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Kirkland Lake Gold Ltd. (NYSE:KL)
Q1 2021 Earnings Call
May 06, 2021, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good afternoon, ladies and gentlemen. My name is Jason, and I will be your conference operator today. I would like to welcome everyone to the Kirkland Lake Gold conference call and webcast to discuss the company's first-quarter 2021 financial and operating results. [Operator Instructions] With that, I would now like to turn the call over to the senior vice president of investor relations, Mark Utting.

Mark Utting -- Senior Vice President of Investor Relations

Thanks very much, operator, and good afternoon, everyone. Welcome to Kirkland Lake Gold's first-quarter 2021 conference call and webcast. On the call, today are many members of the Kirkland Gold senior management team. Speaking today will be Tony Makuch, our president and CEO; David Soares, our chief financial officer; Natasha Vaz, our chief operating officer; Larry Lazeski, our general manager for Detour Lake Mine; Evan Pelletier, our vice president of Mining for Kirkland Lake; Ian Holland, our vice president, co-lead of Australian Operations; and Eric Kallio, our senior vice president of exploration.

There are also several other members of the management team on the phone as well. After we go through the presentation, we'll open up the call to questions. [Operator Instructions] The slide deck that we'll be referring to is available on our website, both on the homepage and in the Events section. Before I get started, I would like to direct everyone to the forward-looking statement on Slide 2 on our slide deck.

Our remarks and answers to questions may contain and likely will contain forward-looking information about future events affecting our company. Please refer to Slide 2 as well as the forward-looking information section of our most recent Management discussion and analysis dated May 05, 2021, for more information. Also, during today's call, we'll be making reference to non-IFRS performance measures. A reconciliation of these measures is also available in our most recent MD&A.

Finally, all figures are mentioned today will be in U.S. dollars unless otherwise stated. With that, I'll now turn the call over to Tony Makuch, president and CEO of Kirkland Lake Gold.

Tony Makuch -- President and Chief Executive Officer

Thanks, Mark. And thanks to everybody for being on the call. I know, it's been trying times for people but at the same time, it's a pleasure to get the opportunity to give a update on how but successively better Kirkland Lake and Q1 of this year. We're going to start on slide, Slide 4, and actually getting back to just the thoughts have started off with and they these are challenging times.

But there are also opportunities and, you get to know us more and more as we go through this. And I know we're all going through COVID fatigue and it's affecting a lot of people in a lot of different ways, but a lot a lot of good is coming out of people and we really got to acknowledge the support and the, we're receiving from shareholders from communities from even the support we received from the healthy mobile health use of Kirkland Lake and -- region in north-eastern Ontario, as well as the support from the people in Australia. Also, we have to acknowledge the people that work for us, they that these are definitely trying times the families that come into work and, performing them and putting in a good day's work this time and we really appreciate all the efforts been happening and, our main goal is to maintain a safe workplace and with its there's definitely there's things constantly evolving and changing and it could be challenged, but because of the people and the support we're getting from all the people that work for us, I think, where we're moving forward, and we're winning the battle. Anyway.

And with this slide I'll begin to talk about COVID. And, in terms of a COVID-19 protocols, we have a lot of protocols, in fact, and it continued to infect us a quarter. And as well, we include new measures including much more rapid testing and data lake, we can test basically the income to our operations we can anybody can get tested within 15 minutes, we will give you the result. In terms of some of the impacts of COVID-19 during the quarter, we did have eight workers test positive, five at Macassa, and three at Detour.

In every case, that this happened to workers were fully recovered, and there's been no additional transmission of the virus on site. The five cases at Macassa were all in early March, and they were deemed an outbreak as defined by the local health unit. In response, we shipped 64 rapid test kits and over 1200 swab kits in Macassa and tested the entire workforce. The upgrade was resolved quickly with no further transmissions on site.

Just over a week ago, we had another concept of Macassa. Again, classified as an outbreak by public health and involved our near-surface ramp project at Macassa where we're developing to that near-surface or and we ended up here, overall, seven people tested positive. We did suspend the work on the project and tested all people during the period of time and project was halted for just under a week and then we had – I can't tell you that no further case is emerging, we have reason to work on this project last weekend.Turning to Slide 5. Q1 2021 was also a very important quarter for us in terms of our commitment to responsible mining.

We released our 2021 sustainability report, and immediately, we highlight a great deal of progress we the companies made both in terms of the work we were doing, and our capability around reporting and disclosure of ESG issues. Also, during Q1 we pledged to achieve net-zero emissions by 2050 or earlier, we are well-positioned to achieve this goal already being an industry leader in reducing and minimizing greenhouse gas emissions. During the quarter, as part of to follow our pledge with we made a commitment to invest $75 million per year for five years in technology and innovation at our sites in working toward looking at alternative fuels and supporting our efforts toward reducing our carbon footprint. And a big part of it is in supporting our communities.

These are three key areas we will focus on in here. And here and one, as I talked about earlier was investing in alternative fuels and energy, looking for new ways to do work that that reduces our carbon footprint, building the mines of the future by promoting automation and digitization, looking for alternative ways we understand the impact that we do at site, whether it be Macassa, or at Fosterville to find ways we can minimize that impact, we eliminate that impact or offset it in some ways. And also, I think, a big thing what we've been doing is investing in communities and investing in community, especially during the times while our focus on mental health, homelessness and addiction, senior citizen care and a big area that we feel is important in youth training and development for a number of reasons. Turning to Slide 6, we get into the results of the first quarter and returned to solid performance.

