Download - Dgc 15 09_10-11 - baml 1x1 presentation
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CANADA’S INTERMEDIATE GOLD PRODUCER
21st Annual Canada Mining Conference
Bank of America Merrill Lynch
Toronto – September 10-11, 2015
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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 2015 guidance for
production, total cash costs, all-in sustaining costs, capital costs, deferred stripping costs, and exploration costs; expected throughput,
mining and recovery rates; expected future production and mining activities; opportunities to optimize the mine operation; timeline for the
life of mine plan update, and exploration program; 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 2014 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.
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Notes to Investors
The scientific and technical content of this presentation was reviewed, verified and approved by Drew Anwyll, P.Eng., Senior Vice President Technical
Services, and exploration results was reviewed, verified and approved by Guy MacGillivray, P.Geo., Exploration Manager , both Qualified Person as
defined by Canadian Securities Administrators National Instrument 43-101 “Standards of Disclosure for Mineral Projects”.
Qualified Persons
Non-IFRS Financial Performance Measures The Company has included non-IFRS measures in this presentation: total cash costs, all-in sustaining costs, adjusted net loss and adjusted net loss per
share. 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. 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. Other companies may calculate these measure differently.
Detour Gold reports total cash costs on a sales basis. Total cash costs 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. The measure also includes other mine related costs incurred such as mine standby costs and current inventory write downs. Production costs are
exclusive of depreciation and depletion. Production costs include the costs associated with providing the royalty in kind ounces.
Commencing in 2015, the Company adopted all-in sustaining costs on a prospective basis. The Company believes this measure more fully defines the total
costs associated with producing gold. The Company calculates all-in sustaining costs as the sum of total cash costs (as described above), share-based
compensation, corporate general and administrative expense, exploration and evaluation expenses that are sustaining in nature, reclamation cost
accretion, sustaining capital including deferred stripping, and realized gains and losses on hedges due to operating and capital costs, all divided by the gold
ounces sold to arrive at a per ounce figure.
Costs excluded from all-in sustaining costs are non-sustaining capital expenditures and exploration costs that are expected to materially increase
production, financing costs and tax expense. Consequently, this measure is not representative of all of the Company’s cash expenditures. In addition, the
calculation of all-in sustaining costs does not include depreciation and depletion expense as it does not reflect the impact of expenditures incurred in prior
periods.
Adjusted net earnings (loss) and adjusted basic earnings (loss) per share are used by management and investors to measure the underlying operating
performance of the Company. Presenting these measures from period to period helps management and investors evaluate earnings trends more readily in
comparison with results from prior periods. Adjusted net earnings (loss) is defined as net earnings (loss) adjusted to exclude specific items that are
significant, but not reflective of the underlying operations of the Company, including: fair value change of the convertible notes, the impact of foreign
exchange gains and losses, including the foreign exchange on deferred income and mining taxes, non-cash unrealized gains and losses on derivative
instruments, accretion on convertible notes, unwinding of discount on decommissioning and restoration provisions, impairment provisions and reversals
thereof, and other non-recurring items. Adjusted basic net earnings (loss) per share is calculated using the weighted average number of shares outstanding
under the basic method of loss per share as determined under IFRS.
