Mark Utting - VP, IR Tony Makuch - President and CEO Philip Yee - EVP and CFO Pierre Rocque - VP, Canadian Operations Doug Cater - VP, Exploration Canada Ian Holland - VP, Australian Operations John Landmark - VP, Exploration Australia.

Cosmos Chiu - CIBC Mike Parkin - National Bank Ovais Habib - Scotia Bank Steven Butler - GMP Securities Dan Rollins - RBC Capital Markets.

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kirkland Lake Gold 2017 and Fourth Quarter 2017 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. Mr. Mark Utting, Vice President of Investor Relations, you may begin your conference..

Thanks very much, operator, and good afternoon everyone. Welcome to our year-end and fourth quarter 2017 conference call and webcast. With me today are actually most of the members of Kirkland Lake Gold’s senior management team, specifically Tony Makuch, our President and Chief Executive Officer; Philip Yee, our EVP and Chief Financial Officer.

Both for our Canadian and Australian operations, we have our Vice Presidents. For Canada, we have Pierre Rocque, Vice President, Canadian Operations; and we have Doug Cater, our Vice President, Exploration. Here from Australia, we have Ian Holland, our Vice President of Australian Operations; and John Landmark, VP of Exploration.

As I mentioned, there are many other members of our management team in the room as well. Today, we’ll be providing comments on our results for the full-year and fourth quarter 2017 and providing our outlook comments relating to 2018 and beyond. After our prepared remarks, we will then open the call to a Q&A session.

The slide deck that we will be referencing during the call is available on our website at www.klgold.com in the webcast that’s provided on the home page and the Investors Relations and Events pages. Before we get started, I'd like to direct everyone to the forward-looking statements slide on slide two of that deck.

Our remarks and answers to your questions today may contain forward-looking information about future events and the Company's performance.

Please refer to the detailed cautionary note in slide two of the presentation and the forward-looking information and advisories that are available both on our website and in our management discussion and analysis for the period ended December 31, 2017.

Also during the call, we will be making references to non-IFRS performance measures, a reconciliation of these measures is provided in the MD&A as well. Finally, during the call, we will be comparing our full-year and Q4 results prior period. Listeners are advised that prior periods before November 30, 2016 -- excuse me.

Prior periods do not include our Australian operations, as that was the date that we completed the Newmarket transaction. In addition, for year-to-date comparisons, results in 2016 include assets of St Andrew’s Goldfields business, principally results from Holt and Taylor mines from January 26, 2016 on. All figures discussed today will be in U.S.

dollars unless otherwise stated. With that, I’ll turn the call over to Tony Makuch. .

Okay. Thanks, Mark, and good afternoon, everyone. Before I start, really, it’s always nice to be able to get here and talk in front of you and present some really good results.

And really that’s the -- we just get the benefit of talking about that really and that is all about the 2,000 employees and the suppliers, and all of our contractors that do all the hard work and really give us these results that we can talk about.

So, with that, maybe, I’ll just move on to thanking them and then turning -- turn over to talk about the presentation, which is I’ll start on slide four. Turning to our performance, Kirkland Lake Gold had a record year in 2017 and also turned in record quarterly production in Q4 to finish off the year.

Looking at 2017, we beat our improved guidance for production which we had -- sorry, we beat our guidance for production which we improved three times during the year. Our unit costs were very low, which helps us to generate a substantial amount of earnings and free cash flow.

We ended the year with a strong cash position and no debt, having repaid or converted our two series of debentures in the year. Also, during the year, we repurchase stock through our NCIB, introduced a dividend, doubled it in the second half of the year, and made a number of strategic investments.

One of the most important achievements for the year was announced late yesterday. Based on the exploration work in 2017, we were able to significantly grow both mineral reserves and mineral resources at a number of mine -- our sites, and I’ll get into the details of the reserve and resource update in a few minutes. Turn to slide number five now.

Production in 2017 totaled 596,000 ounces, again we just beat our guidance of 580,000 to 595,000. Production in 2017 was 90% higher than in 2016. Fosterville was a key driver to our strong operating and production performance. We started the year targeting 140,000 to 160,000 ounce.

Ultimately, we produced 264,000 ounces, which beat our improved guidance of 250 to 260. It became clear as 2017 progressed that Fosterville was a very different mine than the one we acquired in late 2016. It is a high-grade low-cost mine that generates substantial free cash flow and has a lot of growth ahead of it.

As announced yesterday, the reserves now total 1.7 million ounces at a grade of 23 grams per ton. We also have a very large resource base at Fosterville which bodes well, giving a sense how we can replace and grow reserves even into 2018.

Another important benefit of the growth we have achieved is that we should see even lower depreciation costs going forward, not just at Fosterville but even out of mines from Canada. Turning to Canada, we had growth from all three of our operating mines.

Macassa had a strong year with production of 194,000 ounces, in line with its improved guidance of 190,000 to 195,000 ounces, and 11% better than in 2016. Both tonnage and grades improved at Macassa. We achieved a very large increase in mineral resources for the year because exploration success and again this will support for future reserve growth.

Turning to slide six, talking about full year cost in 2017. We achieved our improved guidance for both operating cash cost and all-in sustaining costs. Our cash costs of $481 per ounce were in the low end of our improved guidance of $475 to $500 per ounce and were significantly better than our initial guidance for the year of $625 to $675 an ounce.

Our cash costs for the year were 16% better than the previous year and largely reflected the full-year contribution of Fosterville where cash cost averaged $264 per ounce for the year, and that’s without any byproduct credits.

