Kirkland Lake Gold (KL, Financial) continues its strong momentum. The stock soared 3.43% to $18.69 per share at the end of regular trading hours on May 4. Kirkland Lake Gold outperformed the Van Eck Vectors Gold Miners ETF (GDX, Financial) by 21% this year.
Kirkland Lake Gold’s growth in the first three months of 2018 was led by strong results on production, a significant increase in mineral reserves and by solid first quarter financial figures.
Looking ahead, the company anticipates delivering higher volumes of production through the end of 2018. Higher throughput levels will lower unit costs since fixed costs will be spread over a higher output.
First-quarter production increased 13% to 147,644 ounces from the comparable of 2017. However, it was lower than the production that the company made in the last quarter of 2017. That was a record 165,579 ounces. Of course, higher production on a year-over-year basis enabled Kirkland Lake Gold to sustain an operating cash cost, which, at $447 per ounce, was in line with the company’s guidance for 2018. The all-in sustaining cost (AISC) also improved to $833 per ounce of gold sold.
During the quarter all the mines performed very well, especially Macassa in Ontario and Fosterville in Australia, where operations were driven by a positive ore grade encountered during mining.
Macassa mine hit a record-high with 54,038 ounces of gold produced, an 11% growth year-over-year, and 63,843 ounces, a 39% increase from the prior-year quarter. At Fosterville,Ă‚ production was strong.
The company’s other mines are Holt Mine and Taylor Mine in Canada. From these assets, Kirkland Lake Gold added 29,730 ounces of gold to its quarterly production.
In 2017, Kirkland Lake Gold grew its reserves by 36% to 4,640,000 ounces, thanks to increases at Fosterville and Taylor, as well as the replacement of depleted ounces at Macassa.
Fosterville hosts 1.7 million ounces of gold averaging 23.1 grams per ton of ore, and 1.16 million ounces at its Swan Zone. At Fosterville Swan Zone, one ton of ore contains 61.2 grams of gold on average.
At Taylor and Macassa, Kirkland possesses 167,000 ounces and 2.03 million ounces of gold. The average grade of these reserves range between 4.8 to 21 grams of gold per ton of mineral.
Kirkland Lake Gold closed the first quarter of 2018 with an adjusted net profit of 25 cents per share or $52.6 million, more than a 200% increase year-over-year. It was backed on revenue of $198.24 million. In the comparable of 2017, the miner billed customers for $168.53 million.
The first quarter of 2018 was also strong because Kirkland Lake Gold reported a 58.3% growth in the earnings before interest, taxes, depreciation and amortization to a quarterly record of $105.9 million. With over 30% year-over-year growth, operating cash flow and free cash flow stood at $89.6 million and $50.2 million.
The amount of cash and securities on hand was $275.3 million at the end of the quarter.
The operating and cash flow results showl that Kirkland Lake Gold is a top-performer in the worldwide gold mining industry. Its business is based on a portfolio of assets, which is going to draw 1 million ounces of annual gold production in the next five to seven years.
For the entire year of 2018, the company expects a gold production of 620,000 ounces at $750 to $800 per ounce. The operating cash cost is anticipated to range between $425 and $450 per ounce. For the maintenance of its operations and growth purposes, Kirkland Lake Gold is forecasted to use funds ranging between $235 million and $265 million. Explorations will absorb financial resources for about $83 million.
The stock has a market capitalization of $3.81 billion and is currently reporting a volume of 211.21 million shares outstanding. The portion of institutional ownership in the stock of the gold producer is 46.81%, while insiders hold 0%.
The Van Eck Associates Corp. is the top institutional holder, with an 11.44% of total shares outstanding, according to GuruFocus. That figure is as of Dec. 30.
During the first three months of 2018, Joel Greenblatt and Pioneer Investments opened a position in Kirkland Lake Gold and bought 14,450 and 75,000 shares.
Jim Simons increased its position by 7.91% to 141,000 shares.
Ray Dalio and Chuck Royce reduced their positions 7.81% and 8.02% to 36,909 and 142,224 shares held.
For the 52-weeks through May 4, the stock climbed 183% and is trading above the 200, 100 and 50 SMA lines.
The stock is not cheap. It is trading very close to the 52-week high of $18.71 per share. The 52-week low is $6.4 per share.
The stock is approaching over-bought levels.Ă‚
(Disclosure: I have no positions in any security mentioned in this article.)
