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CANADA’S NEXT
INTERMEDIATE
GOLD
PRODUCER

1

Corporate Presentation
October 21-25, 2013
Forward Looking Information
This presentation contains certain forward-looking information as defined in applicable securi...
Notes to Investors
Note Regarding Certain Measures of Performance
This presentation presents estimates of future “cash ope...
Invest in Detour Gold
Our Vision

Become a leading intermediate gold producer and
premier investment opportunity
Focus

4
...
Focused on One Core Asset
DETOUR LAKE – ONTARIO, CANADA
 Low-risk, safe mining jurisdiction
 100% owned large prospectiv...
Share Capital
ISSUED AND
OUTSTANDING

C$1.0 B

138.2 M

MARKET CAP

C$161 M
CASH POSITION

FULLY DILUTED

161.5 M
OPTIONS ...
Execution = Detour Lake in 6 Years
2007

ACQUISITION
/DISCOVERY

2009

PRE-FEASIBILITY
STUDY

2010

FEASIBILITY
STUDY &
PE...
Strategy = Focused on Profitability
Objectives:
 Deliver on operational performance
 Generate positive cash flows
 Use ...
2013 Objectives
Q1-Q3 2013
 First gold pour in February
 Secured $90 million credit facility
 Commissioned second produ...
Detour Lake Mine at a Glance
Key Statistics

OP reserves (M oz)

15.6

Mill throughput (tpd)

55,000

Strip ratio (waste:o...
Detour Lake Mine Ramp Up
Processing Plant
 55,000 tpd conventional gravity and
CIP processing plant with two
production l...
Q1-Q3 2013 - Operation Statistics

2013

Q1

Q2

Q3

Ore tonnes mined (Mt)

1.29

2.70

4.16

Tonnes milled (Mt)

1.02

2....
2013 Ramp-up
Guidance
Gold production

Total cash costs 1
Sustaining capital 2

2013 Estimate
270,000 oz

US$1,100/oz
C$19...
Near-term Agenda: At the Mine
Next Focus:

Production Growth

Lowering Costs

Mine Operations:
 Open-up the pit to allow ...
Detour Lake Mine

October 2, 2013
15
Near-term Agenda: At the Mill
Next Focus:

Production Growth

Lowering Costs

Processing Plant:
 Target +50,000 tpd capac...
Near-term Results: Free Cash Flow
Next Focus:

Production Growth

Lowering Costs

Cost Reductions:
 Mining and milling un...
Looking at 2014 and Beyond
In Progress:
 Year-end reserve and resource update
› New pit shell for Detour Lake (2011 drill...
Organic Growth Opportunities
 Long-term growth of reserve base to
+20 M oz
› Reserve/resource update for
Detour Lake mine...
Organic Growth Opportunities
630 km2

15.6 M oz in Reserves

Lower Detour
Area

*Note: Excludes drilling around Detour Lak...
Organic Growth Opportunities
25,000 m of drilling
in Q1 2013

17.33/4.4

21
Organic Growth Opportunities
Long Section across Zone 75

22
Organic Growth Opportunities

Near-term objectives (1-3 years):
 Detour Lake reserve/resource update (open pit west expan...
Invest in Detour Gold
Our Vision

Become a leading intermediate gold producer and
premier investment opportunity
Focus

24...
ADDITIONAL
INFORMATION
25
Detour Lake Profile
Sept. 2012
Mine Plan(3)

Detour Lake

@ US$850/oz

Tonnes
(millions)

Grade
(g/t)

Contained
Gold (‘00...
Projected LOM Profile
September 2012 Mine Production Plan*
(Includes expansion from 55,000 tpd to 61,000 tpd)

Gold Produc...
Projected LOM Operating Costs
Based on September 2012 Mine Production Plan
Operating Costs (LOM)

C$/t
milled

C$/t
mined
...
Conventional Milling Process
Mine Trucks
Primary Crusher
90,000 tpd

