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DGC 14_03_2-5 - pdac conference
- 1. CANADA’S INTERMEDIATE GOLD PRODUCER 1 PDAC International Convention,Toronto March 2-5, 2014
- 2. Forward Looking Information Thispresentation 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 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, the projected life of mine, the net present value, 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 forwardlooking 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 2012 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. 2
- 3. Notes to Investors Non-IFRSFinancial Performance Measures The Company has included “Total cash cost per gold ounce sold (TCC)” and “Total cash cost plus total capital per gold ounce sold (TCC plus Total Capital)” 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. 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 43101Standards 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”. 3
- 4. Invest in DetourGold A premier intermediate Canadian gold producer and long-term investment opportunity 15.5 MILLION oz of gold in proven and probable reserves 4 + 21YEAR mine life in mining-friendly Ontario, Canada ~ 600 THOUSAND oz / year average annual gold production over next 10 years
- 5. Flagship Operation inCanada DETOUR LAKE – ONTARIO, CANADA Low-risk, safe mining jurisdiction 100% owned large prospective land package of 630 km2 on Abitibi Greenstone Belt › High quality, long life producing open pit mine (15.5 M oz in reserves) ONTARIO DETOUR LAKE MINE Timmins Toronto 5 › Significant potential for production growth › Exploration upside for high-grade mineralization
- 6. Detour Lake: 1stYear of Operation 6 Oct. 2, 2013
- 7. Detour Lake: 1stYear of Operation 2013 Production (Koz) Gold production 2013 GOLD PRODUCTION 80 60 40 Key statistics 2013 gold production of 232,287 oz Total cash costs of US$1,162/oz sold1 in Q4 2013 Capital expenditures of C$196 M incurred 20 0 Q1 Q2 Q3 Q4 Significant milestones First gold pour in February 2013 Commercial production declared on September 1, 2013 Discovery of high grade mineralization at Lower Detour 1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation. 7
- 8. Detour Lake: 1stYear of Operation 2013 Actual grade vs forecast (g/t Au) Ore shortage Stockpiled HG Higher Dilution 0.84 0.05 0.02 0.02 0.75 Planned 8 Actual Positive reconciliation to reserve model High degree of confidence with block model Improving dilution trend (5.6% in Q4) Actual feed grade lower than planned mainly due to scheduling issues Robust process plant design Milling rates proven at design levels Plant availability has been below expectations Gold recovery exceeded design levels
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- 10. 2014 Finance Objectives Realizeopportunities to improve liquidity: Secured long-term power contract for estimated savings of C$20 M/yr for 6 yrs Finalizing discussion to amend the equipment lease facility Closing C$150 M financing in March1 Giving opportunity to deleverage balance sheet 1. Subject to closing the bought deal offering on or about March 7, 2014. 10
- 11. 2014 Guidance 450-500 THOUSAND oz estimatedgold production US$800-900 estimated total cash costs US$131 MILLION 3 capex estimated capital expenditures 2014 second year of operation Other US$19 M Corporate G&A US$3 M Exploration program 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. 11 TCC 1, 2 per oz sold
- 12. 2014 Capital Plan SustainingCapital: US$131 M Mine Mining fleet purchase (1 truck, 1 shovel) Ancillary mobile equipment Mill Start of debottlenecking exercise (plant improvements) TMA Implementing “center-line” construction design Raise dam of Cell 1 by 6 m Commence Cell 3 footprint 12 BREAKDOWN OF 2014 SUSTAINING CAPITAL Mill US$18 M TMA Deferred Stripping US$40 M US$35 M Mine US$33 M Other US$5 M
- 13. 2014 Operating Plan Steadystate production & optimization Targets: 19 MT milled ore G/T AU 0.87 head grade 92 % recovery gold 3.3:1 WASTE:ORE strip ratio (1) 1. Includes 7% dilution at 0.20 g/t. PRODUCTION 13 2014 gold production (oz) H1 2014 H2 2014 450,000-500,000 200,000-225,000 250,000-275,000 50% of overall mill feed from higher grade ore zones Mill throughput rates gradually increase to 55,000 tpd in Q4
- 14. 2014 Success Factors Targets: THOUSAND 252tpd mining rate 52 THOUSAND tpd throughput 14 Steady state production & optimization Mining and milling unit costs to decrease – ‘economies of scale’ Reach mill design operating rates by year-end Increase process plant operating time › Improve planned shutdowns scheduling › Operating experience gained will further reduce unplanned shutdowns Improve shovel productivity and management of overburden removal
- 15. 20142035 15 LIFE OF MINE Updatedplan – 02/04/2014
- 16. LOM Summary Main objective:Optimize first 5 years 02/2014 Update Proven & Probable Reserves (M oz) 1 15.5 Average gold grade (g/t) 1.02 Strip ratio (waste:ore) 3.5 Estimated gold recovery (%) 92 Mine life (years) Average annual gold production (oz) 21.7 660,000 Average total cash costs (TCC) (C$/oz sold) 2 $723 Average TCC + capex (C$/oz sold) 2 $848 1. Estimated using a gold price of US$1,000/oz (refer to slide 32). 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. 16
- 17. Gold Production/Cost Profile GoldProduction (‘000 oz) 598,000 oz C$759/oz 800 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$639/oz 1.16 g/t TCC1 (C$/oz sold) 900 700 850 600 800 500 750 400 700 300 650 200 600,000 oz/yr for first 10 yrs 600 100 550 0 500 17 1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation.
