Dgc 14 08_06 - corporate presentation
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Transcript of Dgc 14 08_06 - corporate presentation
1
CANADA’S INTERMEDIATE GOLD PRODUCER
Corporate Presentation
August 6, 2014
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 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 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
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 June 30, 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
www.sedar.com. Total cash costs plus capex per gold ounce sold includes TCC 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
Invest in Detour Gold
15.5 MILLION oz of gold
in proven and
probable reserves
600 average annual gold
production over next 10 years
~ THOUSAND oz / year 21
in mining-friendly
Ontario, Canada
+ YEAR mine life
A premier intermediate Canadian gold producer
and long-term investment opportunity
5
ONTARIO
Toronto
DETOUR LAKE MINE
A Unique Investment Opportunity
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 & Canadian dollar
Strong exploration upside on 100% owned
land package of 630 km2 on Greenstone Belt
Invest in Detour Gold
6
H1 2014 Highlights
22%
Positive developments to date:
Gold production of 224,520 oz
Total cash costs of US$956/oz sold1
Repaid US$40 M of debt
US$138.2 M in cash and short-term
investments at end of Q2
High grade gold intersections
reported at Lower Detour
Received electricity rebate of
US$16 M for half of 2013 and 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 second quarter ended June 30, 2014.
7
76 82
107
117
0
20
40
60
80
100
120
140
$1,214 $1,174
$976 $941
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Ramp-up Progression
Gold Production (‘000 oz)
Q3’132 Q4’13 Q2’14 Q1’14
Total Cash Costs (US$/oz sold)1
Q3’132 Q4’13 Q2’14 Q1’14
Quarter to quarter improvements:
Steady production growth since commercial production
Operations costs per ounce continue to trend lower with ramp-up
progress
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
corresponding period.
2. Commercial production declared on September 1, 2013. TCC reported is for the month of September 2013.
8
2014 Guidance Update
2014 Guidance
H1 A Prior Revised
Mill throughput avg (Ktpd) 46.9 52.0 49.0
Mine output (Ktpd) 211 252 230-235
Gold production (oz) 224,520 450,000-500,000 450-000-480,000
TCC (US$/oz sold)1 $956 $800-900 $900-975
Sustaining capital (US$ M) $452 $96 $95-$100
Deferred stripping (US$ M) $15 $35 $30-$35
Debt reduction (US$ M) $40 $80-100 Max. $80
H1 2014 Scorecard:
Higher end of gold production achieved, mainly driven by higher grades
Lower mining and milling rates than planned
Operating cost per ounce trend decreasing at slower rate than projected
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 corresponding period.
2. Refer to Slide 15.
9
Q2 2014 Operating Results
0
1
2
3
4
5
Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
1.0
0.8
0.2
0.0
0.4
0.6
To
nn
es
Mille
d (
Mt)
Q2’13 Q3’13 Q4’13 Q2’14
1’14
Q1’14
82 85 92 91 91
Mill Production
Hea
d G
rad
e (
g/t
Au
) Recovery %
0.91 G/T GOLD head grade 4.42 MILLION
tonnes milled 91 % GOLD recovery
Q2’14 Performance:
Gold production of 117,366 ounces
4.4 Mt of ore processed: 65% direct
feed and 35% run-of-mine stockpiles
Head grade of 0.91 g/t, above model
Recovery rates as expected
Dilution reduced to <3%, well below
2014 budget of 7%
10
Q2 2014 Operating Results - Mine
Q2’14 Performance:
2.9 Mt ore mined; strip ratio 5.6
Total of 19.0 Mt mined
Avg. mining rates of 209,000 tpd vs
230,000 tpd in plan
Shortfall due to reduced productivity:
› in mining overburden and till
› in removing old infrastructure
around the former Campbell pit
ROM stockpiles total 1.3 Mt @ 0.76 g/t
at end of Q2, net decrease of 1.5 Mt
from end of Q1
Q2 2014 Mining Rates (Ktpd)
Q1’13 Q2’13 Q3’13 Q1’14 Q4’13
18 3
0
50
100
150
200
250
Overburden
Till
Production
Removal
of Old
Infrastructure
Ta
rge
t
Ou
tco
me
230
209
11
H2 2014 Focus - Mine
Plans for H2:
Reduction in overburden and till
removal
› Total of approx. 4.6 Mt (approx.
