Dgc 13 09_12-13_bo_aml conference


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Dgc 13 09_12-13_bo_aml conference

  1. 1. 1 Bank of America Merrill Lynch Canada Mining Conference, Toronto September 12-13, 2013 CANADA’S NEXT INTERMEDIATE GOLD PRODUCER
  2. 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.
  3. 3. 3 Notes to Investors 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. Information Containing Estimates of Mineral Reserves and Resources 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.
  4. 4. 4 Invest in Detour Gold Our Vision Become a leading intermediate gold producer and premier investment opportunity ExecutionDisciplineFocus
  5. 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) › Significant potential for production growth › Exploration upside for high-grade mineralization ONTARIO Toronto Timmins DETOUR LAKE MINE
  6. 6. 6 Note: Cash position at June 30, 2013 and share data at August 31, 2013. Conversion price for the Notes is US$38.50. Share Capital FULLY DILUTED 161.7 M OPTIONS & FN SHARE COMMITMENTS 10.6 M CONVERTIBLE NOTES 13.0 M ISSUED AND OUTSTANDING 138.1 M C$1.4 B C$207 M TOPSHAREHOLDERS MARKET CAP CASH POSITION PAULSON & CO: 15% INSTITUTIONS TOTAL: >80%
  7. 7. 7 Execution = Detour Lake in 6 Years 2013  Built Detour Lake on schedule  Started gold production in February  Reached commercial production in August ACQUISITION /DISCOVERY 2007 PRE-FEASIBILITY STUDY 2009 FEASIBILITY STUDY & PERMITTING 2010 DEVELOPMENT 2011-12 PRODUCTION 2013
  8. 8. 8 Strategy = Focused on Profitability Objectives:  Deliver on operational performance  Generate positive cash flows  Use cash flow to fund future organic growth  Provide return on capital
  9. 9. 9 Key Statistics OP reserves (M oz) 15.6 Mill throughput (tpd) 55,000 Strip ratio (waste:ore) 3.7 Gold recoveries 91% Average grade (g/t) 1.03 Estimated mine life (yrs) 21.5 Avg. production (oz/yr) 657,000 Initial capex (C$ B) 1.5 Sustaining capex (C$ B) 1.2 Detour Lake Mine at a Glance Commercial production declared on September 1, 2013
  10. 10. 10 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 to +200,000 tpd by year- end  Mining fleet of 20 haul trucks & 5 shovels (incl. 2 rope shovels)  Stockpile availability Detour Lake Mine Ramp Up
  11. 11. 11 2013 Q1 Q2 Ore tonnes mined (Mt) 1.29 2.70 Tonnes milled (Mt) 1.02 2.87 Mill grade (g/t Au) 0.64 0.76 Recovery (%) 80 83 Availability (%) 66 68 Gold produced (oz) 16,841 57,897 H1 2013 - Operation Statistics
  12. 12. 12 2013 Ramp-up Guidance Guidance 2013 Estimate Gold production 270,000 oz Total cash costs (1) US$1,100/oz Sustaining capital (2) C$192 M  Availability and recoveries continue to trend in a positive direction  Mining rates increasing towards target rate of +200,000 tpd  Hiring contractor in Q4 for pre-stripping (adds 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. 13. 13 Near-term Agenda: At the Mine Mine Operations:  Open-up the pit to allow for increased flexibility in mining plans  Increase access to higher grade ore  Continue to improve: › Shovel productivity with increased blasted inventory › Haul truck cycle › Haul road and pit floor quality › Pit de-watering Next Focus: Lowering CostsProduction Growth
  14. 14. 14 Near-term Agenda: At the Mill 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 Next Focus: Lowering CostsProduction Growth
  15. 15. 15 Near-term Results: Free Cash Flow 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 Next Focus: Lowering CostsProduction Growth
  16. 16. 16 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 capacity expansion from 55,000 to 61,000 tpd
  17. 17. 17  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 m Inferred M&I P&P 10M oz 20M oz 30M oz 15.6 14.9 11.4 8.8 Organic Growth Opportunities
  18. 18. 18 *Note: Excludes drilling around Detour Lake and M zone (Block A). Lower Detour Area 15.6 M oz in Reserves Organic Growth Opportunities 630 km2
  19. 19. 19 Organic Growth Opportunities 25,000 m of drilling in Q1 2013 17.33/4.4
  20. 20. 20 Long Section across Zone 75 Organic Growth Opportunities
  21. 21. 21 Organic Growth Opportunities Near-term objectives (1-3 years):  Detour Lake reserve/resource update (open pit west expansion)  Evaluation of potential expansion options
  22. 22. 22 Invest in Detour Gold Our Vision Become a leading intermediate gold producer and premier investment opportunity ExecutionDisciplineFocus
  24. 24. 24 Detour Lake Profile Detour Lake Sept. 2012 Mine Plan(3) Gold price (US$/oz) (1) 1,200 Foreign exchange rate (US$/Cdn$) 1.00 Fuel price (US$/barrel) 100 Income/mining tax rate (%) 25/10 Net Smelter Royalty (%) 2 Ore milled (Mt) 470.0 Waste mined (Mt) (4) 1,734 Strip ratio (waste:ore) 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) 21.5 Avg. annual gold production (oz) 657,000 1. US$1,600/oz for 2013, US$1,500/oz for 2014, and US$1,400/oz for 2015. 2. Press release Jan. 31, 2011 with Technical Report dated Mar. 15, 2011. 3. Press release Sept. 4, 2012 with Technical Report dated Oct. 18, 2012. 4. Includes low-grade stockpile. AssumptionsMineParameters @ US$850/oz Tonnes (millions) Grade (g/t) Contained Gold (‘000 oz) Reserves (1) Proven 101.6 1.29 4,222 Probable 368.4 0.96 11,351 P&P 470.0 1.03 15,573 Resources (2) 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 1. After a 95% mining recovery rate; Mining dilution factor of 15.5%. 2. Inclusive of mineral reserves.