- 18. LOM Operating Costs 09/12 C$/t milled C$/t milled 02/14 C$/t mined 11.65 11.55 2.56 Processingcosts 7.83 7.82 266 G&A Total cash operating costs 1.86 2.44 83 21.34 21.81 741 Operating Costs Mining costs C$/oz sold 2 392 2014 Costs Labour & Contractors Maintenance 20% 26% 30% 11% Diesel 7% 6% Power Consumables Other adjustments 1 (18) Total cash costs G&A and other 723 80% of costs in Cdn$ 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. 18 18
- 19. LOM Sustaining Capital Description Sustaining CapitalLOM (C$ M) 5 years 2014 -2018 (C$ M) 5 years 2019- 2023 (C$ M) 5 years 7 years 2024-2028 2029-2035 (C$ M) (C$ M) Mining 535 168 1 69 255 43 Process Plant TMA 126 454 71 2 24 114 20 70 11 67 8 5 1 203 3 14 G&A 28 Total 1,143 456 215 350 122 614 225 366 23 - Deferred Stripping 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 19 70 50% of sustaining capital costs in Cdn$
- 20. LOM Opportunities Targets: 2015 2016 2017 THOUSAND 55 tpd THOUSAND 58tpd 61 THOUSAND tpd Increase throughput to 61,000 tpd/ 94% availability for 2017 Debottlenecking exercise starting in 2014 › Modification of primary crusher conveyor › Installation of 1 cyanide detox tank and 1 additional oxygen plant Other opportunities to realize: Increase mill feed grade › Improve mine production › Reduce dilution › Reduce internal waste Increase plant recovery with further optimization 20
- 21. LOM Opportunities Medium tolong-term Improve LOM gold profile with Block A ~5.5 km P+P 15.5 Moz @ 1.02 g/t Au US$1,200/oz M+I 2.0 Moz @ 1.15 g/t Au US$1,000/oz 21
- 22. Organic Growth Opportunities Strategy:Find and develop a high-grade deposit to take advantage of existing infrastructure 22 Long-term growth of reserve base to +20 M oz › Detour Lake mine and Block A Large prospective land position of 630 km2 › Focus on high-grade gold targets: › Discovery of Zone 75 with 17.33 g/t over 4.4 m › Up to 8,000 m drilling program in Q1 2014
- 23. 2014 Exploration Focus 630km2 15.5 M oz in Reserves Lower Detour Area 23
- 24. 2014 Exploration Focus LowerDetour Area: 6,000 - 8,000 m of drilling in Q1 2014 *Proposed drill locations subject to change pending initial drill results. 24
- 25. Detour vs. Peers:Dec. 31, 2013 Consensus P/NAV P / 2015 CF African Barrick 0.95x Allied Nevada 0.92x Alamos 0.89x New Gold 0.84x Allied Nevada 18.7x Alamos 12.7x Eldorado 9.3x Argonaut 7.6x 7.6x Osisko 0.81x Alacer Alacer 0.80x Osisko B2Gold 0.77x AuRico 0.73x 6.9x AuRico 6.2x New Gold 6.0x Eldorado 0.69x African Barrick 5.0x Argonaut 0.69x B2Gold 4.7x IAMGOLD Detour 0.50x 0.32x Source: Bloomberg, Factset and select Street Research Note: Market data updated to December 31, 2013 25 Detour 3.6x IAMGOLD 3.4x DGC: C$4.10
- 26. Detour vs. Peers:February 14, 2014 Consensus P/NAV P / 2015 CF Allied Nevada 1.48x African Barrick 1.35x Alamos 21.3x Eldorado 12.3x New Gold 1.14x Alacer 11.3x Alacer 1.12x Argonaut 11.2x Osisko 1.11x Osisko 10.2x B2Gold 1.11x AuRico 10.0x AuRico 1.07x New Gold 9.2x 9.1x Argonaut 0.93x Allied Nevada Eldorado 0.93x B2Gold 7.9x African Barrick 7.7x Alamos 0.86x Detour 0.74x Detour IAMGOLD 0.71x IAMGOLD Source: Bloomberg, Factset and select Street Research Note: Market data updated to February 14, 2014 26 6.2x 5.2x DGC: C$9.89
