Dgc 14 01_28-29 - td mining conference
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Dgc 14 01_28-29 - td mining conference Dgc 14 01_28-29 - td mining conference Presentation Transcript

  • CANADA’S INTERMEDIATE GOLD PRODUCER 1 TD Securities Mining Conference, Toronto January 28-29, 2014
  • 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, sustaining capital expenditures for 2014, reserve estimates, ore grade, expected mine life, average annual gold production, gold recovery, strip ratio, cash operating costs and other costs, ramp-up of operations, throughput and mining rates, future operating plans, potential expansion opportunities, and plans for organic growth which includes growing mineral reserves to more than 20 million ounces. Forwardlooking 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
  • Notes to Investors Non-IFRS Financial Performance Measures The Company has included a non-IFRS measure in this press release: “total cash cost per ounce of gold sold”. The Company believes that this measure, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to other issuers. Detour Gold reports total cash costs on a sales basis. 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. . 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. The scientific and technical content of this presentation has been reviewed, verified and approved by Drew Anwyll, P.Eng., Vice President of Operations, a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 “Standards of Disclosure for Mineral Projects”. 3
  • Invest in Detour Gold A premier intermediate Canadian gold producer and long-term investment opportunity 15.6 MILLION oz of gold in proven and probable reserves 4 + 21YEAR mine life in mining-friendly Ontario, Canada ~ 600 THOUSAND oz / year average annual gold production over next five years
  • Flagship Operation in Canada ONTARIO Timmins 5 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 DETOUR LAKE MINE growth › Exploration upside for high-grade Toronto mineralization
  • Detour Lake: 1st Year of Operation 6 Oct. 2, 2013
  • Detour Lake: 1st Year of Operation 2013 Production (Koz) Gold production 2013 GOLD PRODUCTION 80 60 40 20 0 Q1 Q2 Q3 Key statistics  2013 gold production of 232,287 oz  Total cash costs expected to be $1,100/oz during commercial period (September to December)  Capital expenditures of C$196 M incurred Q4 Significant milestones  First gold pour in February 2013  Commercial production declared on September 1, 2013  Discovery of high grade mineralization at Lower Detour 7
  • Detour Lake: 1st Year of Operation Q1 Q2 Q3 Q4 2013 Ore tonnes mined (Mt) 1.29 2.70 4.16 4.08 12.24 Tonnes milled (Mt) 1.02 2.87 3.88 3.40 11.18 Mill grade (g/t Au) 0.64 0.76 0.72 0.81 0.75 Recovery (%) 80 83 85 92 86 Availability (%) 66 68 78 66 71 16,841 57,897 75,672 81,877 232,287 Ounces produced (oz) (1) 1. During the commercial period (September 1 to year-end), the Detour Lake mine produced 105,898 oz of gold. 8
  • Detour Lake: 1st Year of Operation Mining rates: Q4 DEC 9 203 THOUSAND tpd 222 THOUSAND tpd 2013 Mine performance  Exiting 2013 with average mining rates close to 2014 planned rates  Access to multiple ore zones in pit, including higher grade Domain #2  Improvement in shovel productivity and haul truck cycle  Continuous improvement in dilution control  Year-end stockpiles of 2.4 Mt at 0.82 g/t providing operation flexibility
  • Detour Lake: 1st Year of Operation Best months: OCT NOV THOUSAND 45 tpd 47 THOUSAND tpd 2013 Mill Performance  Milling rates proven at design levels (2,500 tpoh)  Availability below expectations as a result of unplanned shutdowns  Main shutdown: 15 days in December due to structural damage to the torque cage of the pre-leach thickener  Gold recovery has exceeded design levels  Modifications to secondary and pebble crushers completed 10
  • 2014 11 PRODUCTION INCREASE production DECREASE costs