2.6 Mt completed in July)
Completion of southwall pushback
in Q3
Removal of old infrastructure near
Campbell pit
Continue improving availability of
large shovels
Annual mining tonnage of 82 Mt
(approx. 44 Mt in H2)
Q1’13 Q2’13 Q3’13 Q1’14 Q4’13
12
Q2 2014 Operating Results - Mill
Q2’14 Performance:
Plant throughput rates averaging
48,569 tpd
Availability of 83%, at low end of
expectations
Optimization and efficiencies focused on
› Secondary crushers availability and
utilization
› Dome stockpile management and
mill drive system
› Maintenance improvement plan
Recovery rates as planned; gravity
recovery at 24%
0
10
20
30
40
50
60
Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
Availability % 1
Q2’13 Q3’13 Q4’13 Q2’14 Q1’14
Mill Throughput (ktpd)
83 80 66 78 68
1. Availability = capital utilization.
13
H2 2014 Focus - Mill
Plans for H2:
Ramping up from 83 to 89% by year-end
Q3 Schedule:
› SAG pulp lifter liner change
completed in July
› Further optimization of dome
feeding system
Q4 Schedule:
› Ball mills liner change
› Pre-leach thickener rake inspection
Reach 55,000 tpd by year-end
Q3-Q4’14:
Implement next phase of
maintenance improvement plan
14
Q2 Progress:
Higher mining costs due to:
› Shortfall in total tonnes mined
› Higher equipment maintenance
costs
Higher milling costs due to:
› Higher maintenance costs and lower
mill throughput
› Partially offset by lower consumables
and reagent consumption
H2 Forecast:
Downward trend to continue with
throughput and production increase
Q2 2014 Operating Results - Costs
Q1’14 Q2’14
Gold oz sold 84,560 oz 107,206 oz
TCC /oz sold1 US$976/oz US$941/oz
1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation. Reconciliation of these measures is
described in the MD&A for the corresponding period.
Mining (C$/t mined):
Processing (C$/t milled):
G&A (C$/t milled):
$2.87/t $2.60/t $2.87/t
$11.13/t $11.75/t $11.25/t
$3.68/t $3.46/t $4.13/t
Q2’14 Q1’14 Q4’13
15
2014 Capital Expenditures
Mine
US$33 M
TMA
US$40 M Deferred
Stripping
US$35 M
2014 CAPITAL: US$125-135 M
Other Mill
US$18 M US$5 M
(US$ M) Q2’14 H1’14
Tailings facility (TMA) $ 6.2 $ 11.4
Mill 2.4 2.9
Mine 16.0 27.5
Other 2.5 2.7
Sustaining expenditures1 $ 27.1 $ 44.5
Deferred stripping $ 15.1 $ 15.1
1. $19.4 M incurred in 2013 (including 6060 shovel and two 795F haulage trucks received in 2013) and includes
payment of $2.5 M to NAC.
Initial budget holding
TMA construction on schedule
16
Near-term Opportunities (2-5 yrs) Current Status
1. Increase throughput to 61,000 tpd for 2017
Starts in 2014 with installation of 1 cyanide (CN)
detox tank and 1 additional oxygen plant
CN detox to be
operational in Q3 and
2nd oxygen plant in Q4
2.
Block A project
Bring to pre-feasibility study for reserve
definition in Q1 2015
In progress
3.