All-in sustaining costs for 2017 averaged $812 per ounce, which achieved our improved guidance of $800 to $825, and was much better than our initial target of $950 to $1,000 per ounce. Going to slide seven. With record production and a strong cost performance, we succeeded in generating solid financial results for the year.

Phi Yee, our Chief Financial Officer, will get into more of the details later, but I want to briefly focus on earnings and free cash flow. In terms of earnings from continuing operations, we achieved earnings of $0.76 per share for the full-year and $0.32 in the fourth quarter.

We had a loss from continued operation related to the sale of install Stawell mine, which was sold at the end of the year and this loss is about $0.12 per share. Going to slide eight now, in terms of free cash flow. In 2017, it totaled $178 million, which is about 56% higher than 2016.

The ability of our Company to generate cash is a key competitive advantage of Kirkland Lake Gold as an investment. It allow us to invest also to achieve one of our key pillars of value creation, which is organic growth, using the existing cash and not having to dilute shareholders. Now, going to slide nine and looking at our balance sheet.

We ended the year with $232 million of cash. During the year, we made about $78 million in strategic investments. We also used $44 million of cash to eliminate our two series of convertible divestures. Most of the cash was used to repay our 6% debentures on June 30th, in the year.

Over 99% of our 7.5% debentures converted into 4.5 million common shares in December. We also used about $60 million to repurchase 5.4 million common shares through our normal course issuer bid.

The program remains in place to the end of May, and we will look for additional opportunities to repurchase stock till then, and we’ll also consider reestablishing the NCIB for 2018-2019. Finally, we used about $3.3 million to pay two quarterly dividends during 2017 and have now raised the dividend to $0.02 per share.

On slide 10 now, turning to fourth quarter. It was a very solid quarter with strong production, low unit costs, solid earnings and free cash flow. Our total production of 166,000 ounces was 56% higher than Q4 2016, and the 20% increase from the previous quarter. Fosterville produced over 79,000 ounces driven by an average grade of 21.5 grams per ton.

In Canada, all three of our mines achieve solid quarter-over-quarter growth in production, largely driven by increased tons processed. Going to slide 11, Q4 2017 costs. In terms of costs, our unit cost performance was very strong.

Operating cash costs averaged $412 per ounce that’s 23% better than in Q4 2016 and a 15% improvement from the previous quarter. All-in sustaining cost improved from the prior periods, even though we had our heaviest quarter of the year in terms of sustaining capital expenditures. Turning to slide 12.

Supported by stronger sales and lower unit costs, we achieved strong earnings and cash flow in Q4 2017. Earnings from continuing operations were $66 million or $0.32 per share, as I said previously. Free cash flow totaled $65 million, which was 42% better than Q4 2016 and more than double the previous quarter.

It is fair to say that Q4 2017 was a quarter when we as a company were firing on all cylinders. Just before, I turn the call over to Phil, I want to briefly review our 2018 guidance, which we released on January 17th. So, turning to slide 13.

At a very high level, 2018 is expected to be a year when we achieve year-over-year production growth, improved unit costs and continued strong financial performance. 2018 will be a year when we increase our levels of investment and ramp up our exploration activity, particularly in Australia.

Increased spending is a direct results of success we achieved in 2017 in terms of demonstrating the growth potential of high grade deposits. Going to slide 14 now, there are three things I want to focus on, first is production. Our consolidated guidance for the year is over 620,000 ounces.

If you look at the ranges in the different mines taking the high end low, you can see a range from 600 to 670. Basically, there is a lot of upside and our ranges, should continue to grow -- sorry, should we continue to grow our production at each of these mines.

And we don’t expect it to go down to below 620 but we definitely expect that we can beat it without having to continually change guidance throughout the year. Slide 15, the second area to touch on, involves, planned capital expenditures. Our sustaining capital will be higher than the $148 million of sustaining capital we spent in 2016.

Most of the increases at Fosterville, as we prepare to bring both Swan and Harrier zones into production. Many of the expenditures are for development, equipment purchases and infrastructure that will sustain production for many years.

I should point out that given with higher sustaining capital, we are targeting improved all-in sustaining cost of between $750 and $800 per ounce. Turning to our growth capital. Our target for 2018 is between $85 million and $95 million.

We are planning to invest about $35 million of growth capital as Fosterville which is the bulk of the growth capital we will require to achieve our annual production target of 400,000 ounces by 2020 here.

Most of the remaining growth capital will be invested at Macassa with the vast majority relating to initial work on a new shaft at the Macassa mine which will support the growth of production over the 400,000 ounces at Macassa within five to seven years. Turning to slide 17.

As mentioned in our January 17th press release of this year, we are sinking a new shaft at Macassa that will allow us to both double production and get the mine -- sorry, double production to over 400,000 ounces over the next five to seven years.

And in fact, this shaft will also provide many benefits including derisking the mine, improving ventilation and other working conditions, and supporting future underground exploration. Earlier, I mentioned the significant growth in resources at Macassa. We will discuss that more in a few minutes.

What I will say now is that we expect to be mining in the South Mine Complex at Macassa and mining back again along the 04 Main Break for a very long time. And this shaft is a very important part of our long-term strategy here. For those who may not have been -- have seen the announcement, the capital for the project is estimated at $320 million.

The project will be done in two phases. Phase 1 will involve sinking the shaft and installing a loading pocket around the 5,450 level and so having 5,300 as production level. This will cost about $240 million, and the completion is targeted for early 2022.

Phase 2, if we decide to proceed with it, will take the shaft to 7,000 feet and will cost another $80 million. It would be done by the end of 2023. And that’s considering it goes concurrently with Phase 1. We will commence production from the shaft at the completion of Phase 1 with the 5,300 at the production level.

