Q3 2021 Kirkland Lake Gold Ltd Earnings Call
Good morning, My name is Christian of your conference operator today.
To start I'd like to welcome everyone to the Kirkland Lake Gold third quarter 2021 conference call and webcast.
All lines have been placed on mute to prevent any background noise.
The Speakers' remarks, there'll be a question and answer session.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad and if you'd like to withdraw your question. Please press star one again.
Thank you Mark <unk> Senior Vice President of Investor Relations you may begin.
Thanks, very much operator.
Annualized to our third quarter 2021 conference call and webcast.
When the timing of our planned merger with Agnico Eagle, which we're very excited about that.
We will likely be our last conference call.
I think if you've looked at our results you will agree with me.
We're finishing with a bang.
We've got record earnings.
Namely low unit cost.
Yeah, just a continuation.
With industry, leading and industry, leading track record over the last five years for returning value to shareholders.
I'm talking about all these things on today's call.
With me today are most of the members of the Kirkland Lake Senior executive team.
Speaking today will be Tony.
President and CEO.
David Soares, our Chief Financial Officer.
Natasha Vaz, our chief operating officer and Ron.
Our vice President Australian operations, Larry with Nike, Our Vice President Detour Lake.
And at a pace, our vice president mining critical leg as well Eric Kallio.
Our senior Vice President of exploration.
Slides accompanying today's presentation are available on our website and through the webcast.
Following the presentation will last call for questions and answers.
I will draw your attention to slides two and three.
The presentation, which contains our forward looking information and other cautionary language.
We'll be making forward looking statements on today's call. So I ask you to give that information due consideration.
We will also be referring to non IRS measures during the course of the call reconciliations involving those measures has provided starting on page 37.
DNA, we filed late yesterday.
All dollar amounts mentioned today will be in U S dollars unless otherwise stated.
With that I'll turn the call over to Tony Mukherjee, President and CEO.
Thanks, Mark and thanks, everybody for being on the call.
It's not necessarily our last quarterly call.
So when we're talking to you in future.
Future quarters.
We have had lots of significant success.
Michael over the last few years.
Definitely a very very strong Q3.
Our quarterly results and you can see a small part of our performance a number of areas Secondly, Fosterville mine in Australia, where at the end of the three quarters already achieved full year guidance.
It continues to do and.
And it's not just great pipeline, great coming out at Fosterville.
Thanks, and very high level of safety performance operational performance.
My attention to detail in terms of the kind of.
Social issues, there, where if you want to add.
Great job in terms of buyer malware cleanup, that's going on up in the northern territory in Australia contributed to this with the leadership and all the people at that whole a whole number the whole people that are working for us in Australia.
Exceptionally good job in the region.
We thank them for what they do with it and then over to Canada, we haven't been significant success and significant success.
In Q3 and again.
Again.
<unk> tend to have a very exceptional.
That is a great record in Q3, but we had a very exceptional Q4 as well and get.
A demonstration of strong leadership in the company right.
<unk> from <unk>.
Corporate breakdown through the operations and fundamentally the people driving the trucks the people doing the work and the cast at detour and rethinking of Big differences again really thank them for what they work onto achieved in the quarter and as I say, we're looking at a very strong Q4 and.
In short the year, Hey, maybe I'll start on slide four here and patents.
I'll just highlight a few things about our recent announcement of an agreement to combine <unk> merger beef liquidity equal Eagle mines.
From our perspective. This is a very exciting development for our company and our shareholders and the.
Big figures for fixed.
Mercury brand new leader in the global mining industry and.
Critical mining company that can definitely be a leader in trends in terms of transforming the nonrecurring property industry, but also transforming changing the perception of our industry as we move forward.
Moving to slide five.
<unk> is basically keep some of the highlights.
Our merger with Agnico.
We are creating the highest quality vehicle producers with the lowest unit cost less risk profile.
The key areas of ESG and extensive approach pipeline to drive future growth.
The combined companies have significant very strong financial strength.
<unk> pipeline approaches.
And when combined with a strong balance sheet, good solid operations are performing well and profitable.
We see the opportunity to fund future growth internally.
Merger and consolidation of big thing to consolidate the Abitibi region of northeastern Ontario, Northwestern Quebec provides significant value creation opportunities through synergies and then we see some other business improvement initiatives and in all I think one of the biggest things.
From our perspective is the development of the new offer either entity amalgamated kirklin coffee.
Amalgamated add into incident of Cas operations in perfectly.
Significant benefits in northeastern Ontario, and 70 for the shareholders.
You may be legal.
We see the new Agnico Eagle.
<unk> and our way, we got as demonstrated by the warrant a premium valuation and 10 fundamentally.
What will drive that combination of increased scale low cost low risk operations, but I think fundamentally superior financial performance and continued strong balance sheet strength and good execution of offering of the salto will be will be key to driving that value.
We want a premium valuation and what we see the right deal for our company and our people at the time as well as our shareholders communities and all the stakeholders.
To the comment at that type of deal with.
I'll move over to slide number six investors, so talking about our third quarter results.
Slide <unk>.
You gave him focusing here maybe give it a quick update on our responsible mining efforts.
For other responsible mining that triple therapy, we do it is ingrained in our culture all of our Canadian operations anticipated in the first national data truth and reconciliation with learning seminars for all employees supported.
And we do think.
