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Gold Producer Boosts 2019 Production Guidance After Resource Update
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The new resource numbers and expectations for 2019 are summarized in a CIBC report.

In a Feb. 21 research note, Cosmos Chiu reported Kirkland Lake Gold Inc. (KL:TSX; KL:NYSE) released a company-wide resource update, in which total reserves expanded 24% to 5.75 million ounces (5.75 Moz).

"Overall, our net asset value per share increases to $18.11 from $17.23 on the increased reserves and guidance update," Chiu added. As such, CIBC increased its target price on the company to CA$53 per share from CA$48. In comparison, the current share price is CA$48.08.

Chiu relayed that most of the reserve increase came from Fosterville's Swan zone, where reserves doubled to 2.3 Moz at 49.6 grams per ton, surpassing CIBC's forecast of 2 Moz. Reserves also grew outside of Fosterville by 3%. At Macassa, for instance, 250,000 ounces (250 Koz) were added through conversion of Measured and Indicated (M&I) ounces. However, 1.6 Moz of M&I plus Inferred resources were removed; to supplant those, Kirkland plans to drill about 90 kilometers there this year.

Also at Fosterville, the reserve grade increased, by 43%. As such, Kirkland revised its 2019 guidance upward to a range of 920 Koz to 1 Moz at an all-in sustaining cost (AISC) of $520–$560 per ounce versus its previous projection of 740–800 Koz at an AISC of $630–680 an ounce.

The new guidance included Kirkland's decision to restart the Holloway mine. Management expects to start production there at 20 Koz and ramp it up to 50 Koz by 2021.

CIBC has an Outperformer rating on Kirkland Lake, which, Chiu noted, "remains one of our Top Picks, and we see the potential for more than $400 million in free cash flow in 2019."


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Disclosures from CIBC, Kirkland Lake Gold Ltd., Earnings Update, February 21, 2019

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Kirkland Lake Gold Ltd. (KL)

• Kirkland Lake Gold Ltd. is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months.
• CIBC World Markets Inc. has received compensation for investment banking services from Kirkland Lake Gold Ltd. in the past 12 months.
• CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Kirkland Lake Gold Ltd. in the next 3 months.

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