Turning to slide 18, and the third in our guidance I want to focus on is exploration. We’re significantly increasing exploration in 2018 with guidance up to $75 million to $90 million. Of that amount $65 million to $75 million will be spent in Australia.

Fosterville, we will continue to aggressively target growth of Swan Zone as well as other key areas and looking for new Swans. We’re also going to spend about $10 million conducting exploration on a number of district targets within our large land position.

We also plan extensive drilling and development to further in the Lantern Deposit at the Cosmo mine as well as to begin exploration at Union Reefs.

We had some very good exploration results out of Lantern late in 2017, and we’re making good progress working on establishing a five-year mine plan involving higher production levels and grades for Northern Territory.

We fully expect 2018 to be another very successful year for KL Gold and will also be very important year for investment as we work towards achieving our objectives of consistent year-over-year growth and production and reaching a 1 million ounces of annual -- 1 million ounces of production from the existing mines over the next five to seven years.

I’ll now turn the call over to Phil Yee, our Executive Vice President and Chief Financial Officer, to review the financials in more detail..

Thank you, Tony. Before I get started, I just want to provide a second reminder that all figures referenced are in U.S. dollars unless otherwise stated. Also, I’d like to point out that the results for the year 2016 and the fourth quarter of 2016 have been restated to exclude discontinued operations.

Discontinued operations are related to the Stawell mine which was sold on December 21, 2017. Starting on slide 20. Tony has already mentioned many of the components of our 2017 and Q4 2017 performance. I will focus more specifically on the key elements of our financial statements. We had a very profitable year in 2017.

Net earnings for the year totaled $132.4 million or $0.6 4 per share; that is more than double the 2016 net earnings of $42.1 million or $0.35 per share. The increase in 2017, largely resulted from increased sales as well as improved unit costs, reflecting the full-year impact of our Fosterville operations in 2017.

We also benefitted from a lower effective tax rate in 2017 versus 2016. Partially offsetting these factors were higher production costs, higher depreciation and completion expenses, and significantly higher exploration expenditures in 2017.

Net earnings for the year included earnings from continuing operations of $157.3 million or $0.76 per share and a loss from discontinued operation from $24.9 million or $0.12 per share.

As mentioned earlier, the loss from discontinued operations pertains to the 2017 care and maintenance expenses, and sale of the Stawell mine in Australia on December 21, 2017.

Adjusted net earnings from continuing operations for the year totaled $149.1 million or $0.72 per share, more than doubled the $67.9 million or $0.56 per share in adjusted net earnings from continuing operations in 2016.

The exclusion of the loss from discontinued operations amounted to $0.12 per share and was the most significant difference between net earnings and the adjusted net earnings from continuing operations for the year. In addition, there was also a $10 million net deferred tax recovery adjustment, which had an impact of $0.05 per share.

In 2016, net earnings included $17.7 million of transaction costs and $9.8 million of fair value adjustments on acquired metal inventory that were both excluded from adjusted net earnings from continuing operations. Both of these items were related to the Newmarket acquisition on November 30th of 2016. Turning to slide 21.

Revenue in 2017 totaled $747.5 million, an 85% increase from 2016. The significant growth in revenue in 2017 was due mainly to an 80% increase in gold sales to approximately 593,000 ounces. The addition of our Australian operations at the end of November of 2016, had a very significant impact on the increase in revenue in 2017.

Gold sales from Fosterville totaled just over 258,000 ounces in 2017 versus approximately 19,000 in the last month of 2016. Gold sales from our Canadian operations were 3% higher in 2017 at approximately 312,000 ounces.

However, if we exclude the impact for the Holloway mine, which is put on care and maintenance in December of 2016, gold sales in Canada increased 13%, largely reflecting increased production at Macassa mine in 2017. Gold prices were not significant of a factor in terms of revenue growth.

The average realized price was $1,261 per ounce in 2017 compared to $1,234 per ounce in 2016. EBITDA from continuing operations was very strong for the year, at 356.9 million for the year ended December 31, 2017 that’s a 137% higher than $150.4 million reported for EBITDA from continuing operations in 2016. On slide 22, we put our focus to costs.

Total production costs in 2017 amounted to $288. 3 million which compared to $192.8 million in 2016. This increase is attributable to higher production volumes in 2017 due mainly to the inclusion of the Company’s Australian operations for the full-year. Moving to slide 23.

Far more significant in terms of profitability is the unit cost performance, which as you heard from Tony, was very strong in 2017. Operating cash costs were $481 per ounce sold, a 16% improvement from $571 per ounce sold in 2016. All-in sustaining costs of $812 per ounce sold were 13% improvement over the $930 per ounce sold reported for 2016.

A major contributor to the improved unit cost performance in 2017 is the contribution from Fosterville, which recorded operating cash costs of $264 per ounce sold and all-in sustaining costs of $491 per ounce sold for the full-year of 2017. On slide 24, we look at some of the other expenses in more detail.

Depletion and depreciation expense increased to $148.7 million in 2017 from $59 million in 2016.

The increase in 2017 is a reflection of the impact of the new market acquisition and the purchase price allocation exercise of the assigning fair values to mining interest and property -- and plant and equipment acquired as part of the business combination.

On the subject of depletion and depreciation, most of you have seen our mineral reserves and mineral resources news release that was issued late yesterday. It included a significant in mineral reserves and mineral resources at Fosterville.

