Dgc 13 12_03-04_scotia mining conference


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Dgc 13 12_03-04_scotia mining conference

  1. 1. CANADA’S NEXT INTERMEDIATE GOLD PRODUCER 1 Scotiabank Mining Conference, Toronto December 3-4, 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 gold production and cash costs guidance for 2013 and 2014, reserve and resource estimates, ore grade, expected mine life, average annual gold production, gold recovery, cash operating costs and other costs, sensitivities, ramp-up of operations, mining rates reaching approximately 250,000 tpd by year-end 2013, mining of Domain #2 representing approximately 20% of the total feed for the fourth quarter, future operating plans, providing 2014 guidance in January 2014 and reporting an updated mine plan for Detour Lake in the first quarter of 2014, 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 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 43-101 Standards 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. The scientific and technical content of this presentation has been reviewed, verified and approved by Drew Anwyll, P.Eng., Director of Operations, a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 “Standards of Disclosure for Mineral Projects”. 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$543 M 138.2 M MARKET CAP US$156 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 at September 30, 2013 and share data at October 31, 2013. 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 To Date  First gold pour in February  Secured $90 million credit facility  Commissioned second production line  25,000 m drilling program targeting high-grade gold mineralization  Reached commercial production in August  Produced approximately 180,000 ounces of gold in first 10 months Looking Ahead  Gold production target of between 240,000 and 260,000 oz for the year  Updated mine plan and year-end mineral resources/reserves in Q1 2014 9
  10. 10. Undervalued vs. Peers Consensus P/NAV African Barrick P / 2014 CF 1.15x Alamos 0.98x New Gold 0.92x Alamos 16.9x Argonaut 10.1x AuRico 9.2x Alacer 0.85x B2Gold 8.2x B2Gold 0.82x Osisko 8.0x AuRico 0.82x New Gold 7.8x Osisko 0.82x Alacer 6.2x Argonaut 0.67x Allied Nevada 6.1x Allied Nevada 0.65x IAMGOLD 5.8x IAMGOLD 0.64x African Barrick 5.7x Detour 0.33x Source: Bloomberg, company filings, Thomson and select Street Research Note: Market data updated to November 14, 2013 10 Detour 5.1x
  11. 11. Detour Lake Mine at a Glance Key Statistics (1) OP reserves (M oz) 15.6 Mill throughput (tpd) 55,000 Strip ratio (waste:ore) 3.7 Gold recoveries 91% Average grade (g/t) 1.03 Estimated mine life (yrs) 21.5 Avg. production (oz/yr) (2) 657,000 Initial capex (C$ B) 1.5 Sustaining capex (C$ B) 1.2 1. Based on September 2012 Mine Plan (October 2012 Technical Report). 2. Includes expansion from 55,000 tpd to 61,000 tpd. Commercial production declared on September 1, 2013 11
  12. 12. 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 205,000 tpd in October  Current mining fleet of 20 haul trucks & 5 shovels (incl. 2 rope shovels)  Stockpile availability 12
  13. 13. 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 82 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. 13
  14. 14. Q3 2013 – Mine Development 2013 Ore (Mt) Waste (Mt) Overburden (Mt)(1) Total Mined (Mt) Strip Ratio Q3 4.16 12.4 4.16 16.6 3.0 Q2 2.70 10.0 4.0 12.7 3.7 Q1 1.29 8.5 4.4 10.4 6.6 1. Overburden is included in the waste figure. Q3 Mine Performance:  Mining rates averaged 180,222 tpd › 201,000 tpd average in September; 252,000 t record day  Increased blasted inventory: 2.3 Mt at end of September  Improvement in shovel productivity  Improvement in haul truck cycle › Haul road and pit floor quality › Pit de-watering 14
  15. 15. Q3 2013 – Mine Development Waste rock Domain 2 Domain 5 Current OB removal by contractor Calcite Zone Oct. 2, 2013 15
