Friday, April 6, Kirkland Lake Gold Ltd. (KL, Financial) jumped 2.9% to $15.59 per share on the heels of strong operating results for the first quarter of fiscal 2018.
Thanks to a record production of gold at Macassa mine (54,038 ounces; +11% year over year) and strong results from Fosterville (63,843 ounces; +39%), the miner closed the first quarter of 2018 with an output of 147,644 ounces. Operations at Macassa (Ontario) and Fosterville (Victoria, Australia) were driven by a positive ore grade encountered during mining.
In the same quarter of fiscal 2017 Kirkland Lake Gold produced a total of 130,426 ounces of gold.
Holt Mine (16,675 ounces) and Taylor Mine (13,055 ounces) also performed well year over year.
Kirkland Lake Gold said, “The company remains on track to achieve its full-year 2018 production guidance of over 620,000 ounces.” Production volumes will increase in the second six months of 2018. Those will include Fosterville where the stope production is expected to commence from the Swan Zone.
Tony Makuch, president and CEO at Kirkland Lake Gold, appreciated the impact of first quarter 2018 operations on the company’s balance sheet: “Based on our strong performance in Q1 2018, we continued to build financial strength, with our cash position increasing 19% during the quarter to $275.4 million at March 31, 2018.”
The first quarter of 2018 has been full of positive surprises for the shareholders of Kirkland Lake Gold.
A 36% growth in Kirkland Lake's consolidated mineral reserves to 4.64 million ounces reverberates on the value of the stock, which outperformed the Van Eck Vectors Gold Miners ETF (GDX, Financial) by 9% over the last six weeks of trading. From the date of the announcement of the increase in mineral reserves (Feb. 20), Kirkland Lake Gold appreciated 10%, while the gold backed ETF gained only 1%.
Also, the high concentration of the precious metal in the mineral has convinced investors, increasing their holding of the gold stock. That is 11.1 grams of gold in one ton of ore -- one of the highest in the industry.
Tony Makuch highlighted long-term catalysts: “With our current business portfolio, we are poised for solid year-over-year production growth to a million ounces of annual production over the next five to seven years.”
The stock is trading its book value at 2.85 times per common share towards an industry median of 2.06. Its EV-to-Ebitda ratio is at 8.81 times versus an industry median of 9.90.
The stock has a market capitalization of $3.26 billion and is currently reporting a volume of 210.94 million shares outstanding. The portion of institutional ownership in the stock of the gold producer is 45.98%, while insiders hold 0%.
The Van Eck Associates Corp. is the top institutional holder, says GuruFocus, with an 11.38% of total shares outstanding. That figure is as of Dec. 30, 2017.
(Disclosure: I have no positions in any security mentioned in this article.)