We previously indicated that the first quarter of this year was expected to be our lowest quarter production and the highest quarter of the unit cost for the year. We even put out guidance for the quarter to drive that point home. We meet our guidance for use our production and within our own sustaining costs and the beat of our guidance and even you know our own our own budgets for the quarter really reflected a very strong, strong operating performance and from the people want to work done. We really came together a lot in March.

And for the quarter we produced 302, 000 ounces. And operating cash cost of $542 an ounce and AISC $846 an ounce I'm sure everybody can read that. Looking at earnings and cash flow; the adjusted net earnings of $0.63 per share with free cash flow of $43 million in the quarter. And assuming current gold prices we fully expect to see stronger numbers for the balance of the year on financial performance and that applies that, just go to the net also replace your operating results.

We also returned just under $100 million to shareholders. This included $50 million in dividend payments during the quarter following the 50% decrease in the quarterly dividend and $46 million related to our NCI share repurchases or NCIB. Moving to Slide 7. Now, we had some key developments as well, in quarter.

We achieved additional exploration success. And in fact, we issued a press release earlier this week with new, very encouraging total results in Detour Lake. And we -- this was -- there's been a number of very good results coming out a Detour that [Inaudible] doing there. We also continue to make excellent project with our growth projects during Q1, our No.

4 Shaft project at Macassa, remained ahead of schedule. And, the multiple projects at Detour Lake had done very well. And Larry and Natasha will talk a little bit about that later on in terms of some of the progress there. Also, we issued a new technical report for Detour at the end of the quarter, it outlines a very attractive project that we expect to improve upon going forward, may need some support and by what we're going to live with a drilling and come up with an updated resource and reserve.

But even if you go to that, look at that, with that report and our projection now for the next five years, production in 680,000 to 720,000 ounces a year and then growing to 800,000 ounces a year, that report does show in-depth and for while you go through a low grade cycle and extra stripping for a year and a bit, then we grow production over 900,000 ounces a year in that report, part of what we're going to do, we're going to work on with an updated resource and reserve estimate that we expect to come at the end of 2021 going into 2022 and updated my plan is working toward maintaining that and once we get the 800,000 ounces a year to try to minimize that trough or eliminate that trough and see a way to move forward we have been permitted to process that through 20 million tonnes per year in our current forecast, we just see ourselves getting up to 20 million tonnes per year. Anyway, still on Slide 7, there's also a few things that maybe I can emphasize as well. And I think, there's lots of excitement. But in terms of Kirkland Lake Gold, we think we're definitely uniquely positioned to perform very well going forward.

And why was that? Why would I say that? Well, we have we haven't completed Q1, we are now poised to have three very strong quarters over the balance of 2021. We were on track to achieve all of our 2021 guidance. And we have a number of catalysts coming that we believe have rerate potential to our valuations. And to tell you a little bit more of that what I mean by that.

The Detour Lake on Slide 8, I did give some discussions on the technical report. And in terms of what it was doing, and as I mentioned, part of us going forward is we see as not only is this a very good project now, and very definitely be positioned for significant cost reductions and, and significant levels of production for quite some time, quite a lot limelight. But as you can see, we were as I mentioned earlier, we expect to be able to come up with a definitely an improvement to this as we go forward into 2022. On Slide 9, value creation you see, and this is supported with some of the expiration results that continue to come out.

And this slide here, as shown, is taken from that expiration press release. Eric will give a little more color on it. But you can see what the drawing and what's happening both in terms of extending the resources, the sort of mineralization, both to the west through the Saddle zone between the potential of the current Main pit and both potential or the future West pit. But also you can see that the mineralization we identified at depth, both current resources and reserves add to the main pit and the resources and reserves that as the West pit, future West pit and then for the West and I can say on this on this long section, it also shows the bottom of the old mine workings from the Detour Lake underground mines.

And this is this is basically demonstrating over four maybe four or a five-kilometer surface-long section. And the potential for – we have seen 30 million and 40 million ounces of mineral inventory of mineral resources above 700 meters. They've been -- almost no testing of below the 700 meter level below the old underground mine that was as Detour Lake and we haven't even found the ore body yet. So I think there's a lot of upside in terms of Detour.

Turning to Slide 10, I've already mentioned that the No. 4 shaft project at Macassa is going very well. It is really the key point is that it will mean when shaft would have been is done, we're talking, we've been talking for quite some time that this shaft will be very transformed into Macassa. Fundamentally, we're building a new mine at Macassa.

And as we see you've been sort of, by Q4 of next year of 2022, we'll be able to start taking advantage of the shaft. And with the new shaft will allow us to grow production, where we're targeting to grow production over 400,000 ounces by 2023. But it's going to improve working conditions in the mine, improve ventilation in the mine, it will improve productivity, we, this shaft alone will be over 4000 tonnes a day. We, if we go back to the No.

3 shafts by selling around 2000 tonnes a day or capability 2100 tonnes a day capability, but we -- 4000 tonnes a day with this new shaft. We still have the old shaft to help us in terms of doing that we see that this, the combination of improved working conditions, improve shaft productivity, will improve our unit cost substantially, easily bring in all staining possible of $600 per ounce. And very importantly, facilitate a whole new chapter, because it's been a greater on exploration platforms underground if you go back and explore the Kirkland Lake camp. Kirkland Lake camp is 100 years old.