In addition to supporting higher production and longer mine life at Fosterville, an additional benefit of the growth in reserves and resources is that the remaining values related to the Fosterville mining interest and plant and equipment will now be depreciated over a much larger number of ounces.

We’re still looking for our models but we definitely should see a meaningful reduction depletion and depreciation expense for Fosterville beginning in 2018.

Looking at another expenses, the growth in the size of our business portfolio was the primary factor leading to an increase in corporate, general and administrative expenses to $21.7 million in 2017, an increase from $10.7 million in 2016. These numbers exclude non-cash share-based payment expense.

Care and maintenance costs totaled $11.9 million in 2017, mainly related to the placements of the Cosmo mine and the Union Reefs mill on care and maintenance as of June 30, 2017. Exploration expenditures increased significantly in 2017, totaling $48.4 million, which more than tripled the $15.8 million expensed on exploration in 2016.

The increase partially reflected our growing asset base. It also illustrates the commitment we have to achieving production growth form our existing mines and the success that we have had with drill programs at our existing operations including Fosterville, Macassa, the Northern Territory and Taylor. Exploration is a success-driven business.

Based on the results from our 2017 drill programs, we are increasing our exploration budget to between $75 million and $90 million from 2018. Slide 25 focuses on the fourth quarter of 2017.

Net earnings were $41 million or $0.20 per share which compared to $3.1 million or $0.02 per share in Q4 of 2016, and $43.8 million or $0.21 per share in the third quarter of 2017.

The main reason for the significant change from last year’s fourth quarter net earnings related to having a full quarter of results in 2017 from Fosterville versus just one month in 2016 after completion of the Newmarket acquisition on November 30, 2016. As a result, I’ll focus my review mainly on performance to the prior quarter.

Included in net earnings for Q4 of 2017 were earnings from continuing operations of $65.9 million or $0.32 per share and a loss from discontinuing operations of $24.9 million or $0.12 per share that related to the sale of Stawell mine in December of 2017. All of the net earnings from Q3 of 2017 were from continuing operations.

The change in net earnings from Q3 2017 was significantly influenced by the impact of fair valuing our common share purchase warrants in Novo. In Q4 2017, we reported a pretax $17.6 million mark to market loss on fair valuing the Novo share warrants.

In Q3 of 2017, we recorded the opposite, a $19.2 million mark to market gain on fair valuing the Novo warrants. These amounts are reported in other income. EBITDA from continuing operations for Q4 2017 totaled a $103.9 million, a 6% increase from the previous quarter of $98.1 million. On slide 26.

Adjusted net earnings from continuing operations for Q4 of 2017 totaled $71.2 million, or $0.34 per share, which excludes the impact of the $17.6 million loss of Novo warrants which amounts to $0.08 per share as well as the $24.9 million loss from discontinued operations, which amounts to $0.12 per share, and the impact of the $10 million net deferred recovery, which amounts to $0.05 per share.

The Q4 2017 amounts more than doubled for $27.4 million of adjusted net earnings from continuing operations or $0.14 per share in Q3 of 2017. A 20% increase in revenue in Q4 of 2017 to $212.4 million contributed significantly to the increase in adjusted net earnings from continuing operations compared to the previous quarter.

Gold sales increased 20% from Q3 2017 to approximately 166,000 ounces, which was the major driver of revenue growth quarter-over-quarter. We also achieved improvement in both operating and all-in sustaining unit costs in Q4 of 2017.

Operating cash costs improved $412 per ounce sold from $482 per ounce sold in Q3 and all-in sustaining costs improved to $816 per ounce sold from $845 per ounce sold in the previous quarter. Finally on slide 27, Tony mentioned earlier about our strong financial position. We ended the year with $231.6 million in cash.

We no longer have any convertible debentures outstanding. And we’re a Company that generates a significant amount of cash flow as evidenced by the $178 million of free cash flow generated in 2017.

Our strong balance sheet and our ability to generate cash is a key competitive advantage, which is very important as we look to grow our production to over 1 million ounces per year over the next five to seven years. With that, I’ll turn the call back over to Mark..

Thanks very much, Phil. And now, what we’d like to do is look at an announcement that we made yesterday a little bit in a little bit more detail. I am sure many of you have seen the announcement. We released our December 31, 2017 reserve and resource update.

There was obviously a lot of work done in 2017 to both grow mineral reserves and mineral resources and that we very much like the results that we came up with.

Just at a very high level, and I’ll cover a few very high level points and then I am going to turn it over to both our heads of Operations and Exploration for Australia and Canada to give you some more of the details. Basically, at a very high level, we achieved a 36% increase in consolidated mineral reserves.

We now have 4.4 million ounces at just over 11 grams per ton, which compares to about 3.4 million or 9 grams per ton at the end of the previous year. The growth in reserves to a large extent, came out of Fosterville mine. And as many of you’ll know, we had a midyear update last year based on the success we had had, leading up to the last summer here.

Basically, what we achieved was, if we look at the full-year 247% increase in reserves, Fosterville mineral reserve now 1.7 million ounces at about 23 grams per ton, very significant increase in the grade.

Big part of that is the Swan Zone, and you will be hearing more about that in a few minutes, but we’re very excited about what we see there and we think we’re going to see a lot more. At Macassa, we replaced our reserves after completion.

But what we’re really focused on was growth in mineral resources based on the some of the drilling success we had, and we had very good increases in both M&I and inferred resources.

And based on that and the growing resource base we have across the country generally, Company generally, I would say that we were very optimistic in terms of what the future looks like with prospect of increasing mineral reserves down the road.

