland Lake Gold.
Have done exceptionally well in terms of.
Putting in good policy.
Again as seniors on how we work and people adopting ways to protect each other and work together.
We've had a lot of success, we have had some outbreaks as defined by public health at both per cap and detour Lake in Ontario during the during the second quarter, but but.
The company and people were.
We're very proactive in responding and the situations were quickly resolved and actually in fact in both cases, we were recognized by the local health units will focus on.
On health unit on it.
With folks out to the <unk> health unit.
And for Kirkland Lake and in terms of what we what we did take on transmission and protect us.
Our people and protect any community spread from these efforts.
Thanks to everybody for continuing.
To work hard in these areas and look towards staying safe.
Turning to slide 5 I think I'll take amongst give you an update on our responsible mining efforts. We are a signatory to the world Gold Council responsible mining principles.
And we're working to achieve compliance to these objectives in our business and at the same time, we're working to also support the industry as a whole to achieving these objectives as well.
And fundamentally for US the response of Malaysians integral to everything we do and it's part of our culture and we believe it's not just good enough for us to do it.
Kirkland.
My goal do you want to make sure that day.
The rest of the industry is there with us and we think we can we can demonstrate leadership the rest of the rest of the industry and not just the gold mining companies, but but all all the mining companies.
In the region.
Also Additionally, as you may recall in Q1, we pledged to achieve net zero.
And on the emissions by 2050 on earlier, we've been working towards that establishing a net zero task force. So we've been working on trying to identify what our carbon footprint is at this point in time.
In all different areas.
And then work out ways to what does it mean, how do we do it and look on waste communicated internally.
Lots to do there. We've also made a pledge where we made a commitment to invest $75 million per year over the next 5 years.
Basically on the.
Supporting a number of efforts 1 is reducing.
Our greenhouse gas footprint and the impact from from.
Our sites so looking at.
Zero carbon debt.
Reducer.
Our use of carbon also looking at a big areas investing in technology and innovation to support a safer more productive workplace and.
Digitization automate automation working towards creating smart minds at our mines book feature in Mckesson, Canada as well as on Fosterville.
Bill on Australia, and we are also committed to providing support to our local communities and regions, where people live where people work to support these areas make it make them more livable.
For our people and for the people in those communities.
Who host us.
During Q2.2021, we achieved.
The day number achievements in these key areas, we made a significant donation on the area of community support over and then to go into the next day Fosterville in Victoria, Australia, we need to $12 million on community partnership fund.
We also made a major commitment to the correct on my cost growth, including providing financing for.
Redevelopment of the emergency Department at the hospital.
Building on also on our leisure on minimizing on reducing carbon emissions. We took additional steps in Q2.2021 to see further reductions in some of these on an example would be the rollout of a new fleet of the debt 50 trucks at Macassar, which are the world's first 50 ton underground haul trucks.
For a complete I'll turn it over to our financial and operating results on slide 6 as I mentioned, we had an excellent quarter in Q2 highlighted by record net record net earnings of $244 million or <unk> 91 per share I think that pretty much industry, leading by the way a solid increase in quarterly production was $50, 50% higher.
Trucks from 2020, and 16% from Q1.2021, we had strong revenue growth and significant increase in both operating and free cash flow.
All 3 of our mines increased production during Q2.2021 with fossil having a particularly successful quarter in Canada, both detour Lake and Mccann.
And coupon production growth from both from related to both prior periods.
Looking at our unit cost in Q2, we beat our full year guidance range is this we have been we are being impacted by the FX rates, but our operations are doing very well managing cost and we continue to target our existing guidance.
Terms of cash flow, we had operating cash flow of 330 million.
<unk> solar.
Free cash flow of $131 million operating cash flow trends translate into free cash flow per share of cash flow because all the 65.
Turning to slide 7.
<unk> financial strength has continued to improve and again, we think we have an industry leading finance.
On <unk> strength.
Cash increased to almost $860 million and again with no debt. We also continued our very successful track record around capital allocation, we've made significant investments for future value creation into our assets, while also returning capital to shareholders.
And what would have been doing well.
During Q2, we returned $62 million given to shareholders $50 million for from Q1 dividend in April and $12 million to.
We purchase of 300000.
Insurance.
We also demonstrated our commitment to continue.
Continuing to repurchase stock, we renewed our ntis in early June.
And net new in that.
To revise and CIB now for the next 12 months gives us the right sorry.
The ability to repurchase up to 27 net new chairs, we followed that up by introducing an automatic share purchase plan, which we used to announce a buyback 300000 additional 300000 shares on June and we're making good use of the automatic share purchase.
Purchase volume in July.
To date in July we purchased about 945 shares.
And that's an additional $38 million. So in total we are.
Right.
The repurchase 5 million shares.
On her.
Automatic share purchase loans.
Turning to slide 8.
Again, when we talk about investing in investment grade debt to put shareholders and providing value for shareholders.
<unk> is definitely we invest.
Thank you.
Given from money back to shareholders through our through our dividend policy through our through our <unk>.
And those weighted.
Wait to make allocation back to shareholders.
Thing is true through exploration and investing in our assets in terms of per.
Proving the value of these assets.
On another third way, we create value for shareholders is through investing in capital investment into our assets.
What.
We.
Continue to have.
Very successful track record on that.
Detour Lake we are generating.
Very encouraging exploration results, Eric will talk about them a little bit later.
And I think from the day results continue to point to the conclusion that we talked about when we originally did the <unk> transaction that theirs is an.