- 27. Invest in DetourGold A premier intermediate Canadian gold producer and long-term investment opportunity 15.5 MILLION oz of gold in proven and probable reserves 27 + 21YEAR mine life in mining-friendly Ontario, Canada ~ 600 THOUSAND oz / year average annual gold production over next 10 years
- 28. ADDITIONAL information 28 Shareholder Information Analyst Coverage CorporateResponsibility Detour Lake Mine: 2013 Results Detour Lake Mine: LOM Update Detour Gold: Reserves & Resources Q3 2013 Financial Highlights Debt Repayment Schedule Management & Directors
- 29. Shareholder Information Share Structure1 TopShareholders 138.2 M 10.5 M 15% >80% 13.0 M 161.7 M Issued & outstanding Options & FN share commitments Convertible notes 2 FULLY DILUTED C$96 MILLION cash position 29 Paulson & Co INSTITUTIONS TOTAL Cash position and share structure at Dec 31, 2013. 1. Bought deal announced on Feb. 18, 2014: 16.22 M sh. + over-allotment of 2.43 M sh. @ C$9.25/sh. Closing expected on or about March 7, 2014. 2. Conversion price for the Notes is US$38.50. C$1.3 BILLION market cap
- 30. Analyst Coverage Initiating Research 07.06.11 Firm Analyst Target Target Date KerrySmith $8.50 14.01.15 07.07.09 Paradigm Don Blyth/Don MacLean $8.25 14.01.23 07.08.07 Raymond James Phil Russo $12.00 14.02.06 07.11.26 National Bank Steve Parsons $9.00 13.11.25 07.12.20 Macquarie Mike Siperco $16.00 14.02.14 08.01.14 Canaccord Rahul Paul $11.00 hold 14.02.25 08.07.14 TD Dan Earle $14.00 14.02.06 08.09.04 RBC Dan Rollins $9.00 14.02.05 08.11.06 BMO NB John Hayes $9.50 13.11.25 09.06.17 Laurentian Eric Lemieux $10.75 14.02.06 10.05.19 CIBC World Markets Cosmos Chiu $10.50 13.12.23 10.07.22 Credit Suisse Anita Soni $7.00 14.02.05 11.07.15 Bank of America Merrill Lynch TBA 13.04.16 Scotiabank Trevor Turnbull $10.00 14.02.03 13.08.14 Desjardins Michael Parkin $9.50 14.02.06 13.11.12 Beacon Securities Michael Curran $8.75 14.02.06 13.12.09 GMP Securities Ian Parkinson $11.50 14.02.14 14.02.06 30 Haywood Cormark Securities Richard Gray $13.00 14.02.06 Under review
- 31. Corporate Responsibility Focus onhealth and safety of our employees, the well-being of our community and the protection of the natural environment Hiring in the region, giving priority to local Aboriginal communities: 637 full-time employees* WORKFORCE ORIGIN 92% of workforce from region 24% are Aboriginals Cochrane Cochrane Scholarship and job training Area 23% 31% Supporting local communities Business opportunities Participation in municipal development Corporate philanthropy * As of January 31, 2014. 31 Northern Ontario 38% Rest of Ontario 4% Other 3%
- 32. Detour Lake Mine:2013 Results Q1 Q2 Q3 Q4 2013 Ore tonnes mined (Mt) 1.29 2.70 4.16 4.08 12.24 Tonnes milled (Mt) 1.02 2.87 3.88 3.40 11.18 Mill grade (g/t Au) 0.64 0.76 0.72 0.81 0.75 Recovery (%) 80 83 85 92 86 Availability (%) 66 68 78 66 71 16,841 57,897 75,672 81,877 232,287 Ounces produced (oz) (1) 1. During the commercial period (September 1 to year-end), the Detour Lake mine produced 105,898 oz of gold. 32
