detour-lake-mine-recent-development

Recent Developments

Recent Developments (Updated January 15, 2015)

2014 Q4 & Full Year Operational Summary

Detour Gold reported its 2014 fourth quarter operational and full year operational results and 2015 guidance on January 15, 2015.

View the related press release:
15 01 15 - Detour Gold Reports 2014 Q4 & Full Year Operating Results and 2015 Guidance

 

Detour Lake Mine – 2014 Fourth Quarter and Full Year Operational Summary

The Company reported gold production of 116,770 ounces for the fourth quarter, bringing total gold production to 456,634 ounces for the year. This represents an increase of 97% over 2013 gold production of 232,287 ounces. Total cash costs for 2014 are estimated at US$930 per ounce sold1.

In the fourth quarter, the mill facility processed 4.7 million tonnes (Mt) of ore at an average grade of 0.85 grams per tonne (g/t) with recoveries of 91%. The processing plant continued to show progress with throughput rates averaging 51,142 tonnes per day (tpd) for the quarter, including 51 days at above design capacity of 55,000 tpd. Mill availability for the quarter was 4% below expectations at 83%. In December, the mill reached 54,310 tpd, 99% of its design capacity, with 87% availability and milling rates of 2,604 tonnes per operating hour (tpoh).

A total of 19.7 Mt was mined during the fourth quarter (equivalent to 214,000 tpd), with December showing significant improvement with an average mining rate of 234,000 tpd. The main driver for the mining rate progress is higher drill productivity which increased 40% from September to December resulting in a higher drilled and blasted inventory at the end of December.

At the end of December, the run-of-mine ore stockpiles totaled 0.8 Mt grading 0.76 g/t.

During 2014, the block model reconciled positively both on tonnes and grade, giving approximately 4% more ounces.

2014 Detour Lake Mine Operation Statistics:


Q1 2014 Q2 2014 Q3 2014 Q4 2014 2014
Ore mined (Mt) 4.88 2.89 4.20 4.30 16.28
Waste mined (Mt) 14.29 16.11 14.71 15.39 60.49
Total mined (Mt) 19.17 19.00 18.91 19.69 76.77
Strip ratio (waste:ore) 2.9 5.6 3.5 3.6 3.7
Mining rate (tpd) 213,000 209,000 206,000 214,000 210,000




Ore milled (Mt) 4.08 4.42 4.53 4.71 17.73
Head grade (g/t Au) 0.90 0.91 0.88 0.85 0.88
Recovery (%) 91 91 90 91 91
Mill throughput (tpd) 45,282 48,569 49,186 51,142 48,563
Mill availability (%) 80 83 81 83 81
Ounces produced1 (oz) 107,154 117,366 115,344 116,770 456,634
Ounces sold (oz) 84,560 107,206 106,334 124,913 423,013

2015 Guidance

The Company’s guidance for 2015 is as follows:

2015 Guidance

Gold production (oz)

475,000-525,000

Total cash costs ($/oz sold)1

US$780-$850

All-in sustaining costs ($/oz sold)1,2

US$1,050-$1,150


At the mid-point of the guidance, the Detour Lake operation is forecast to process approximately 19.7 Mt of ore (approximately 54,000 tpd) at an average grade of 0.86 g/t gold with gold recovery of 91.5%, equivalent to approximately 500,000 ounces of gold.

Gold production is expected to gradually increase over the first three quarters (110,000 to 120,000 ounces per quarter), with the fourth quarter forecasted to be significantly higher (up to 155,000 ounces) due to access to higher grade ore during that period. Total cash costs1 are therefore expected to be relatively consistent in the first nine months of 2015, at approximately $900 per ounce sold, and decline to below $700 per ounce sold in the fourth quarter. This significant reduction reflects the higher gold production and the building of stockpile inventories in the fourth quarter. It is expected that the run-of-mine (ROM) stockpile will be 1.8 Mt averaging 0.80 g/t, or approximately 46,000 ounces of gold, at the end of 2015.

At the mid-point of the guidance, the 2015 mine plan anticipates a total of approximately 87 Mt to be mined (equivalent to mining rates of 238,000 tpd). Approximately 222,000 tpd will be mined using five shovels (two CAT7495s and three CAT6060s) with the remaining 16,000 tpd for pre-stripping using one CAT6030 excavator and CAT777 trucks (equivalent to approximately 6 Mt for the year). The average waste to ore ratio for the year is estimated at 3.5:1. There are specific months during the year where this strip ratio will be above the life of mine average of 3.5:1 and stripping costs will be capitalized.

Continued progress in increasing the mining rate is key to the Company’s operational success in 2015 and beyond. A 10,000 tpd change in the annualized mining rate for 2015 is estimated to impact gold production by approximately 10,000 ounces.

Projected sustaining capital expenditures for 2015 are estimated to be between $90 and $100 million. In addition, capitalized stripping costs related to the development of the open pit are expected to range from US$20 to $25 million. Overall, budgeted capital expenditures are expected to be weighted in the second and third quarters.

The 2015 corporate general and administrative expense is estimated at US$20 million. The exploration budget is estimated at $2 million and will be allocated to a limited drilling program to test the depth extension of the high-grade mineralization encountered earlier this year in Zone 58N of the Lower Detour area and to other surface exploration work on the property.

The following price and cost assumptions were used to forecast the 2015 guidance: gold price of US$1,200/oz, diesel fuel price of US$0.82 per litre, power cost of US$0.04 per kilowatt hour, and exchange rate of $1.00US:$1.15Cdn.

Notes:
1 Refer to the section on Non-IFRS Financial Performance Measures at end of the related press release.
2 All-in sustaining costs represent total cash costs, plus share-based compensation, corporate general and administrative expense, exploration and evaluation expenses that are sustaining in nature, reclamation cost accretion, sustaining capital and deferred stripping costs.

Ongoing optimization efforts

The Company is initiating a number of optimization efforts not reflected in the 2015 guidance which, if successful, would result in additional production and cost improvements in 2015 and beyond:

  • Further reductions of consumables and reliance on contractors;
  • Installation and testing of a pebble extraction system; and
  • Processing the enriched zone of the low-grade stockpile.

Financial Risk Management

The Company’s financial position at year-end was approximately US$135 million in cash and short term investments after making debt repayments of approximately $57 million during the year. Given the gold price volatility seen in 2014, the Company continues to use its gold sales risk management program and currently has 80,000 ounces of forward sales at an average price of $1,229 per ounce for the first half of 2015. Furthermore, the Board has approved the extension of the gold sales risk management program for up to 50% of 2015 projected production.

The Company has entered into “zero-cost” collars to hedge a portion of its Canadian dollar expenditures. The Company has hedged US$135 million whereby it will purchase Canadian dollars at no worse than 1.10 and can participate up to 1.19.

Life of Mine Plan Optimization

The Company has initiated a review of its current life of mine plan (February 2014) and is evaluating a number of options to further optimize the Detour Lake mining operation. This evaluation will focus on a tonnage rationalization update to confirm whether the current life of mine plan maximizes returns after considering the capital investment necessary to increase the annual mine output to a maximum of 140 Mt. The review will also evaluate whether Block A should be included as a mineral reserve and incorporated into the life of mine plan as a second pit feed source. The progress made on the pebble extraction and segregation of fines will dictate whether these opportunities can be incorporated in the revised mine plan. It is anticipated that an updated life of mine plan will be announced in the second half of 2015.

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

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.