Zinc to support local divisions company through our insurance programs and each one of our 795 trucks and deeper late March. Additionally, halt how bids were painted green to support mental health awareness seminars and employee training programs.
<unk> bookings in both Canada, and Australia, and medical Australia, where we can get to $600000.
Wellness Center and cancer wellness program to assist with the sustainability of the program and expanding on the services and improving access for regional patients building.
Building on our leadership at minimizing the use of carbon emissions. We took additional steps in Q3 2021 to achieve further reductions, including testing and building an energy storage system from entirely recycled performance, including the battery casing batteries for margin for us.
Turning to our financial and operating results on slide seven as mentioned Q3, 2021 was a quarter of financial progress to being highlights.
Mark alluded to some at the beginning both record quarterly earnings solid year over year production growth unit cost significantly better than full year guidance and strong cash flow generation.
Our record performance was driven by strong operating results, including quarterly production throughput and all in sustaining cost of Detour Lake Q3 was it submerged quarter for diesel production was 189000 ounces at.
The previous record of 166000 ounces in Q2 of this year by 23000 ounces, a 48% and.
As I said, we're on track for four and a.
A new record in Q in Q4 of this year.
Hospital also address whether it is a very.
Very strong quarter and a strong.
Contributing to our record results.
And it was a combination of greater performance as well as.
As high or higher levels of throughput through the mill so the operator <unk>.
Very successful in terms of moving forward at Costco.
And the derivative items driving our.
Achieving record production performance.
Also with US in terms of our unit cost and in our unit costs in Q2 in Q3 due to full year guidance ranges.
We are also being impacted body, we are being impacted by the exchange rates and inflationary pressures in certain areas, but our operations are doing very very well in managing the cost and we'll be in very good shape to meet our guidance for the year turning to cash flow, we had operating cash flow of $323 million and free cash flow of $141 million David.
Okay.
On both areas.
Turning to slide eight we continue to have a very strong balance sheet with cash at September 3800, $22 million to get a very clean balance sheet and no debt.
We also continued on a very successful track record of returning capital to shareholders.
During Q3, we returned $175 $3 million $50 million through Q2 dividend paid on July 14, and $125 3 million for the repurchase of three 1 million shares through our NCI.
Turning to slide nine a significant component of our successful track record with capital allocation was investing capital for future value creation, we released encouraging exploration results at all three of our cornerstone assets remain on track with our key growth projects, Eric Kallio will give a little bit more to the market and color on that but maybe I'll just.
A few things here.
On the exploration success of expiration program at detour.
And we announced in.
In early September we announced the $10 1 million ounce increase of measured and indicated resources at detour Lake that triple legal M&A and resources.
Yes.
Yes.
The feature and we see it is definitely a milestone.
Milestone in terms of event.
Being able to support strong growth in mineral reserves and future that's going to come out next year as we complete our studies this year.
And earlier this week, we announced additional new drill results.
But I think with the these continue to hide the fact that the 10 million ounces increasing resources at the end of the call.
We still see the potential for them to continue to grow the resource at <unk> before the end of this year and then really supports what we were what we give in terms of our view and the view, we put out a detour.
When we acquired it back in and complete the acquisition announcement back in 2019.
No.
Besides the exploration success at <unk>, we are making very good progress, but a lot of other <unk>.
<unk> at the mine in terms of value creation and optimize the operation and that includes increasing.
Increasing the throughput in the mill exited the milling.
July and August Q3, actually was running at a rate that is no.
Almost 28 million tons per year.
We had significant improvements in great management at detour.
And we have a lot of other infrastructure that we are installing and feed through the really healthy.
We will build the operation for the long term support.
Future improvements in operating performance, but also on the safety and care and consideration.
For this cycle.
At Makassar number four shaft remains ahead of schedule on track for completion later this year, we also had what I'm sorry.
Such statements completion of thinking later this year the actual.
The actual installation of loading parkinson.
Or or handling system and the changeover from sinking plant two.
<unk> production plant will be started and we expect that <unk> come.
Come into full production or be a competitor for production in Q4 into Q3 Q4 2022.
We also had a significant exploration success of mechanics of expense discipline complex and identify new areas of high grade mineralization on both the automated and main breaks and looking at Fosterville, We did come up with a very new.
And interesting exploration results that we released at the end of August and NOI guess, what it what it tells you the potential for continued.
The discovery of new high grade intercepts in our goal at Fosterville is the demonstrator operation of 300 to 425000 ounces for the year on an annual basis.
Seven to 10 years of production I think we're definitely lots of work to do but we definitely feel confident that we'll be able to achieve that and demonstrate that.
Our holders.
Now moving on to Slide 10. This is look at our year to date results.
We had a solid year to date operating opex versus our full year guidance.
Reductions with just under $1 1 million ounces, a 5% increase from year to date 2020, we.
We achieved a very solid unit cost performance record earnings and strong cash flow generation.
You can also see that on the slide that so far this year, we have repurchased $4 5 million shares for close to 180.
We returned $300 or about $334 million to shareowners holdings, which represents a $1 28 per share and.
$317 per ounce produced and year to date 2021.
Now on slide 11, let's look a bit closer at a track record of returning capital to shareholders.
We have now returned a total of $1 three $6 billion to shareholders. Since we first introduced our in CIB in 2017, and our dividend policy in March 2017 of this amount 111 off just over 1 billion was used to repurchase 31 5 million common shares and.
And $315 million was used to make 17 quarterly dividend payments.