Low-grade material (not in reserves)
Heap leach
Segregation of fines
Heap leach test
underway
4. Pebble circuit removal
Pebbles appear to be barren Testing continuing
5. Increase exploration activities on 630 km2
prospective property Planning in progress
17
Q2 2014 Financial Results
Key Financial Statistics
(US$ M, unless noted) Q2’14
Revenues $139.0
Production costs $98.1
Depreciation & depletion $38.3
Loss from mine operations $2.6
Cash provided by operations $46.3
Net loss/Adjusted net loss1 $35.0 / $17.4
Net loss & Adjusted net loss per share1 $0.23 / $0.12
Cash & short-term investments $138.2
1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation.
Price protection during ramp-up
At end of July 2014: 100,000 oz of gold hedged at an average price of
US$1,287/oz for gold sales from August to December 2014
18
Solid Balance Sheet / Ramp-up Completion
Targeting minimum of US$100 M cash at year-end
Reducing debt by up to a further US$40 M
Complete Detour Lake mine ramp-up by year-end
› Attain mill design capacity (55,000 tpd)
› Achieve mining rates of + 250,000 tpd
2014 Year-End Objectives
19
ADDITIONAL information
Analyst Coverage
Shareholder Information
Near-term Opportunities
Exploration Focus:
Lower Detour
Corporate Responsibility
LOM Summary
LOM Gold Production Profile
LOM Operating Costs &
Sustaining Capital
Debt Repayment Schedule
Management & Directors
Contact Information
20
Initiating
Research Firm Analyst Target at
August 6, 2014
07.06.11 Haywood Kerry Smith $15.50
07.07.09 Paradigm Don Blyth/Don MacLean $14.50
07.08.07 Raymond James Phil Russo $18.00
07.11.26 National Bank Steve Parsons $15.00
07.12.20 Macquarie Mike Siperco $18.00
08.01.14 Canaccord Rahul Paul $15.00
08.07.14 TD Dan Earle $18.50
08.09.04 RBC Dan Rollins $17.00
08.11.06 BMO NB Brian Quast $17.25
09.06.17 Laurentian Eric Lemieux Under review
10.05.19 CIBC World Markets Cosmos Chiu $18.00
10.07.22 Credit Suisse Anita Soni $14.50
13.04.16 Scotiabank Trevor Turnbull $18.00
13.08.14 Desjardins Michael Parkin $16.00
13.11.12 Beacon Securities Michael Curran $15.25
13.12.09 GMP Securities Ian Parkinson $13.50
14.02.06 Cormark Securities Richard Gray $18.50
14.04.22 Goldman Sachs Andrew Quail $11.50
14.06.17 Dundee Capital Markets Joseph Fazzini $14.50
Average target $16.03
Analyst Coverage (19)
21
Shareholder Information
Paulson & Co.
>80% INSTITUTIONS TOTAL 11.0 M Share options
13.0 M Convertible notes 1
181.8 M FULLY DILUTED
157.8 M Issued & outstanding
Share Structure (03/31/2014) Top Shareholders
1. Conversion price for the Notes is US$38.50.
2. Cash and short-term investments at June 30, 2014.
16%
C$2.0 BILLION market cap US$138.2 MILLION
cash position2
Share Structure (June 30, 2014) Top Shareholders
22
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
Reserve estimate in Q1 2015
In-pit dumping and tailing deposition
Best comingling options with Detour Lake
Near-term Opportunities: Block A
23
Near-term Opportunities Low-grade Material
Currently stockpiling 0.4-0.5 g/t
mineralized material:
Extra 1.5 M oz not accounted
for in LOM plan
Potential to process at end
of LOM
Evaluate potential for heap leach
and gold concentration by natural
segregation of fines
› Testing has started
Pebbles
Remove pebble circuit?
Pebbles appear to be barren
Reject pebbles and replace with
new feed?
Producing 700-800 tpoh of
pebbles. Replace with 40-60%
of new feed?
