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Dgc 14 05_01 _ q12014


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Dgc 14 05_01 _ q12014

  1. 1. 1 Q1 2014 Results Conference Call & Webcast - May 1, 2014 CANADA’S INTERMEDIATE GOLD PRODUCER
  2. 2. 2 Forward Looking Information This presentation contains certain forward-looking information and statements as defined in applicable securities law (referred to herein as “forward-looking statements”). Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “projects”, “potential”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will be taken”, “occur” or “be achieved” or the negative connotation of such terms. Forward-looking statements include, but are not limited to, statements with respect to Detour Gold’s future financial or operating performance; guidance for production, total cash costs, capital costs, exploration costs; expected throughput, mining and recovery rates; expected future production and mining activities; and opportunities to optimize the mine operation. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause 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, assumptions and parameters underlying the life of mine update not being realized, a decrease in the future gold price, discrepancies between actual and estimated production, changes in costs (including labour, supplies, fuel and equipment), changes to tax rates; environmental compliance and changes in environmental legislation and regulation, 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 2013 AIF and in the continuous disclosure documents filed by Detour Gold on and available on SEDAR at 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 sustaining capital costs; the Company’s ability to attract and retain skilled staff; sensitivity to metal prices and other sensitivities; the supply and demand for, and the level and volatility of the price of, gold; 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. All forward-looking statements in this presentation are necessarily based on opinions and estimates made as of the date such statements are made and are subject to important risk factors and uncertainties, many of which cannot be controlled or predicted. Detour Gold and the Qualified Persons who authored the associated Technical Report undertake 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.
  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 February 4, 2014, Detour Gold announced an updated life of mine plan for the Detour Lake mine. The NI 43-101 compliant Technical Report for this update was filed on SEDAR on February 4, 2014. The following QPs participated in this update: BBA Inc., under the direction of André Allaire, Eng., Acting President and CEO and Patrice Live, Eng., Director Mining; SGS Canada Inc., under the direction of Yann Camus, Eng., Project Engineer, 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 and Geotechnical Engineering Group Manager. 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”. Information Containing Estimates of Mineral Reserves and Resources Non-IFRS Financial Performance Measures The Company has included “Total cash cost per gold ounce sold (TCC)” , “Average realized gold price” and “Adjusted net loss” in this presentation which are non-IFRS measures. The Company believes that these measures, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company and its ability to generate operating earnings and cash flow from its mining operations. Detour Gold reports total cash costs on a sales basis. Total cash costs per gold ounce sold include production costs such as mining, processing, refining, site administration, costs associated with providing royalty in-kind ounces, and costs for agreements with Aboriginal communities, but are exclusive of depreciation and depletion, reclamation, non-cash share-based compensation and deferred stripping. Total cash costs are reduced by silver sales and divided by gold ounces sold to arrive at total cash costs per gold ounce sold. Total cash costs plus total capital per gold ounce sold includes TCC as calculated above plus sustaining capital and deferred stripping divided by gold ounces sold. These 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. Other companies may calculate this measure differently.
  4. 4. 4 Management Participants Paul Martin President and Chief Executive Officer Pierre Beaudoin Chief Operating Officer James Mavor Chief Financial Officer First Quarter 2014 Operational & Financial Results Conference Call and Webcast All monetary amounts are in U.S. dollars unless otherwise stated.
  5. 5. 5 Q1 2014 Highlights Ramp-up Progressing Well  Gold production of 107,154 ounces  Revenues of $110 million on sales of 84,560 oz  Total cash costs of $976 per gold ounce sold1  Net loss of $54.9 million or $0.38 per share  Adjusted net loss of $28.1 M or $0.20 per share1  Signed a 6-yr fixed rate electricity contract at Cdn$0.05/kWh  Closed equity financing for net proceeds of $149 million  Repaid $40 million of debt  Cash and short-term investment balance of $145.2 million at March 31, 2014 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the first quarter ended March 31, 2014.