And a lot a lot a lot a lot of work now, over the 100 years in terms of gold production, but when you look at in terms of what we have, it's just as exciting. It's almost like a discovery in [Inaudible]. Turning to Slide 11 now. Many of you know, we also make changes at Fosterville in terms of reducing the production in Swan Zone and drilling throughout the mine while we executed drilling programs.

In terms of that, there's two key points I'd like to make. First, that anywhere between 525,000 ounces per year, with cash costs between $200 and $300 per ounce. Fosterville will still remain a very profitable mining impact and, we expect to continue to be one of the most profitable gold mines in Australia. And really, definitely intend to talk globally.

Second, and most importantly, we continue to believe that there is very attractive exploration upside if possible. That's why we're investing in our $90 million of exploration this year. Looking at a share price, we firmly believe that there is nothing in our valuation today for future exploration success, if possible. With the exploration program, we are completing the multiple targets we have to drill all containing course with the goal of providing the, still, they still have a gold system here.

We think there's this there's the demonstrated, created value in perfectly Goldman's password expiration and the diamond drilling. And we see going forward, that there's still lots of value creation to come from Fosterville. Turning to Slide 12 and just to summarize, before I turn the call over to David, we believe Kirkland Gold is very well positioned right now to outperform. No.

1, we are poised for three strong quarters of performance this year. And we expect to lead to a very strong 2022. We are on track to meet all of our 2021 guidance. We just issued an attractive technical report for Detour lake and we'll be issuing a new one in 2022 that we believe will establish Detour Lake as one of the world's premium gold mines.

We will effectively be opening a new mine in Macassa this year leading to higher production, lower unit costs, increased profitability, and very attractive exploration upside. And we are drilling extensively at Fosterville and willing to successfully targeting very accretive to our share price. I'll now turn the call over to David Soares, chief financial officer, to give you a little bit of highlights on the financial results. Thanks

David Soares -- Chief Financial Officer

Thank you, Tony, and good afternoon everyone. I will be starting on Slide 13. In Q1 2021, adjusted net earnings totaled $167.8 million or $0.63 per share. The difference between the adjusted net earnings per share of $0.63 and net earnings per share of $0.60 in Q1 2021 was mainly related to the exclusion of the hold complex asset impairment charge of $6.5 million and $5.7 million of non-cash foreign exchange gains reflecting the strengthening of the Australian dollar against the U.S.

dollar during the quarter. In addition, non-operating site costs of $4.2 million incurred at the hold complex, NNP, which are not reflective of our operations; and COVID banking-related costs of $2.9 million mainly at Detour Lake related to the introduction of rapid testing are also excluded from adjusted net earnings. Depreciation also had an impact on the quarter. We will go through depreciation and depletion expenses in more detail in subsequent slides.

Turning to Slide 14, in Q1 2021 the total revenue is $551.8 million, the change from Q4 2020 is mainly impacted by decreased sales volumes and the 87 per ounce decrease in the average gold price, compared with Q1 2020 of 202 pounds increase in the average gold price from $1,586 to $1,788 accounted for $55 million of the revenue growth year-over-year offset by a decrease in the ounces sold. Looking at the EBITDA on Slide 15, Q1 2021 EBITDA totaled $340.9 million. The change from Q4 of 2020 primarily related to a 20% reduction in revenues impacted by lower volumes and lower gold price, higher production costs reflecting higher milling and consumable costs at Detour, an increased mining rates and milling costs on Macassa. Compared with Q1 2020, the change in EBITDA was largely driven by $72.9 million of foreign exchange gains in Q1 of 2020, resulting from a strengthening of the U.S.

dollar -- as well as higher production costs, mainly reflecting three months results from Detour Lake in Q1 2021 versus two months in Q1 2020. All this is partially offset by $33.8 million of transaction costs related to the Detour acquisition last January 2020. Depletion and Depreciation totaled $104 million in Q1 2021 compared to $121 million in Q4 2020. As discussed on our fourth-quarter results call, depreciation in the fourth quarter of 2020 was impacted by a one-time adjustment of approximately $10 million resulting from purchase price allocation adjustments on inventory at Detour Lake.

The remainder of the change from the fourth quarter in deprecation is mainly due to lower sales loans. For the balance of the year, we expect depreciation to remain at levels similar to the last few quarters, excluding this one-time adjustment. Turning to Slide 16, to look at our cash balance and cash flow. On the slide you will see that our operating cash flow was strong.

We generated $272 million of operating cash flow in the quarter before $64 million in cash taxes paid in the quarter. During the quarter, we invest in key assets, spending $165 million capital as well as $1.6 million on strategic investments, and receive $2.8 million from the sale of investments in the quarter. Cash used for financing activities of $98.2 million reflected the $46.3 million we used to repurchase shares in Q1 as well as $15.3 million used for payment on the Q4 dividend. Moving to Slide 17, it looks at the change in cash in a slightly different way.

You can see that the largest contributor to growth in cash was our operations, which generated about $294 million of cash, which is before income tax paid of $64 million. Growth capital investment of $46 million exploration spending $42 million. Other cash outflows include costs incurred at our non-operating sites at the NTN hold complex of $10.2 million and corporate G&A of $14.9 million. As noted in the previous slide, during the quarter $96.6 million was returned to shareholders through share repurchases and dividend payments.

The $56 million in other largely reflects payment of AP balances at year-end. Next, I'll turn it over to Natasha Vaz, our chief operating officer.