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Unique Investment Opportunity
Mining-friendly Jurisdiction
Large-scale, long mine life
Largest gold producing mine not
controlled by a senior producer
Growing cash flow profile
Production growth opportunities
Favourable exposure to
Canadian Dollar
DOMINANT
GOLD PRODUCER
IN CANADA
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2015 Production Guidance (Koz)
#2 in Production and #1 in Reserves
DGC Detour Lake
AEM/YRI Canadian
Malartic
AEM Meadowbank
G Red Lake
Canadian Intermediate Gold Producer
400-
425
560 475-
525 400
Gold Reserves (Moz)
DGC Detour Lake
AEM/YRI Canadian
Malartic
AEM Meadowbank
G Red Lake
2.1
15.0
8.7
1.2
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2015 Drivers to Success
Execution of Plan
Gold production increase with higher
mining and milling rates
Strengthen balance sheet
Added Benefits
Significant leverage to gold price and
Canadian dollar
Low power and favourable diesel costs
Near to Long-Term Value Enhancements
Plant optimization (with limited capital)
Development of Block A
Exploration potential
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2015 Guidance1
TCC2
$780-
$850
AISC/oz sold2
$1,050-$1,150
Capital Expenditures
Sustaining capital: US$90-100 M
475,000 -
525,000
Gold ounces
ESTIMATED
COSTS
ESTIMATED
PRODUCTION
Deferred stripping: US$20-25 M
1. Cost assumptions (US$): Gold price of $1,200/oz, diesel fuel price of $0.82 per litre; power cost of $0.04 per kilowatt hour; and
exchange rate of $1.00US:$1.15Cdn.
2. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation.
2015 third year
of operation
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H1 2015 – Solid Progress
106 125
$1,321
$1,030
$750
$850
$950
$1,050
$1,150
$1,250
$1,350
0
20
40
60
80
100
120
140
H1 2015: Detour Lake Mine
■ AISC (US$/oz sold)1
■ Gold Production (k oz)
Q1 Q2
1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. Reconciliation and adjustment of this measure
is described in the MD&A for Q2’15.
H1 2015 Highlights:
Gold production of 230,920 oz at TCC
of $828/oz sold and AISC of $1,163/oz
sold
Break-even cash flow position
Positive amendments to credit facility
of C$135 M
Cash position of US$133 M at June 30
H2 2015 Expectations:
Stronger operational performance
Encouraging results from Lower Detour
30,000 m drilling program
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Continued positive progress on drilling rates, blasted inventory,
and shovel productivity
Mining rates averaged 280,000 tpd, exceeding budget by 18%
220
280
170
190
210
230
250
270
290
310
Q1A Q2A H2EQ1 Q2 Mining Rates (k tpd)
Q2 2015 Operating Results – Mine
H1 Achieved H2 Target:
250-290 k tpd
H
L
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Successful re-build of ROM stockpiles
at Q2 end (1.7 Mt @ 0.71 g/t) provides
operational flexibility for H2 2015:
Focus on delivering higher grade to mill
Accelerate Phase 2 pre-stripping
On target for east end pit access to
higher grade (former Campbell pit area)
Maximize TMA placement efficiency
(using CAT795 trucks)
H2 2015 Mine Plan Focus
Targeting 250,000
to 290,000 tpd for
remainder of 2015
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Throughput rate of 57,015 tpd
At design capacity since March
Milling rates at 2,712 tpoh with operating time improving to 88%
Exceeding design of 2,500 tpoh
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57 55*
30
40
50
60
Q1'15 Q2'15 H2E
Q2 2015 Operating Results - Mill
2015 Mill Throughput (k tpd)
MT ore milled
0.82 G/T AU
head grade
% gold recovery
5.2
91
Q2’15 Performance
Q1 Q2
* Excluding the processing of fines
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H2 2015 Focus – Mill
H2 Focus
Continue plant optimization efforts
Assess robustness of 410-conveyor
Increase operating time to >90%
Increase milling rate to 2,800 tpoh
with ‘fines’
Processing of fines in month of July;
test to continue in Q4
Targeting average throughput rate of
55,000 tpd for H2 2015
MT ore milled
0.86 G/T AU head grade
% gold recovery
19.7
91.5
2015 Mine Plan Targets
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$954 $955 $886
$939
$734
Q2'14 Q3'14 Q4'14 Q1'15 Q2'15
Q2 2015 Operating Costs
Significant cost reduction
per ounce & tonne due to
economies of scale
Continued reduction of
plant consumables
TCC & AISC1,2 ($/oz sold)
Trending down
Q2’15
$1,321
$1,030
1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the
relevant periods.