So, what I would like to do now is start with Ian Holland, our Vice President Australian Operations to talk to you a little bit more about Fosterville performance as well as the Fosterville reserve..

Thanks, Mark. So, stepping on to slide 30, we can see that 2017 was a transformational year for Fosterville and we were able to increase guidance multiple times during the year and ultimately produce a record 264,000 for the year on the back of the significant increase in grade.

Very pleasantly, we finished the year strongly with a record 79,000 ounces in Q4, driven by mill grade 21.5 grams per ton. Driven by the increased grade profile, we also saw a significant reduction in unit costs for 2017 with cash costs at $264 an ounce and all-in sustaining costs at $491 an ounce.

We expect to maintain this momentum going forward with production guidance for 2018 of 260,000 to 300,000 ounces and an anticipated annual production profile of 400,000 ounces within three years.

Very importantly, we’re also seeing a substantial increase in our reserves, which I’ll cover on the next side, and also in our resources, which John Landmark will discuss in more detail. Stepping to slide 31.

First point to highlight on this slide is the exceptional growth in reserve ounces year-on-year with a 247% increase to 1.7 million ounces at 23.1 grams per ton. In addition to the grade increase, there was also significant tonnage increase which is always well for mine life.

We published a mid-year reserve update, as Mark mentioned, in 2017, and the second table highlight this with a 65% increase in ounces, as a result of the successful drilling prior over the course of H2.

That key driver of the success has been the growth of the Swan ore body, which is outlined in the third table, first reported in the June 2017 update at a little over 0.5 million ounces at a grade of 58 grams, and this is more than doubled over the course of H2 to 1.16 million ounces at a grade of just 61 grams per ton.

With that I will pass over to John Landmark to discuss resources..

Thanks, Ian. Good afternoon, everybody. And just looking at slide 32, the three tables there, starting with the first table. It’s the possible resources inclusive. What you can see is that we’ve got a total now of measured, indicated and inferred the resources is over 6 million.

If you go back a year, that was probably about 3.4 million ounces, so it’s a 2.5 million ounce growth in resources in 2017. Looking at that slightly differently, there is an exclusive table in the middle side. You can see, there is still a significant increase in the last six months of the year.

And finally, the bottom table, which shows the Swan resources exclusive, you’ll notice there is some 840,000 ounces in our resource, measured and indicated and inferred. Most of that is actually contained in the inferred category. And I should just point out that the grade of a 116 grams per ton is not a typo.

For Swan, it’s quite a remarkable bid and a great ore body that we’ve got. But, we would expect the 840,000 ounces, a significant proportion of that during the course of 2018 to be converted into reserves towards -- during the course of the year.

We turn to slide 33, talk just briefly about our strategy, particularly Fosterville where we’ve got two approaches. The one is an intense exploration program within the mine lease, [ph] predominantly focused on extending the down plunge extensions to Swan but also to Harrier, and the rest of the Phoenix ore body.

And then the other approach is of course looking at our mining, our exploration lease, which is in the middle inset on the left hand side, it’s the blue outline.

To give you a sense of scale there, that’s a nearly 60 kilometers of strike length; that’s 500 square kilometers exploration lease, and we are spending some $10 million on our LODE program across the lease there.

Tony earlier referred to significant exploration as well in the Northern Territory, and that’s on the back of the success we’ve had, particularly at the Lantern project in this last year. With that, let me hand it over to Pierre Rocque to comment on the Canadian operations..

Thanks, John. 2017 was a very good year for the Canadian Operations. At Macassa, we met the top end of our guidance and set the production record slightly over a 194,000 ounces. This is an increase of 11% from last year. We’re planning a similar production increase in 2018 with resulting cash costs below $500 an ounce.

This will pave the way to achieve a yearly target of 400,000 ounces once our number 4 shaft is commissioned. The increase in production is also supported by the size of our deposit, which showed a significant improvement in mineral resources in all three categories and a continual growth in mineral reserves.

On the next slide, at the end of 2017, we added to the mineral reserves after depletion from mining activities. Macassa stands at 3 million tons, brining 21 gram per ton for 2 million ounces. I will now turn it over to Doug to talk about resources..

Thanks, Pierre. At Macassa, year-end 2017 mineral resources resulted in a 58% increase in measured an indicated resources now totaling 2 million ounces at an average grade of 17.1 gram per ton gold and a 48% increase in inferred resource ounces, totaling 1.37 million ounces at an average grade of 22.2 gram per ton gold.

These increases were attributed to successful underground infill and exploration drill programs which effectively extended the South Mine Complex mineralization for total of 259 meters to the east. Drilling also focused on the lower SMC block, which is situated on the west side of the South Mine Complex.

A total of seven underground drills were used to drill over 45,000 meters of infill drilling and 58,000 meters of exploration drilling and the majority of which took place on the SMC. This strong mineral resource base lends itself to potential reserve growth conversion in the future. I’ll now hand it back over to Tony for his concluding remarks..

Okay. Well, thanks, everyone. And I appreciate the opportunity to call. And maybe I kind of bumbled up at the beginning here when I was trying to thank everybody for their hard work.

So, maybe, I’ll end by saying again to thank our 2,000 employees and all of our contractors and suppliers for the hard work and the dedication and the results we achieved in 2017. As you can see we had a lot of success and lot of good things to talk about in terms of what was -- what happened in Kirkland Lake Gold in 2017.

And I would say, it bodes very well with what we can do in 2018 with the people that we have both in Canada and Australia in the Company. In this slide we talk about three pillars of value creation for Kirkland Lake. One is our operational excellence. And again, we had strong performance against guidance, and both for production and costs in 2017.