To
Gravity
Circuit

Stockpile

Secondary Crushers (2)...
Grade Control
Bench 6252m

DDH Block model 40x40m drill spacing

RC GC 20X10m & 10X10m drill spacing

Block Gold Grade
(g/...
Grade Control
DDH Block model 40x40m drill spacing

RC GC 20X10m & 10X10m drill spacing

Bench 6228m

RC 40X10m

Block Gol...
Detour Lake & Block A
Block A near-surface resource

2012 completed DH
DH included in 2011 year-end
reserves
DH not includ...
Corporate Responsibility
Focus on health and safety of our employees, the well-being of
our community and the protection o...
Analyst Coverage
Initiating
Research

Analyst

07.06.11

Haywood Securities

Kerry Smith

07.07.09

Paradigm Securities

D...
Management & Directors
Management


Gerald Panneton



Founder, President & CEO



Michael Kenyon
Paul Martin



Pierr...
Contact Information
Gerald Panneton
President & CEO
Email: gpanneton@detourgold.com
Phone: 416.304.0800

Laurie Gaborit
Di...
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Detour Gold corporate presentation

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Transcript of "Detour Gold corporate presentation"

  1. 1. CANADA’S NEXT INTERMEDIATE GOLD PRODUCER 1 Corporate Presentation October 21-25, 2013
  2. 2. Forward Looking Information This presentation contains certain forward-looking information as defined in applicable securities laws (referred to herein as “forward-looking statements”). Specifically, this presentation contains forward-looking statements regarding 2013 guidance for gold production and total cash costs, reserve and resource estimates, ore grade, expected mine life, average annual gold production, gold recovery, cash operating costs and other costs, sensitivity to metal prices and other sensitivities, ramp-up of operations, mining rates reaching approximately 200,000 tpd by year-end 2013, future operating plans, potential expansion opportunities, and plans for organic growth which includes growing mineral reserves to more than 20 million ounces. Forward-looking statements involve known and unknown risks, uncertainties and other factors which are beyond Detour Gold’s ability to predict or control and may cause Detour Gold’s actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, gold price volatility, changes in debt and equity markets, the uncertainties involved in interpreting geological data, increases in costs, environmental compliance and changes in environmental legislation and regulation, interest rate and exchange rate fluctuations, general economic conditions and other risks involved in the gold exploration and development industry, as well as those risk factors discussed in the section entitled “Description of Business - Risk Factors” in Detour Gold’s 2012 AIF and in the continuous disclosure documents filed by Detour Gold on and available on SEDAR at www.sedar.com. Such forward-looking statements are also based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about the following: the availability of financing for exploration and development activities; operating and capital costs; the Company’s ability to attract and retain skilled staff; the mine development schedule; sensitivity to metal prices and other sensitivities; the supply and demand for, and the level and volatility of the price of, gold; timing of the receipt of regulatory and governmental approvals for development projects and other operations; the supply and availability of consumables and services; the exchange rates of the Canadian dollar to the U.S. dollar; energy and fuel costs; the accuracy of reserve and resource estimates and the assumptions on which the reserve and resource estimates are based; market competition; ongoing relations with employees and impacted communities and general business and economic conditions. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements contained herein are made as of the date hereof, or such other date or dates specified in such statements. Detour Gold undertakes no obligation to update publicly or otherwise revise any forward-looking statements contained herein whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. 2