2. The calculation for TCC and AISC (non-IFRS measures) and processing unit costs, including prior periods, were adjusted
to allocate the electricity adjustment into the appropriate historical period to which the cost applied.
Refer to slide 24 and MD&A for Q2’15.
Q1’15 Q2’15 2015E
Mining (C$/t mined) $3.16 $2.42 $2.60
Processing2 (C$/t milled) $11.78 $8.81 $9.87
G&A (C$/t milled) $3.89 $2.72 $3.05
Total Cash Costs1
Other (Sustaining capital, G&A and exploration)
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1. Includes US$2.0 M NAC settlement payment.
Q2 Sustaining Capital
Mine
$30 M
TMA
$34 M
Other
$13 M
Mill
$9 M
Water Management
$10 M
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Q2 2015 Capital Expenditures
Q1’15 Q2’15 2015E
Sustaining Capital $19.8 M $25.8 M $90-100 M
Capitalized Stripping $10.0 M - $20-25 M
Total (US$) $29.8 M $25.8 M $110-125 M
Breakdown of 2015 Sustaining
Capital (US$)
~90% of costs in Cdn$
Mine $7.5 M
Mill $5.2 M
TMA $6.5 M
Other $6.6 M1
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Benefiting from a Weak Cdn $
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
Budget 2015 1-Jan-15 8-Sep-15
$Cdn $US
Gold Performance
YTD
$Cdn: +8%
$US: -5%
$/oz
FX rate 1.15 1.16 1.32
YTD 2015 Gold Price
in US Dollars vs Canadian Dollars
$1,380 $1,372
$1,479
$1,200 $1,182
$1,121
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Prudent Financial Management
Hedge up to 50% of 2015 Gold Production
Forward sales on 35,000 oz @ US$1,276/oz
Currency Exchange Contracts
Zero-cost collars for US$40 M with a ceiling
of 1.21; Forward contracts for US$40 M at
average 1.26
Hedge ~50% of Next 3 Months’ Diesel Use
Purchasing diesel product (~6 M litres) at
effective hedge price of US$0.46/litre
As at June 30, 2015:
Mark-to-market value of US$3 M
No addition to
hedging programs in
Q2’15
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Optimize capital vs mine output (at gold price of US$1,200/oz
long-term)
Evaluate production ranging from 110 to 140 Mt annually
(equivalent to mining rates of 300,000 to 385,000 tpd)
Include Block A as a second feed source (at earliest 2018)
Evaluate the use of Block A pit as waste rock dump and TMA cell
Evaluate the inclusion of enriched low-grade stockpile (fines) in
mineral reserves (2nd test underway)
LOM Plan Update – EOY Target
Goal: Maximize Returns for Next 5-10 yrs and Optimize NAV
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Processing of Fines
Segregation of fines:
Gold concentrates in the finer
material
Segregation of fines allows for:
› better grade
› faster processing rates
First Test in Fall 2014:
Positive results from first
200,000 tonnes test
› grade of 0.62 g/t = 41%
higher than avg. grade of SP
› processed at 68,000 tpd
Low-grade stockpile (avg. grade 0.44 g/t)
Natural segregation of fines
from unloading truck
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Second Test in Q3-Q4 2015:
Fines processed in July
and continuing in Q4
Tonnage up to 4,000 tpd
Validate milling rate
improvement
If results are successful:
Incorporate into LOM plan
› Potential for +20,000 oz/yr at very low cost
Processing of Fines
X No
fines
With
fines
Projected model
Plant
throughput 55,000 54,000
Loss of 1,000 tpd
of capacity
Added
throughput 0 4,000 Gain of 4,000 tpd
Total 55,000 58,000 Net gain of 3,000 tpd
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Drilling program started at end of June
17,900 metres in 45 holes completed as of September 6
All holes have intersected the targeted mineralized zones
Majority of holes encountered visible gold
Further targets identified from Magnetic & IP surveys east of
Lower Detour trend
Budget increased to approximately US$8 million
Exploration – Lower Detour
30,000 m drilling program underway
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PRODUCTION GROWTH /
DECLINING UNIT COSTS
REALIZE VALUE-ENHANCING
OPPORTUNITIES
MATERIAL INPUTS TRENDING
FAVOURABLY
GROWING CASH FLOW
A GREAT TIME TO BE A
GOLD PRODUCER!
