Spotlight: Kirkland Lake Gold
Kirkland Lake Gold operates in Northern Ontario, Canada, one of the safest mining jurisdictions in the world. The Company mines one of the highest-grade ore bodies in the world at 0.44 opt (14 g/t) with massive exploration and growth potential in the immediate area.
Kirkland Lake’s mission statement is to produce gold in a safe, sustainable and profitable manner such that the Company generates a return on investment for its shareholders while providing benefits to all stakeholders with the goal of improving the lives of their employees and the residents within the communities that they operate. The Company remains true to this mission statement by considering safety, sustainability and profitability in every decision they make within the business each and every day.
Kirkland Lake operates with the core values of safety, trust, respect, equity, environmental, teamwork and social responsibility. “We want our employees to go home in the same condition as they came to work. Subsequently, safety is at the forefront of every decision we make while all meetings start with a safety talk. In the workplace we believe in trust through honesty, commitment and open dialogue and communication,” says Kirkland Lake’s CEO George Ogilvie.
“We respect everyone’s contribution no matter how small and regularly reward and acknowledge our employees when we see good results and the right behavior. More often than not it requires a team effort to get the best results. We also treat our people with dignity. All of these values are part of how I conduct myself as the CEO so that they can cascade down into the business. Environmental stewardship and sustainability is also a very important core value for us; which is highlighted in our main energy conservation program. We take our social responsibility very seriously and subsequently invest in the community and groups when the right opportunities present themselves.”
A concrete example of how these values are applied to their employees includes the Company’s improved management: “I think the management here is enjoying the new management style. I encourage collaboration amongst managers and staff, support and consider new ideas or suggestions on how we can improve. Now it's much more of a partnership and collaborative process where we determine the targets and hold ourselves accountable and responsible for our results towards our targets. And we're constantly monitoring, giving positive recognition and feedback when we're doing well, as well as addressing weaknesses through discussion and action planning.”
Among the many factors that help keep Kirkland Lake among the leaders in the mining industry is their dedication to continuous improvement. This includes raising cut-off grades and stopping the practice of mining incremental tonnage, which is mineralization not in any reserve and resource category, but previously was mined when encountered.
Something that is unique to the Kirkland Lake Gold Camp is their high reserve grade of 0.44 ounces per ton. “Prior to my appointment, mined grades were significantly below reserve grades. This was creating an adverse effect on costs and margin. Stopping this practice has increased our calendar year grade to 0.39 ounces per ton, a significant improvement over the 0.30 ounces per ton the Company was averaging prior to January 2014,” says Ogilvie.
The primary methods of achieving these particular results through continuous improvement include tighter dilution control, tighter scrutiny with onsite requests for capital (managers required to show IRR, payback and NPV’s and other justifications on capital requests), and aggressively looking at new ore sources on our existing land package to feed the mill and lower costs.
In addition, Ogilvie shared a particularly promising element regarding improved productivity through new equipment: "We're looking at productivity gains in the mine department. In some areas where we should be more productive, we ordered new electricity powered equipment from Atlas Copco. Typically, all the drilling is done with handheld drills, which operate through compressed air, which is very inefficient and not particularly effective...so once our new electric drills arrive we think in the second half of the calendar year we should see better productivity."
Kirkland Lake Gold Camp has been producing for a very impressive 100 years. One of the most recent releases from the company provided details regarding why we might be able to expect 100 more. According to the report, it included near-surface mineralization within 1,000 feet of surface of 152,000 oz. gold (104,000 oz. indicated and 48,000 oz. inferred category) at 0.35 opt grade.
“We believe this represents an expansion opportunity in the future; which could be mined cost effectively while the mill has excess capacity. Subsequently, one exploration drill is currently expanding the resource with a second doing in-fill drilling with the hope of having a mineable reserve in 12 months with plans to mine the orebody at that time. All of this could be completed with minimal capex and could be undertaken quickly once given the green light due to the near surface proximity.”
Next Phase of Development
The strategy for Kirkland is to return the mine to producing at its historical grade averages of 0.4 – 0.44 ounces per ton. The Company also plans to lower unit costs through scale and efficiencies and return to generating free cash flow. Once this is achieved the company will look to further increases output through self-funded exploration and development of other sources of ore from their current property position. “The Company’s share count of 70 million shares in issue, 83 million fully diluted permits that once the company’s production is steady state and generating significant free cash flow significant return on investment would be seen by shareholders,” says Ogilvie.
With its new business plan in place, the Company has a strong focus on higher grade. The Company expects to return to breakeven and profitability in the next several quarters. Once profitability has been returned any future uplift in the gold price will result in a corresponding uplift in free cash flow, meaning greater return on investment for shareholders. All signs point to Kirkland Lake being a solid investment.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.