  3. 3. Notes to Investors Note Regarding Certain Measures of Performance This presentation presents estimates of future “cash operating costs per tonne milled”, “cash operating costs per ounce of gold produced”, “total cash costs per tonne milled” and “total cash costs per ounce of gold produced” which are not recognized financial measures under GAAP. These non-GAAP financial measures are intended to provide additional information to investors. However, they do not have a standardized meaning under GAAP and may not be comparable to similar measures presented by other gold producers. The estimates of future cash operating costs per tonne milled and future cash operating costs per ounce of gold produced include estimated mining, processing and site administration costs divided by estimated tonnes milled or gold ounces produced, respectively. The estimates of future total cash costs per tonne milled and future total cash costs per ounce of gold produced include estimated mining, processing, site administration, royalty and refining costs net of estimated silver by-product credits divided by estimated tonnes milled or gold ounces produced, respectively. These future estimates are based upon the cash operating costs per tonne milled, the cash operating costs per ounce of gold produced, the total cash costs per tonne milled and the total cash costs per ounce of gold produced that the Company expects to incur to mine gold at the Detour Lake mine. Since the Detour Lake mine has not yet reached commercial production, there is no reconciliation to actual GAAP measures provided as it is not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable GAAP measures. Information Containing Estimates of Mineral Reserves and Resources The mineral reserve and resource estimates reported in this presentation were prepared in accordance with Canadian National Instrument 43-101Standards of Disclosure for Mineral Projects (“NI 43-101”), as required by Canadian securities regulatory authorities. For United States reporting purposes, the United States Securities and Exchange Commission (“SEC”) applies different standards in order to classify mineralization as a reserve. In particular, while the terms “measured,” “indicated” and “inferred” mineral resources are required pursuant to NI 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories constitute or will ever be converted into reserves. In addition, “inferred” mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities laws, issuers must not make any disclosure of results of an economic analysis that includes inferred mineral resources, except in rare cases. On September 4, 2012, Detour Gold announced an updated mine production plan for the Detour Lake project. The NI 43-101 compliant Technical Report for this update was filed on SEDAR on October 18, 2012. The following QPs participated in this update: BBA Inc., under the direction of André Allaire, Eng., Vice-President, Markets – Mining and Metals and Patrice Live, Eng., Mining Manager; SGS Canada Inc., under the direction of Michel Dagbert, Eng., Senior Geostatistician and Maxime Dupéré, P.Geo., Senior Geologist; and AMEC Environment & Infrastructure, a Division of AMEC Americas Limited, David G. Ritchie M.Eng., P.Eng, Senior Associate Geotechnical Engineer. 3
  4. 4. Invest in Detour Gold Our Vision Become a leading intermediate gold producer and premier investment opportunity Focus 4 Discipline Execution