OR
pebbles
24
Exploration Focus: Lower Detour
Priority Target: Lower Detour area
Lower Detour area approx. 6-7 km south of mill
› Structural complexity: number of shear zones sub-parallel and
splaying from LDDZ
› Several gold mineralization styles encountered
2014 exploration program results:
› Mineralization extends for 450 metres
› High-grade gold intercepts in altered feldspar porphyry
intrusive containing quartz and/or quartz/tourmaline veins
› Results suggest that grade and continuity may improve at
depth
25
Lower Detour Area
15.5 M oz in Reserves
630 km2
Exploration Focus: Lower Detour
26
Lower Detour Area: 14,874 m of drilling completed in 2014
A B C
A’ B’ C’
Exploration Focus: Lower Detour
27
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:
692 full-time employees*
91% of workforce from region
24% are Aboriginals
Scholarship and job training
Supporting local communities
Business opportunities
Participation in municipal development
Corporate philanthropy
Northern
Ontario
40%
Cochrane
21%
Cochrane
Area
30% Rest of
Ontario
5%
4% Other
Corporate Responsibility
WORKFORCE ORIGIN
* At June 30, 2014. Excludes corporate office at 32 full-time employees.
28
LOM Plan1 02/2014
Update
Proven & Probable Reserves (M oz)2 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)3 $723
Sustaining capital (C$ billion) $1.14
TCC3+ capex (C$/oz sold) $848
LOM Summary
Main objective: Optimize first 5 years
1. As per NI 43-101 compliant Technical Report dated February 4, 2014.
2. Estimated using a gold price of US$1,000/oz. Includes stockpiles as of December 31, 2013.
3. Refer to the section on Non-IFRS Performance Measures on slide 3. Capex = sustaining capital expenditures + deferred stripping.
29
TCC1
(C$/oz sold)
800
700
600
500
400
300
200
100
0
Gold Production
(‘000 oz)
LOM 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$639/oz
1.16 g/t
1. Refer to the section on Non-IFRS Financial Performance Measures on
slide 3 of this presentation.
600,000 oz/yr for first 10 yrs
30
LOM Operating Costs1 C$/t milled C$/t mined C$/oz sold 2
Mining costs 11.55 2.56 392
Processing costs 7.82 266
G&A 2.44 83
Total cash operating costs 21.81 741
Other adjustments 3 (18)
Total cash costs 723
30
LOM Operating Costs & Capex
1. As per NI 43-101 compliant Technical Report dated February 4, 2014.
2. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation.
3. Other adjustments include costs for deferred stripping, agreements with Aboriginal communities, refining charges and
are net of silver by-product credits.
Capex1 (C$ M) 5 yrs: 2014 -2018 LOM
Mining 168 535
Process Plant 71 126
TMA 203 454
G&A 14 28
Total 456 1,143
Deferred Stripping 225 614
Mine Closure 70
Higher capital in first
5 years:
Ramp-up to 38 trucks
Complete plant de-
bottlenecking exercise
Prepare TMA foundation
for 2nd and 3rd cell
31
Debt Repayment Schedule
At June 30, 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 - $9.9 - $27.5 $37.4
2015 - $34.6 - $27.5 $62.1
2016 $30 $32.7 - $27.5 $90.2
2017 - $35.8 $500 $27.5 $563.3
Thereafter - $7.2 - - $7.2
Total $30 $120.2 $500 $110.0 $760.2
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.
32
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
Charles Hennessey General Manager Operations
Andrew Croal Director Technical Services
Laurie Gaborit Director Investor Relations
Alberto Heredia Controller
Bill Snelling Director Corporate Systems & Controls
Rickardo Welyhorsky Director Mineral Processing
Peter Crossgrove
Lisa Colnett
Louis Dionne
Robert E. Doyle
Alex G. Morrison
Jonathan Rubenstein
Graham Wozniak
André Falzon
Ingrid Hibbard
Michael Kenyon
Paul Martin
Management & Directors
Management
Directors
33
Laurie Gaborit Director Investor Relations
Email: [email protected]
Phone: 416.304.0581
Paul Martin President and Chief Executive Officer
Email: [email protected]
Phone: 416.304.0800
www.detourgold.com
Contact Information