Canada mining firm strikes gold as oil price falls

THE slump in oil prices has boosted a Canadian gold mining company whose fortunes have been transformed since a Scottish industry veteran took over as chief executive two and a half years ago.

Kirkland Lake Gold last week poured its one millionth ounce of gold from its Macassa mine complex in Ontario

Motherwell-born George Ogilvie, president and chief executive of Kirkland Lake Gold, which last week poured its one millionth ounce of gold from its Macassa mine complex in Ontario since operations started in 2003, said: “The collapse of the oil price has definitely helped us. The industry is seen as a safe haven, a last resort. Other things have also helped gold’s popularity for investors, such as the collapse of Asian stock markets, which have seen a dep­reciation of about 50 per cent since last year and created jitters.”

Ogilvie said weak oil prices, which led to energy major Shell revealing last week that its profits fell 80 per cent in 2015, has boosted the company by putting pressure on the ­Canadian dollar, as the country is a big energy prod­ucer.

“The Canadian gold miners have 80 to 90 per cent of their costs in Canadian dollars, so a weak oil price putting pressure on the currency is always going to be a positive,” he said.

Ogilvie said the positive implications for gold of the oil slump were also likely to continue for another 12 to 18 months, according to strategists, as Opec was showing no signs of easing production, and Iran, with sanctions lifted, was entering the market.

“I’m very confident about our prospects,” the Scot said. In January, Kirkland Lake Gold announced the acquisition of Canadian gold miner St Andrew Goldfields, beefing up its presence in Ontario with three new working mines.

Ogilvie said the deal gave the firm diversified gold prod­uction from four mines, while Kirkland is also exploring prospects on four dormant mines it has near Macassa.

It invested $5 million in this exploration in 2015, and plans to invest another C$7.5m in the coming year, he revealed. “We have put down nine holes at between 6,000 and 6,500 feet and each of them has hit gold. But we don’t know if it can be definitively called ore yet.”

Ogilvie has 24 years management, technical and operating experience in the ind­ustry after receiving his degree in mining and petroleum engineering from Strathclyde University. He began his working career with Anglo American in 1989 and other positions have included mine superintendent at Hudson Bay Mining. Most recently, he spent seven years at the helm of Rambler Metals and Mining in Canada, during which it has transformed from a grass roots explorer to a profitable junior producer.

His chairman at Rambler Metals and Mining was Harry Dobson, the Scottish mining tycoon, who is also said to be a “supportive” 4.5 per cent investor in Kirkland Lake Gold after stepping down as chairman last year.

Kirkland’s stock market value has more than trebled to C$640 million now compared with C$200m when Ogilvie came on board. Two years ago its shares were trading at C$2.20, before hitting C$6.80 last summer, and are currently at C$5.60. The company gave up its Aim listing in London last year and the stock is now traded out of the Toronto ­market.

Ogilvie said the decision to leave Aim was backed by UK investors as there was little liq­uidity in the stock here.

He added that further acquisitions were unlikely in 2016, which he saw more as a “bedding-in” year. “I don’t see us doing anything [in terms of acquisitions] over the next 12 months. But there could be some bolt-ons in 2017.”