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Dgc 14 05_07-08 - corporate presentation


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Dgc 14 05_07-08 - corporate presentation

  1. 1. 1 CANADA’S INTERMEDIATE GOLD PRODUCER Corporate Presentation Toronto, May 7-8, 2014
  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 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; opportunities to optimize the mine operation; the updated mine plan and economic analysis of the Detour Lake mine including, but not limited to, the life of mine plan, the waste to ore ratio, processing and production rates, grades, metallurgical recovery rates, operating and sustaining capital costs, and the projected life of mine, opportunities to optimize the mine operation; the success and continuation of exploration activities, the future price of gold, reclamation obligations, government regulations and environmental risks. 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)” 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. Refer to the MD&A of March 31, 2014 or relevant period for reconciliation of these measures. 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. Further details regarding total cash costs per gold ounce sold and a reconciliation to the nearest IFRS measures are provided in our MD&A accompanying our financial statements filed on Total cash costs plus capex 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 Invest in Detour Gold 15.5MILLION oz of gold in proven and probable reserves 600 average annual gold production over next 10 years ~ THOUSAND oz / year21 in mining-friendly Ontario, Canada + YEAR mine life A premier intermediate Canadian gold producer and long-term investment opportunity
  5. 5. 5 ONTARIO Toronto DETOUR LAKE MINE Flagship Operation in Canada Detour Lake mine investment thesis  Low-risk, safe mining jurisdiction  High-quality asset with long mine life  Production growth opportunities  Strong cash flow growth following ramp-up completion  Leverage to gold price & weakening Canadian dollar  Strong exploration upside on 100% owned land package of 630 km2 on Greenstone Belt
  6. 6. 6 2014 INCREASE production DECREASE costs
  7. 7. 7 2014 Guidance 450-500 estimated gold production THOUSAND oz US$800-900 estimated total cash costs TCC per oz sold US$131 estimated capital expenditures MILLION capex Other  US$19 M Corporate G&A  US$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 US$35 M. 1, 2 second year of operation 2014
  8. 8. 8 2014 Developments 22% Positive developments to date:  Updated Life of Mine Plan  Closed equity financing for net proceeds of US$149 million  Repaid US$40 million of debt in Q1  Secured 6-year power contract at C$0.05/kWh  Q1 production of 107,154 oz Next Milestones:  Complete ramp-up of Detour Lake  Generate positive cash flows in H2
  9. 9. 9 Steady state production & optimization  Mill throughput rates gradually increase to 55,000 tpd in Q4  Quarterly production increase expected as mine ramps up: › H1 = 200,000-225,000 oz › H2 = 250,000-275,000 oz  50% of overall mill feed from higher grade ore zones 19 MT ore milled 3.3:1 WASTE:ORE strip ratio 0.87 G/T AU head grade 92 % gold recovery (1) 1. Includes 7% dilution at 0.20 g/t. 2014 Targets 2014 Operating Plan
  10. 10. 10 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 due to: › In-pit rehandling for pit development › Shovel allocation (  Avg. mining rates of 213,000 tpd  Run-of-mine stockpiles of 2.8 Mt @ 0.78 g/t at Q1 end  Dilution reduced to 4.6% Next steps:  Mining rates to 230,000 tpd in Q2  Complete mine development by summer to access higher grade ore for H2 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
  11. 11. 11 Q1 2014 Operating Results - Mill Q1’14 Performance:  4.1 Mt ore processed @ 0.90 g/t Au  Mill availability 80% vs budget of 82%  Recovery rates as planned  Reduction in cyanide, SO2 and grinding media consumptions Next steps:  Further improve mill availability  Reach nameplate capacity of 55,000 tpd in Q4 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 Q1’14Q4’13 80 82 85 92 91 Mill production HeadGrade(g/tAu) Recovery %
  12. 12. 12 Q1 2014 Operating Results - Costs Total Cash Costs: Q1’14 Q4’13 Gold oz sold 84,560 oz 95,000 oz TCC/ oz sold1 US$976/oz US$1,174/oz Q1 Progress:  Higher unit mining costs as a result of ex-pit tonnes shortfall  Unit processing costs under budget with lower reagents consumption $- $5 $10 $15 $20 $25 $30 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 $29.15/t 1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation. Unit Costs (C$/t milled) Q4’13Q1’14 Next steps:  Downward trend to continue with throughput and production increase Total Cash Costs $0
  13. 13. 13 Q1 2014 Financial Results Key financial statistics (US$ M) Q1’14 Revenues $110.0 M Production costs $83.1 M Depreciation & depletion $30.6M Loss from mine operations $3.7 M Cash used by operations $32.1 M Net loss/Adjusted net loss1 $54.9 M/$28.9 M Net loss & Adjusted net loss per share1 $0.38/$0.20 Cash & short-term investments $145.2 M  Capex2 totals US$96 M for 2014; only US$5.5 M spent in Q1  No capitalization of stripping costs during period  70,000 oz hedged at an average of US$1,225/oz = < 20% of 2014 remaining forecasted gold sales 1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation. 2. Sustaining capital excludes deferred stripping, which is budgeted at US$35 M for 2014.