The large deposit along the <unk> trend.
That's near surface at a much much larger than it is included in the current reserves and I would I would say that.
Central that that's just the beginning we might not be founded on the body.
Once we do we just cover this.
We're also.
Extremely good progress on multiple growth projects, including optimizing deeper mining.
<unk> throughput in the mill and we did have some record throughput.
During the Korean court during the period book.
Both from a day perspective and for the period.
There has been improvements and great management.
Kind of coming with it with a new assay lab.
Making looking at changing some of our processes that site as well as the other infrastructure to support the improvements in terms of mill throughput.
Such as.
We're looking at putting such a screens in front of in front of the cone crushers and the new seat system to support moving down for maintenance.
There's a lot of a lot of projects.
And we're investing over about assets and number 4 shots. The number 4 shaft significant project. It currently range continues to remain ahead of schedule and on and on track for completion late next year.
We also then the cash that has continued to have a significant exploration success, we issued a press.
Release couple of weeks gold, which fills the results continue to show that the South mine complex is going to keep growing and it also highlights the potential of the loan book the amalgamated break in the main break per new mineralization and excellent and new potential mining areas in future and as possible. We've already talked about the strong results from Q.
<unk> is today 2021, but based on cost plus.
Spits out on the tremendous near Indian Han will discuss it more shortly apart from the results. We have also made progress with key underground development critical 40 feature on export of future exploration.
And the sustainability of Fosterville.
<unk>.
The Robin's Hill Hasnt second mining front, but also.
Looking for the cheap the down plunge extensions on new new.
New discoveries such as the Swan zone.
Now on slide 9.
Looking at a year to date results, we achieved better than expected production of 682000 ounces.
For the first half of the year again, this is mainly due to possible from cheap.
Very solid unit cost performance, we had record half year earnings and earnings per share and very strong cash flow you.
You can also see on the slide that so far this year, we have repurchased $2.3 million share for close to a $100 million that includes 945000.
2 is we have bought back in March.
In total we have returned around $1.1 billion to shareholders since the beginning of last year.
I think a very importantly, we are low.
Additionally, 2 up to on top of the strong results. We are also poised for and poised for a very strong second half of 2021 and for the strong value creation going forward from.
We do have a lot of catalysts coming up on the company.
Catalyst being.
Updated resource reserve estimate at detour, which we're talking about into Q1, finishing this year effective December 31, 2021, but coming out in Q1.2022 and <unk>.
Talked about with the completion and.
The use of their number from the number 4 shaft from building a new mine low for cancer.
Looking at Slide 10. This shows our performance against guidance as you can see we're very well positioned to achieve our guidance entering the second half of the year.
In our Q2 results and press release, we discussed FX rates and the fact that the strong.
<unk> than budgeted Canadian and Australian dollars.
It's having an impact on our cost and expenditure performance relative to guidance relative to the unit cost guidance on in terms of dollar per dollar spent offsetting that impact in the first half of the year were higher than planned sales.
Cost management and as I say.
All 3 of our operations.
As it is if we continue to see the rates like we have in the first half of the year, we will likely come in at right around the offerings as per unit cost and capital spending, but just wrapping that up what I want to emphasize that is that in our operations that our offerings performed very well our financial results are strong and continue to have very encouraging exploration results and we.
We're making excellent project with all of our key projects and value creation initiatives anyway with that maybe I'll turn it over the call over to David <unk>.
Chief Financial Officer, and he will give you some highlights simple on the financial results. Thanks, David.
Thank you Tony and good morning, everyone I'll begin on slide 11 in Q2.2021, we achieved record.
Net earnings of $244.2 million or <unk> 91 per share.
This represents the 63% increase from $150.2 million in Q2, 2020, and 51% increase from $161.2 million the previous quarter.
The increase from both prior quarter.
<unk> and prior year resulted mainly from higher revenues and lower effective tax rate.
Q2, 2020 also saw a sizable foreign exchange loss of $72.8 million.
Compared against Q2, 2021, foreign exchange gain of $2.6 million.
Adjusted net earnings totaled $246.
A record $9 or <unk> 92 per share.
The difference between adjusted net earnings per share of <unk> 92.
And net earnings per share of <unk> 91. In Q2, 2021 was mainly related to the removal of $3.5 million net mark to market gain recognized on warrant liability care and maintenance.
9 loss incurred at our non operating sites.
Holt and coal complex and the anti <unk> and other items that were not reflective of our operations like COVID-19 cost and other restructuring charges.
Turning to slide 12 in Q2.2021 total revenue.
Is 660.
$62.7 million. The change from Q1, 2021 is mainly impacted by increased sales volume and a $26 per ounce increase in average gold price.
Compared with Q2.2020.
$111 per ounce increase in average gold price from 1716.
<unk> to $1814 accounted for $36 million of the revenue growth year over year.
Looking at EBITDA.
As shown on slide 13 Q2.
<unk> 2021, EBITDA totaled $451.3 million.
The change from Q1.2021, primarily.
Related to a 20% increase in revenues driven by higher volume and gold price.
Compared with Q2.2020 change in EBITDA was due to a 15% increase in revenues and a large foreign exchange loss impact in Q2.2020 EBITDA.
Q2, 2021 also saw.
Higher depletion and depreciation expense of $111.3 million the.
The change from Q1, 2021, primarily due to higher sales volume.
Deferred tax expense was higher in Q2.2021, but overall the effective tax rate for Q2.2021 was lower.