  • 2014 Corporate Objectives  Realize immediate opportunities to improve liquidity:  Have secured long-term power contract  Finalizing discussion to refresh mine equipment lease to US$150 M Estimated cost savings C$20 MIILLION per yr for 6 yrs Extra borrowing capacity UP TO C$40 MILLION for 2014  Ramp up to full nameplate capacity (55,000 tpd) by year-end  Achieve financial and production guidance targets  Confirm high-grade mineralization through 2014 drilling program at Lower Detour 12
  • 2014 Guidance 450-500 THOUSAND oz estimated gold production US$800-900 TCC (1) (2) per oz sold estimated total cash costs US$131 MILLION(3) capex estimated capital expenditures 2014 second year of operation Other  US$19 M Corporate G&A  US$3 M Exploration program 1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation. 2. The following price and cost assumptions were used to forecast 2014 production and costs: diesel fuel price of C$0.95 per litre; power cost of C$0.05 per kilowatt hour; and exchange rate of $1US:$1.05C. 3. Includes deferred stripping costs of US$35 M. 13
  • 2014 Capital Plan Sustaining Capital: US$131 M  Mine › Mobile fleet purchase (1 truck, 1 shovel) › Capitalize maintenance  Mill › Plant improvements  TMA › Raise dam of Cell 1 by 6 m › Commence Cell 3 footprint BREAKDOWN OF 2014 SUSTAINING CAPITAL Mill US$18 M TMA Deferred Stripping US$40 M US$35 M Mine US$33 M Other $US5 M 14
  • 2014 Operating Plan Targets: Steady state production & optimization 19 MT milled ore G/T AU 0.87 head grade 92 % recovery gold WASTE:ORE 3.3:1strip ratio (1) 1. Includes 7% dilution at 0.20 g/t. PRODUCTION 15 2014 gold production (oz) H1 2014 H2 2014 450,000-500,000 200,000-225,000 250,000-275,000  H2 gold production will be ~20% higher than H1 as throughput rates are projected to gradually increase to 55,000 tpd in Q4  Higher grade ore from Domain 2 and 11 will represent up to 50% of overall mill feed  Mining rates to average +250,000 tpd
  • 2014 Operating Plan Targets: 52 THOUSAND tpd throughput 87 % availability 16 Steady state production & optimization  Mining and milling unit costs to decrease – ‘economy of scale’  Reach design operating rates by year-end  Increase availability › Improve maintenance schedule to reduce downtime  Tailing facility costs reduced with construction change to “center-line” design
  • Operations Outlook Beyond 2014 Targets: 2015 2016 2017 17 THOUSAND 55 tpd THOUSAND 58 tpd 61 THOUSAND tpd Increase throughput to 61,000 tpd/ 94% availability for 2017  Debottlenecking exercise starting in 2014 › Modification of primary crusher conveyor › Installation of 1 cyanide detox tank and 1 additional oxygen plant  Gold recovery improvement  Secondary crushers optimization
  • 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 › Up to 8,000 m drilling program in Q1 2014 18
  • Organic Growth Opportunities 630 km2 15.6 M oz in Reserves Lower Detour Area *Note: Excludes drilling around Detour Lake mine and Block A. 19
  • Organic Growth Opportunities 8,000 m of proposed drilling in Q1 2014 *Proposed drill locations subject to change pending initial drill results. 20
  • Invest in Detour Gold A premier intermediate Canadian gold producer and long-term investment opportunity 15.6 MILLION oz of gold in proven and probable reserves 21 + 21YEAR mine life in mining-friendly Ontario, Canada ~ 600 THOUSAND oz / year average annual gold production over next five years
  • ADDITIONAL information        22 Shareholder Information Corporate Responsibility Detour Lake Mine at a Glance Conventional Milling Process Q3 2013 Financial Highlights Debt Repayment Schedule Management & Directors
