By Charles Wyatt

There is no reason why it should not achieve this as Mark Tessier is running the mining operation, and he

has stacks and stacks of experience. He joined the company in August 2008 as vice president operations,

and was given the specific task of carrying out the two phase 36-month development plan. Under phase

one, the plan was to increase production to between 80,000 and 100,000 ounces. Under phase two, to

between 180,000 and 200,000 ounces. Mark is a mining engineer with over 30 years experience in

underground mining, including seven years overseeing the underground mine expansion project and

subsequent underground mine operations at Goldcorp’s Red Lake Mine, between 1999 and 2006.

Small wonder, then, that in February 2010 he was promoted to chief operating officer of Kirkland Lake and

made a director of the company. At the time Harry said: “Since Mark joined us in 2008, he has been playing

a vital role in helping us to achieve our objective of transitioning to an intermediate gold producer.” His feet

are now well and truly under the table and he gets rave notices from Mirabaud and Ocean Equities, the two

London brokers associated with the company.

Simon Gardener-Bond, an analyst at Ocean, points out that production has increased every quarter for the

previous 15 months, so not too much should be read into the last quarter’s results. The cause was a delay

in the expansion of the shaft capacity and the outcome, which was production at 20,231 ounces compared

with 21,542 ounces in the previous quarter is hardly a disaster. Okay, it meant that the forecast for output

for the current year had to be reduced from between 90,000 and 100,000 ounces to between to 80,000 and

85,000 ounces. But there will be no impact on the overall growth of the company. Indeed, in response to

the issue with shaft capacity, priority was given to sticking to the Phase 2 expansion rather than worrying

about the short term target. The gold price, after all, is holding up well, and during the quarter in which the

shortfall occurred the average selling price was US$1,391 per ounce. Just as important, total cash costs

continue to fall, the most recent drop showing a decline from US$866 per ounce to US$794 per ounce.

There is no hedging and cash as of a couple of weeks ago was C$51 million, even after the company spent

a record C$16 million in the quarter on capital development and expansion plans.

The expansion of shaft capacity has now been sorted. A new service hoist was commissioned a couple of

month ago, after delays caused by electrical design problems related to uneven input voltages were

overcome. The working platform required to complete final headframe work and carry out shaft upgrades

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was also installed at the same time. And a decision was made during the quarter to move forward with

other upgrade work.

This is all to the good, as the biggest obstacle to processing more tonnage has been the shaft. There are

actually three compartments, and it is the third one that Mark Tessier is bringing back into operation. Once

that happens the mine will have the capacity to haul 3,600 tonnes of ore and waste per day, compared with

the present capacity of just 1,000 tonnes, which has been something of a bottleneck. Higher production will

make the whole production process more efficient, so costs should continue to fall, provided the average

head grade stays close to the expected 16 grams per tonne mark, as against the 12 grams per tonne

delivered in the last quarter. At the same time, the overall plan put together by chief executive Brian

Hinchcliffe should also push up the resource base, to five million ounces from the present 3.7 million by the

time the second phase of expansion is completed.

To this end, the existing joint venture with Queenston Mining was expanded last August. Queenston has a

big land package in the Kirkland Lake Gold camp and has been carrying out deep exploration targeting the

South Mine Complex (SMC). During the last three years this drilling has confirmed that the SMC extends

onto the Amalgamated Kirkland property which is 100 per cent owned by Queenston. As a result it is

contributing some claims from the Amalgamated Kirkland property and from the neighbouring Kirkland

Hudson property to the joint venture, and a drift will then be driven from the 5,300 level of Kirkland Lake’s

Macassa mine south east onto the Amalgamated Kirkland property where a drilling station will be

established.

Brian Hinchcliffe saw this as the ideal way to extend the SMC to the east, while Charlie Page of Queenston

saw it as a means whereby Queenston could participate in advanced underground exploration, so both are

happy. For its part Kirkland Lake has already advanced this drift to the edge of the Amalgamated Kirkland

property, so all seems to be going well. At the same time, Kirkland Lake is also exploring to the west of the

SMC and has come up with some fascinating underground drilling results from the hitherto unexplored

western part of the Macassa property. These have included a 1.5 ft intersection grading 12.34 ounces per

tonne, and an intersection in a follow-up hole grading 6.04 ounces per tonne over 8.4 feet. These grades

are verging on bonanza levels and must remind Mark Tessier of Red Lake. Kirkland Lake is in the right

place and it has a good team. What it now has to do is regain investor confidence by under-promising and

over-performing.