Reflecting favorable tax adjustments during the quarter, resulting from re assessments of income taxes paid in prior years.
Looking at.
The next slide turning to slide 14.
At our cash balance and cash flow.
On the slide you'll see that our.
Cash flow was strong we generated $487.5 million of operating cash flow in the quarter before $157 million in cash taxes paid in the quarter.
During the quarter on $98 million tax payment was made in Australia, representing the final tax installment for 2020.
Tax year.
During the quarter, we invested in our key assets spending $199 million in capital.
Cash used for financing activities of $64.3 million reflected the $11.9 million was used to repurchase shares in Q2 as.
As well as.
50.
Opera million used for payment of the dividend.
Turning to the next slide slide 15 looks at the change in cash in a different way.
You can see that the largest contributor to growth in cash flows from our operations, which generated about $395 million of cash which.
1 for income tax paid of $157 million gross capital investment of $82.5 million exploration spending of $46.6 million.
Other cash outflows include cost incurred at our non operating sites.
BNP and Holt complex.
A $14 million.
And corporate G&A of $17 million.
As noted on the previous slide during the quarter $62 million was returned to shareholders, including $11.9 million used to repurchase shares through the companies and CIB.
And $50.1 million.
Which is the dividend payments.
Next I'll turn it over to Ian harm to discuss operating results at Fosterville.
Thanks, David.
Starting on slide 16.
<unk> also had a very strong quarter in Q2 and for that matter, but a phase <unk> of the.
On a 56 months of the year.
Talk to you up against the 150000 ounces in Q2.2021 based on purchasing 170000 tons and an average growth of 29, 2 grams per ton and average mill recoveries of 98, 7%.
For the year to date, we produced 266.
Nearly 267000 answers a day.
<unk> from last year, but consistent with our plan to reduce production in the Swan zone to draw more on law from most sustainable levels.
The $266.7 day finances, approximately 60 day as an answers about playing levels sort of hockey.
2 main factors.
Driving this on the mine back to being very strong growth.
Our performance in several swarms on starts.
There was also the benefit from re sequencing that beginning Q2.
Looking at the re segmenting and are involved in area and so on code audits.
We plan to start a sanction of the starts from the talking with Hawaii Dan.
However, once optimized.
Chinese debt statements really flip it on a day.
And on bottom up.
Out of that was bringing some horror grads does from Q4 into Q2 on Tom Zone.
Turning to cost our guy and very strong from both Q2 and need to die.
<unk> for Q2, we had operating cash cost of $162, an ounce and all in sustaining cost of $353 an ounce gold.
Year to date operating cash cost averaged $192 an ounce with Orleans, just on cost of $395 an ounce.
And then there's a very low numbers.
Entering the second half of the year, we're very well positioned to achieve our production guidance and potential including better. We're also well positioned relative to your cost guidance.
On aircrafts presentation I E.
Non.
On general manager of Detour Lake mine.
Hey.
Just before you come on near the Eni.
I don't know.
Yes.
I don't think that was a Friday and slip at the beginning it wasn't just the first 6 months of solid performance from Fosterville is probably is on a strong track record of 6 years from solid performance and I think theres a point in time when that when we all have to believe that.
It's a very good mine very well run.
Alright.
By some exceptional people and and and and and and the people working there. It's the next day.
Sectional work force on exceptional area to be in.
We were just lucky to have it in our portfolio. So anyway, thanks, and sorry about that Larry Thanks, John.
No problem.
Let me see him.
Starting on slide 17.
Detour Lake achieved as Tony mentioned record quarterly production in quarter..2 for you 1 of 166000 ounces based on processing like 1.8 million tons on average grade of zero point 96 grams per tonne.
3 of those 91%.
This is an increase of 26% from quarter, 2 last year, and an increase of 13% from the previous quarter.
Quarter over quarter increase was largely due to significant improvement in the average grade for their sequencing into higher grade areas as part of our phase III mining.
With the recovery of indicated to the market that you would start to see the ramp up on grade starting in quarter, 2 and we certainly did.
The average of <unk> 96 grams per tonne was in line with our reserve grade.
We also on the increases in comes process since the first quarter throughput is typically the lowest of the year, having said that you may recall that.
Q1, this year was a record for first quarter throughput levels.
So year to date, we produced 312000 else's just 40% higher than the 5 months after the acquisition last year from 16% increase from a full 6 months.
Year to date 2020.
Looking at our operating cash costs were average $610 notes from quarter, 2 from $674 an ounce per year to date.
Excluding the impact of.
FX rates, our Q2 operating cost per ounce improved from last year's second quarter much of the increase reflecting higher grades and income.
Day sales.
Sales volume.
All in sustaining cost per ounce sold average $996 per ounce from quarter, 2 and $1090 crowds for the year to date.
Looking ahead, we expect continued improvement in grades.
For the remainder of the year above the Q2 level and are well positioned to achieve our full year.
2021 guidance.
Moving to slide 18.
And as Tony had mentioned earlier, we are on a significant number of projects on the royalty to relate.
Our growth capital expenditures of <unk> for the first half of the year total totaled $80 million of that amount $44 million was from deferred stripping.
And $37 million was to support ongoing work to expand capacity.
We continue the processing plant expansion is on track with good progress on crushing improvements.
From the capacity.
Air strip had significant progress.
We anticipate that being complete.
<unk> by the end of Q3.
The tailings facility is progressing well with from the favorable weather conditions in an early startup.
Mobile on maintenance facility expansion is nearing completion for the field.
