Kirkland Lake Gold Stock Will Move Higher After Latest Results

Kirkland Lake Gold [stock_market_widget type="inline" template="generic" color="default" assets="KL.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock has shot up in 2019 and its golden run is all set to continue thanks to the recent increase in price of the yellow metal. Kirkland Lake Gold investors got a glimpse of what stronger gold pricing can do when the company released its fiscal second-quarter results.

Let’s take a closer look at how Kirkland performed and what lies in store for the company going forward.

Delivering Impressive Growth

Kirkland Lake Gold delivered 31% annual revenue growth to $281.3 million in the second quarter of 2019. This solid growth was driven by gold sales of 212,091 ounces during the quarter, which was significantly higher than the year-ago period’s gold sales of 164,305 ounces.

But this was not the only positive takeaway for Kirkland Lake Gold investors. The company’s average realized price per ounce of gold sold increased to $1,320 an ounce during the quarter from $1,301 an ounce in the year-ago period.

Thanks to the combination of higher production and prices, Kirkland Lake Gold’s adjusted net earnings shot up 66% year over year to $105.5 million. So, there was a lot to like about Kirkland Lake Gold’s latest set of results, and the good news is that the momentum is all set to continue in the coming months.

What Next for Kirkland Lake Gold?

Kirkland Lake Gold investors can expect stronger profitability in the coming quarters thanks to further reduction in costs.

Kirkland Lake Gold expects its performance to get even better in the second half of the year. This is evident from the fact that the company has not changed its outlook and remains on track to achieve gold production between 950,000 ounces and 1 million ounces for 2019.

More importantly, the company’s operating cash costs for the year are expected between $285 and $305 an ounce, while all-in sustaining costs are expected to average between $520 and $560 an ounce. This means that Kirkland Gold expects a further reduction in costs from current levels.

This is because the company’s operating cash costs per ounce of gold sold came in at $312 during the second quarter. This was a 23% improvement over $404 an ounce in the prior-year period. Similarly, all-in sustaining costs per ounce of gold sold fell 16% to $638 during the second quarter.

As such, Kirkland Lake Gold investors can expect stronger profitability in the coming quarters thanks to further reduction in costs. This, coupled with an increase in gold prices, will give Kirkland Gold a nice boost in the coming months because the current price of gold is much higher than the average the company witnessed last quarter.

More importantly, the price of gold is on its way higher thanks to the prevailing macroeconomic conditions. Goldman Sachs predicts that gold could hit $1,600 an ounce in the coming months thanks to higher demand as investors look for a safe haven asset. As such, it makes sense for investors to keep holding Kirkland Lake Gold as it is taking the right steps to take advantage of higher prices.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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