  5. 5. Focused on One Core Asset DETOUR LAKE – ONTARIO, CANADA  Low-risk, safe mining jurisdiction  100% owned large prospective land package of 630 km2 on Abitibi Greenstone Belt › High quality, long life producing open pit mine (15.6 M oz in reserves) ONTARIO › Significant potential for production growth DETOUR LAKE MINE Timmins Toronto 5 › Exploration upside for high-grade mineralization
  6. 6. Share Capital ISSUED AND OUTSTANDING C$1.0 B 138.2 M MARKET CAP C$161 M CASH POSITION FULLY DILUTED 161.5 M OPTIONS & FN SHARE COMMITMENTS TOP SHAREHOLDERS PAULSON & CO: 15% INSTITUTIONS TOTAL: >80% 10.3 M CONVERTIBLE NOTES 13.0 M Note: Cash position and share data at September 30, 2013 (excluding 11,000 oz unsold) Conversion price for the Notes is US$38.50. 6
  7. 7. Execution = Detour Lake in 6 Years 2007 ACQUISITION /DISCOVERY 2009 PRE-FEASIBILITY STUDY 2010 FEASIBILITY STUDY & PERMITTING 2011-12 DEVELOPMENT PRODUCTION 2013  Built Detour Lake on schedule  Started gold production in February  Reached commercial production in August 7 2013
  8. 8. Strategy = Focused on Profitability Objectives:  Deliver on operational performance  Generate positive cash flows  Use cash flow to fund future organic growth  Provide return on capital 8
  9. 9. 2013 Objectives Q1-Q3 2013  First gold pour in February  Secured $90 million credit facility  Commissioned second production line  25,000 m drilling program targeting high-grade gold mineralization  Reached commercial production in August  Produced 150,410 ounces of gold in first 9 months Q4 2013  Gold production target of 270,000 oz for the year  Year-end mineral resources/reserves (news release in Q1 2014) 9
  10. 10. Detour Lake Mine at a Glance Key Statistics OP reserves (M oz) 15.6 Mill throughput (tpd) 55,000 Strip ratio (waste:ore) 3.7 Gold recoveries 91% Average grade (g/t) 1.03 Estimated mine life (yrs) 21.5 Avg. production (oz/yr) 657,000 Initial capex (C$ B) 1.5 Sustaining capex (C$ B) 1.2 Commercial production declared on September 1, 2013 10
  11. 11. Detour Lake Mine Ramp Up Processing Plant  55,000 tpd conventional gravity and CIP processing plant with two production lines  Primary crusher (90,000 tpd capacity)  Each line has 1 secondary crusher, 1 pebble crusher, 1 SAG and 1 ball mill Mine Operations  Mining rates averaged 201,000 tpd in September  Current mining fleet of 20 haul trucks & 4 shovels (incl. 2 rope shovels)  Stockpile availability 11
  12. 12. Q1-Q3 2013 - Operation Statistics 2013 Q1 Q2 Q3 Ore tonnes mined (Mt) 1.29 2.70 4.16 Tonnes milled (Mt) 1.02 2.87 3.88 Mill grade (g/t Au) 0.64 0.76 0.72 Recovery (%) 80 83 85 Availability (%) 66 68 78 16,841 57,897 75,672 Gold produced (oz)1,2 1. Q3 = 80,765 oz poured (the inventory was reduced from 23,189 to 17,998 oz). 2. During September, the first month of commercial production, the Detour Lake mine produced 24,021 oz gold. 12
  13. 13. 2013 Ramp-up Guidance Gold production Total cash costs 1 Sustaining capital 2 2013 Estimate 270,000 oz US$1,100/oz C$192 M  Availability and recoveries continue to trend in a positive direction  Targeting mining rates of 250,000 tpd by year-end  Pre-stripping with contractor (adding US$100/oz in operating costs for Q4 2013) 1. For period September to December 2013 (post-commercial production). 2. Advancing purchase of 3 haul trucks to 2013. 13
  14. 14. Near-term Agenda: At the Mine Next Focus: Production Growth Lowering Costs Mine Operations:  Open-up the pit to allow for increased flexibility in mining plans › South haul road under construction  Access to higher grade ore (Domain #2)  Continue to improve: › Shovel productivity with increased blasted inventory › Haul truck cycle  Haul road and pit floor quality  Pit de-watering 14
  15. 15. Detour Lake Mine October 2, 2013 15
  16. 16. Near-term Agenda: At the Mill Next Focus: Production Growth Lowering Costs Processing Plant:  Target +50,000 tpd capacity by year-end › Improve availability (less unplanned downtime) › Increase utilization  Improve gold recovery › Maximize use of gravity circuit › Optimize leach circuit 16