So dividend payments have increased seven times since we began issuing them in 2017. In addition, since mid 2016, we have eliminated 195.
Over $190 million.
This includes paying $98 million of debt held by New Triple Corporation. Shortly after acquired in January 31, 'twenty 30 million was also used to close the features or hedge position. We are in a very good return on that $30 million given the changes in global commodity prices and FX rates that fall in 2022.
'twenty one.
Also repurchase in part based on 1% and Srs accountable for Franco Nevada in 2016 of our earnings.
So almost $30 million to $36 million.
Adding it all up in aggregate we have provided.
$1 billion of value to shareholders.
2016.
All of this while also building the industry's strongest.
<unk> balance sheet.
Looking at Slide 12, it shows our performance against guidance.
You can see we are very well positioned to achieve our guidance injury in the last quarter of the year, we are targeting targeting the top end of our guidance production guidance and on track to achieve our operating cash cost per ounce guidance.
We are doing very well in terms of bond sustaining cost per ounce solvent and $785 on a year to date August.
Saving costs it is better than our guidance, we definitely expect to be potentially either on sustaining cost guidance for the year and that's in spite of.
Inflationary pressures related to.
Fuel and power and energy cost and to be honest.
And the change in FX rates without an impact.
Looking at our expenditures if you take the sustaining and growth capital expenditures together total capex guidance of $530 million to $585 million for the year and we are tracking to be in line with that range also exploration spending should be in the low end of our guidance of $170 million to $190 million for the year.
The lower edge of achieving the exploration guidance.
Really a function of lack of.
And get access to drills, you get access to.
A lot of equipment to do the work that we can get people to vantage roles and Thats been a challenge under that I think the challenge for our industry.
Anyway with that I'll turn the call over to David sources beautiful.
Thank you Tony and good morning, everyone I'll start on slide 13 in Q3 2021, we achieved record net earnings of $254 9 million or 96 per share. This represents a 26% increase from $210 million in Q3, 2020, and 4% increase from 244.
$2 million from the previous quarter, the increase from both prior year prior quarter and prior year resulted mainly from higher revenues.
Adjusted net earnings totaled $241 3 million of our Nike one cents per share. The main difference between adjusted net earnings per share of 19, 1% and earnings per share of <unk> 90 success. In Q3, 2021 was mainly related to the exclusion of $15 6 million net tax recoveries, resulting from the optimization of <unk>.
Discretionary deductions for Ontario mining tax on part of it.
'twenty tax foreign exchange gains cost attributed to nonoperating assets, mainly in the northern territory system implementation costs as well as COVID-19 related costs.
Turning to slide 14 in Q3, 2021 revenue totaled $667 million. The change from Q2 2021 is mainly driven by at 8000.
Ounce increase in sales volume, which was partially offset by lower realized oil price in the quarter compared with Q3, 2020 revenue increased by $34 million or 5% year over year, mainly due to a higher gold sales volume, which increased from 332000 ounces in Q3 2020 to three <unk>.
Third 70 to 1000 ounces in Q3 2021, with the increase largely reflecting record gold production at detour Lake and strong production as possible.
Partly offset by unfavorable impacts from the lower average gold price.
Moving to the next slide and looking at EBITDA on Slide 15, Q3, 2021, EBITDA totaled $451 6 million, which was comparable to Q2 EBITDA of $451 3 million compared with the same periods in 2020, EBITDA increased by $67 million, mainly as a <unk>.
<unk> of higher revenues.
Looking at income taxes, our Q3 2021 net earnings benefited from a lower effective tax rate of 25, 3% versus 31, 6% in Q3 2020, mainly as a result of the $15 6 million net tax recovery related to the optimization of the eligible tax deductions for our carrier.
<unk> Tec.
Following our restructuring of the company's Canadian entities early in 2021.
Moving on to slide 16.
We look at.
Q3 cash flows.
See thats the largest contributor to the growth in cash was from our operations, which generated about $396 million of cash. This is before income tax paid of 78 million growth capital assessment up $88 5 million in exploration spending of $39 4 million in the quarter other cash outflows.
With the costs incurred at our non operating sites.
Yes, he had hoped complex <unk> done at corporate G&A of $14 3 million.
During the quarter of $175 3 million was returned to shareholders, including $125.
$3 billion used to repurchase shares through the Companys, CIP and $50 million of dividend payments.
Yes.
Turning to slide 17 to look at our cash balance and cash flow on a year to date basis, we generated nearly $1 1 billion of cash flows from our mining operations after sustaining capital, we paid $298 million of income taxes.
In our key assets for $217 billion in growth capital and $128 million in exploration expenditures, we would've accumulated ending cash balance of $1 2 billion before returning $334 million of capital to shareholders comprising of $184 million used to repurchase shares.
At 150 in dividends paid on a year to date basis, ending the quarter with $822 4 million from cash.
Next I'll turn it over to our CFO Natasha Vaz to discuss our operating results.
Thank you David and good morning, everyone.
Slide 18 Lasalle.
Holiday introductions.
Thank you Anthony.
So overall as Tony mentioned earlier, we achieved solid operating results in the quarter.
Production.
In semi cap.
We haven't identified any route.
Q3, 2020 and of course the market.
Alright.
Got that.
Alright.
Which is well below our full year guidance.
And then that's where I think Pascal is also very strong at $740 and now this is a fiction.