  14. 14. 14 2014- LIFE OF MINE Updated plan – 02/04/2014 2035
  15. 15. 15 LOM Plan 02/2014 Update Proven & Probable Reserves (M oz) 1 15.5 Gold grade (g/t) 1.02 Strip ratio (waste:ore) 3.5 Estimated gold recovery (%) 92 Mine life (years) 21.7 Annual gold production (oz) 660,000 Total cash costs (TCC) (C$/oz sold) 2 $723 Sustaining capital (C$ billion) $1.14 TCC + capex (C$/oz sold) 2 $848 LOM Summary 1. Estimated using a gold price of US$1,000/oz. Includes stockpiles as of December 31, 2013. 2. Refer to the section on Non-IFRS Performance Measures on slide 3. Capex = sustaining capital expenditures + deferred stripping. Main objective: Optimize first 5 years
  16. 16. 16 TCC1 (C$/oz sold) 800 700 600 500 400 300 200 100 0 Gold Production (‘000 oz) Gold Production/Cost Profile 900 850 800 750 700 650 600 550 500 598,000 oz C$759/oz 0.96 g/t 596,000 oz C$762/oz 0.91 g/t 659,000 oz C$778/oz 1.00 g/t 765,000 oz C$639/oz 1.16 g/t 1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation. 600,000 oz/yr for first 10 yrs
  17. 17. 17 Growth Opportunities  Increase throughput to 61,000 tpd/ 94% availability for 2017 › Starts in 2014 with installation of 1 cyanide detox tank and 1 additional oxygen plant  Incorporate Block A into current mine plan  Evaluate heap leach potential of the low-grade stockpiles › Grading 0.4-0.5 g/t Au and currently classified as waste  Test exploration potential of large prospective property
  18. 18. 18 Block A Potential US$1,000/oz US$1,200/oz 15.5 Moz @ 1.02 g/t Au P+P 2.0 Moz @ 1.15 g/t Au M+I ~5.5 km
  19. 19. 19 Lower Detour Area 15.5 M oz in Reserves 630 km2 2014 Exploration Focus
  20. 20. 20 2014 Exploration Focus Lower Detour Area: 14,874 m of drilling completed in 2014  New mineralized system with strike length of 300 m  Tested from surface to depth of 300 m  Qtz or qtz-tourmaline veins with pyrite & visible gold
  21. 21. 21 Invest in Detour Gold 15.5MILLION oz of gold in proven and probable reserves 600 average annual gold production over next 10 years ~ THOUSAND oz / year21 in mining-friendly Ontario, Canada + YEAR mine life A premier intermediate Canadian gold producer and long-term investment opportunity
  22. 22. 22 ADDITIONAL information  Shareholder Information  Corporate Responsibility  Detour Lake Mine: LOM Operating Costs  Detour Lake Mine: LOM & 2014 Sustaining Capital  Detour Gold: Reserves & Resources  Debt Repayment Schedule  Management & Directors
  23. 23. 23 Shareholder Information Paulson & Co >80% INSTITUTIONS TOTAL10.8 M Share options 13.0 M Convertible notes 1 181.2 M FULLY DILUTED 157.4 M Issued & outstanding Share Structure (03/31/2014) Top Shareholders 1. Conversion price for the Notes is US$38.50. 15% C$1.9 BILLION market capUS$145.2 MILLION cash position Share Structure Top Shareholders
  24. 24. 24 Focus on health and safety of our employees, the well-being of our community and the protection of the natural environment  Hiring in the region, giving priority to local Aboriginal communities:  665 full-time employees*  93% of workforce from region  25% are Aboriginals  Scholarship and job training  Supporting local communities  Business opportunities  Participation in municipal development  Corporate philanthropy Northern Ontario 40% Cochrane 23% Cochrane Area 30% Rest of Ontario 4% 3% Other Corporate Responsibility WORKFORCE ORIGIN * As of March 31, 2014. Excludes corporate office at 34 full-time employees.