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ADDITIONAL information
2015 Safety Performance
Q2 2015 Operational & Financial
Summary
Detour Gold Reserves &
Resources
Detour Lake & Block A
Lower Detour Exploration
Shareholder Information
Analyst Coverage
Cautionary Statement
Management & Directors
Contact Information
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3.9
2.5 2.8
0
0.5
1
1.5
2
2.5
3
3.5
4
2014 ON
Average2
Zero Harm is Our Goal
Total Recordable Injury
Frequency Rate1
2015 Safety Performance
H1 2015 2014
H1 2015
TRIFR at 2.8 with
Q2 higher than Q1
2015 Initiatives
Safety Leadership
for Safe Production
Life Saving Rules
1. Total recordable injury frequency rates = number of recorded injuries per 200,000 hours worked.
2. 2014 Ontario Mining Industry average (source: Workplace Safety North, WSIB).
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Q2 2015 Operational Statistics
Q2’14 Q3’14 Q4’14 Q1’15 Q2’15
Ore mined (Mt) 2.89 4.20 4.30 3.82 6.37
Waste mined (Mt) 16.11 14.71 15.39 15.97 19.08
Total mined (Mt) 19.00 18.91 19.69 19.79 25.45
Strip ratio (waste:ore) 5.6 3.5 3.6 4.2 3.0
Mining rate (tpd) 209,000 206,000 214,000 220,000 280,000
Ore milled (Mt) 4.42 4.53 4.71 4.30 5.19
Mill grade (g/t Au) 0.91 0.88 0.85 0.84 0.82
Recovery (%) 91 90 91 91 91
Mill throughput (tpd) 48,569 49,186 51,142 47,797 57,015
Mill operating time (%) 83 81 83 78 88
Ounces produced (oz) 117,366 115,344 116,770 105,572 125,348
Ounces sold (oz) 107,206 106,334 124,913 104,497 123,296
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Q2 2015 Financial Summary
Key Financial Statistics (US$ M, unless noted)
Q2’15
Metal sales $147.5
Production costs ($100.2)
Depreciation & depletion ($39.8)
Earnings from mine operations $7.5
Net loss/adjusted net earnings1 ($15.4) / 0.5
Net loss/adjusted basic earnings
per share1 ($0.09) / $0.00
Cash & short-term investments $133.2
1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation.
Note: The Company has been notified by the Independent Electricity System Operator (“IESO”) of an adjustment to its electricity rebate
for the period between January 2013 and April 2015, which has resulted in an additional electricity cost of US$12.5 million (refer to Note 6i
in second quarter 2015 financial statements). The balance is payable in 20 equal monthly instalments starting in Q3 2015. As per its
contract with IESO, the Company pays a maximum of C$0.05/kWh until December 2019. The Company has filed for a three-year
extension of the contact.
Refer to the MD&A for Q2’15.
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Effective December 31, 2014 Tonnes (Mt) Grade (g/t Au) Contained Gold (koz)
Reserves
(1,2,3,4,5)
Detour Lake Mine Proven 94.2 1.25 3,795
Probable 364.6 0.95 11,146
P&P 458.8 1.01 14,941
Stockpiles 0.7 0.74 16
Total P&P 459.4 1.01 14,957
Resources (1,3,4,5)
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 19.1 0.75 463
Block A Inferred 2.5 1.23 99
Total Inferred 21.6 0.81 562
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 (refer to the “Detour Lake Mine NI 43-101 Technical Report dated February 4, 2014).