The slight improvement from Q3, 2020, and 5% better than the previous quarter.
And secondly, tell us announce also.
Lee to our full year guidance ranges present 90 10.
No.
And then when we look at and get any operating results due to a very strong.
Production totaled one 5 million ounces, which is a 5% increase particularly 2020.
Operating cash cost per ounce sold.
As announced compared to $78 20.
Finally, I think perhaps ultimately.
Cytology.
If I could.
And year to date 2020.
So with that I will now get into a little more detail on the operations and I will turn the call over to Ian Holland.
Scaling operations to provide an update on Mako.
Thanks Sanjay.
Start with book to Bill on Slide 19.
First of all they had a very strong Q3.
First we will produce 130 book, There's Manses, Inc. Q3, 2021 based on processing just over 190000 tons.
Average ground up 23, six grams, a ton and average mill recoveries of 98, 7%.
Production in Q3, 2021 exceeded expected levels, mainly due to continued growth and performance in the Swan zone.
For the year to date, we produced 401 for Fathom answers.
It's really hard to target levels, largely reflecting greater outperformance and the multiples one zone.
Given year to date as.
As well as some changes to the sequencing.
Bobby maybe hardware 2021.
The production of 476000 ounces.
To date 2020.
The reductions are flattening out.
A lower average grade consistent with their previous inside the plane to reduce production with the intention of creating a more sustainable operations. While we continue our extensive exploration program.
Partially offsetting the impact of a planned reduction in the average grade was at 28% increase in tonnes processed.
To just under 520 bumped asthma tons year to date 2021.
Turning to costs.
Again, we achieved very strong performance for both Q3 and year to date.
Q3, we had operating cash cost of $170, an ounce and all in sustaining cost was $337 an ounce.
For the year to date operating cash costs averaged $194 an ounce with all in sustaining cost of 360 statement Don.
All you have to Nicola <unk> General manager and box prisoner day to a light month.
Thanks Kim.
On slide 20.
As Tony mentioned earlier quarter, three was an outstanding quarter for 289000 ounces based on processing $6 2 million tons at an average grade of 1.04 grams per tonne.
Average recoveries of 91, 6%.
This is an increase of 35% from Q3, 2020, and an increase of 14% from the previous quarterly record.
66000 ounces.
In Q2.
Quarter over quarter increase was largely due to a 5% increase in tonnes processed as well as an 8% improvement in the average great.
Mining during the quarter focus largely on high grade areas as part of the phase two mining plant.
For year to date 2021, we produced $501 eight doses.
38% higher than the eight months after the acquisition last year.
22% increase from the full nine months of year to date 2020.
Looking at our operating cash costs averaged $601 in Q3.
$647 per ounce for the year to date.
Very importantly, the mine achieved record all in sustaining costs of $937 per ounce.
Protest due to largely to higher levels of underground maintenance and reduced equipment of implant average grade b the mainly.
Due mainly to mining sequencing.
Totaled 148854 ounces based on processing 243615 tonnes at an average grade of $19 four grams per ton and average recoveries of 98%.
Production year to date is lower than planned with the underperformance is being due largely to reduced equipment availability caused by increased maintenance requirements pull battery performance and delay in receiving new batteries.
Moving to slide 23.
Where we are doing very well at mckesson and advancing our key projects, mainly for shops as well as with exploration, which I know Eric talked about in last quarter's call.
Looking at four shaft. During Q3 2021, the shaft advanced approximately 500 feet and had reached a depth of 6100 feet as of September 32021 with development of the 6100 level station also being completed.
We also made good progress with other projects such as our ventilation expansion involving completing of the two that raises.
With that I'll turn the call back to Natasha bass.
Thanks, Brian.
On the operating review.
Yes, Brian.
Thank you.
On a consolidated basis, Tony has already touched on it.
We are on Capex EBIDTA.
The top of our production guidance of $1 three to $1 preliminary announcement.
Cash cost per ounce on traffic.
And yes position.
Potentially.
<unk>.
In your opinion.
Okay. So just looking at the individual operations Occidental achieved its full year guidance in the first nine months.
So we're now expecting to hospitals.
100000 ounces for the year or higher.
Although this affected operating cash cost per ounce, we said Q3.
Guidance range of 230 to $250 now.
We're targeting another record.
With production.
The level of variety.
189000 ounces.
We now expect production for the year.
7000 ounces operating cash costs at the top end of our guidance range or slightly higher.
Okay.
And then all of a catheter we are already seeing improved results in Q4, having said that we're not expecting to achieve that guidance with production now.
190, and 210000 ounces at operating cash costs above the guidance range.
With that I'll turn the call over to Eric Kallio, Senior Vice President of exploration.
Hey, Thanks, Good morning, everyone. My first slide today is number 25 from Detour Lake project.
Good afternoon to success with both drilling and events that are these are.
Product being an updated resource.
Substantial increase analysis from early this year in.
Herewith nation from shown on this slide which is the long section looking north bridge across the corporate area containing Fitzgerald from both the new and the old work.
Vindicated update in regards to the guidance.
The $10 1 million ounces. Good overall total to bringing the new total to about $14 7 million exclusive of reserves, which in theory, I think were about $15 million.
All of this material size of the pit shell, which is located about four kilometers long and extending to the maximum 600 meters from surface with all reserve located at the top here the dark green.
At all with regards to the five below as stated in yellow and library, which is essentially operating as a whole.