  16. 16. Q3 2013 – Mill Ramp-up Tonnes Milled (Mt) Availability (%) Tonnes per Operating day Tonnes per Calendar day Q3 3.88 78 53,821 42,142 Q2 2.87 68 46,500 31,500 Q1 1.02 66 16,837 11,112 2013 Q3 Mill Performance:  Mill processing rates averaged 42,142 tpd › Record day at 58,000 tonnes › 12 days in September above 50,000 tpd  Planned shutdown for 6 days in September for SAG mills liner change  Further adjustment and modifications to secondary crushers 16
  17. 17. Q4 2013 – Mine Development Next Focus: Production Growth Lowering Costs Objective: Increase Gold Production Levels  Progressively increase mining rates to 250,000 tpd  Mining higher grade Domain #2 (~20% of total feed)  Start operating 5th shovel (CAT 6060) in November Preparation for 2014 Mine Plan:  Accelerating pre-stripping with contractor: 2 Mt of OB removal underway for construction of south haul road  South haul road to be completed by year-end 17
  18. 18. Q4 2013 – Start Mining Domain #2 Current OB removal by contractor Oct. 2, 2013 18
  19. 19. Q4 2013 – Mill Ramp-up Next Focus: Production Growth Lowering Costs Objective: Increase Gold Production Levels  Target throughput of +50,000 tpd › Improve availability to +85% › Increase utilization rates  Improve recovery to +87% › Improve use of gravity circuit › Continue leach circuit optimization Key catalyst to reach nameplate capacity (55,000 tpd):  Finalize modifications to both pebble and secondary crushers  Further reduce unplanned shutdowns (8% in September) 19
  20. 20. October Preliminary Production Results  Best month to date: Gold production of 29,541 oz (32,043 oz poured)  Mill processed 1.4 Mt at an average grade of 0.72 g/t  Metallurgical recoveries averaged 91.6%, (higher than projected levels in the feasibility study)  Average throughput rate of 44,937 tpd, with 15 days > 50,000 tpd  Availability improved to 83%  Mining rates averaged 205,000 tpd 20
  21. 21. 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 21
  22. 22. Looking at 2014 and Beyond In Progress:  Budget and detailed mine production plan for 2014 › Preliminary 2014 guidance of between 440,000 oz and 500,000 oz of gold produced at total cash costs+capex of US$1,150/oz to US$1,250/oz  Year-end reserve and resource update › New pit shell for Detour Lake (2011 drilling) › Reserve estimate at US$1,000/oz and cut-off grade of 0.5 g/t (unchanged) › Block A in resource category (2012 drilling)  Optimize 5-year production schedule  Evaluate potential expansion from 55,000 to 61,000 tpd 22
  23. 23. 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 23 Inferred M&I P&P 30M oz 20M oz 14.9 11.4 10M oz 8.8 15.6
  24. 24. 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). 24
  25. 25. Organic Growth Opportunities 25,000 m of drilling in Q1 2013 17.33/4.4 25
  26. 26. Organic Growth Opportunities Long Section across Zone 75 26
  27. 27. Organic Growth Opportunities Near-term objectives (1-3 years):  Detour Lake reserve/resource update (open pit west expansion)  Evaluation of potential expansion options 27
  28. 28. Invest in Detour Gold Our Vision Become a leading intermediate gold producer and premier investment opportunity Focus 28 Discipline Execution
  30. 30. Q3 2013 – Highlights  Sustaining capex spent: C$136 M (2013 budget: C$192 M) Commercial Production period (September):  24,700 oz sold during commercial production period  Total cash costs of US$1,214/oz gold sold 1  Average realized price of US$1,340/oz 1  Average realized margin of US$126/oz 1 Income Statement Q3 2013 Revenues 2 $33.1 M Cost of sales Production costs $30.4 M Depreciation and depletion $2.9 M Loss from mine operations $0.2 M G&A $6.9 M Exploration and evaluation $1.0 M Net finance costs $3.7 M Net loss for the period $11.8 M 1. For reconciliation of these measures, refer to Non-IFRS Financial Performance Measures slides 41 & 42 of this presentation. 2. All sales prior to commercial production were credited against capitalized project costs. 30
  31. 31. 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 31 Gold Furnace Gold Electrowinning Leach Tailings
  32. 32. 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 32
  33. 33. 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 33 < 0.3 < 0.5 < 0.8 < 2.0 > = 2.0