Natasha Vaz -- Chief Operating Officer

Thanks, David, and hi everyone. Ok, so starting on Slide 18. For the first quarter of 2021 Detour Lake produced 147,000 ounces, which actually exceeded our target levels because of higher than planned average grade for the quarter. Also, the [Inaudible] 27 million tonnes that we progress in Q1 2021 was a record level for first quarter content.

On March 24, this year, we actually achieved a very a new day to record at the processing plant of over 3000 tonnes yield. So we're moving in the right direction. Alright, so now looking at unit costs, operating cash costs average $748 an ounce for the quarter. This increase in operating cash costs per ounce sold compared to Q1 last year largely relates to a stronger Canadian dollar in Q1 2021 as well, we incurred the highest stripping and milling costs this quarter.

The increase compared to Q4 last year, so that mainly reflects higher low maintenance costs and higher costs for consumables such as diesel this quarter. For all-in sustaining costs, per ounce, sold Detour, averaged $1,064 an ounce which was down from the previous quarter, reflecting lower different stripping costs in sustaining capital as well as lower expenditures relating to the tailings management. I'll now call on Larry Lazeski, our general manager of Detour Lake lead the projected growth in Q1

Larry Lazeski -- General Manager, Detour Lake Mine

Thanks, Natasha. So looking at Slide 19 as Tony mentioned earlier, we have an array of projects ongoing at Detour Lake which support the vision for the mine. Growth capital expenditure in Q1 2021 stood at $27.8 million. This includes $14.9 million related to deferred stripping in Phase 4 and the maintenance.

The remaining $4.9 million is related to the procurement and mobile equivalents and projects involving Kirkland's management area, process plants enhancements, as well as construction of the new assay lab and airfield. We're fully mobilized and I've already done work on the tailings dam with an earlier start than in years. As for the process plant enhancements, we're on track to accomplish our objectives for this year but support our ramp-up plans and then finally mine plants. This year focuses on crushing CIP and detox circuits.

Initial surface infrastructure projects including new core shaft, fuel maintenance contract, plant expansion, improved access roads and cell tower construction. The state of the art communications improvements initiated this year will support our investments in technology for years to come. So that's all. I'll turn the call back to Natasha.

Natasha Vaz -- Chief Operating Officer

Thanks, Larry. Ok, so turning to Macassa I'm speaking to Slide 20 production in Macassa in Q1 2021, with just over 47,000 ounces at an operating cash cost of $699 an ounce and a defending cost of $947 an ounce. The change in production from Q1 of last year reflected a lower time to progress while the change from Q4 2020s is mainly due to lower plan grades during Q1 2021 as a result of mine sequencing. The increase in operating costs compared to both prior periods, it largely reflected higher operating times mine in Q1 2021.

And this is in terms of both ore and lease. We also had increased maintenance costs related to mobile mining equipment and processing. As well we have the impact of a stronger rotating dollar. As mentioned AISC per ounce sold average $947 an ounce in Q1 2021, which was largely unchanged from the previous quarter or higher operating cash costs were offset by lower sustaining capital expenditures.

The sustaining capital totaled about $9.3 million in Q1, reflecting the completion or near completion of the number of projects during Q4 2020. We also had lower levels of capital development in this quarter and we also revised the timing of delivery of new mobile equipment. Ok, so I'll now ask Evan Pelletier, our VP, Mining, Kirkland Lake to look at our project for Macassa.

Evan Pelletier -- Vice President, Mining for Kirkland Lake

Thanks, Natasha. Looking at Slide 21, we had a very good quarter in terms of our projects. As Tony mentioned earlier, we continue to make excellent progress on the shaft, for shaft advancing approximately 750 feet in Q1 and reaching a depth of 5000 feet by the end of March. Another project where we made good progress was in Q1 was our ventilation expansion involving the development of two new vent raises.

The first raise is targeted for completion by the end of this quarter, with the second expected to be completed in the first half of 2022. The two new raises will almost double the ventilation going into the mine, dramatically improving working conditions. We achieved a major milestone on the vent raises on Tuesday this week; we hope to resurface with the first raise. These raises are significant and that they will be two of the longest raises ever completed for mine in North and South America, extending over 3300 feet.

So to provide some context on that, that's twice the height of the CN Tower. I'll now pass the presentation over to Ian Holland, vice president co-lead of Australian operations.

Ian Holland -- Vice President, Co-Lead of Australian Operations

Thanks, Evan. Good evening and afternoon, everyone. I'll be speaking to Slide 22. Fosterville produced just under 109,000 ounces in Q1 2021.

That compared to approximately 160,000 ounces in Q1 2020 and 164,000 ounces the previous quarter. The change from both prior periods, mainly the result of lower average grade consistent with our previous and standard playing to reduce production in the Swan Zone by increasing mining activities in other areas of the mine. The intention is to create a more sustainable operation over a longer period while I continue the extensive exploration program. Production in Q1 2021 exceeded plant levels mainly reflecting greater performance in the Swan Zone in March.

The Swan Zone accounted for 42% of tonnes milled and 72% of ounces produced in Q1 2021, compare that to the 62% and 93% respectively in Q1 2020. Looking at costs, operating cash costs in Q1 2021 were $228 while all-in sustaining costs of $423. Both measures were higher than in prior periods, with the key factor driving unit cost performance for an impact with a lower grade on sales volume. In addition, compared to Q1 2020, we also had significantly higher terms mined and milled.

[Inaudible] to reduce grades with increased throughput levels. So those are foreign impacts given the strengthening of the Australian dollar we've contributed, particularly this last year's first quarter. I'll now pass the presentation over to Eric Kallio, senior vice president, Exploration.