The area for the main focus of our research.
Important to note that all of this increase was accomplished with only about 180000 meters of drilling.
Our two third of the plan of 270000 meter program.
Last year.
The limits are really close to the limits of drilling.
We are still seeing good hole at the center.
So now turning to my next slide.
Number 26, what we see here is another way, Michigan, Detroit illustrating additional detail from the resource model along with new drill results.
Two days ago, and already demonstrating additional upside potential here.
Our analysis.
New results include an additional 39 fold in fixed wasteful targeting mainly towards the west pit.
And.
In our view containing a lot of very good positive messages.
Including reinforcement of our overall geological model of Westwood, a funding issue, it's a very positive Julian herself.
Some of the cable.
Yeah.
No.
<unk> ability to conclude a costume remind you would be comfortable over the west side of the curve itself.
With very limited drilling in the past.
And now continues to wide wider and higher grade intercepts as well her whole number 300, which you see more of a central part of the west pit, which is actually drill under the north wall of the pit and also having good intercepts.
The critical point out I'm Rahul to 95.
In the eastern part of the cycle, which had affected 20 grams over 25 years and so they need it quite as well as in inkjet.
So it's very normal.
And the fact that we still have 11 trials do onsite continue the program.
We obviously are feeling very confident about the project.
And our possibility to get more out of it by the time when you do the next update.
Now turning to my next slide number 27, we see the first and fourth life already in Pottsville.
We also saw some very good success.
In Q3, including multiple high grade intercepts for both the lower Phoenix and Raleigh Hill areas.
In terms of the slides annually is long section across the line Harry it's showing the location of these targets as.
As well as some details for our 'twenty one exploration program.
Indicated the lower Phoenix is all of that kind of slide two main targets.
One of the segments.
And most of the work at the time being focused on the floor and downtime also an important target here.
It's important to note.
Until early part of this year most of the work and it's one that was not really available to us, but only became more available. When it was finished in June and now we have five deals that dislocation and are able to do a lot of drilling in this area.
Additionally, we also now have a lot of billings happening Robin's Hill.
Thats one area the main targets downtime from the reserve most of the work to date. It has been done from surface and as you can see we are still continuing to advance.
The underground decline again at very close to be able to start drilling from underground.
Turning to the next slide.
You can see some additional detailed forward to work with property.
At the Swan zone as organic area.
And.
Few things to note here with me.
Trying to get a large number of holes 190, <unk> polls were actually released in early and a lot of.
Press release here.
And.
Following hold we're showing a fairly.
Does that trend down slightly probably reserve relative to the very high grade intercepts right near the limits of the reserves, including $51 seven grams over two six meters at four eight or $4 $69 six over $6 four.
So.
In addition to that what we've seen is I agree with him within the trend.
$14 one.
Or seven 510 over $10 for $13 two or two.
And our view of offerings.
So potential for high grade lenses within the overall trend.
Turning to my next slide.
It's selling a little bit more detail for the drilling what's the timing of the signet area.
And then together with.
With me this one drilling.
Despite quite a bit of new water, what Google located within this area now.
And.
The drilling team.
A lot of new high grade intercept some.
Some of the key one 268 grams over one 842 or two meters at 49 $494 $4 one.
He is part of this drilling though has been not only being the iron resolve but that Densification I think.
Parallel.
<unk> coming from the bank.
Promulgated structure, which we identify the pie, but the key was independent of the targeted.
These are defined and are showing all of that type of stuff.
The slide deck.
These are more directly aligned with one containing some of the higher grade intercepts, so very important development.
Turning to my next slide.
Just from a Robin's Hill area.
As you can see here, we're also starting to get quite a few against Goldman Sachs and now a full of extended down to below 1000 meters downhole.
Uh huh.
As announced in our last press release things are very favorable right near the limit.
The trend.
Given the 1000 meter level very close to the elevation of our sponsor pattern. We're.
We're seeing coals and how sports visible gold and numbers, which are much higher grade than the average we saw at higher elevations, including 28 grams over $1 123 over $1 415, and 19 three four.
The bond we also see a very high recoveries within the trends such as 81 grams over two and a half meters, which again suggests the possibility of hybrid lens.
All in all we believe that the work in perhaps at Fosterville come along very well a lot of possibilities for not only replacing ounces, but coming up with new high grade material.
Now I would want to pass it over to Tony.
Okay. Thanks, Eric.
I'm, turning now to slide 31.
The slide in our deck.
And then as it can.
And an extra quarter in Q3, 2021.
And you know when we talked about the operating results. We also had.
Florida returned to the merger now.
Great.
Which will create a new leader in ball bonding industry and again as we've talked about the lowest cost highest margin.
Curious if sanctions and an extensive pipeline of development and exploration projects to drive sustainable almost growth and you know with a very very strong balance sheet.
Strong.
Corporate depth of people.
To create that value.
Shareholders.
Okay.
Q3 was a record quarter core earnings per share for people.
And that is all white meat, you laid out a pretty outstanding quarter record earnings throughput the knowledge.
Awesome.
Possible continued outperformance.
Continued outperform and does not shotgun before project our cash remains on track for completion in late 2022.
He helped in terms of that and combined with that lets say you got it.
Patients system at a cash surplus.
Nuclear equipment as we move into 2023 will really transform the cabinet coupled with mine.
Eric outlined our success drove it a continuous deep part of ballpark.
Value creation, you can see.