And we gave guidance, in 2018, we expect to meet or beat that guidance as well in 2018. From a growth point of view, we have disciplined organic growth. John mentioned about the discovery of ounces in Australia, over 3 million ounces in Australia in 2017.

If you look at that, less than $10 an ounce discovery cost and actually not just discovery but discovery and taking them to resource, and we had similar numbers in Canada, especially at Macassa at over 1 million ounces added.

And that gives you a sense that both, not only we have the opportunity to grow reserves in 2018, the exploration expenditures were -- and the development that we’re doing in 2018 is going to lead to further new discoveries, further growth in resources in 2018 which we -- supports our target to grow production over 1 million ounces per year from our existing mines.

And again, with a strong balance sheet and strong cash flow generation, we’re going to fund this strictly from inside the Company while still being able to focus on providing return to our shareholders, both through repurchasing of shares through a normal course issuer bid because we do feel our shares are undervalued and by paying dividends and potentially increasing dividends as we go forward.

So, with that, I thank everybody for listening to the call, and it was a little bit of a long call, and hopefully we didn’t bore anybody too much. And now we’d be happy to take your questions. Thanks..

[Operator Instructions] And your first question comes from the line of Cosmos Chiu from CIBC. Your line is open..

Thanks Tony, thanks Phil and team for the very thorough presentation. And congrats on a very successful 2017. Maybe my first question is on Fosterville here. Certainly, what’s driving the share price higher today is your reserve update last night. And clearly, Swan has added a number of ounces, high grade ounces to it.

On that front, could you remind me once again, when are you expecting in 2018 to get to the Swan Zone and what kind of throughput ultimately are you expecting from Swan?.

So, as to the growth that we’ve seen in Swan with the reserve update is a really a down plunge extension of the orebody. So, in terms of first production, it reminded what we’ve guided to previously and we will see in the second half of 2018 but they didn’t really start become more important player from 2019 onwards.

It sits currently at 25% roughly of the reserve base and that would vary over time..

And then just frame a few things in perspective as well. When we first acquired new market, we went and looked across with 240,000 ounces of both seven grams per ton and we did discover and add these million ounces plus at Swan zone that you see now in our updated reserve statements at very high grade.

If you look at the other ounces that are in our reserves though, 500,000 ounces with grades over 11 grams per ton. So there has been significant success in exploration here and other parts of lower Phoenix and Eagle that bodes well to some future growth there. .

So, I guess given that’s a down puncher, ultimately while I'm trying to get to do we ultimately see more ounces or more tonnage coming out of Swan depending on how big it's going to get, on a ton per day basis sort of. .

We are still really working through this, through our life of mine models. So, I don’t think we are prepared to comment on that..

And clearly as we talked about the reserves increased quite a bit; in 2018 the exploration budget is actually quite sizable as well as you mentioned $60 million to $75 million in Australia.

From that perspective, do we potentially see the same type of or same magnitude of increase that we saw in 2017 and 2018 for reserves and resources if all things go well. From that perspective how, much drilling 2018 is in-fill versus step out. .

John here, I would like to say, we would love to repeat that. We can't make any promises but a significant proportion of what you're seeing there are exit also towards the northern territory when we actually currently got six rigs drilling.

We're going to expand the size of deposits and the discovery that we made 15 months and also going to be more drilling. So, from the prospects all done. But our exploration budget is sort of evenly possibly in the AMT [ph].

A lot of what of what we are going to do in this next year will in-fill on the Swan resources and so there will be -- we are going to see a significant conversion. .

May be switching gears a little bit now and combing back to Canada, in terms of the shafts sinking project at Macassa.

Tony could you give us a bit more granularity in terms of since you made the announcement in late January 2018, how have you progressed, what kind of progress have you made and a bit more granularity in terms of the timing in between?.

[Darren Chang's], our VP of Project Development is here and maybe I'll let him give you little bit of update in terms of progress with the shafts?.

Currently we are drilling the pilot hole down to the final depths some 1,000 feet, also we are starting a figure out program on the site. The site has been pre-growth and we're proceeding to look at starting the clearing and construction. .

So, what would you start saying collaring the shafts?.

We're looking at hopefully in the second quarter of putting down the collar and majority this year is construction of the head works. .

And I guess on that front Tony when you made the announcement in late January that was not accompanied with a technical NI 43 101 technical report.

Is your plan here to publish something of a technical nature according to NI 43 101?.

Not really, we intend to think the shaft and get on the ground at Macassa and really turn this into a very productive mine. We've done some engineering estimates, we feel what we're doing it is correct in terms of building production at the mine, and we're going to progress like that.

We're going to continue to do often reserve resource update year-over-year and with that any material change or material updates in our 43 101 will that get publish will now include the shaft and the discussion of the shaft and the impact of what the shaft does for us but we want to kind of specific 43 101 or pre-feasibility study that presented or publish for the shaft..

And then maybe one last question on the shaft here. My understanding is that you are not raised for it, you want to do conventional sinking with the Galloway. Could you maybe talk a bit more about that and in that case, there is not going to be any kind of impact on your production coming from a number three shaft.

Is that correct?.

Yes, that's right. I mean the number three shaft itself we want to focus on our mining at Macassa and using number three shaft to support the existing operations and production year-over-year to help to pay the bills for sinking the new shaft.

Any kind of work that would be done from underground would require that rock to be removed using number three shaft and will displace potentially waste ore development that we are currently doing in our five-year plan. We’re going to sink it full face conventionally. We expect to see equal rates development of the shaft by setting it up this way. .

And maybe one last question from me here.