  • Shareholder Information Share Structure Top Shareholders 138.2 M 10.5 M 15% >80% Issued & outsanding Options & FN share commitments 13.0 M Convertible notes (1) 161.7 M FULLY DILUTED C$96 Paulson & Co INSTITUTIONS TOTAL Cash position and share structure at Dec 31, 2013. 1. Conversion price for the Notes is US$38.50. C$850 MILLION cash position MILLION market cap Research Coverage        23 Bank of America Merrill Lynch Beacon Securities BMO Capital Markets Canaccord Genuity CIBC World Markets Credit Suisse Securities Desjardins Capital Markets       GMP Securities Haywood Securities Laurentian Bank Securities Macquarie Capital Markets National Bank Financial Paradigm Securities     Raymond James RBC Capital Markets Scotia Capital TD Securities
  • Corporate Responsibility Focus on health and safety of our employees, the well-being of our community and the protection of the natural environment  Hiring in the region, giving priority to local Aboriginal communities:     625 full-time employees* 93% of workforce from region 25% are Aboriginals Scholarship and job training  Supporting local communities  Business opportunities  Participation in municipal development  Corporate philanthropy * As of December 31, 2013. 24 WORKFORCE ORIGIN Cochrane Area Cochrane 31% Northern Ontario 38% 24% Rest of Ontario 3% Other 4%
  • Detour Lake Mine at a Glance Key Statistics OP reserves (M oz) Sept 2012 (1) 15.6 Mill throughput (tpd) 55,000 Strip ratio (waste:ore) 3.7 Gold recoveries 91% Average grade (g/t) 1.03 Estimated mine life (yrs) 21.5 Avg. production (oz/yr) (2) 657,000 Initial capex (C$ B) 1.5 Sustaining capex (C$ B) 1.2 Commercial production declared on September 1, 2013 1. Based on September 2012 Mine Plan (October 2012 Technical Report). 2. Includes expansion from 55,000 tpd to 61,000 tpd. 25
  • 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 Carbon Stripping Gold Doré Bars 26 Gold Furnace Gold Electrowinning Leach Tailings Pre-Leach Thickener
  • Q3 2013 Financial Highlights Income Statement Revenues 1 Q3 2013 $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. All sales prior to commercial production were credited against capitalized project costs. 27
  • Debt Repayment Schedule Revolving Credit Facility (1) CAT Finance Lease Convertible Notes Face Value US$70 M (1) US$150 M US$500 M Maturity March 2016 Jan 2017-Jan 2019 (2) November 30, 2017 Interest Rate LIBOR + 3% LIBOR + 4% 5.5% Monthly Quarterly Semi-annually n/a n/a $38.50 At Dec 31, 2013 Payable Conversion Price Payment schedule Principal Interest Principal + Interest Principal Interest Total (US$M) 2014 - $2.3 $33.7 - $27.5 $63.5 2015 - $2.3 $34.2 - $27.5 $64.0 2016 $70 $0.4 $32.3 - $27.5 $130.2 2017 - - $24.0 $500 $27.5 $551.5 Thereafter - - $4.1 - $70 $5.0 Total (US$M) $128.3 $500 $110.0 $4.1 $813.3 1. The Revolving Credit Facility provides for borrowings of up to C$90 M. Subject to a completion tests prior to September 30, 2014. 2. Includes multiple leases with maturities of 5 yrs from lease date. 28
  • Management & Directors Management  Michael Kenyon  Executive Chairman  Paul Martin Pierre Beaudoin  James Mavor  Julie Galloway   Derek Teevan  Sr VP Corporate & Aboriginal Affairs  Rachel Pineault James Robertson Rickardo Welyhorski Director Mineral Processing  Charles Hennessey Process Plant Maintenance Manager and Deputy Mine General Manager VP Environment & Sustainability Sr VP General Counsel & Corporate Secretary   VP HR & Aboriginal Affairs Interim Chief Financial Officer  Jean-Francois Metail Bill Snelling Director Corporate Systems & Controls VP Reserves and Resources Chief Operating Officer   VP Corporate Development Interim Chief Executive Officer  Pat Donovan  Andrew Croal  Joshua Hurrell Acting Mine Manager - Chief Geologist Director Technical Services Mike Papadakis Process Plant Manager Laurie Gaborit Director Investor Relations  Drew Anwyll Alberto Heredia Controller MGM/VP Operations Directors     29 Peter Crossgrove Louis Dionne Robert E. Doyle André Falzon    Ingrid Hibbard Michael Kenyon Alex G. Morrison   Jonathan Rubenstein Graham Wozniak
  • 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 30