We're doing that in each one of our assets each one of our mines.
Looking ahead.
Aggregates.
Two we are on track to finish 2021 strong and keep all of our 2021 guidance grateful mining companies and there's one that is well positioned to generate superior long term value for shareholders, but you know before I finish.
On space competitor for us and where.
We talked about.
We are having.
Coming into Q4, but we're all sort of start at the half Christmas season.
You're in a period of time.
Everyone within Kirkland Lake Gold our suppliers contractors.
Also on the call. Please remain diligent for your own personal safety and the safety of others.
Year.
We.
Wanted to maybe get hurt.
Ounce of gold produced.
All are in cash flow and a penny in earnings is more important than your personal safety personal safety people you work with everybody should end the year, you're going to be able to do with your families over the Christmas season anyway, but that.
Thanks for my questions.
Thanks.
As a reminder, if you'd like to ask a question. Please press Star then one on your telephone keypad.
And our first question is from Tyler Langton with Jpmorgan. Your line is open.
Good morning, Thanks for taking my questions.
Maybe just to start can you talk about the sort of the levels of cost inflation.
You are seeing right now and you know sort of what you're seeing in these areas for materials and labor and fuel and then just kind of.
I'll talk a little bit about your expectations.
Heading into 2022.
So the first part of it.
I'm, sorry, I missed a little bit in the first part of your question, but it was you're asking about sort of what we're seeing in terms of labor inflation as well.
Cost of it yes, sorry, yes.
The cost inflation, you're seeing now and just from whether it's from materials consumables labor fuel just kind of sort of the different buckets.
Yeah, well I mean, we don't see anything.
I'm doing labor every library.
<unk> tracks that we normally see year over year in terms of.
Net favorite coffee costs, but you know again, a part of it all of it part of it all is our NOI as we train and develop people as people are you know.
Earn more they become more productive.
Great book value. So all of that gets offset so people aren't hard commodity prices I mean.
That's some of the big areas.
You can get the dasher and even.
There you can give us.
For more color, but some of the big areas that we talked about this.
Forecast, where diesel was at the beginning of the year with diesel prices have gone some energy price.
That's where we see that and a few other commodities definitely be fixed rates up at some impact on us, but as you can see our operations, but it would be.
Whether whether that and perform well probably would have we would have.
If commodity prices were to stay the same.
We probably would've been at a significant beat environment and our cost items, but I think the task you got any color there.
Recently I came in in Q3, 2021 yes, we have seen some inflationary cost pressures as Tony mentioned.
Mainly in India, and a legacy in things like grinding media.
It has mainly impacted at that time.
And habits and supply chain issues.
David mentioned, particularly with batteries and battery powered equipment.
Yeah.
Cost management and higher than planned sales at Occidental.
Cash cost per ounce.
Okay.
Nick.
Joining me.
One was significantly better than the full year 2021.
And then looking forward into 2022.
Inflationary pressures for energy in containerboard to come to you and while difficult to predict.
Yes.
I think we've seen that way I'm focusing in on.
Now looking to mitigate that.
Right.
Yes.
Great and just as a.
As a final question on the cost that you cannot you mentioned.
The issues that impacted production in Q3, and you said they were getting Youre seeing improvement now in Q4 because of these issues.
Largely be resolved in Q4 or did they sort of slip into Q1 of next year.
Sure Yeah, well rounded performance 15, other Catherine is again, he's leading to equipment availability caused by caused by increased maintenance requirements and also core values performance of domain in the C D and humanity.
The battery truck industry is predominantly in U S.
With demand Duane asking tightness in the market as well as some issues with quality.
Oh, the battery life for getting it.
Mobile minutes down in some cases.
Okay.
Yeah, Yeah, I've seen momentum from Q1, two 5 million is encouraging.
We are working with our suppliers haven't had time to talk.
That's an impossible until it doesn't impact us.
As much claims did you place got it.
Technology better equipment underground, we were really the only only only.
Sure.
Got it.
So we were.
Where we're getting the quality and on time delivery and effectiveness out of them, but now that the industry is picking up.
More of the industry is asking for this equipment.
The supply and the supply industry is not able to match them and all of a sudden now that you're seeing.
The drop in quality as well as.
Timing of the delivery of any of them even availability.
Exceeding.
You need a break for the supply and that you can catch up at what kind of be working on we're working on a number of initiatives or something like that.
Great that's it for me thanks.
Our next question is from Obs Habib Scotiabank Your line is open.
Thank you operator, I don't Ian Cook, and the team and congrats on the strong quarter.
Really thanks for taking my questions.
Couple of questions for me and I apologize in advance if you've already touched upon these are separate companies as reported updates this morning, and I'm kind of bulky stuff like that.
So my first question is regards to Fosterville.
Obviously, well suicide that fantastic too.
Production beat.
And then kind of continues to on the other.
Great outperformance.
You have made changes to the mine sequencing essentially bringing great board, but at the same time, you've seen some seem to be getting some significant positive.
Great reconciliation as well are.
Are you expecting that to continue into 2022 and are you modeling this pause.
Cancellation.
In Q4.
But he is.
While we get back.
The answer to these questions is that fair.
Yeah sure tiny.
Good question, so you're right.
The outperformance.
Performance. So I thought I was saying to you here is really going to come from them.
Three types, Miami and ice really starts right.
I can't call. It seems like a bad 60000 answers they'll do the performance so far this year.