<unk> area.
And finally as pictured, we're expanding our Tam which.
It should be completed by the end of quarter..3 is just just to note that the discount.
Once complete will be the largest hotel in Ontario.
Imagine the size of it.
With that I'll turn the call over to have an L shape president money for Kirkland Lake.
Thanks, Larry.
I'm starting on slide 19 production that in the cash in Q2 totaled 55300 ounces at an operating cash cost of 586 and all in sustaining cost of 848 <unk>.
Q2, 2021 production was 32% higher from Q2, 2020 and increased 17% from the previous quarter.
Higher tonnes were processed in Q2.2021.
Due to better than anticipated wins and strike links from scope on the South mine complex.
Operating cash cost per ounce sold average 586 million versus a 547 for the same period in 2020 and 699 per the previous quarter.
With the increase from Q2.2020, reflecting a stronger Canadian dollar in Q2.2021.
The 16% improvement from Q1, 2021, largely reflecting the favorable impact of higher ounces sold.
As well as lower maintenance cost and reduce expenditures related to operating development compared to the previous quarter.
Okay.
All in sustaining per.
Cost per ounce sold was largely unchanged from Q2.2020 as the impact of a stronger Canadian dollar was offset by higher sale volumes when.
When you include the impact of exchange rates all in sustaining cost per ounce sold improved from Q2.2020, reflecting the favorable impact of higher sales volumes as well.
Well as lower operating cash cost and sustaining capital expenditures.
Looking at year to date production that in the cash totaled 103000 ounces based on processing 167000 tons and that on average grade of $19.5 grams per ton with recoveries of 97.9.
9%.
Year to date production increased.
<unk> for the same period in 2020, reflecting a higher average grade and increased tonnes processed.
Turning to slide 20.
We'll look at our growth projects that are helping us build a new Makassar mine for the future.
Our growth capital expenditure for the first half of the year were 43 million.
$11.30 million in Q2.2021.
Of total growth that's been expenditure so far in $2021.22 million were related to the 4 shaft project during.
During the quarter the shaft advanced approximately 600 feet and had reached a depth of 5600 feet as of June 32021.
The project ended Q2.2020.
On 1 ahead of schedule and on track for completion in late 2022.
An additional $10 million and $4.7 million in Q2, 'twenty 1 of growth capital expenditure and year to date of 21 were related to the ventilation expansion project involving the development of 2 new ventilation raises the.
The 2 new.
We will add significant.
Tour ventilation into the mine, which have already improved from the level. This time last year.
The remaining growth capital expenditure in Q2, 2021 mainly relates to the number of underground projects, including lateral enrollment from the mine.
Uh huh.
Yeah.
I'll now pass the presentation over to Eric.
<unk> senior Vice President of exploration.
Okay.
Thanks, Kevin and good morning, everyone.
My first slide today is number 21 unrelated to detour, where we're continuing to advance the large scale drill program commenced in 2020 evaluated potential surrounding the main on future wells.
Now the program.
Program includes a minimum of 250000 meters and aiming for an updated resource potentially extended mine plan for announcement in early 'twenty 2.
In terms of progress at 8 I believe it is still continuing to track very well with 64000 meters in Q2, and now close to 200000 years starting in early 2020.
<unk> now on Butler.
Number of athletes return from that.
6 press release.
Including the 1 in July with results continues to look very very encouraging.
Summarizing some of himself.
Is the first slide which is the long section from the latest release containing color coded peers point to highlight holes from different areas.
Also shown on the image is a series of black Dot, which.
On it appears plane for all holes drilled since the start of drilling in early 2020 as.
As indicated now starting to really fill on the page, especially in the central and east part of the saddle.
Syndicated on the image results from in Newark.
Look very promising in all areas with some of the balance continuing to come from the central part of the subtle highlighted by pink and Green Dot.
New intercepts, such as $1.7 over 80 meters and 131 over a 7.
Book to in addition to several other good intercepts, we've already reported.
And in.
In the same area.
Additionally, this however, we also had some very good results from blow into the west of the future what pit.
We're drilling to date is much more limited.
Key intercepts in the west pit on Mark with Blue and Orange box and include 1 point going on over 75 and $1.6 to over 77.
1.8 from near the lower limit of the resource pit.
As well as 6 grams over 14 meters, including 25 grams over 3 near the 5.
The 550 meter level.
Key intercepts to the west.
Include 163 over 32, including $13.35 over 2 meters per mix.
From approximately 250 meters below into the west of the current resource pit.
You need to demonstrate expansion potential in that direction.
In summary work force.
To date at Detour continues to advance along very well.
So turning now from my next slide which is number 22.
You see an image for Mckesson, where.
Can you divest or large.
Our large exploration program to.
To confirm and expand resources key.
Key targets for the program include the direct extensions of the SMC amalgamated and main break between the <unk> 53, and 58 level, but with additional work now in progress boxes targets below into the west of the main.
Break on 51 and 58.
As well as on the FMC on 34.
So.
In terms of their drilling.
Our aim for the year is about 200000 meters and tracking a little bit lower at this time, but in our view still achieving some good success with it.
Highlight being.
We can turn on the screen at this time from the east part of the 3 level.
As shown on the edge.
The work was focused mainly on testing various along strike to the east.
Of the SMC as well as up and down debt of the current resource and reserve.
And there are a number of good intercepts in.
Sure.