2. Mineral reserves estimated using a 4% dilution at 0.20 g/t Au 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.
5. Totals may not add due to rounding.
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Detour Lake & Block A
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
Current
North
Pit
Note: Mineral reserves and resources as of December 31, 2013. Refer to February 2014 Technical Report.
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Lower Detour Area
630 km2
Exploration Focus: Lower Detour
Block A
Resource
Detour Lake
OP Mine
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Lower Detour Phase 1 Drilling Program*
*Phase 1 drilling completed in Q1’15.
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Lower Detour Phase 1 Drilling Program*
*Phase 1 drilling completed in Q1’15.
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Lower Detour Phase 1 Drilling Program*
*Phase 1 drilling completed in Q1’15.
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1. Conversion price for the Notes is US$38.50.
2. Cash and short-term investments at June 30, 2015.
Shareholder Information
Paulson & Co.
>80% INSTITUTIONS TOTAL 8.7 M Share options
13.0 M Convertible notes 1
192.5 M FULLY DILUTED
170.7 M Issued & outstanding
Share Structure (03/31/2014) Top Shareholders
13%
C$2.3
6
BILLION market cap US$133.2
3
MILLION cash position2
Share Structure (August 31, 2015) Top Shareholders
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Initiating
Research Firm Analyst Target Price at
September 9, 2015
07.06.11 Haywood Kerry Smith $18.50
07.07.09 Paradigm Don Blyth/Don MacLean $18.50
07.08.07 Raymond James Phil Russo $15.00
07.11.26 National Bank Steve Parsons $17.50
07.12.20 Macquarie Mike Siperco $17.00
08.01.14 Canaccord Rahul Paul $19.00
08.07.14 TD Dan Earle $18.50
08.09.04 RBC Dan Rollins $19.00
08.11.06 BMO NB Brian Quast $16.00
09.06.17 Laurentian Killian Charles $16.40
10.05.19 CIBC World Markets Cosmos Chiu $16.50
10.07.22 Credit Suisse Anita Soni $17.50
13.04.16 Scotiabank Trevor Turnbull $18.00
13.08.14 Desjardins Michael Parkin $18.00
13.11.12 Beacon Securities Michael Curran $15.75
13.12.09 GMP Securities Ian Parkinson $10.20
14.02.06 Cormark Securities Richard Gray/Tyron Breytenbach $20.00
14.04.22 Goldman Sachs Andrew Quail $17.00
14.06.17 Dundee Capital Markets Josh Wolfson Under review
14.09.03 Morgan Stanley Brad Humphrey $16.50
Average target C$17.10
Analyst Coverage (20)
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Cautionary Statement
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 43-101
Standards 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., Senior Vice President
Technical Services, a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 “Standards of Disclosure for
Mineral Projects”.
35
Paul Martin President and CEO
Pierre Beaudoin COO
James Mavor CFO
Drew Anwyll Sr VP Technical Services
Julie Galloway Sr VP General Counsel &
Corporate Secretary
Derek Teevan Sr VP Corporate &
Aboriginal Affairs
Jean-François Métail VP Mineral Resource
Management
Rachel Pineault VP HR & Aboriginal Affairs
Jim Robertson VP Environment &
Sustainability
Charles Hennessey Mine General Manager
Andrew Croal Director Technical Services
Laurie Gaborit Director Investor Relations
Alberto Heredia Controller
Bill Snelling Director Corporate Systems & Controls
Lisa Colnett
Robert E. Doyle
André Falzon
Alex G. Morrison
Jonathan Rubenstein
Graham Wozniak
Ingrid Hibbard
Michael Kenyon
Paul Martin
Management & Directors
Management
Directors
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James Mavor Chief Financial Officer
Email: [email protected]
Phone: 416.304.0800
Paul Martin President and Chief Executive Officer
Email: [email protected]
Phone: 416.304.0800
www.detourgold.com
Contact Information