Letter to Shareholders

Dear Fellow Kirkland Lake Gold Shareholder:

On behalf of the Board of Directors, we are pleased to present to you a very attractive opportunity that we believe gives us another high-quality asset, substantially grows our Mineral Reserves and mine duration, solidifies our position as a senior gold producer, and creates immediate and long-term value for all shareholders.

The Kirkland Lake Gold Board, with the advice of its independent third-party financial and legal advisors, unanimously recommends that you vote in favour of the share issuance in connection with Kirkland Lake Gold’s acquisition of Detour Gold Corporation by way of the proposed plan of arrangement, as described in the management information circular.

In a few short years, Kirkland Lake Gold has established a proven track record of acquiring mining operations, namely Macassa and Fosterville, and transforming them into high-quality assets that not only generate industry-leading earnings and free cash flows but create significant returns for all of us as shareholders.

Detour Gold, and its flagship asset, the Detour Lake mine, represents an opportunity — in our own backyard — to build on this success by adding a third cornerstone asset, with significant upside. The Detour Lake mine, located in a prolific geological setting in Northern Ontario, boasts one of the world’s largest gold deposits.

With this acquisition, we expect to immediately and significantly grow our production, cash flow, and Mineral Reserves, better positioning us for sustainable long-term growth and value creation.

For Kirkland Lake Gold and shareholders, this acquisition:

  • Adds a long-life, high quality asset in a low-risk jurisdiction. The Detour Lake mine is a uniquely large-scale, long-life Canadian mine, with current production of approximately 600,000 ounces of gold per year and substantial growth potential.
  • Solidifies our position as a senior gold producer with industry-leading free cash flow. The acquisition is expected to provide Kirkland Lake Gold with enhanced scale with pro forma 2019 production targeted at approximately 1.5 million ounces of gold and analyst consensus 2019 free cash flow of almost US$700 million.
  • Bolsters our financial strength and capital markets profile. The combined net cash balance of Kirkland Lake Gold and Detour Gold at September 30, 2019 was US$630 million. The increased public float, liquidity, and access to capital, is expected to provide Kirkland Lake Gold with greater capacity to pursue further growth, make strategic investments to improve mining throughput and efficiency, and return capital to shareholders.
  • Increases Kirkland Lake Gold’s Mineral Reserve base and complements our existing operating profile. The acquisition is expected to add approximately 15.4 million ounces of gold to Kirkland Lake Gold’s Mineral Reserve base and extend our Mineral Reserve life index by eight years.
  • Enables value-creation through continued optimization and potential expansion of the Detour Lake mine. The financial strength and technical expertise of Kirkland Lake Gold is expected to support the continued optimization and potential expansion of the Detour Lake mine with opportunities to significantly increase production at improved unit costs and to expand current Mineral Reserves and Mineral Resources.
  • Provides attractive exploration upside. Detour Gold’s land position covers approximately 1,040 km2 along the northernmost sections of the Abitibi Greenstone Belt (including approximately 646 km2 on the existing Detour Lake property) in Ontario, Canada. The combination of free cash flow generating operations, significant in-mine growth potential and considerable regional exploration upside is a common feature among the Detour Lake mine and the Macassa mine in Canada and the Fosterville mine in Australia.
  • Delivers significant potential synergies. The acquisition is expected to generate approximately US$75-US$100 million in annual pre-tax synergies.
  • Creates immediate value. The acquisition is expected to deliver cash flow per share and net asset value per share accretion to Kirkland Lake Gold.

Our Plan for Detour Lake

Over the past year, the current management team at the Detour Lake mine has strengthened operational performance improving recovery rates, increasing production and lowering all-in sustaining costs. Once the acquisition is completed, we will continue to build on this momentum: With our financial strength, experience, and established track records at Macassa and Fosterville, our team expects to further optimize current operations and commence engineering work to evaluate expansion opportunities, which we anticipate could lead to significant production growth and improved unit costs. Further, with a large underexplored land package in a prolific geological setting, there is considerable potential for new discoveries to support future growth.

By acquiring Detour Gold, we will combine Kirkland Lake Gold’s strong balance sheet, technical expertise and commitment to exploration with a gold deposit that is one of the world’s largest, has tremendous growth potential and is located in our own backyard. We believe we can unlock significant value from the current operations at Detour Lake mine. We also plan to invest in growth with a view to transforming Detour Lake into something much larger and more valuable, in the same way we did at Fosterville mine following our acquisition of Newmarket Gold. Our overriding focus is on generating shareholder returns, and the acquisition of Detour Gold represents a unique and attractive opportunity for long-term value creation.

We hope you will join us as we embark on this exciting opportunity.

Yours very truly,
“Anthony Makuch”

Anthony Makuch
Kirkland Lake Gold Ltd.
Shareholder, President, Chief Executive Officer and Director