Kirkland Lake Gold has reduced its operating budget for the 2014 fiscal year, including cutting staff, freezing hiring and reducing exploration activity. The changes will reduce the budget by $2.1 million, resulting in savings of $5 million for the year.
According to a news release, the company will shut down one surface drill and one underground exploration drill. Exploration activities will continue with one surface drill and two underground exploration drills.
Consulting contracts have been reduced and some staff employment contracts have been terminated, while all hiring is now frozen.
Outstanding capital requests will be assessed on a case-by-case basis, with some being cancelled or deferred, and additional cost-saving initiatives are under review by management.
The company indicated it has shut down the lowest grade stopes to try and raise the mine head grade, and operations will focus on stopes and areas that are at or above cutoff grade.
“We have made some quick wins in immediately cutting costs in the business,” CEO George Ogilvie said in the release. “Over the course of the next few months, as I spend time on the ground in Kirkland Lake, mine plans will be revised to improve productivity and recovered grade. The company is focused on executing a mine plan to deliver profits and free cash flow for investors.”
The news comes only a few weeks after the company said it would increase its production over the second half of the fiscal year after announcing positive second-quarter operating results. But a few days later, it made a correction to those results, indicating it had produced 31,387 ounces of gold and not the 34,935 ounces earlier reported.