Eric Kallio -- Senior Vice President, Exploration

Thank you, very much, Ian. And good afternoon, everyone. Thanks, Ian. And good afternoon, everyone.

My first slide today will be No. 23. And related to Detour where we're continuing to advance the large scale program commenced in 2020 to evaluate resource potential surrounding the main and future West tips. As previously announced, the program includes a minimum of 250,000 meters and aiming for an updated resource and potentially expanded mine plan for an announcement in early 2022.

In terms of progress to date, we believe it's been going very well, with close to 70,000 meters of drilling completed in 2020, another 60,000 in Q1, and things still proceeding very, very well. Additional to this, we've now had -- we've now already seen quite a large number of assets return and had five press releases, including one earlier this week with results that we believe are very, very urgent. Summarizing some of these results is the image on the current slide, which is a long section from the latest release, and is indicating 40 new zones, which are mainly from Saddle zones, but with a number of others from both under into the West and the future West tip. Although all areas continue to look very good, we're especially happy with what we see in the Central and East part of the Saddle where drilling continues to intersect broad zones in our addition, a very good open fifth grade with higher grade topping it all.

Significant results further central in these areas are shown on the image with pink and green dots, and as indicated, include a number of outstanding intersections such as 1.13, over 155.1, 2.03 over 73, 9 over 13, and 31 over 5, all from the lower part of the current resource scale, as well as 1.08 or 56, and 0.9 over 103 meters from areas very close to surface. Additional to the block, we also saw some very good results nearby to the future West tip where again, the intersections not only demonstrated very good listing grades, but extension mineralization to depth and to the West. Key results from all tests in the depth are shown on the image in blue, and include intercepts such as 2.94 over 51.9, 2.37 over 36 meters, which intersect the Central part of the area, between the 25 and 50 meter level below the current pitch. You also have 2.26 over 21, and 1.04 over 46.9 on the East side of that pit area.

Keyholes to the West are highlighted here in yellow, and as indicated not only confirm strong validation up to 400 meters in this direction but include a highlight hole of 10.66 grams a ton over 13 meters. And some of the work to Detour continues to judge very well and argue proving our initial theory that there's a much larger goal system here than previously thought. So now turning to my next slide, Slide No. 24.

You see an image for the Macassa mine, which outlines the overall exploration plan for '21, as well as progress for Q1. As announced in the past, we're aiming for a minimum of 150 to 300,000 ounces, to replacing Macassa's mine this year and there's going to be some like broad areas but strongly [technical difficulty] of the current resource shown here in orange, as well as implemented break to the south. These are all high potential target areas where we've always had a lot of success in the past. And we're very optimistic again this year.

Additional to this, the plan includes work on a number of new areas on 34, 51, and 58 levels, where there's been not been any recent work, and our view has a lot of new potentials to add. Work on the 15th level will be done mainly from a new grip being developed for access to the No. 4 shafts and targeting both the up diff extension of the SMC, as well as the west part of the main break, where we announce high-grade intercepts and the new highway corridor 30 last year. Work on 34 will be from adrift just south of No.

2 shafts and testing for extensions of the main break, which is shown here in the dark blue in the background. And as well as looking for new structures, which could be above in parallel to the mine complex. And the work on 51, which is on the far left side of the slide there will be from a new drift, which we're going to be developing this year and extending west from three-shaft. So in this area, what we'll be targeting is really the downtrend extension of the main break.

So again, the larger the new structure, which you see on the slide here. And this area is going to bring us out past the previous limit of path mining, where there's very little happy. Aside from this we have a small amount of work both on surface and in the new service ramp where again, we still feel there's a lot of areas that have not been fully tested, and a lot of untapped potential. In terms of progress to date, I believe it's been going very well.

The 46,000 meters of drilling completed in Q1 and a lot of this focused on the SMC. But what some small amounts on 34 and 58 already started. We also accomplished about 450 meters the development with good portions of this being completed to gain access to the new targets on 34, 51 and 58. Although no results to report today, we see good progress being made so far.

And we've been confident for success in 2021. So now, I'll turn into my next Slide, which is No. 25. We should see an image for the Fosterville mine area and outlining the expiration plan and recent progress here in Q1 as well.

And as with Macassa, program here is aiming to at least try and replace -- all mine in '21, which is in the order of both 450,000. As indicated, the plan includes work on a number of different targets, with most of the focus being on the lower part of the Fosterville mine and the Robin's Hill Area, with remainder being on a series of new what we believe are very interesting targets lying to this area. Work at Fosterville will be all from underground involve drilling and strong focus down plans of the Swan Zone to both convert and expand the current resource. As you know this is a very high potential area we already have, we already have widely spaced drilling indicating that the system extends for at least another 900 meters down plunge and with locally higher grades and physical gold.

So we're putting a lot of emphasis on this. Some of the work was planned for existing drifts near the upper part of the zone and already in progress in Q1. But the largest part of this will actually be from a new hanging ball drive, which is being developed near the 3900 level and aiming for completion in mid-June. So as such, most of the new results from this drilling, which we believe will be quite positive will only become available to us later this year.

Work at Robin's Hill will be done mainly from drilling from surface, but expecting to do at least some drilling from underground platforms in our new exploration drive, starting sometime in Q3. And as with Fosterville, the drilling will be strongly focused on the area down plans of the current reserve. We already have seen some good success, but believe there's a lot more potential for ounces and higher grades. In terms of progress to date, work has been proceeding well against and accrued over 39,000 meters of drilling into key targets at both Fosterville and Robbin's Hill.