- 33. Detour Lake Mine:LOM Update Detour Lake Update (02/2014) Ore milled (Mt) 476.4 Waste mined (Mt) 1,676 Strip ratio (waste:ore) 3.5 Average gold grade (g/t) 1.02 Total contained gold (M oz) 92 Total recovered gold (M oz) 1 14.3 Mine life (yrs) Gold price (US$/oz) FX rate (US$/Cdn$) Electricity (C$/kWhr) Fuel price (US$/barrel) Diesel fuel (C$/l) Income/mining tax rate (%) Net Smelter Royalty (%) 15.5 Estimated gold recovery (%) Assumptions 21.7 Avg. annual gold production in first 5 yrs (oz) 598,000 Avg. annual gold production over LOM (oz) 660,000 1. 2. 3. 4. 33 Includes approximately 58,000 ounces to be recovered from stockpiles as of December 31, 2013. Exchange rate of 1.05 for 2014, 1.07 for 2015, and 1.08 for 2016, and 1.10 for 2017 onwards. Cdn$0.05/kWh for 2014-19 and Cdn$0.08/kWh for 2020 onwards. 2% royalty is assumed to be paid in-kind. $1,200 1.10 2 0.05/0.08 3 100 0.95 25/10 2.0 4
- 34. Detour Gold: Reserves& Resources Tonnes (Mt) Grade (g/t Au) Contained Gold (koz) Proven 94.4 1.29 3,901 Probable 379.7 0.95 11,585 P&P 474.0 1.02 15,486 2.4 0.82 63 476.4 1.02 15,549 Measured (M) 16.4 1.37 725 Indicated (I) 65.9 1.01 2,150 M+I 82.4 1.09 2,874 Measured (M) 1.5 1.21 57 Indicated (I) 52.5 1.15 1,934 M+I 53.9 1.15 1,991 136.3 1.11 4,866 Effective December 31, 2013 Reserves Detour Lake Mine (1,2,3,4) Stockpiles Total P&P Resources Detour Lake Mine (3,4) Block A Total M+I Detour Lake Mine Inferred 19.2 0.75 465 Block A Inferred 2.5 1.23 99 21.7 0.81 564 Total Inferred 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. 34
- 35. Debt Repayment Schedule RevolvingCredit Facility (1) CAT Finance Lease Convertible Notes Face Value US$70 M (1) US$150 M US$500 M Maturity March 2016 Jan 2017-Jan 2019 (2) November 30, 2017 Interest Rate LIBOR + 3% LIBOR + 4% 5.5% Monthly Quarterly Semi-annually n/a n/a $38.50 At Dec 31, 2013 Payable Conversion Price Payment schedule Principal Interest Principal + Interest Principal Interest Total (US$M) 2014 - $2.3 $33.7 - $27.5 $63.5 2015 - $2.3 $34.2 - $27.5 $64.0 2016 $70 $0.4 $32.3 - $27.5 $130.2 2017 - - $24.0 $500 $27.5 $551.5 Thereafter - - $4.1 - $70 $5.0 Total (US$M) $128.3 $500 $110.0 $4.1 $813.3 1. The Revolving Credit Facility provides for borrowings of up to C$90 M. Subject to a completion tests prior to September 30, 2014. 2. Includes multiple leases with maturities of 5 yrs from lease date. 35
- 36. Management & Directors Management MichaelKenyon Executive Chairman Paul Martin Pierre Beaudoin James Mavor Julie Galloway Derek Teevan Sr VP Corporate & Aboriginal Affairs Rachel Pineault James Robertson Andrew Croal Drew Anwyll Mark McCallion Chief Geologist Director Investor Relations Alberto Heredia Joshua Hurrell Technical Services Superintendent Director Technical Services Charles Hennessey Process Plant Maintenance Manager and Deputy Mine General Manager Laurie Gaborit Rickardo Welyhorski Director Mineral Processing VP Environment & Sustainability Sr VP General Counsel & Corporate Secretary VP HR & Aboriginal Affairs CFO Jean-Francois Metail Bill Snelling Director Corporate Systems & Controls VP Reserves and Resources COO VP Corporate Development President and CEO Pat Donovan Mike Papadakis Process Plant Manager Controller Craig Rintoul Open Pit Manager MGM/VP Operations Directors 36 Peter Crossgrove Louis Dionne Robert E. Doyle André Falzon Ingrid Hibbard Michael Kenyon Paul Martin Alex G. Morrison Jonathan Rubenstein Graham Wozniak
- 37. Contact Information Paul Martin Presidentand 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 37