I don’t know if you can answer this Tony but as you mentioned in 2017 you improved your guidance three times how many times are you planning to improve your guidance in 2018?.

As many times as, we find things are improving. We have a culture of people that are working hard and working towards success and when we see things are getting better then we will be happy to tell shareholders we are getting better. .

Your next question comes from the line of Mike Parkin from National Bank. Your line is open..

A couple of questions.

I think I heard in there that you're expecting your depreciation per ounce at Fosterville will come down year-over-year, could you give us a sense of what's the model there, and if that's ounces produced not sold?.

In terms of the depreciation I think overall on a combined basis we're probably looking about 15% to 20% reduction overall in 2018 from 2017..

And that's from the Macassa as well or just for Fosterville?.

That's for [indiscernible] Australia and Canada. Australia you are probably looking around 25% to 30%..

And then also on care and maintenance costs to what you're keeping on care and maintenance for 2018, can you give a sense of what you would expect to the expensing or incurring in terms of total costs per quarter or year for 2018?.

We don't really have any care and maintenance costs in 2018, the work at Cosmo is being done out to support the underground exploration program, so it's really not care and maintenance, it's classified exploration, we had some minor care and maintenance that was being spent to keep Holloway pumped out in open and that's maybe a $100,000 a month or and we're not going to continue long on that but that's about it in terms of any care and maintenance.

We don't intend to keep mines in care and maintenance for very long. We start them or we close them completely..

So, for the Cosmo costs, the exploration budget is actually carrying that cost..

Yes.

Because the -- there's the people that are there to maintain pumps and fans and maintain the infrastructure, are there now to support the underground diamond drilling and there's an underground development program planned now to develop into the Lantern and provide a more close to drill platform, into the Lantern Deposit so we can explore it more effectively..

And just to get a sense of like to be able to understand when you might be active with NCIB, you mentioned that your shares to be undervalued, what do you guys look at in terms of the valuation metric, are you looking at price to cash flow, price to NAV?.

I mean we look at price to NAV, we look at what we think our NAV is, and what we think the price is, we look at what's happened to the price over time, where we think things going.

We think -- the market might think we're trading above NAV, we think we're trading below NAV, we know we're trading below NAV, our challenge is to make sure that the market understands that we're below NAV and get our share price up there, if doesn't then we'll do what we can to get there to support our shares..

Your next question comes from the line of Ovais Habib from Scotia Bank. Your line is open..

Just starting off with Fosterville obviously that was a pretty solid update from you guys last night based on the reserves at Swan, just want to get my head wrapped around in terms of how much drilling was done and what kind of spacing was drilled at, just specifically at Swan. .

Right, it's about 50 meters by 50 meters and we would look to close that to be able to bring that into reserve. .

Okay and in terms of the drilling done in 2017. .

In terms of how many meters. .

How many meters, yes correct. .

In Australia we did 150,000 you could say at least 80,000 of that was in the Fosterville..

Got it and just going to 2018 then, where will you be focusing mostly your drilling in 2018 based on those offsets you have sat Swan, are you looking for extension the Swan, the harry zone or can you give us a little bit sense on that. .

If you can refer back to slide back on slide 33, you will see there is a diagram on the right which shows in paint the proposed plans for 2019. It is mostly the extension of the Swan zones to the to the south but we also have drilling problems here and Phoenix north area as well..

Got it just we really haven't dust upon Harrier as to how the developments going on and what plan of action at that point.

Can you give us a little update on Harrier as well?.

Just from a developing perspective, we have been advancing the production decline. So, it will become a part of the production profile in 2018 and will significantly in 2019.

As a part of that development program we're also bringing in place underground drill platform to the staff and that would be the platform for the drilling programs that you see on that diagram on slide 18. .

And then when looking at 2019 then with Harrier coming online specifically in 2018 and more so I guess in 2019, is there a plan to increase a throughput that we were talking about when we were back at site in July I guess. .

That’s certainly align, so if we consider 2017, 550,000 tons or thereabout, at today's grade and all characteristics we have got more than 30% stay capacity in the processing fund.

There are alliance certainly to take advantage of that and the way we could take advantage is to open up some additional production fronts and that for realign we've stay and then we're looking others as well. .

And then just in terms of moving into 2019, obviously you guys are looking to open up some stopes at Swan and then have most of the bulk of the production coming in 2018 from Swan, how many stopes are you guys targeting in 2018 and going into 2019 to sustain some sort of production level at Swan. .

So in terms of specific data, that’s probably a little of data, that we are not in a position to provide, what we can absolutely say though is that the proportion of Swan would increase in 2019 and that the great profile in Swan it becomes high grade as you move deeper in so we would expect the grade of that to increase, so at this stage it's fair to say that we continue to look for growth in momentum in our production profile and we think that it will come from by the combination of potentially some higher grade with most Swan coming online and but also potentially tons with [Harriers debt] coming online.

.

The next question is from Steven Butler with GMP Securities..

John a question for you with respect to the November update we had on the Fosterville with respect to the Swan drilling where we have looked at the long section of semiconductor rate now where you had the 6,200-meter north line where you sort of had projected or had the [indiscernible] section down plunged.

In this resource update in particular in inferred category did you drill further down plunge with success beyond the November update that we have in the market..

Yes, Steve we have drilled further down plunge, in fact I think we've drilled as far south now about 55,000. We haven't released any results yet we think and number of sections is about 56,000 to 55,000 and 54,000..

And you are still intersecting mineralization at that…..

We strictly identified in structure but we haven't put out any your results or percentage..

