KIRKLAND LAKE GOLD COM NPV (OTCMKTS:KLGDF) is a stock we have been very bullish on over the past six months. The most important part of the pattern KLGDF is how it outperformed when the dollar was holding up. Now that the dollar is locked in a downtrend, and gold is on the move higher, it is outperforming other miners during a time of strength. That’s always a good sign.
The latest catalyst for KLGDF is the company’s recent announcement of its financial and operating results for the second quarter and first half of 2017. The key highlights include growth in free cash flow to $44.8 million from $37.2 million in Q1 2017 and $23.9 million in Q2 2016, operating cash flow of $71.0 million versus $68.6 million in Q1 2017 and $40.3 million in Q2 2016, increased net earnings totaling $34.6 million ($0.17 per basic share) compared to $13.1 million ($0.06 per basis share) in Q1 2017 and $10.6 million ($0.09 per basic share) in Q2 2016, adjusted net earnings of $35.6 million or $0.17 per basic share, and revenue more than double that of Q2 2016, to $189.9 million in Q2 2017, based on sales of 151,208 ounces at average realized price of $1,256 per ounce.
KIRKLAND LAKE GOLD COM NPV (OTCMKTS:KLGDF) bills itself as a Canadian-listed gold mining company with three 100% owned operating mines across Australia.
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The Company is focused on creating substantial shareholder value by maintaining strong foundation of quality gold production, over 200,000 ounces annually, generating free cash flow and maintaining a large resource base as it executes a clearly defined gold asset consolidation strategy.
KLGDF is focused on sustainable operating performance, a disciplined approach to growth, and building gold reserves and resources while maintaining the high standards that its core values represent.
According to company materials, “Kirkland Lake Gold Ltd (KL Gold) is a mid-tier gold producer targeting +500,000 ounces in tier 1 mining jurisdictions of Canada and Australia. The production profile of the Company is anchored from two high-grade, low-cost operations including the Macassa Mine Complex located in northeastern Ontario and the Fosterville Gold Mine located in the state of Victoria, Australia. KL Gold’s solid base of quality assets is complemented by development and district scale exploration projects, supported by a strong financial position with extensive management and operational expertise.”
As noted above, we have consistently been bulls on KLGDF over the past 6 months mostly because the stock was acting like it had an edge on its market space.
Now that we have a very weak dollar and strong action in the gold market, that character of movement is really paying off for long side investors. That said, this is probably as good as it gets for the raw data when mixed with accommodating intermarket relationships. Those in long the stock have ridden along for a fantastic ride, up as much as 70% over the past 3 months. Now that we have strong results to confirm the basis for the move, it might be time for longs to put something in the bank.
Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, commented: “Both of our high- grade, cornerstone assets, Fosterville and Macassa, performed very well in Q2 2017. Fosterville achieved record production, very low unit costs and average grades well above target levels. In addition, we recently released an updated mineral reserve estimate for Fosterville, which more than doubled underground reserve ounces, came close to doubling the grade, and significantly increased the value of the operation. There also remains significant exploration upside for further growth, both through continued expansion of existing deposits, and by exploring our many large district targets in the area. At Macassa, we continued to see year- over-year improvement in both production levels and unit costs. We also made excelle nt progress with our drilling programs, having recently announced a significant extension to the South Mine Complex.”
Currently trading at a market capitalization of $2.11B, KLGDF’s cash equivalents at June 30, 2017 totaled $267.4 million, which is significantly higher from a year earlier. Higher revenue was the main driver of the increase in cash flow compared to a year ago according to the company’s recent release. As noted above, revenues more than doubled in that year as well. We will update the story again soon as further details emerge. For continuing coverage on shares of $KLGDF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next breakout stock pick!
Disclosure: we hold no position in $KLGDF, either long or short, and we have not been compensated for this article.