We don't we don't see.
Yeah, the broad range of studies since one of our model really well and reconcile it really well.
Do have a really really extreme dry areas that are really difficult to model to be honest.
And I take very small variation in physical stores are buying to add significant answers them in into the equation for the study.
Do we say continuing.
We haven't seen a little bit of outperformance already in Q4, driven.
Driven by a month. So you can see it at the start of the year decisions were made in Q1.
I'm leading into Q2.
So.
So it had the effect of dragging some higher grade starts from Q4 into Q2.
Page three regional plane.
But really the main the main contributor for the year is that he knows so I.
Sort of three steps today outperformed significantly.
Does that answer the question.
Yes, it does and just kind of follow up on that.
Are you looking to kind of tighten up drilling or do some.
Additional grade control drilling to kind of tighten up that model or is this possibly completion, you're just thinking about the dumps.
Yeah.
Yeah.
Good question.
The drilling that we need to be at a really pinpoint to vary what we're really very small physical changes in buying with Randall good I can.
We'd be talking about it and I thought the Fox with the drilling side. So we don't intend to do that and.
And we understand the geological.
And we'll be looking to try and model.
Model that as best we can going forward.
I'll read out.
The vast majority of this of the Swan reconciles, you really well too to model it.
It's just the old style that would be tend to have you been a bit wont supply to it.
Did significantly outperforms.
Got it got it.
I mean is it that the way you still are expecting a pretty solid.
22 coming into it right.
Okay.
Right.
Family time Yep Yep, we are we would say we see 2022.
Steuben, a very strong year for possible.
Perfect that's great.
And just shifting gears to detour.
It was great to see throughput moving higher in Q3.
7000 tonnes per day.
And really to meet the target of $24 5 billion tons for the year.
You need a process around that 70 to 73000 tonnes per day in Q4 now do you need any additional equipment on the additions to the plan to achieve this are you on track you know any color you can provide in October.
It is progressing.
He can answer that question better in our detection.
Sure sure I can start on the life.
Overall, we're in good shape.
In Q4 from a line perspective, we had a good mikael anyway on talking to you.
Like last quarter.
Neil is shaping up to be based that can be have a small shut down.
In the quarter.
Any material so I'm a plant it's not that I can remember my perspective, we're in good shape.
I just want to add some more color.
Yes sure.
In fact, it's.
We're very optimistic.
To finish strong in the in Q4, we've already got a good start in October.
Sure.
As we mine through some some higher grade zones in phase two that's going to continue not just this quarter, but in the middle.
And the next year, so from the mining and we're in pretty good shape.
Naturally as we haven't even seen the benefit of.
Our growth projects.
The mill yet so.
So things are looking.
Pretty strong for him to finish the year so.
The team has worked really hard to make some operational improvements.
So the increase in throughput since we are a pure group project chat as they come online this quarter and into next year.
Should only help us compete for schools or tonnage.
Yeah, Ananda success from a tariff point of view.
Yes.
A lot of initiatives led to a lot of small initiatives like a lot of the big projects are still to come in 2022.
So I think that's a great update and just just to confirm in terms of the grade and grade moved up over it got done in Q3 and is that expected to remain around the gram per ton going into Q4 as well.
Okay.
Go ahead sorry.
Yeah.
Absolutely and again the other piece too we're kind of right in the heart of the ore body right now going through the underground areas.
We expect to be in and their own to grow kind of a ton maybe a little better.
Okay.
That's great and I really appreciate the color that's it for me. Thank you.
Yeah.
Our next question is from John Tumazos with John Tumazos Independent Research. Your line is open.
Thank you.
I know you provided some explanation I wanted to give you a chance to explain a little more.
Tremendous 67368 tons a day.
The mill at Detour.
I'm, assuming that it wasn't softer rock.
And that's part of it.
Whereas the significant increase in uptime.
Better maintenance practices and infrastructure improvements.
Some of it was due to specific.
Relatively small capital improvements.
Just don't stand out on the cash flow statement, and obviously had a big impact.
Please tell us how you did such a great job.
How about that.
Hi, John.
So and there are some initiatives that we've been working on with respect to Hill ROM.
Opportunity, where we are coming.
Kind of wide open in the area.
Yes.
Yeah.
There's some work being done.
On the mill side.
Okay.
Do you want to add any more detail.
Yeah, sure I think Natasha.
Most of them.
Really focused.
Thrown the optimizing our high intensity feed.
High intensity blasting absolutely.
Yes. It was just as hard as it is or whatever else.
So you got that feeling.
And really just the team working together between the mine and the mill and making sure that the feed is consistent.
Well actually on uptime.
We did have two plant shutdowns and in Q3.
The only one in Q4 so.
Suites.
It was not a factor you actually have more downtime.
Yes, that's correct.
Congratulations.
Our next question is from Mark Marcon with National Bank Financial Your line is open.
Thanks, guys congrats on the good quarter.
It's certainly been the focus of the call but on detour.
Can you give us an idea of like where you're seeing.
What's the bottleneck.
Currently it's at more.
The mine is hungrier or you know it's more.
On the <unk>.
On the mining side is it minor mill that you're kind of focused on near term in terms of unlocking the next step up throughput upside.
Go ahead.
So I think that the minus.
Okay great.
Do you mean to find Dennis you think very well I would say, we wanted to increase throughput going forward into the future.