Okay, guys and in the of Q4 results you released with the grade of over 23 grams I'm assuming that some mill feed would have been VG baring and therefore your metrology seems to be doing [Indiscernible] your recoveries are still not suffering any issues, so is there any -- I mean are you comfortable with the metallurgy that next that you have and with Swan being maybe 25% a feed plus or minus is that do you still think there won't be any issues on recoveries?.

We're not seeing any issues on that front, what we are doing is putting some investment into increasing the revenue circuit so if they arrival to cut with and digital component of [indiscernible] go so there is some investment relatively modest and going into accommodate that, but we are not seeing any concerns in our ability to treat the [Indiscernible].

Actually, with the gravity recovery we plan to go up almost a 50% this year from previous levels of 20% to 25% and the other thing we investing and we have to invest in because of all the [Indiscernible] increase the size at a refinery so that we can deal with more as well..

A pleasant problem to have Tony..

I wanted to make sure I understand that..

John just to clarify for me again you said the resources reached down plunged minus to what line?.

We've got some 60 to 50 that's in the resource shuts but the drilling that we are doing is probably another 500 meters further to the south but we haven't been through the dozen [ph] of resources yet. .

Okay, resources are 60/50..

Yes, that's correct..

And then last one on the Northern territory plan and the potential around the five-year mine plant, what can you do this year, can you convert some of the MNI up into [indiscernible] category reserves but what needs to be done there this year to get comfortable with the restart plan?.

Yes, I'll cover that, -- so in terms of like a couple of fronts to cover here, is what we're looking to do is to restart the northern territory not on one production center or line, so my key part of the strategy is we see [indiscernible], we got a significant interesting resource base, more than 300 million ounces, we see potential to have a large scale operation and was the case in the past, so at close not as specifically, we plan to develop across to the land nobody exposed it, but from a testing and exploration perspective, it was a [indiscernible] platform, and that'll be important step for us, but in addition to that we're planning significant [indiscernible] rates much closer to the middle where we have reserves and we expect some significant growth and we expect those to be in a broad sense to two production times, to take the project forward and finish [early]..

Do you what the [indiscernible] Lantern resource stands out today?.

[indiscernible] but I think it's about 350,000 ounces in resource at a grade of about 3.4 grams..

The next question is from Dan Rollins with RBC Capital Markets..

Tony just moving on beyond Swan and Macassa, it was interesting to note in the reserve update that you noted that you're not really doing much drilling at hold right now just given the royalty, any you had any initial conversations with the royalty holders about restructuring the royalties at Holloway to potentially get to those mines and fill that mill..

Well we've actually haven't had any detailed discussion with them, we have approached them and expressed them some that we need to do that and they've expressed that they're willing to talk, we just haven't been able to provide them with a plan but we're planning with an actual strategy and demonstrate what we're trying to do there.

So, I think going forward we'll be a little bit more proactive in terms of what's going on there.

There's lot of potential growth that hold in Holloway, we can have two stages, one we can just mine out the current reserves, that we have at hold and call it a day but we also see if we can make some significant investments in capital and development, we can grow that to well over 150,000 ounce a year producer, Holloway by themselves again and there's a large potential resource there..

And then just on to the dividend, just given how much free cash flow you were currently generating given that you have no debt and you're building cash, and you haven't even touched the Swan yet, have you started to think about what level of dividend yield you'd like to start paying out on an ongoing basis?.

Well, I mean to get there I get asked by the Board in terms of where we're going with dividend, we have some growth here and some capital that we're putting together this year, we're trying to -- we're going to be updating our five year plans and so we can understand use of capital and ourselves what we're going to do from a cash flow generation, and then we'll be able to come up with a dividend strategy, that, I could see that potentials for at least, definitely grow the current dividend and potentially even to double [indiscernible] over the next while but we need to make sure we understand that, to understand a long term outlook on the company.

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The next question is from Glen [indiscernible] Research. .

May I direct ask to Ian Holland, in downstream down slope at the Swan is would you make a generalization as to with grade it's that you had a look there down extreme down slope, it does grade and would continue to increase. .

Yes, thanks for that. In terms of the reserves that we define to which relatively consistent again three to five meters on average, so very favorable to our tax finding method. The grade profile of the reserves does increasing with debt so the fund reserve, these lower grade and lower part of the Swan reserve.

In terms of incurred resource, it’s a little early to say and there is some high grade immediately adjacent to the reserve and John touched on that before in terms of as a high immediately adjacent to it.

But the overall grade in third reserve part of Swan is 36 of these and in grams per ton as we outlined, thickness remains relatively consistent as well, it’s a pretty consistent relatively ore body. .

Thanks, one last one would you comment on the proceptivity of the targets apart from Swan where you intend to spend 10 million this year, are there lookalikes to the Fosterville, you have a vast acreage there and can you comment on the proceptivity as a generalization. .

Look, if you look at the Google Earth image of the property, you will see there is a number of open pits that are effectively inline along at least [indiscernible] of which Phoenix is just one, we have seven of those lines 60 kilometers of total property.

So, we took me grade the proceptivity as high and we certainly are looking quite aggressively of the mining lease to the exploration property. Thank you very much. .

There are no further questions at this time. I'll turn the call back over to Mark Utting for closing remarks..

Thanks very much everyone for taking time to join us this afternoon. We’re always happy when we can all being in the same place and has an opportunity to talk to market and where even happy to put up some of the results that we've done over the last 24 hours.

So, my first quarter call will be in beginning of May and we look forward to talking to you again. Thanks a lot, and have a good day. .

This concludes today's conference call. You may now disconnect..