  17. 17. Near-term Results: Free Cash Flow Next Focus: Production Growth Lowering Costs Cost Reductions:  Mining and milling unit costs to improve with increased volume and efficiency - economy of scale  Reduce current Tailings Facility costs - construction change from “downstream” to approved “center line” design  Opportunity to reduce power costs with Ontario provincial program 17
  18. 18. Looking at 2014 and Beyond In Progress:  Year-end reserve and resource update › New pit shell for Detour Lake (2011 drilling) › Block A in resource category (2012 drilling)  Detailed mine production plan for 2014  Optimize 5-year production schedule  Evaluate potential expansion from 55,000 to 61,000 tpd 18
  19. 19. Organic Growth Opportunities  Long-term growth of reserve base to +20 M oz › Reserve/resource update for Detour Lake mine and Block A  Large prospective land position of 630 km2 › Focus on high-grade gold targets: › Discovery of Zone 75 with 17.33 g/t over 4.4 19 Inferred M&I P&P 30M oz 20M oz 14.9 11.4 10M oz 8.8 15.6
  20. 20. Organic Growth Opportunities 630 km2 15.6 M oz in Reserves Lower Detour Area *Note: Excludes drilling around Detour Lake and M zone (Block A). 20
  21. 21. Organic Growth Opportunities 25,000 m of drilling in Q1 2013 17.33/4.4 21
  22. 22. Organic Growth Opportunities Long Section across Zone 75 22
  23. 23. Organic Growth Opportunities Near-term objectives (1-3 years):  Detour Lake reserve/resource update (open pit west expansion)  Evaluation of potential expansion options 23
  24. 24. Invest in Detour Gold Our Vision Become a leading intermediate gold producer and premier investment opportunity Focus 24 Discipline Execution
  25. 25. ADDITIONAL INFORMATION 25
  26. 26. Detour Lake Profile Sept. 2012 Mine Plan(3) Detour Lake @ US$850/oz Tonnes (millions) Grade (g/t) Contained Gold (‘000 oz) Assumptions Gold price (US$/oz) (1) 1,200 Reserves (1) Foreign exchange rate (US$/Cdn$) 1.00 Proven 101.6 1.29 4,222 Fuel price (US$/barrel) 100 Probable 368.4 0.96 11,351 P&P 470.0 1.03 15,573 Measured 124.5 1.36 5,424 Indicated 554.3 1.00 17,836 M&I 678.8 1.07 23,261 Inferred 208.5 0.86 5,785 Income/mining tax rate (%) Net Smelter Royalty (%) Ore milled (Mt) Waste mined (Mt) 25/10 2 470.0 (4) 1,734 3.7 Avg. gold grade (g/t) 1.03 Total contained gold (M oz) 15.6 Estimated gold recovery (%) 91.0 Total recovered gold (M oz) 14.1 Mine life (years) Mine Parameters Strip ratio (waste:ore) 21.5 Avg. annual gold production (oz) 26 1. 2. 3. 4. 657,000 US$1,600/oz for 2013, US$1,500/oz for 2014, and US$1,400/oz for 2015. Press release Jan. 31, 2011 with Technical Report dated Mar. 15, 2011. Press release Sept. 4, 2012 with Technical Report dated Oct. 18, 2012. Includes low-grade stockpile. Resources (2) 1. 2. After a 95% mining recovery rate; Mining dilution factor of 15.5%. Inclusive of mineral reserves.
  27. 27. Projected LOM Profile September 2012 Mine Production Plan* (Includes expansion from 55,000 tpd to 61,000 tpd) Gold Production (‘000 oz) Grade (g/t Au) 1.8 900 1.6 800 LOM Avg. 657,000 oz/yr 1.4 700 1.2 600 1.0 500 0.8 400 300 0.6 *Updated 2014 & LOM plan in process to be issued in Q1 2014 with NI 43-101 Technical Report 0.4 200 0.2 100 0 0 Expansion from 55,000tpd to 61,000 tpd 27 Note: Excludes stripping adjustments.
  28. 28. Projected LOM Operating Costs Based on September 2012 Mine Production Plan Operating Costs (LOM) C$/t milled C$/t mined Mining costs 11.65 2.49 Processing cost 7.83 -- 260 G&A 1.86 -- 62 Cash operating costs 21.34 -- 710 Royalty (2%) and other 1.26 -- 42 Refining 0.12 -- 4 Silver credit (0.20) -- (7) Total cash costs (TCC) 22.52 -- 749 Breakdown of 2013-14 TCC 388 C$/oz LABOUR 18% POWER 12% DIESEL MAINTENANCE 22% 8% G&A CONSUMABLES 29% 5% ROYALTY+ OTHER (2% NSR) 6% A 10% change in: Diesel or power costs = $9/oz change in TCC Cdn$ FX rate = $63/oz in TCC 28
