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Kirkland Lake Discoveries’ flagship is the Mirado Gold Project at KL South, a past-producing, structurally controlled gold system about 20 km southeast of Kirkland Lake, with KL West, KL East and Goodfish now sitting behind it. In this interview, I asked the CEO about the summer drilling, how big the system might be, the upcoming financing, permitting, and what it would take to get to a resource estimate.

TL;DR

About 20,000 metres of drilling since late May, and the east-west extent of the mineralized footprint has more than doubled, now interpreted over more than 1.3 km, with hole 37 at Mirado West returning 1.22 g/t gold over close to 70 m including 5.7 g/t over 12 m. The CEO told me straight out that Mirado has replaced KL West as flagship, because KL West hit a large intrusive system and pathfinder metals but no economic gold grades. There are 21 holes pending and he plans to release them every one to two weeks. A financing is coming in the next six weeks, likely flow-through, and he was clear it is not a small one, with the goal of funding through to a resource estimate and potentially a PEA. The big thing to hold onto is that he is not going to do an MRE until drilling finds an edge on the system, and right now it has not found one, so a resource is not a near-term event.

What have they done for shareholders lately?

Roughly 20,000 metres drilled over the summer, the discovery and naming of Mirado West, and the doubling of the east-west footprint. Drilling has also extended mineralization below the historical zones. On the technical side they ran an MT survey in the spring that now shows a geophysical trend stretching about 6.7 km, and hyperspectral imaging on one hole tied gold almost one-for-one to silicification, which he says lets them now call this an orogenic system with high confidence. They also got a regional exploration permit through the comment period with no comments, so the full KL South package is now permitted for drilling. And the drill program kept growing, from 25,000 m to 30,000 m and now closer to 40,000 m, because all-in drill costs came in just under C$200 per metre against a C$250 budget, helped by no standby days over the winter.

How much money do they have and what are they spending it on?

He said the last financials at the end of July showed C$4.2 million, then said they are probably sitting shy of C$2 million now, but when I asked him to break down the spending he answered against the C$4 million figure, saying about C$3.7 million goes to drilling, assays and geologists. The October raise was C$12.7 million with roughly 10 percent, about C$1 million, set aside for G&A and marketing. For next year he is budgeting just under C$1 million for G&A and marketing and is cutting conference spending in favour of digital content because he does not see the return on shows. A second rig comes back in a couple of weeks, which he agreed doubles drilling costs, and the flow-through raise is timed for this part of the year when the pricing is best.

Upcoming catalysts

Technical: 21 pending drill holes released roughly every one to two weeks over the coming months, including regional step-outs more than a kilometre from known mineralization to the southwest, three to four holes stepping out to the north-northwest with the furthest about 600 m out, seven holes around Mirado West, and one hole testing continuity of the Mirado fault across about 180 m of strike. Also pending are till samples from the regional program and multi-element assays that are running on a roughly four-month turnaround, plus a core scanning system they are waiting on to run alteration vectoring across all holes.

Operational: the second rig returning within a couple of weeks, and news flow he expects to continue for at least four months given drilling is still active.

Corporate: a financing in the next six weeks, work with SRK to guide infill drilling and raise the 30 g/t grade cap, and possible insider buying if a trading window opens.

Risks

The near-term one is the financing overhang, which he named himself as a reason the stock has lagged, along with short-term holders who bought for KL West and did not get the result they wanted. If the “shy of C$2 million” figure is the right one, the treasury is thin heading into a doubled drilling expenditure with a second rig, so terms and size of the raise matter. Beyond that, this is a company deliberately spending on aggressive step-outs rather than confidence drilling, so any of those regional holes can miss, and the more the footprint keeps opening up the further out an MRE moves. Assay turnaround, core cutting backlogs and blackout periods are slowing news and limiting insider buying. There is no major or strategic mining company on the register, which the CEO told me is by choice rather than necessity. Permitting and the Beaverhouse First Nation relationship are both solid, though winter access will make regional drilling more awkward than infill.

Kirkland Lake Discoveries CEO Interview

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