  25. 25. 25 MAINTENANCE LABOUR POWER DIESEL G&A ROYALTY+ OTHER (2% NSR) CONSUMABLES 29% 22% 18% 12% 8% 5% 6% Breakdown of 2013-14 TCC A 10% change in: Diesel or power costs = $9/oz change in TCC Cdn$ FX rate = $63/oz in TCC Projected LOM Operating Costs Operating Costs (LOM) C$/t milled C$/t mined C$/oz Mining costs 11.65 2.49 388 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 Based on September 2012 Mine Production Plan
  26. 26. 26 Conventional Milling Process Primary Crusher 90,000 tpd Mine Trucks Secondary Crushers (2) 67,000 tpd Pebble Crushers (2) 73,000 tpd To Market Gold Doré Bars Gold Furnace Gold Electrowinning Carbon Stripping To Gravity Circuit To Gravity Circuit Stockpile SAG Mills (2) 55,000 tpd Ball Mills (2) 55,000 tpd CIP Leach Tailings
  27. 27. 27 Grade Control DDH Block model 40x40m drill spacing RC GC 20X10m & 10X10m drill spacing < 0.3 < 0.5 < 0.8 < 2.0 > = 2.0 Block Gold Grade (g/t) Bench6252mBench6240m Pit Contour at July 31, 2013 Grade Control Data Limit
  28. 28. 28 Grade Control DDH Block model 40x40m drill spacing RC GC 20X10m & 10X10m drill spacing Bench6228m < 0.3 < 0.5 < 0.8 < 2.0 > = 2.0 Block Gold Grade (g/t) Pit Contour at July 31, 2013 Grade Control Data Limit RC 40X10m
  29. 29. 29 2012 completed DH Historical DH Block A near-surface resource Detour Lake 2011 year-end reserves = 15.6 M ozDH included in 2011 year-end reserves DH not included in 2011 year-end reserves Detour Lake & Block A
  30. 30. 30 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:  92% of workforce from region  25% are Aboriginals  Scholarship and job training  Supporting local communities  Business opportunities  Participation in municipal development  Corporate philanthropy NORTHERN ONTARIO 39% COCHRANE 24% COCHRANE AREA 29% REST OF ONTARIO 5% 3% OTHER Corporate Responsibility WORKFORCE ORIGIN
  31. 31. 31 Analyst Coverage Initiating Research Firm 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 Desjardins Capital Markets Michael Parkin
  32. 32. 32  Gerald Panneton Founder, President & CEO  Michael Kenyon Executive Chairman  Paul Martin CFO  Pierre Beaudoin Chief Operating Officer  Julie Galloway Sr VP General Counsel & Corporate Secretary  Derek Teevan Sr VP Corporate & Aboriginal Affairs  Pat Donovan VP Corporate Development  James Mavor VP Finance  Rachel Pineault VP HR & Aboriginal Affairs  James Robertson VP Environment & Sustainability  Eric Josipovic Controller  Drew Anwyll MGM/Director of Operations  Andrew Croal Director Technical Services  Laurie Gaborit Director Investor Relations  Jean-Francois Metail Director Reserves and Resources  Bill Snelling Director Corporate Systems & Controls  Rickardo Welyhorski Director Mineral Processing  Charles Hennessey Process Plant Maintenance Manager and Deputy Mine General Manager  Joshua Hurrell Acting Mine Manager - Chief Geologist  Mike Papadakis Process Plant Manager  Peter Crossgrove  Louis Dionne  Robert E. Doyle  André Falzon  Gerald Panneton  Jonathan Rubenstein  Graham Wozniak  Ingrid Hibbard  Michael Kenyon  Alex G. Morrison Management & Directors Management Directors
  33. 33. 33 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 Contact Information