  29. 29. Conventional Milling Process Mine Trucks Primary Crusher 90,000 tpd To Gravity Circuit Stockpile Secondary Crushers (2) 67,000 tpd Pebble Crushers (2) 73,000 tpd SAG Mills (2) 55,000 tpd Ball Mills (2) 55,000 tpd To Gravity Circuit CIP To Market Carbon Stripping Gold Doré Bars 29 Gold Furnace Gold Electrowinning Leach Tailings
  30. 30. Grade Control Bench 6252m DDH Block model 40x40m drill spacing RC GC 20X10m & 10X10m drill spacing Block Gold Grade (g/t) Bench 6240m < 0.3 < 0.5 < 0.8 < 2.0 > = 2.0 Pit Contour at July 31, 2013 Grade Control Data Limit 30
  31. 31. Grade Control DDH Block model 40x40m drill spacing RC GC 20X10m & 10X10m drill spacing Bench 6228m RC 40X10m Block Gold Grade (g/t) Pit Contour at July 31, 2013 Grade Control Data Limit 31 < 0.3 < 0.5 < 0.8 < 2.0 > = 2.0
  32. 32. Detour Lake & Block A Block A near-surface resource 2012 completed DH DH included in 2011 year-end reserves DH not included in 2011 year-end reserves Historical DH 32 Detour Lake 2011 year-end reserves = 15.6 M oz
  33. 33. Corporate Responsibility Focus on health and safety of our employees, the well-being of our community and the protection of the natural environment  Hiring in the region, giving priority to local Aboriginal communities:     604 full-time employees* 93% of workforce from region 25% are Aboriginals Scholarship and job training  Supporting local communities  Business opportunities  Participation in municipal development  Corporate philanthropy 33 * As of September 30, 2013. WORKFORCE ORIGIN COCHRANE AREA COCHRANE 31% NORTHERN ONTARIO 38% 24% REST OF ONTARIO 3% OTHER 4%
  34. 34. Analyst Coverage Initiating Research Analyst 07.06.11 Haywood Securities Kerry Smith 07.07.09 Paradigm Securities Don Blyth/Don MacLean 07.08.07 Raymond James Phil Russo 07.11.26 National Bank Financial Steve Parsons 07.12.20 Macquarie Capital Markets Mike Siperco 08.01.14 Canaccord Genuity Rahul Paul 08.07.14 TD Securities Dan Earle 08.09.04 RBC Capital Markets Dan Rollins 08.11.06 BMO Capital Markets John Hayes 09.06.17 Laurentian Bank Securities Eric Lemieux 10.05.19 CIBC World Markets Cosmos Chiu 10.07.22 Credit Suisse Securities Anita Soni 11.07.15 Bank of America Merrill Lynch TBA 13.04.16 Scotia Capital Leily Omoumi 13.08.14 34 Firm Desjardins Capital Markets Michael Parkin
  35. 35. Management & Directors Management  Gerald Panneton  Founder, President & CEO  Michael Kenyon Paul Martin  Pierre Beaudoin Chief Operating Officer  Julie Galloway    James Robertson Drew Anwyll Derek Teevan  Andrew Croal Rickardo Welyhorski Director Mineral Processing  Charles Hennessey Process Plant Maintenance Manager and Deputy Mine General Manager  MGM/Director of Operations  Sr VP Corporate & Aboriginal Affairs  VP Environment & Sustainability Sr VP General Counsel & Corporate Secretary  Rachel Pineault Bill Snelling Director Corporate Systems & Controls VP HR & Aboriginal Affairs CFO   VP Finance Executive Chairman  James Mavor Joshua Hurrell Acting Mine Manager - Chief Geologist  Director Technical Services Mike Papadakis Process Plant Manager Laurie Gaborit Director Investor Relations  Pat Donovan Jean-Francois Metail Director Reserves and Resources VP Corporate Development Directors     35 Peter Crossgrove Louis Dionne Robert E. Doyle André Falzon    Ingrid Hibbard Michael Kenyon Alex G. Morrison    Gerald Panneton Jonathan Rubenstein Graham Wozniak
  36. 36. Contact Information Gerald Panneton President & CEO Email: gpanneton@detourgold.com Phone: 416.304.0800 Laurie Gaborit Director Investor Relations Email: lgaborit@detourgold.com Phone: 416.304.0800 www.detourgold.com 36
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