That's the area to the east we saw drilling reaching almost 180 meters in this in this direction and intersecting a number of good values, including a highlight of their 589 grams per ton or 2 meters near quite quite near to be limit on drilling.
And looking to the areas up and down.
Really we saw on intercept almost 100 meters in each of these directions, but those down debt being near the injunction on the SMC with the amalgamated where are we as announced success in other areas before.
Those drilled up just identifying significant new block.
With very little testing.
And which we will continue to try and expand.
On from platforms on 53 and 58.
Additionally, we saw some good advancement of the exploration drifts towards the new targets on 34, 51, and 58, keeping us on track for drilling to start on these.
Most likely later this year.
As mentioned earlier these new Jersey will provide access to areas.
On depth deep and west part of the main break and is well above the SMC.
We have not really worked on before but we think have a lot of potential.
Now turning to my next slide which is number 23, we see an image outlining exploration plan and recent progress at Fosterville, whereas on the cash that we.
We have a very large exploration program in place with the vast majority being directed towards the lower part of the possible mine and raw material areas on the remainder towards a series of promising targets both on.
Are mainly on the mine operating.
As indicated on the image work at Fosterville is designed to focus pretty much entirely.
Clearly on the area down plunge of the current reserve the Swan Zone includes both development and drilling to convert and extend mineralization to death with the bank.
Cost majority of drilling being from the new 39, 12 hanging wall area, which is shown here with a small red line.
Which we have been working on over the first half this year.
Now on happy to say that suggests is that.
That's just been completed in June and we have drilled in progress.
5 in total and situated along the zone.
So although it's still a work is still fairly early in this program. We can say that things are proceeding very well and we expect to have a lot of new drill.
And information to talk about.
Please proceed later into this year and into early 'twenty 2.
Turning to Rob until the plan here again, it's focused on the area of downtime on the existing reserves or we continue to believe that we cannot only extend realization, but we have the potential to identify high grade zone similar to the Swan zone.
<unk> done to achieve this we put together what we think is a very good program, including continued advancement of the Robin Hill decline and drilling from both surface and underground.
And that's what <unk> has with Phoenix. The morphine next area of work is continuing to progress very well with significant investment being achieved.
New defined bringing it tomorrow.
More than halfway to Robyn till now.
On a substantial amount of surface drilling preparations in place for underground drilling to start in Q3 to test the various outside of the Robin Hills structure.
So from all indications to date project advancing very well and look forward to delivering an increasing amount of.
Information on this in the near future.
And with that I'll pass the call back to Tony.
Okay.
Alright, Thanks, Eric.
Uh huh.
And then thanks to David Larry and Kevin and Ian per your presentations as you can see Kirkland Lake Gold has really been very strong awesome company.
I had a significant success this.
But if you really break it down you know as I mentioned possibility 6 years of industry, leading and bolt on or lowest cost gold mines in the world in a proper gold mines in the world significant exploration success and significant.
The motivation of people going forward to continue to continue on that track record we have enough cash.
Current form.
This year on it.
1 of them on 1 of the pulp from come from.
On the historical gold Kirkland Lake camp to be to be continuing to deliver the solid production results. It is and.
In a way where it can be it's not quite where we aren't wanted to be yet, but we know we've got a we're investing in a new shaft and investing in new ventilation.
Systems on.
Will significantly improve Mckesson and you know, we're patient and diligent working forward there and once Makassar is by 2020 free into 'twenty 'twenty 4 we expect accounts would be 1 of the largest underground gold.
Gold mines in Canada, and you know as as we see would be to on the growth coming a deeper.
So <unk> has the potential to be the largest gold mining.
In Canada, and then growing from that to be on among the largest gold mines in North America low loan that definitely in the top top quartile in the world. So a very solid company.
And then if you go by that you can tie it into the excellent results.
Or from Q2, 2021 we had record earnings and earnings per share strong revenue growth cash flow generation and as we talked about our progress with both our exploration program, then and our investment into our assets and by the way when we talk about record earnings and earnings per share not only record earnings per share, but industry leading earnings.
Results from leading earnings per share and <unk>.
We are committed to responsible mining we're committed to.
2.
Recognize rising on the supporting the communities, where we R&D.
In terms of doing what we can to ensure that.
Sustainability into regions and and that we can make things better for the local.
Local communities so the local indigenous communities in the areas.
Where we are and we recognize and in support of strong an honorable and trusting partnership as we move forward into the future.
Interesting also as we look ahead from from.
2021 on.
Well positioned with cheaper guidance, and where and again when you look going on it and coming out of 2021into 'twenty 'twenty 2 we expect to achieve some very important value, creating catalysts and all 3 of our mines and.
There's still lots of exciting things coming up and I.
And honestly for us so anyway, thanks, everybody for listening and are happy to take any questions.
Sure.
And at this time, if you would like to ask a question. Please press Star then the number 1 on your telephone keypad again that has started on the number 1.
Your first question comes from the line of Fahad Tariq with.
I had suisse.
Hi, Good morning, Thanks for taking my question I'm, just going back to the 2020..1 guidance you mentioned now I expect them to high end of our production guide can you talk a bit about just the puts and takes on the cost side because on the 1 hand, the higher production, presumably would lead to lower cost.
Per ounce.
But at the same time, we're hearing about inflation expectations from some of your peers and her.
For you specifically more of an FX impact. So just wanted to get kind of a net effect on cost this year thing.
Well I mean, I'll, let David kind of answered the question, but on you know definitely we got FX rates that are having an impact.