We also have 1.8 kilometers of development on our two main exploration drives at North Phoenix and Robbin's Hill. So in summary, I think we had a pretty good overall quarter for exploration, and still be feeling very confident on achieving our goals for 2021. With that, I will now pass the call back to Tony.

Tony Makuch -- President and Chief Executive Officer

Hey, thanks. Thanks, Eric, and thanks to Natasha and Larry Lazeski and Ian and Mark for supporting this call, I hope maybe by giving you a variety of speakers, we keep every interested. Anyway, I'm just going to summarize on one Slide 26 and maybe want again no, I think if we just keep things in and very shortened, that's in terms of what the highlights are for the quarter. It wasn't a very strong solid quarter from our perspective.

We've beaten any of our own targets for the quarter. We are now placed the three very strong quarters over the balance of the year and we're on track to achieve all of our full-year 2021 guidance. And we see, where projects coming on this year in 2022, being very strong. The year 2023, having a lot of developments and maybe you'd see a lot of upsides as we continue with the company forward.

But very importantly, we are well-positioned and coming out of the end of Q2 to outperform a peer group in the coming months and really based upon a number of 23 points. One is, we've had we continue to have significant success at Detour Lake. And we really believe that Detour we're going to be a benefit -- Detour is one of the premium deferral amount in Auckland in North America and definitely in the world. And we'll be demonstrating that over the next while.

And the two, we have to really progress with the No.4 shaft at Macassa, combined that with exploration operating success and operating growth where we are going to be creating a new mine with significant upside. So, we see Macassa as being coming into 2023 is one of the most one of the top 10 in terms of the largest underground gold mines and that was once again one of the most profitable gold mines in the world. And No. 3 with our expensive exploration program at Fosterville, we see we have a refractive exploration upside wind and then had in terms of being able to demonstrate.

And Fosterville is already one of the best gold mines in the world. With the exploration success and new discoveries and mineralization of Fosterville, which there are all things clean to it, we'd be able to demonstrate long-term sustainability at Fosterville as well. So, we have three solid projects, very profitable company, cash flow generating and we're focused on responsible mining and really being able to be leaders in terms of moving forward, in terms of in a change and supporting a lot of change and lots brought for the communities that with there we working so. And we thank you again for participating in today's call and we're happy to take any questions.

Questions & Answers:


Operator

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

Cosmos Chiu -- CIBC World Markets -- Analyst

Hi, thanks, Tony and Ian. We're not maybe my question is on cost. There are nowadays some concerns about the inflationary cost in the mining sector. With a big project like shaft No.

4, are you seeing any kind of impact in terms of higher input cost and how are you managing that risk. And I guess if we can talk about the strengthening Canadian dollar as well. In this case, it might actually help if you're making any purchases in U.S. dollars.

But could you talk about inflation and how do you manage that risk for big projects like Shaft No.4?

Tony Makuch -- President and Chief Executive Officer

Yes. I'll start and probably that cash and aggregate that a little bit of color in terms of some of the things they're seeing and same as even and to be in Macassa. But you first off at Shaft No.4, I mean that project has been ongoing for quite some time. A lot of the procurement it's been done.

We that you're correct that there is inflationary effects and there is extra cost associated with a lot of things we you're coming out and learning how to live within this pandemic type environment and these processes. But for the most part, the number, the No. 4 shaft since the scope is defined since there is a lot of low cuts in the project is where you find we don't see ourselves going over budget at all of that. And Macassa, in terms and schedule in terms of completing that.

We are seeing new impacts in fuel costs etc. It'd be better if I let Larry, and Larry and Ian and Evan give some color there. I don't know, Larry you want to get into the thoughts and would you see some cause happening?

Larry Lazeski -- General Manager, Detour Lake Mine

Yes. We're seeing an impact, I guess with some other consumer bones. I want a particular seeing it'll increase the price up sure. It's for a limiting of each or anything it becomes I know the high volume as we move.

We're seeing a slight I guess increase some maybe some things like steel and parts like that. But again, a lot of the activities and pairs with we have ongoing students here in it, part of explorations. Unfortunately, we have the older DropBox moving and we'll have a contract unit in place. So, won't really impact it that way.

But there is some pressure but are going to the material at Detroit.

Tony Makuch -- President and Chief Executive Officer

Ok. And I think, definitely that the strengthening of both Canadian and Australian dollars has offset some of the impacts in some of these areas. Any color, Ian from Australia?

Ian Holland -- Vice President, Co-Lead of Australian Operations

Yes, thanks, Tony. Look, we haven't really seen strong per share across the board, in Australia he's died. And once your time is Larry, we've got a number of long-term contacts in place for a lot of reaction seen the most. And apart just sitting and therefore a goddess where will bite some stronger conservative numbers and all there is any of our exit tracks and Scott, we enter into some of in.

sorry, that's it's not sort of money concern of that like is a mistake. Certainly from the library, when the life at point-of-view, we are not saying any significant increases in terms of lightweight plus Indexes or anything of that?

Cosmos Chiu -- CIBC World Markets -- Analyst

Great, thanks, Stephan. Sorry, Tony.

Tony Makuch -- President and Chief Executive Officer

I'm just to say and for the most part like if you can see we're not really destiny of our cost guidance. So, we see and think something manageable as we progress throughout the year.

