In a July 6 research note, CIBC analyst Cosmos Chiu indicated that Kirkland Lake Gold Inc. (KL:TSX; KLGDF:OTCQX) reported results from underground drilling in the eastern extension of the South mine complex at Macassa, which "continue to support the company's growth plans" there. CIBC increased its target price on the company to CA$31 per share from CA$26. In comparison, it is trading today at around CA$29.29 per share.
At Macassa, the company intends to finish building the #4 shaft and to reach annual gold production of more than 400,000 ounces. Chiu noted that "intersections reported today are in close proximity, or ~560 meters (~560m) south-southeast, of the new #4 shaft," the first construction phase of which is scheduled for completion in early 2022.
Chiu relayed that drilling indicated additional resource expansion as all of the extensions but two were outside of the existing mineral resource area. The high-grade ones included 241 grams per ton (241 g/t) over 1.1m true width, 24.3 g/t over 1.4m true width and 54.2 g/t over 2.3m true width. Others, within the footwall veins, included 50.7 g/t over 0.8m and 16 g/t over 0.7m.
Drilling also identified a "'high potential area' within the eastern extension of the South mine complex of high grades and exceptional true widths," Chiu said. It featured an approximately 73m strike length and 45m dip. Average grades there were greater than or equal to 30 g/t. True widths were greater than or equal to 30m.
Chiu added that Kirkland Lake, "one of our preferred gold producers," is trading below its peers but warrants a premium to the group based on its "ability to deliver attractive returns to investors." He reiterated CIBC's Outperformer rating on the miner.
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Disclosures from CIBC, Kirkland Lake Gold Ltd., July 6, 2018
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Important Disclosure Footnotes for Kirkland Lake Gold Ltd.
· 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.
