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Kirkland Lake on growth track

RESULTS: Kirkland Lake Gold remains on track for substantial production growth
December 13, 2011

Kirkland Lake Gold continues to make excellent progress rehabilitating and expanding the mine it acquired from Kinross Gold in Ontario, Canada. Operations in the first half of the year were on budget and plan and keep the company on track to deliver full-year output of between 110,000 and 130,000 ounces of gold. Chairman Harry Dobson commented that, as at the end of November, the company was "slightly ahead of plan in regards of ounces poured and sold".

IC TIP: Hold at 1,128p

On completion of the expansion project, annual production is expected to grow to 180,000-200,000 ounces of gold in the year to April 2013, and to 210,000-250,000 ounces of gold in the years to April 2014 to 2016.

Furthermore, exploration drilling continues to discover new zones of mineralisation at the project's South Mine Complex (SMC), eight years after the SMC was discovered. The company now has 15 drill rigs working to increase reserves and resources at the SMC, while maintaining the quantity of proven gold to support production at the main mine.

During the half year, the company paid off the 4 per cent royalty due to Kinross Gold that formed part of the original purchase agreement. Evolution Securities is forecasting EPS of 124C¢ (29.6C¢ in 2011) for the year to April 2012.

KIRKLAND LAKE GOLD (KGI)
ORD PRICE:1,128pMARKET VALUE:£788m
TOUCH:1,110-1,145p12-MONTH HIGH:1,335pLOW: 800p
DIVIDEND YIELD:nilPE RATIO:32
NET ASSET VALUE:196pNET CASH:C$13.3m

Half-year to 31 OctTurnover (C$m)Pre-tax profit (C$m)Earnings per share (C¢)Dividend per share (p)
201048.110.618.0nil
201176.019.745.0nil
% change+58+85+150-

£1=C$1.594