Cosmos Chiu -- CIBC World Markets -- Analyst

Ok, understand. That's the only question I have. Now should keep Mark happy. So, thanks again.

Tony Makuch -- President and Chief Executive Officer

Thanks. Thanks, Cosmos.

Operator

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

Ovais Habib -- Scotiabank -- Analyst

Thanks, for bringing in. Hi, Tony and the production team, and thanks for taking my questions. A couple of questions from me. Just starting off with the performance you had in March, and obviously, it was a pretty strong performance that you've been talking about.

Any color you guys can provide on whether this performance continuing into April?

Tony Makuch -- President and Chief Executive Officer

Natasha, you want to give some color in if that's ok?

Natasha Vaz -- Chief Operating Officer

Sure, no problem. So, with respect to March, we had a pretty strong March, and into the Detour like I mentioned the throughput was up. And that's the function of the commissions we had pretty mild winter, so maybe we got with both mine and the mill better than expected than we had. So, could I help with that again? And then Fosterville, I think we'd have to mention it, but we had a still that how performed but being had originally planned to what makes a very positive by conservation on that end.

And in terms of April, in the Q2 we did expect as I mentioned, I think we had a route, we were playing to have in Q1 that was a big quarter, the next big quarter we're expecting to be better it's going to be more weighted to the second half of the year. So, we expect to have a strong [Inaudible]. In terms of Macassa, we're seeing good productivity reach there with months and some good reconciliation.

Ovais Habib -- Scotiabank -- Analyst

Ok, thanks, Natasha. And I'm just going to follow up on that regarding Detour. Detour's grade was higher than average in Q1, what we were expecting in Q1. Was it due to faster reconciliation or was this just the fact that you moved into a higher grade area during the quarter? Essentially I'm asking is that have you moved into Phase 3 from Phase 2?

Natasha Vaz -- Chief Operating Officer

And we're in Phase 2 right now, but to obviously mind more, we put more out of the pits and what we had planned and have to move more so, we were able to, it's a bit of both, honestly say. I would take 50/50. We had a very positive reconciliation, but we also were able to bring up higher grade material than we had forecasted.

Ovais Habib -- Scotiabank -- Analyst

Ok, thanks, Natasha. I'll stick with my two questions and jump back into the group.

Operator

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

Mike Parkin -- National Bank -- Analyst

Hi guys, thanks for taking my questions. One would on the new rate -- now on the situation where the challenge you had last summer with high-temperature rate side -- where you could access safely underground from a heat perspective as kind of thing of a past, so you got that Q3 kind of de-risked?

Tony Makuch -- President and Chief Executive Officer

It's definitely going to help, it's helping as we speak, yes it's absolutely going to provide more air and cooler, air down there. So the rates actually extend always down the 5,600 so just two legs, but the longest leg is 3,300 feet. And there is a parallel rate at that ongoing rate now, hopefully, you can get that and then -- and that's another step change and then once the shaft is connected that's a third -- and step changes.

Mike Parkin -- National Bank -- Analyst

Super, I appreciate it. And then, just on the investments being made on the ESG front with the goals being toward net zero, is there any thoughts around detour maybe using an in pick conveyor to one of the number of trucks you're using, is that something that might be considered for the new plan, especially as you -- if you're going into the west pit, you're moving further away from the pits, seems like it could be a big opex savings tip?

Tony Makuch -- President and Chief Executive Officer

Yes, I mean, good point, we're looking at the variety of alternatives and that's one and the cash vary even provide some supporting -- vary on that.

Unknown speaker

Yes. As part of that initiatives, we're looking at a number of options, we're looking at conveyors, we're looking at trolleys as well. Yes, so we're in there, we're just starting off, so there is still a lot of work we need to do on our end.

Yes, for sure. All those things looking at, can we put in more material in pits and I've [Inaudible].

Tony Makuch -- President and Chief Executive Officer

And that's one area where it can be taken to pit whereas a point in time when you start putting, selling back into the pit as you move through east or west. But there is a number, there is one big initiative for this year, just getting by private area network the partnership we have with Rogers Communication up in the region and being able to start advancing -- use the technologies and be able to look at a lot of ways to really transform above operations.

Mike Parkin -- National Bank -- Analyst

Great, just one last question. The 75 million you're planning to spend on those initiatives through the next several years, how should we think about that going through, it would be all capitalized or it's going to different buckets on the financial payments?

Tony Makuch -- President and Chief Executive Officer

Go ahead David, in a variety of areas, some of it -- not already in the budget, but David will get you -- can answer that.

David Soares -- Chief Financial Officer

Yes. That is already incorporated into our guidance numbers, there is a large influx in the technology and this is my version of it that is focused on growth. And so, I'd say a little bit mixture of a bucket, but we're focused on growth.

Mike Parkin -- National Bank -- Analyst

Super. Thanks, that's it.

Operator

Your next question comes from the line of John Tumazos from John Tumazos Very Independent Research, your line is open.

John Tumazos -- John Tomazos Very Independent Research -- Analyst

Congrats Tony and the gang on the good work, I got to stick to two questions, so I can move from the jersey short. First, thank you for disclosing great tons and answers by zone. It looks like heavier and lower Phoenix more than doubled their tons from a year ago and their gravy grows from 9.4% to 9.6% or 9.8%, so some real goods happening in the new stopes at a faster go, like you to elaborate on that first? Then second, the whole No. 103 that was the first line of the press release on Tuesday, I understand the great result that there were 9 grams over 13 meters.