  34. 34. 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 34 * As of September 30, 2013. WORKFORCE ORIGIN COCHRANE AREA COCHRANE 31% NORTHERN ONTARIO 38% 24% REST OF ONTARIO 3% OTHER 4%
  35. 35. Analyst Coverage (16) 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 Desjardins Capital Markets Michael Parkin 13.11.12 35 Firm Beacon Securities Michael Curran
  36. 36. Non-IFRS Financial Performance Measures Total cash costs per gold ounce sold Total cash costs per gold ounce is a common financial performance measure in the gold mining industry but with no standard meaning under IFRS. Detour Gold reports total cash costs on a sales basis. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, such as sales, certain investors use this information to evaluate the Company’s performance and ability to generate operating earnings and cash flow from its mining operations. Management utilizes this metric as an important tool to monitor cost performance. Total cash costs per gold ounce include production costs such as mining, processing, refining and site administration, less non-cash share-based compensation and net of silver sales divided by gold ounces sold to arrive at total cash costs per gold ounce sold. Production costs are exclusive of depreciation and depletion. Production costs include the costs associated with providing the royalty in kind ounces. Other companies may calculate this measure differently. Three months ended September 30 2013 Production costs $ Share-based compensation $ $ 29,986 1,214 - $ - - - (377) - $ $ 2012 30,363 - 24,700 $ 2013 - - Gold ounces sold Total cash costs per gold ounce sold 2012 (377) Silver sales Total cash costs 30,363 Nine months ended September 30 29,986 $ - 24,700 $ - 1,214 - Gold ounces sold exclude pre-commercial production ounces (prior to September 1, 2013) as these are credited against capitalized project costs. 36
  37. 37. Non-IFRS Financial Performance Measures Average Realized Price and Average Realized Margin Average realized price and average realized margin per ounce sold are financial measures with no standard meaning under IFRS. Management and investors use these measures to better understand the gold price and margin realized throughout a period. Average realized margin represents average realized price per gold ounce less total cash costs per ounce. Average realized price and average realized margin is intended to provide additional information to investors and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate this measure differently. Three months ended September 30 2013 Revenues from gold sales $ Gold ounces sold Average realized price 37 2012 $ $ 1,340 $ (1,214) $ 126 2013 2012 - 33,088 - - 24,700 Less: Total cash costs per gold ounce sold Average realized margin per gold ounce sold 33,088 Nine months ended September 30 24,700 - - $ $ - 1,340 $ (1,214) $ 126 - $ -
  38. 38. Management & Directors Management  Michael Kenyon  Executive Chairman  Paul Martin James Mavor Interim Chief Financial Officer  Pierre Beaudoin Chief Operating Officer  Julie Galloway       Derek Teevan  Charles Hennessey Process Plant Maintenance Manager and Deputy Mine General Manager  Director Technical Services Laurie Gaborit Rickardo Welyhorski Director Mineral Processing Drew Anwyll Andrew Croal Bill Snelling Director Corporate Systems & Controls MGM/Director of Operations  Sr VP Corporate & Aboriginal Affairs James Robertson VP Environment & Sustainability Sr VP General Counsel & Corporate Secretary   VP HR & Aboriginal Affairs Interim Chief Executive Officer  Rachel Pineault Joshua Hurrell Acting Mine Manager - Chief Geologist  Director Investor Relations Mike Papadakis Process Plant Manager Alberto Heredia Controller  Pat Donovan Jean-Francois Metail Director Reserves and Resources VP Corporate Development Directors     38 Peter Crossgrove Louis Dionne Robert E. Doyle André Falzon    Ingrid Hibbard Michael Kenyon Alex G. Morrison   Jonathan Rubenstein Graham Wozniak
  39. 39. Contact Information Paul Martin Interim Chief Executive Officer Email: pmartin@detourgold.com Phone: 416.304.0800 Laurie Gaborit Director Investor Relations Email: lgaborit@detourgold.com Phone: 416.304.0800 www.detourgold.com 39