But but that's an impact on unit cost could be you know we spend a lot of our money in Canadian and Australian dollars and I think in Canadian and Australian dollar terms, where we are seeing some inflation such as and fuel prices aside.
On steel and a few things but.
I think the biggest impact is on FX, but David maybe you can give a little bit of color to this yeah no problem Tony.
Yes, we are seeing inflation in specific areas as Tony mentioned diesel in steel for example, but overall cost in local currencies are pretty much in line with what we had.
In the budget and what.
What we were seeing even even last year.
And that's really due in part to very good cost management.
Tony.
The sites are leased at our operations.
You're absolutely right you know obviously there is offsets there higher production will lead to lower cost and some of these.
Russia is that Tony mentioned with regards to FX or are offset by some of that debt.
Basically on a full year.
Cost.
From an expenditure our guidance was based on.
In the U S exchange rates of $1.31, and Australian to U S exchange of $1.39 versus what we currently see day.
8 versus exchange rates of approximately.
81 to 5 in Australia, and 1 <unk>.
Cost and Euro date, 125, and $1.3 zero so.
Current exchange rates.
If the current exchange rates continue through the remainder of the year.
<unk> impact over that period would be.
To see a bit of an increase in cash cost.
But having.
<unk> said that were well below the budget levels from both measures in the first half of the year end and based on strong cost performance in each of our 3 operating operations and and.
And if we achieve higher than planned production and sales were going to work hard to continue.
Continue that trend in on.
Based on that we're continuing to target.
Target our existing guidance right. So we've done well so far and.
And we plan on continuing that trend through to the end of the year.
Okay. So it sounds it sounded like the midpoint is still feel kind of achievable on the cost side.
My only other question just on Fosterville exploration on you know of course, we've received pretty.
Called updates on Mckesson Detour Lake.
Just wondering on Fosterville is it just a function of.
The drilling is more second half weighted or and I'm. Just wondering if you know went to really expect more detailed results from fosterville.
Eric There Ian.
I wanted to answer that.
D G I think so.
Great.
And I'll hop out.
Oh, Oh, Oh go on you can help me out.
Book to the exploration efforts at Fosterville, but certainly for the first time, we have been doing some drilling.
But the focus really has been on the development on the exploration drifts.
The the Phoenix.
You on 13 on 12.
It's really going to open up drilling for the second half of the year and into the low a sworn area and we and we expecting yet we've got fog drills on it now and we expect on a lot of results to come true it back out to eat and and likewise with the Robin Xu you know we've had excellent project price.
In advance on the on the twin drifts all the way up towards Robin's Hill, and we'll start to see some some drilling in Q3 and certainly into Q4 at the edge really subtly and and and at depth on the on the Robin to and trying to really expand net resource.
But that's really been the practice.
Steady as top has been a development sort of thing so Eric keeps you wanted to add on any more color day.
No I just think it we have to keep in mind that the distance below surface. The Robin Hill targets. You know they were aiming for areas that are up to 1000.
Meters on strike and to depth.
Very hard to drill from surface with any detail.
But now as we get the new platform and on vs.
Decline.
We're gonna start to get a lot more information quickly.
From from that area.
Uh huh.
That's all I can add.
Okay, Great. That's it from me thank you.
Your next question comes from the line of Josh Wolfson with RBC capital markets.
Just sort of confusion on the questions on Fosterville.
The quarter was very strong partially from that positive reconciliation and partially from sequencing is there any sort.
The ability to give us some better insight onto what the what the sort of what the outlook is for the second half of the year are and specifically the resequencing changes that impact fourth quarter now.
I'm sure I mean, Natasha are in Houston, I think that could be up to you.
Sure.
Sorry, Ian and then we can we can flow.
Hi, Josh so effectively removed them from a couple of the higher grade stopes from Q2 into Q2, so I.
I would say that moved about 20 or 30000 ounces forward into Q2, so it will affect our Q4.
You will see that we have maintained our.
So 400 to 420000 ounces for the year, but having said that.
Looking at our plan, we are well positioned to potentially do better than that.
But we want to do.
Just see how the grades perform for the rest of at least for Q3 as we discussed on our results we had a significant.
Guidance grade outperformance on festival on the first 6 months were.
We're not going to assume that you believe that that will continue our journey at fosterville with a very complex ore body. So.
When you have some stopes outperform day and also on an offset from way down the line. So.
So we just wanted to see how the mine performs over the next few.
Few months, if we look at our guidance.
But to say the least here, we're very comfortable with the 400 to 425000 ounces that we've provided.
Okay.
Okay. Thank you and then 1 other question for detour.
For guidance.
<unk> this year, there's a I guess, an implied improvement in both grade, which it sounds like youre pretty comfortable on as well as you know on improvement in throughput.
Probably towards debt.
70000 kind of day rate that's expected next year.
Is there any sort of detail that can provide in terms.
How how that GAAP is gonna be bridged from that 64, and a half that youre running at today.
To that 70000 tons per day towards yearend.
Alright.
Larry I.
I think you can read.
Question on pretty quickly.
Yes for sure.
Yes.
Really it's just continuing to focus on the things that we've been working on and we're going to see.
By September we will see.
The bypass 6 Tim re feed system in place so that will allow us to.
We continue to keep the Sag mills.
Capacity anytime there is.
Tony.
Terms of hitting downtime.
On the crushing circuit, so that will help us.
With the initiatives that we've already had in place Lake.
No changing changing the year.
Vertex.
Listeners.
They're showing promise and really focusing on.
On the fragmentation.
