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'Top Performer in the Precious Metals Space' Continues Run

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Key Q2/19 financial metrics and upcoming catalysts are covered in a ROTH Capital Partners report.

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In a July 31 research note, ROTH Capital Partners analyst Jake Sekelsky reported that Kirkland Lake Gold Inc. (KL:TSX; KL:NYSE) "delivered another strong quarter" in Q2/19. "Kirkland Lake has been a top performer in the precious metals space over the last year."

Sekelsky presented the financial highlights from the quarter. Kirkland Lake's Q2/19 revenue was $281.3 million, above ROTH's forecast of $273.5 million. He attributed this to low costs at Fosterville and Macassa.

Yet, the miner's earnings per share in Q2/19 was a miss, reportedly $0.50 versus ROTH's estimate of $0.56. The cause was higher-than-expected costs at the Holt complex in H1/19 of $906 per ounce, a lot higher than what ROTH anticipated, which was $675, and higher than guidance of $660–680 per ounce. However, ROTH expects costs at Holt "should moderate in H2/19 as the production profile improves, resulting in potentially lower unit costs," noted Sekelsky.

The primary catalyst for Kirkland Lake in H2/19, Sekelsky purported, will be its aggressive exploration programs at Macassa and the company's Australian assets.

A less obvious, potentially positive catalyst over the medium term is activities taking place at Kirkland Lake's Northern Territory assets. For one, the company spent $49.6 million on advanced exploration work and underground development in the Northern Territory in H1/19. Two, it processed 32,000 tons through a bulk sampling program.

Given those two factors, "we believe a positive restart decision in the Northern Territories is likely toward the end of this year," added the analyst.

Sekelsky concluded, "We continue to view Kirkland Lake as a high-quality gold producer with the ability to continue generating organic value."

As such, ROTH has a Buy rating and a US$48 per share price target on Kirkland Lake, whose stock is now trading at around US$44.07 per share.

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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer . This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from ROTH Capital Partners, Kirkland Lake, Company Note, July 31, 2019

Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

ROTH makes a market in shares of Kirkland Lake and as such, buys and sells from customers on a principal basis.

ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.


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