Recent Developments

Recent Developments (Updated July 30, 2014)

Q2 2014 Summary

Detour Gold reported its second quarter operational and financial results on the Detour Lake mine on July 29, 2014.

View the related press release:
14 07 29 - Detour Gold Reports Second Quarter 2014 Results

Detour Lake Mine – Q2 2014 Operational Summary

In the second quarter of 2014, gold production totaled 117,366 ounces, driven primarily by higher gold grades due to improved dilution control. The mill processed 4.4 million tonnes (Mt) of ore from a combination of direct feed (65%) and run-of-mine stockpiles (35%) at an average grade of 0.91 g/t with recoveries of 91%. At quarter-end, the run-of-mine ore stockpiles were 1.3 Mt grading 0.76 grams per tonne (g/t).

The mill facility processed an average of 48,569 tonnes of ore per day (tpd) in the second quarter with 83% availability, approximately 4% higher than the first quarter but at the low end of expectations for the quarter.

A total of 19.0 Mt was mined during the second quarter with mining rates averaging 209,000 tpd, below projected rates of 230,000 tpd. Mining activities were heavily weighted on overburden and waste stripping, mainly for the development of the southwall pushback and Campbell pit breakthrough (western end of former open pit). Due to the reduced productivity in mining overburden and till and removing old infrastructure around the former Campbell pit, mining rates were lower than initially planned. With the overburden and till stripping decreasing significantly in the second half of 2014 (from 12.1 Mt to approximately 4.6 Mt), mining rates are expected to increase to 250,000 tpd by year-end.

The development of the southwall pushback is expected to be completed in the third quarter and tailings construction activities remain on schedule.

Although the operation is making positive progress quarter over quarter, the ramp-up is slightly behind schedule as of the end of June. For the second half of 2014, the forecasted mining and mill throughput rates have been adjusted downwards thereby lowering the high-end of production guidance by approximately 20,000 ounces of gold for the year.

Total cash costs for the second quarter of 2014 were $941 per ounce sold2, 4% lower than Q1 but above plan, mainly due to (1) fewer tonnes mined resulting in less ore stockpiled which would have reduced reportable costs, and (2) higher unit costs during the ramp-up period.

Unit mining costs were higher than plan due to the shortfall in total tonnes mined and higher equipment maintenance costs. Unit milling costs were also slightly higher than plan mainly due to higher maintenance costs and lower mill throughput partially offset by lower consumables and reagent consumption. With further improvements expected in mine and mill throughput rates, unit operating costs are projected to trend downward.

Detour Lake Mine Operation Statistics:

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
Ore mined (Mt) 1.29 2.70 4.16 4.09 4.88 2.89
Waste mined (Mt) 9.12 9.96 12.42 16.80 14.29 16.11
Total mined (Mt) 10.41 12.66 16.58 20.89 19.17 19.00
Strip ratio (waste:ore) 7.1 3.7 3.0 4.1 2.9 5.6
Mining rate (tpd) 123,000 160,000 180,000 203,000 213,000 209,000
Ore milled (Mt) 1.02 2.87 3.88 3.41 4.08 4.42
Head grade (g/t Au) 0.64 0.76 0.72 0.81 0.90 0.91
Recovery (%) 80 82 85 92 91 91
Mill throughput (tpd) 12,941 31,513 42,141 37,090 45,282 48,569
Mill availability (%) 66 68 78 66 80 83
Ounces produced[i] (oz) 16,841 57,897 75,672 81,877 107,154 117,366
Ounces sold (oz) 4,052 37,870 75,600 95,000 84,560 107,206
Average realized price2 ($/oz) - - $1,340 $1,269 $1,301 $1,293
Total cash cost per oz sold2 ($/oz) - - $1,214 $1,174 $976 $941
Mining (Cdn$/t mined) - - - $2.60 $2.87 $2.87
Milling (Cdn$/t milled) - - - $11.75 $11.13 $11.25
G&A (Cdn$/t milled)3 $4.13 $3.68 $3.46

1 Includes pre-production ounces prior to the declaration of commercial production on September 1, 2013.
2 Refer to the section on Non-IFRS Financial Performance Measures section at end of this page. Reconciliation of these measures is described in the MD&A for the relevant periods.
3 G&A costs include site G&A, infrastructure, environmental and Aboriginal costs.

2014 Outlook and Updated Guidance

In the first half of 2014, the Company continued to make progress towards completing the ramp-up of the Detour Lake mine. Detour Gold met the high end of its gold production guidance for the first half of the year, despite the mine ramp-up proceeding slightly below plan.

Based on both the throughput and mining rates being below target levels at the end of the quarter, the Company has revised its mine output from 92 Mt to 82 Mt and mill output from 19 Mt to 17.7 Mt for 2014. As a result, the Company now expects to produce between 450,000 and 480,000 ounces of gold. With this updated production range, combined with an increase in forecasted operating costs, total cash costs for 2014 have been revised from $800 to $900 per ounce sold1 to $900 to $975 per ounce sold1. The Company continues to expect that mill design capacity (55,000 tpd) will be attained by year-end.

Sustaining capital expenditures for the year are expected to range between $125 and $135 million, including no change to deferred stripping of $35 million.

Although the Company remains focused on the mine ramp-up, it is continuing to advance its organic growth and optimization initiatives:

  • Mineral reserve estimation of Block A for 2014 year-end reserve update
  • Amenability to heap leaching underway to evaluate potential to process low-grade material
  • Assessment to potentially remove the pebble crushing circuit
  • Further evaluation of Lower Detour area (high-grade intersections in Zone 58)
  • Exploration plan for 2015 winter drilling program in progress


Additional Technical Documents View PDF

Technical Information
The scientific and technical content of this news release 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”.

Non-IFRS Financial Performance Measures
The Company has included non-IFRS measures in this website page. The Company believes that this measure, 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. Refer to the Company's MD&A for the relevant periods for further details.

NI 43-101 Disclosure:
On February 4, 2014, Detour Gold announced an updated mine production plan for the Detour Lake project. 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.