Less delays in terms of equipment for health et cetera. So there's a lot of these things that are going to comment and as as an attachment very mentioned in terms of the plant we're working on the front end.
Proved throughput through through through the pressures.
The diagonal and that's part of that is the screen every feed system and then and then.
And then getting more time to develop.
Is good but if we don't have a lot of expensive recovery network as an attachment and we're working on improvements and expansion of each circuit, our CIP circuit as well as the new gravity surface.
Additional gravity circuit begin to the bill over the next month.
Alright, thanks for those details.
Two other things that historically, we saw you loading breaks in terms of what a truck could actually be loaded two versus what it was actually being loaded too that was kind of a historical issue pre.
Your management time, how is that kind of shifted.
To where you're kind of upgrading to their the trucks kind of right in line with maximum capacity and then historically also there was a fair bit of re handled now that the open pit.
Continues to mature are you seeing realm.
Relative to historical years, the amount of free handle all or is that it's still kind of something that the west.
Really unlocks the potential showing.
Significant improvement on that front.
Hi.
Alright.
Okay, sorry, I can speak to the truck pillows.
Something that's been ongoing for a couple of years now as we looked at.
The bodies that we had originally.
With the 700 funds and.
Looked at the <unk>.
Right waiting train and to get the.
Increased so we've always been focused on maximizing G D W and keeping within a fairly tight range, but but with these as we continue to add the truck bodies.
Increased payload like.
Almost two 2.5% here who lost.
Maybe four corners yourself, so that's probably going to be a bit of.
And we ask her shop, operator that something will monitor very closely.
And to make sure that.
But we're paying close attention to maximize and pickles as well.
Okay excellent.
And just on the re handle.
Oh, sorry, yeah.
Within pet, there's there's very little rehab.
We really focus on establishing.
A good college and ramp system right off the bat.
How old were we do still have kind of a historic levels of resemble with or on the wrong.
And that's actually been.
Fairly important for us to have to achieve these levels of male throughput. So when we when we focus on our high intensity blasting and resolved so we can't do it.
Everyone told.
Told me in the areas that are kind of safe with respect to.
Minimizing pollution so.
So we we have to stockpile a fair bit of war. So that we can maintain a consistent blood going through the mail.
And is that something that if you have west pit opened up you can kind of bounce it off by doing or in one long waist and the other or does that not how're you guys see.
Still be something like what you're kind of running at now.
Yeah, we foresee a rehab levels could be kind of in line with where we are currently.
Okay.
Alright, that's it for me you guys, thanks, very much and congrats again.
Our next question is from Bahar trick with credit Suisse designing something.
Hi, Good morning things within my question I'm, just trying to get a sense of what will be incorporated into the next year is like a mine plan a detour.
So it sounds like you know, obviously, the ear and reserves will be part of that.
Earlier in this call it but there was something that you mentioned about essentially debottlenecking. The back of the plant are those efforts are that optimization is that gonna be factored into the upon as well or is that just potential further upside.
[noise] [noise] [noise] terminally ill and I'll be happy.
How about the model.
This is all part of the.
What's going into my lap.
You too.
And at that time.
Into the account.
To me.
Chocolate.
[noise] belly a lot of other initiatives in terms of.
My Cat.
Great control permits that we're working on ash mentioned above lapping.
Improvements.
Initiative for quite some time.
Maybe you can get one.
Yeah.
The email.
Combo.
Okay and can claim.
[noise] and tend to like.
Right.
It's my time.
Yes.
Yeah.
Cause you mentioned.
Five.
Hi.
Now.
Oh.
And can I get that now.
Hi.
Okay.
[noise], but.
I mean, if I had.
Go back.
Built in different styles hedge fund that was there.
It helps.
Help people.
The people at the site and done a great job just identifying areas.
And removing any bottlenecks theirs.
Okay. Okay got it so it sounds like all of that has been factored in okay. And then just switching gears to foster Bill just quickly you already spoke about grades, but just on throughput obviously to put this quarter was quite strong I'm just trying to figure out for Q4, because even if I keep.
<unk>, even flat or slightly down you're gonna be well ahead of even about 500000 ounces for the year. So.
Is that through put level sustainable into the queue for.
[noise] yeah.
And.
Alex.
Yes.
Yeah.
How are you.
Yeah.
Okay.
Great.
Lightning at.
Blind anymore.
Yeah Shaun attached.
The the demands it really well sequences at the moment, yeah with the guards are on top of the development.
Oh, I think what we've seen sci-fi.
Hi, still coming on I lost.
Yeah.
A lot of the way.
Take on so it's gone into.
Production sequences and say I would say I would say the benefit of that now with the <unk>.
Traced productivity yoga of asked driving.
And we expect that to continue on and and in fact, we would we would see ourselves.
Proving.
Tonnage productivity I've I've been attempting to eat.
Okay.
The planet itself.
Technology that plan.
800.
Adhere plus plan.
It is not milk okay.
Right.
Maybe that's why.
Got it okay. That's it for me thank you.
We have no further questions at this time will turn the call back over to you Mr ordering for any closing remarks.
Well, thanks, everyone again for.
Taking part in our call today.
We have a very strong third quarter and a very strong first nine months of 2000.
One.
More important.
<unk> for a very strong cash.
Finished a year were very well relative to our guidance.
Looking further ahead as I said when I started we're very excited about the upcoming merger when they can easily.
2022.
New York.
Thanks Diana.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].