  6. 6. 6 Q1 2014 Operating Results 0 1 2 3 4 5 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 1.0 0.8 0.2 0.0 0.4 0.6 TonnesMilled(Mt) Q1’13 Q2’13 Q3’13 Q1’14 1’14 Q4’13 80 82 85 92 91 Mill production HeadGrade(g/tAu) Recovery % 0.90G/T GOLD mill grade4.07 MILLION tonnes milled 91% GOLD recovery Q1’14 Performance:  Positive ramp-up progress  Gold production of 107,154 ounces met expectations  4.1 Mt of ore processed:  Head grade in-line with model  Recovery rates as expected  Dilution reduced to 4.6% below 2014 budget of 7%
  7. 7. 7 Q1 2014 Operating Results - Mine Q1’14 Performance:  4.9 Mt ore mined; strip ratio 2.9:1  Total of 19.2 Mt mined vs 20.9 Mt planned; shortfall of 1.7 Mt due to: › In-pit rehandling to advance southwall pushback & complete optimal south ramp access › Shovel allocation to process HG stockpile  Avg. mining rates of 213,000 tpd  Increase of 500,000 t to ROM stockpile = 2.8 Mt @ 0.78 g/t at end of Q1 Mining Rates (K tpd) Q1’13 Q2’13 Q3’13 Q1’14Q4’13 Ex-Pit In-linewith Budget 0 50 100 150 200 250 In-pit rehandling Shovel test 231513 213
  8. 8. 8 Q1 2014 Operating Results - Mine Next steps:  Moving one 6060 shovel from overburden to rock  Improving availability of large shovels  Mining rates to average approx. 230,000 tpd in Q2  Complete southwall pushback and final south ramp access this summer to provide better exposure to higher grade ore for H2 mining Q1’13 Q2’13 Q3’13 Q1’14Q4’13
  9. 9. 9 Q1 2014 Operating Results - Mill Q1’14 Performance:  Plant throughput rates at 45,282 tpd › Optimize secondary crushers and liner profiles › Last 68 days averaged 49,750 tpd  Mill availability 80% vs 82% › Slower start up following December shutdown › March availability in-line with plan Next steps:  Further improve mill availability  Increase milling rate to 2,500 tpoh Throughput(Ktpd) 0 10 20 30 40 50 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Availability % Q1’13 Q2’13 Q3’13 Q1’14Q4’13 Mill productivity 8066786866
  10. 10. 10 Q1 2014 Operating Results - Costs Total Cash Costs: Q1’14 Q4’13 Production costs $83.1 M $98.0 M Total cash costs $82.5 M $111.5 M Gold oz sold 84,560 oz 95,000 oz TCC/ oz sold1 $976/oz $1,174/oz Q1 Progress:  Higher mining costs as a result of ex-pit tonnes shortfall  Processing costs improving with lower reagents consumption Next steps:  Downward trend to continue with throughput and production increase $- $5 $10 $15 $20 $25 $30 Q1-14 Q4-13 Unit Costs (C$/t milled) G&A $3.57/t G&A $4.13/t Processing $11.13/t Processing $11.75/t Mining $2.87/t mined Mining $2.60/t mined $28.22/t $29.15/t Q4’13Q1’14 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the first quarter ended March 31, 2014 or year-ended December 31, 2013. $0
  11. 11. 11 Q1 2014 Financial Review Revenues: Q1’14 Q4’13 Ounces sold 84,560 oz 95,000 oz Gold sales $110.0 M $120.8 M Avg realized price1 $1,301/oz $1,269/oz 9,929 1,945 10,720 0 20,000 40,000 60,000 80,000 100,000 120,000 Circuit inventory re-build Unsold finished metal & adjustments, including carbon fines 2% royalty in-kindGoldProduction GoldSales 107,154 84,560 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the first quarter ended March 31, 2014. Q1’14 Gold Ounces Produced vs Sold
  12. 12. 12 Adjusted net earnings (loss) per share: is calculated using the weighted average number of share outstanding under the basic method of earnings (loss) per share as determined under IFRS. 2014 2013 Net earnings (loss) $(54,943) $23,413 Adjusted for: Fair value (gain) loss of the convertible notes 16,479 (38,635) Foreign exchange (gain) loss 73 2,283 Non-cash unrealized (gain) loss on derivative instruments 4,252 - Accretion on convertible notes 5,953 - Unwinding of discount on decommissioning and restoration provisions 94 31 Adjusted net earnings (loss)1 $(28,092) $(12,908) Adjusted basic earnings (loss) per share1 $(0.20) $(0.11) Three months ended March 31 Q1 2014 Financial Review 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the first quarter ended March 31, 2014.
  13. 13. 13 Q1 2014 Financial Review Cash Flows: Cash Flow US$’000 2014 2013 Operating Activities (32,090) (6,912) Investing Activities (22,002) (130,046) Financing Activities 110,353 92,720 Changes in cash and cash equivalents 56,261 Effects of exchange rate changes (985) (2,962) Cash and cash equivalents – beginning of financial period 88,130 197,807 Cash and cash equivalents – end of financial period 143,406 150,607 Three months ended March 31
  14. 14. 14 Maintaining 2014 Guidance 450-500 estimated gold production THOUSAND oz $800-900 estimated total cash costs TCC per oz sold $131 estimated capital expenditures MILLION capex Other  $19 M Corporate G&A  $3 M Exploration program 3 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 $35 M. 1, 2 second year of operation 2014