Gold Grade is King at Kirkland Lake – by Lawrie Williams ( – October 8, 2015)

In general gold mining and exploration juniors have been having a horrendous three or four years since the gold price started its decline from its peak at the end of Q3 2011, but high grade, profitable operations like Kirkland Lake Gold (TSX: KGI) have tended to buck the overall trend – and here it is indeed the gold grade which is the key.

In short, Kirkland Lake gold is one of the highest grade operating gold mines in Canada – or indeed in the world. And it is being very successful in maintaining mill grade at very close to reserve grade – achieved by current management under George Ogilvie, former CEO of Rambler Metals and Mining, in not chasing tonnage, but rather putting the emphasis on grades to the mill.

It is thus running well under mill throughput capacity of over 2,000 tonnes a day, but generating excellent returns as a result – and leaves it with scope for expansion from existing operations, let alone from the excellent exploration potential across its land holdings. LawrieOnGold interviewed Ogilvie yesterday in London and these are the impressions gained.

Year to date, Kirkland Lake Gold’s share price has outperformed the gold price by 77%, while the GDXJ Junior Gold ETF has fallen by 20% over the same period. Overall the stock price is up around 55% ytd – not a bad performance in a hugely depressed market sector! Kirkland Lake Gold is currently producing at a rate of a little over 150,000 ounces of gold/year and expects to up this to around 170,000 ounces a year in 2016.

The Kirkland Lake camp has been one of Canada’s most prolific gold producers with some of the biggest old mine names in Canadian gold mining under Kirkland Lake Gold’s control – all high grade mines in their time. Interestingly the company’s production at the moment all comes from what it terms its Macassa South Mine Complex, which is a separate ore occurrence from the main production lodes in the area on what was an unexplored part of the camp. But the grades remain high and appear to be increasing with depth.

It is a fairly deep mine by Canadian standards – with operations below 5,000 ft. It is also hot and the area has a history of seismicity, so mining conditions are potentially difficult and need to be monitored closely. However Ogilvie, in times past, worked for Anglo American in some of South Africa’s even deeper mining operations which faced many of the same problems – but on mostly narrower reef structures – so has some excellent relevant experience behind him.

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