The other 141.6 meters, your Algebra works out 0.397 grams to get to the 1.13 grams over 155 meters, so was the 146.1 a mistake, or do you have to take that out at 0.397 grams because it's between 350 meters and 400 meters in the pit and you're going to have the world's biggest stock power from 2040 to 2045 or 2050 of 0.4 material?

Mike Parkin -- National Bank -- Analyst

Eric?

Eric Kallio -- Senior Vice President, Exploration

That's pretty done. The 9 meters over 30 meters is likely the whole 103.

John Tumazos -- John Tomazos Very Independent Research -- Analyst

Now I've got the numbers, the first sentence of the release.

Eric Kallio -- Senior Vice President, Exploration

No, it's not included. The 103 that one is 1.13 over 155 meters and that's in 103. The 9 over 13 is in whole 79 beings.

John Tumazos -- John Tomazos Very Independent Research -- Analyst

So it's not inclusive, there are all different intercepts and there is no smearing?

Eric Kallio -- Senior Vice President, Exploration

Yes, it's right. That's a separate intercept altogether.

John Tumazos -- John Tomazos Very Independent Research -- Analyst

Thank you. Excuse me, I thought it was something else.

Tony Makuch -- President and Chief Executive Officer

Often probably -- the first part of that question when it comes to the production. We've got numbers on in lower -- that contributed for the quarter. For instance, for the first time, the mining stock in the wrapped up area that's proven to be a solid contributor for the quarter and we did have, well-worked at. We did have some solid contribution from the area and we saw some higher grades in the area, higher than the stocks we've seen, so we're trying to balance the time and money.

John Tumazos -- John Tomazos Very Independent Research -- Analyst

Thank you, it's working well.

Operator

[Operator Instructions] Your next question comes from the line of Carey MacRury from Canaccord Genuity. Your line is open.

Carey MacRury -- Canaccord Genuity -- Analyst

Maybe just a question on the detour. Just with the daily limit lifted there. Just how should we think about throughput for the balance of the year, I assume it's going to increase from here?

Tony Makuch -- President and Chief Executive Officer

When we gave out our guide for the year, we expect this year to be 24.5 million tons total give or take a few percent processes this year and then by 2025, again in the forecast of reports it's up to 20 million tons a year and that's based on the number of initiatives as we progress. But, Natasha you want to or Larry you want to give the simplest point for that.

Natasha Vaz -- Chief Operating Officer

Yes, I think as we mentioned -- in 2021, we're going planning on having 24.5 million tons that haven't changed on average -- and then fully growing for 2025 to 28 million tons, and doing just 25 million tons. And slowly as we have the project come to the line we get to 27 and then 27.8 and then 28.

Tony Makuch -- President and Chief Executive Officer

And one of the things that are going to -- and that's whereas the year progresses, Larry has been working on alternate pit set, but I think the biggest projects we have that going on this year would be the installing that screen index before that -- made between the primary crusher and the secondary crusher and both secondary crusher sides. We're doing one and then the other one in the meantime, there is an alternate feed system being put in place to trying to keep the mills, to be able to keep the mills running under one piece, running during this period of construction, and then that's made into -- further increases in 20, as we progress into future years.

Unknown speaker

And then Q2 last year, there was a cash tax payment just wondering if there was something similar for this year for Q2.

Tony Makuch -- President and Chief Executive Officer

David?

David Soares -- Chief Financial Officer

Yes, thanks, Tony. Yes, last year there was a large tax payment in June that was really related to the filing of our Australian tax and so we're still working through the tax returns this year and we probably will see an increase from Q1 because Q1 was just the right moment, but as we close out the year, we had a very strong year, last year in Australia and probably expect an increase from what we gain in Q1.

Unknown speaker

But am I missing a magnitude of last year?

David Soares -- Chief Financial Officer

Well, it could be, last year was again a record year I expect, the profitable income to be significantly higher. Last year or the previous year, our storm is based on not last year profitable income, the year before so 2019 and so I'm expecting -- it's certainly enough to cover what the full tax is in Australia and so I see a bit of a cap in Q2 [Inaudible].

Unknown speaker

Thank you.

Operator

That concludes our Q&A for today. I'd now like to turn the call back over to the senior vice president of investor relations, Mark Utting for closing comments.

Mark Utting -- Senior Vice President of Investor Relations

Thanks very much, operator. And again, thanks to everyone for participating in the call today. As you've heard, we've got a lot going on, and there is a lot going forward to and we're going to have a lot to talk about over the balance of 2021 and in the next year. So, we look forward to our next call to update you on how much more progress we've made.

Thanks very much, have a good day.

Operator

[Operator signoff]

Duration: 62 minutes

Call participants:

Mark Utting -- Senior Vice President of Investor Relations

Tony Makuch -- President and Chief Executive Officer

David Soares -- Chief Financial Officer

Natasha Vaz -- Chief Operating Officer

Larry Lazeski -- General Manager, Detour Lake Mine

Evan Pelletier -- Vice President, Mining for Kirkland Lake

Ian Holland -- Vice President, Co-Lead of Australian Operations

Eric Kallio -- Senior Vice President, Exploration

Cosmos Chiu -- CIBC World Markets -- Analyst

Ovais Habib -- Scotiabank -- Analyst

Mike Parkin -- National Bank -- Analyst

Unknown speaker

John Tumazos -- John Tomazos Very Independent Research -- Analyst

Carey MacRury -- Canaccord Genuity -- Analyst

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