Dgc 14 05_07-08 - corporate presentation
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Transcript of Dgc 14 05_07-08 - corporate presentation
1
CANADA’S INTERMEDIATE GOLD PRODUCER
Corporate Presentation
Toronto, May 7-8, 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 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
www.sedar.com. 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
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
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
2014
INCREASE production
DECREASE costs
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
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
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
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 Q1’14 Q4’13
Ex-P
it
In-l
ine
wit
h
Bu
dg
et
0
50
100
150
200
250
In-pit
rehandling
Shovel
test
231 5 13 213
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
To
nn
es M
ille
d (
Mt)
Q1’13 Q2’13 Q3’13 Q1’14 Q4’13
80 82 85 92 91
Mill production
He
ad
Gra
de
(g
/t A
u)
Recovery %
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)
Q4’13 Q1’14
Next steps:
Downward trend to continue with
throughput and production increase
Total Cash Costs
$0
13
Q1 2014 Financial Results
Key financial statistics (US$ 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$35 M for 2014.
14
2014- LIFE OF MINE Updated plan – 02/04/2014 2035
15
LOM Plan 02/2014
Update
Proven & Probable Reserves (M oz) 1 15.5
Gold grade (g/t) 1.02
Strip ratio (waste:ore) 3.5
Estimated gold recovery (%) 92
Mine life (years) 21.7
Annual gold production (oz) 660,000
Total cash costs (TCC) (C$/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$1,000/oz. Includes stockpiles as of December 31, 2013.
2. Refer to the section on Non-IFRS Performance Measures on slide 3. Capex = sustaining capital expenditures + deferred stripping.
Main objective: Optimize first 5 years
16
TCC1
(C$/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
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
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
Lower Detour Area
15.5 M oz in Reserves
630 km2
2014 Exploration Focus
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
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
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
Shareholder Information
Paulson & Co
>80% INSTITUTIONS TOTAL 10.8 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 cap US$145.2 MILLION
cash position
Share Structure Top Shareholders
24
Focus on health and safety of our employees, the well-being of
our community and the protection of the natural environment
Hiring in the region, giving priority to local Aboriginal communities:
665 full-time employees*
93% of workforce from region
25% are Aboriginals
Scholarship and job training
Supporting local communities
Business opportunities
Participation in municipal development
Corporate philanthropy
Northern
Ontario
40%
Cochrane
23%
Cochrane
Area
30%
Rest of
Ontario
4%
3% Other
Corporate Responsibility
WORKFORCE ORIGIN
* As of March 31, 2014. Excludes corporate office at 34 full-time employees.
25
09/12 02/14
Operating Costs C$/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
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
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
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
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
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
Paul Martin President and Chief Executive Officer
Email: [email protected]
Phone: 416.304.0800
Laurie Gaborit Director Investor Relations
Email: [email protected]
Phone: 416.304.0800
www.detourgold.com
Contact Information