<unk> and then getting the rate curve.
Volumes in the feed.
As far as the mine goes.
We're really starting to get to the heart of the ore body.
As phase II develops.
At depth.
We are working more and more on the on things and that's really.
A better grade as we do anticipate that agreed there we also.
Of more top tier 2 which helps with throughput so kind of a combination of local <unk>.
So just to your comment about the September delivery on some of those processing items should we see.
On the bigger step up in throughput more geared towards the fourth quarter in that case.
Yes, it will be a gradual ramp up throughout the year for sure.
Okay.
That's all my questions. Thank you.
<unk> had some significant.
Is that.
<unk> been setting.
Yeah.
Where the on time and achieving higher levels.
Constantly right Larry.
Yes, I mean, even even in July here.
Already.
Since that.
Our limit of 75000 tonnes a day has been removed.
We're 11 days this month rebuild or EBITDA.
Average as well.
When we're running things are running quite well.
I don't know if any more questions on.
Certainly your next question comes from the line of from obese Habib with disk.
The bank.
Thanks, Operator, hi, Tony and macro from a team and congrats on a strong quarter on thanks for taking my questions.
Couple of my questions have already been answered, but just on.
Quick follow up on.
Joshua's question regarding.
The.
And mine sequencing at Fosterville.
You talked about.
What the grade is kind of looking towards like going into the second half.
But does this kind of marketing approach.
Wincing change impact any sort of longer term guidance.
Alright.
Hi, Ken.
Ian.
Yeah, I can take that 1 tiny.
And Thats a good question.
Finally.
Yes.
The cost of those constantly optimizing them on and we finish out from the situation weighted with it.
The development ahead.
Change outs.
And we would need to debate it gives them on some flexibility side. So we're not saying any dance ought to the changing needs and it's on a certain part of the idea of Argo Swan zone in the on X area.
We're not saying any dance ought to changing the segments and in fact, we've seen some upside.
I've asked that particularly when it comes to you on the amount of Italy, and a few things like that.
It's been a really good time sequence change net Pat on the mine from the morning Jeanine.
And just was this kind of in the works for a while now or this is just a decision that you've taken just recently.
And made those changes.
Yeah.
Airplanes are rolling.
As you can appreciate.
And the engineering teams are constantly looking at book and what will go down as new information comes in as we say you have the grand behaves as stoping advances.
And we adjusted and on a spicy debt.
The fortunate position we find ourselves in is that is that we are we are on top of that development and and and that gives us the flexibility to make these adjustments as we go and analysts and in this particular catch on in this part of the audit.
Yeah. It was saying that time you know.
We stood to have a bit on more on the ability of debt part of the debt part of the audit boss Donny Lau of dam than originally planed, sorry, So that was a decision that was not.
Perfect.
Guys. That's it from me thanks, so much.
Your next question comes.
From the line of John Tumazos, and please state your company name.
Thank you, it's John Tumazos very independent research congrats.
Congratulations on the big upturn.
In results both from the Swan zone in a hurry or zone at Fosterville.
Could you just refresh us.
As to how tightly.
Okay.
Drill hole patterns are.
For those reserves.
As you develop them and mine stopes.
The potential for <unk>.
Variances, which were so wonderful this current quarter.
Well how about a go ahead there in that.
You know Eric but.
And can maybe start on that day.
Okay.
Thanks, Eric.
And another good question I looked at the drill spacing.
And you have to appreciate that yeah.
The Hot day extremely high grade areas of this one's on you.
Unique.
And.
Quite possibly you could draw that down to the degree I'm still not I still get a probably a handle on it but.
And drilling as Dan too.
And at times.
It's all about 'twenty fall off so to say on his 24 about 25, so it it and on a broad range.
We have a very good handle.
And and very good reconciliations Becky and Sam models, which we are constantly out that.
However, there are there are specific.
Extreme high grade areas of debt of that complaints I'm you know I'm sworn buying itself that debt is is very difficult to know Dan.
What we have been accused of possibly being slightly.
Separate or at times and to be fee.
Yeah.
Yeah, 1 of the World cost guide ore bodies.
Is it is tough to not be it might be slightly conservative at Tom sorry.
We faced and swings and Roundabouts, however that day.
On the on a on a long run.
<unk> seen me I shouldn't against Tomorrow.
<unk> is pretty good and index is very good and yeah.
We get very close to the Max.
Thank you.
Can I ask 1 more on the detour.
Our West T Force saddle zone on extensions.
And I know all of the technical studies are done.
The current reserves.
Appeared a carrier production 2 decades forward.
At a trend near 800000 ounces expanded a few years.
Surely on the big picture, we'd be thinking of these new drill successes.
As a third decade of 800000 ounces a.
Or possibly a fourth decade of 800000 ounces a year.
Or do you think it's possible that the output.
It could be expanded above a million ounces.
I would say you have a both of those scenarios I'm sorry.
So your number 2 and number 3 I think for a decade on another decade of 800000 ounce I think it's easy to see that there's potential to to add.
Growth for another.
Central to decades, <unk> at those levels and or you know work towards.
Increasing.
Net production again further add.
If you look at the plan shows each of growing up to 900000 ounces a year.
As we progressed right. So you know there there's that's a look at that but at the same time, there's a lot of moving parts. It before and we have a lot of things to work on.
You know.
Talk about initiatives getting to 28 million tons.