  25. 25. 25 09/12 02/14 Operating Costs C$/t milled C$/t milled C$/t mined C$/oz sold 2 Mining costs 11.65 11.55 2.56 392 Processing costs 7.83 7.82 266 G&A 1.86 2.44 83 Total cash operating costs 21.34 21.81 741 Other adjustments 1 (18) Total cash costs 723 25 LOM Operating Costs 1. Other adjustments include costs for deferred stripping, agreements with Aboriginal communities, refining charges and are net of silver by-product credits. 2. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation. Maintenance Labour & Contractors Power Diesel G&A and other Consumables 30% 20% 26% 7% 11% 6% 2014 COSTS: 80% of costs in Cdn$
  26. 26. 26 LOM Sustaining Capital Description 5 years 2014 -2018 (C$ M) Sustaining Capital LOM (C$ M) Mining 168 1 535 Process Plant 71 2 126 TMA 203 3 454 G&A 14 28 Total 456 1,143 Deferred Stripping 225 614 Mine Closure 70 Higher capital in first 5 years: 1. Ramp-up to 38 trucks 2. Complete plant debottlenecking exercise 3. Prepare TMA foundation for 2nd and 3rd cell 50% of sustaining capital costs in Cdn$ Mine US$33 M TMA US$40 M Deferred Stripping US$35 M 2014 SUSTAINING CAPITAL: US$131 M Other US$5 M Mill US$18 M
  27. 27. 27 Effective December 31, 2013 Tonnes (Mt) Grade (g/t Au) Contained Gold (koz) Reserves (1,2,3,4) Detour Lake Mine Proven 94.4 1.29 3,901 Probable 379.7 0.95 11,585 P&P 474.0 1.02 15,486 Stockpiles 2.4 0.82 63 Total P&P 476.4 1.02 15,549 Resources (3,4) Detour Lake Mine Measured (M) 16.4 1.37 725 Indicated (I) 65.9 1.01 2,150 M+I 82.4 1.09 2,874 Block A Measured (M) 1.5 1.21 57 Indicated (I) 52.5 1.15 1,934 M+I 53.9 1.15 1,991 Total M+I 136.3 1.11 4,866 Detour Lake Mine Inferred 19.2 0.75 465 Block A Inferred 2.5 1.23 99 Total Inferred 21.7 0.81 564 Detour Gold: Reserves & Resources 1. Mineral reserves calculated using a gold price of US$1,000/oz; mineral resources calculated using US$1,200/oz. Foreign exchange rate of C$1.03 to US$1.00. 2. Mineral reserves estimated using a 4% dilution at 0.20 g/t Au (7% at 0.20 g/t Au for 2014) and 5% ore loss. 3. Based on an elevated cut-off grade of 0.5 g/t Au for Detour Lake and cut-off grade of 0.6 g/t Au for Block A. 4. Mineral resources are exclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral reserves and resources are compliant with CIM definitions.
  28. 28. 28 Derivative Instruments Currency Contracts at April 30, 2014 Ounces Notional Amount US ‘000s Contract Rate/Price Currency Collars $20,000 1.040 Currency Forwards (USD/CAD) $40,000 1.122 Total Derivative Assets $60,000 Currency Collars $20,000 1.085 Gold forwards 30,000 Cdn$1,329/oz Gold forwards 85,000 US$1,273/oz Total Derivative Liabilities 115,000 $20,000 US$1,256/oz1  January 2014 commenced gold sales risk management program; continued FX risk management program throughout Q1  Hedging gains and losses are recorded in net finance income/costs 1. Using exchange rate of $1US:$1.10C.
  29. 29. 29 Debt Repayment Schedule At March 31, 2014 Revolving Credit Facility (1) CAT Finance Lease Convertible Notes Face Value US$30 M (1) US$150 M US$500 M Maturity March 2016 Jan 2017-Dec 2018(2) November 30, 2017 Interest Rate LIBOR + 3% LIBOR + 4% 5.5% Payable Monthly Quarterly Semi-annually Conversion Price n/a n/a $38.50 Payment schedule Principal Principal + Interest Principal Interest Total (US$M) 2014 - $11.1 - $27.5 $38.6 2015 - $34.5 - $27.5 $62.0 2016 $30 $32.6 - $27.5 $90.1 2017 - $35.8 $500 $27.5 $563.3 Thereafter - $7.1 - - $7.1 Total (US$M) $30 $121.1 $500 $110.0 $761.1 1. The Revolving Credit Facility provides for borrowings of up to C$90 M and is subject to a completion test prior to September 30, 2014. The Company intends to repay the Revolving Credit Facility within the next 12 months. 2. Includes multiple leases with maturities of 5 yrs from lease date.
  30. 30. 30  Michael Kenyon Executive Chairman  Paul Martin President and CEO  Pierre Beaudoin COO  James Mavor CFO  Julie Galloway Sr VP General Counsel & Corporate Secretary  Derek Teevan Sr VP Corporate & Aboriginal Affairs  Drew Anwyll VP Operations  Pat Donovan VP Corporate Development  Jean-Francois Metail VP Reserves and Resources  Rachel Pineault VP HR & Aboriginal Affairs  James Robertson VP Environment & Sustainability  Andrew Croal Director Technical Services  Laurie Gaborit Director Investor Relations  Alberto Heredia Controller  Bill Snelling Director Corporate Systems & Controls  Rickardo Welyhorsky Director Mineral Processing  Charles Hennessey General Manager Operations  Peter Crossgrove  Louis Dionne  Robert E. Doyle  André Falzon  Alex G. Morrison  Jonathan Rubenstein  Graham Wozniak  Ingrid Hibbard  Michael Kenyon  Paul Martin Management & Directors Management Directors
  31. 31. 31 Paul Martin President and Chief Executive Officer Email: Phone: 416.304.0800 Laurie Gaborit Director Investor Relations Email: Phone: 416.304.0800 Contact Information