Guns per year, but also putting an assay lab changing some of the process internally combine that we're trying to understand the size of the mineralized minimizing envelope there in the resource and then how are you going to mine. It right I think the the thing that we should all take away is the mine that detour us today there's.
Is gonna be a much is a much better mine then it was a few years ago and it's going to be a much better mining a couple of years from now and essentially tends to be a much better mind, even beyond that and a very long life mine and then I'll. Even say you know when we were talking about saddle on the west extension to the west It doesn't stop with.
There's a line there because there are some western drilling so we could go further to the west and we haven't even drilled any any holes below 700 meters and <unk>.
In the current main pit Theres indicated resource at the bottom of the pit so the.
The other part is we know you're focused on getting cost down as you incur.
Increase the overall.
On site.
There's a lot of exciting catalysts that could come out of detour over the next few years.
Thank you and congratulations.
Yeah.
Your next question comes from the line of Cosmos <unk> with CIBC.
Hi, Thanks, Tony and team.
I guess I can answer a question on the cost side here good to see that you are transitioning.
We're adding even more battery powered trucks to your fleet could you remind me how much more can you transition over.
From diesel powered equipment to battery powered equipment and what percentage.
On pages on right now in terms of the.
The total fleet in terms of battery powered.
Equipment.
I think Evan visits by being a good person that exactly right and I'll leave it up unit Tasha and evident.
Sure I can speak to it a cosmo.
Currently we're.
Around 75 per cent of our fleet at the battery equipment and the plan is definitely to increase that moving forward.
For numerous reasons.
The trucking fleet has improved tremendously as well and regardless of some of the ventilation improvements we still plan on moving forward with the with carrying on.
We're sitting on the battery here.
Yeah and that was the purpose for my question.
No that you're adding the 2 ventilation raises which will add about 200000 CFM of capacity, but could you remind me in terms of you know with a battery powered equipment with our current fleet right now what's your draw on the ventilation that on what's.
With the bad paucity here.
So the current draw on ventilation that we're pulling from surface Cosmo.
Yes.
So the plan is to have about 300000 come down the 3 shops and then.
230 of that.
I'm, sorry, 200 on that is going to go towards the FMC with the current ventilation plan.
And 30000 from 1 of the raise more than 100000 of that 300000 going on at a lower north.
And obviously as we move ahead things youre going to improve with the second raise bore theres 1 more lake where on the last leg of the 4 legs of the raise board breakthrough on surface and obviously with 4 shaft, reaching.
<unk> depth and commissioning that will improve things drastically in the lower part of the mine.
The temperatures pretty well down.
Coolant cooling off the mine as well and if we if you think about it you main arteries right now are feeding your ventilation. If you start putting diesel gear on the main arteries, you're just going to heat the mine back up right. So.
<unk> point is in the plan is to stick with a battery it's much more healthier for our employees and for the environment.
And that's Oh, Yeah, I was more just kind of clarify it so it would be a doubling or more than doubled and lake.
And air to the mine.
Which is a big part of it but we wanted to reduce the heat.
The humidity in the mine and improve working conditions and workplace.
You would have some flexibility for diesel gear, because we are working at the leading edge on battery powered equipment underground, but our commitment is to battery powered equipment and to fund many of the big part of the increase in ventilation it was not.
He can be the logic to say, let's go battery powered equipment. So we don't have to ventilate. The same level I think it's wrong, we should we need to ventilate to that to the level, whether it was easily equivalent of battery equipment in order to deal with he and another conditions than in the workplace that affect people and that's you know that's on.
The main motivation here so.
Yeah, and that's good that you bumped that up Tony and I seem to recall last year. There were some issues in terms of heat during the summer months, it's been fairly hard on Ontario, once again this year.
Has it been okay. So far in the summer of 2021.
Go ahead.
Yes, so absolutely, yes, we've definitely seen.
A positive impact on the ventilation upgrades.
And the SMC alone Youre looking at a drop of $3 to 4 degrees from current our current year and.
And is that things are definitely improving throughout the mine on the ventilation aspect.
So yes, it is cooler down there compared to what it was in last.
Last year summer was rather quite hotter than than this year Hum.
Great and on 1 last question just a follow up.
Ontario, we've seen some forest fires.
<unk> market I think there was on Ontario website on trucks. It I don't think there's anything close to.
You know Kirkland Lake or Timmons, our Cochrane or anything like that is that you know could you confirm that and are you at all worried about our you know what's happening.
So I can speak to that too yes.
Hi, Drackett daily cargo, we have an app called Wendy Dotcom, which helps us out in attractive <unk> levels and forest fires and wind directions. So we're in pretty good shape here.
So far in and we've been getting quite a bit of rain up north so.
Things are looking good.
Great those are all the questions have thanks.
We do.
Yeah.
And there are no further questions at this time.
Yeah.
Okay, great well listen it's Mark here and thanks, everybody for participating in the call. As you heard we are we had a record quarter in terms of earnings not just record we had industry leading.
Again, and very strong cash flow of 2 things <unk> been known for over the last several years as being at the front of the forefront of the industry.
We're making a lot of progress.
Moving towards the big catalyst for our company from a value creation standpoint.
We look forward to our next quarterly call to update you on how much more.
<unk> earnings with me, Thanks, a lot and have a have a great week.
Take care.
This concludes today's conference call you may now disconnect.
Okay.
Yeah.
Progress.
[music].
Okay.
[music].
Yeah.
Yeah.
Yeah.
Yeah.
Yeah.
[music].
Yeah.
Okay.
[music].
Uh huh.
Okay.
[music].