detour-lake-mine-recent-development

Recent Developments

Recent Developments (Updated April 1, 2014)

Q4 2013 Summary

Detour Gold reported its fourth quarter and full year operational update on the Detour Lake mine on January 21, 2014 and a new mine plan update on February 4, 2014.

View the related press releases:
14 01 21 - Q4 Operating Results
14 02 04 - DL Mine Production Plan



2013 Highlights

  • Gold production of 232,287 oz for first year of operation (slightly below lower end guidance of 240,000oz)
  • Gold sales totaled 212,522 oz1 at an average realized price of US$1,318/oz2
  • Sustaining capital of Cdn$196 M incurred during the year, excluding any deferred stripping costs
  • Cash and short-term investments totaling approximately Cdn$96 M at year end (higher than projected as a result of favourable timing of harmonized sales tax refunds)

Detour Lake Mine - Q4 2013 Operational Summary

In the fourth quarter, the mill processed 3.4 Mt of ore at an average grade of 0.81 g/t with recoveries of 92% for gold production of 81,877 oz. Gold sales totaled 95,000 oz1 at an average realized price of US$1,269 /oz2.

The mill facility (both grinding lines) processed an average of 37,090 tonnes per day (tpd). Prior to the unplanned shutdown in December, throughput rates had reached 47,581 tpd in November with a record day at 63,700 tonnes on November 16, 2013.

Mill availability for both October and November averaged 82.5%. Availability was significantly reduced in December due to a four-day planned shutdown and a mechanical failure of the pre-leach thickener which caused the mill to shut down for an additional 15 days. Repairs to the torque cage structure and rakes were successfully completed and operations restarted on January 2, 2014 (refer to news releases of December 23, 2013 and January 2, 2014). During these downtime periods, the Company completed a number of mill related repairs and improvements, which should have a positive impact on near-term performance (i.e. installation of the shuttle chute to the two secondary crushers, replacement of the liners to the primary crusher and SAG mills, and replacement of the mill grates for both SAG mills).

The open pit operation mined 20.9 Mt during the fourth quarter, of which 4.08 Mt was ore and 16.8 Mt was waste (including 5.35 Mt of overburden and till) for a quarterly strip ratio of 4.1 to 1. At the end of December, the run-of-mine ore stockpiles contained over 2.41 Mt grading 0.82 g/t.

Detour Lake Mine Operation Statistics:

  Q1 2013 Q2 2013 Q3 2013 Q4 2013 2013
Ore tonnes mined (Mt) 1.29 2.70 4.16 4.08 12.24
Tonnes milled (Mt) 1.02 2.87 3.99 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
Ounces produced (oz)1 16,841 57,897 75,672 81,877 232,287

(1) During the commercial period (September 1 to year-end), the Detour Lake mine produced 105,898 oz of gold.

Mining rates during the fourth quarter averaged 203,000 tpd, excluding the contractor overburden removal contract. Mining rates averaged 222,000 tpd in December 2013.

In November and December 2013, the Company took delivery of an additional hydraulic shovel (CAT 6060) along with three haul trucks (CAT 795F). The Company now has a mining fleet of 23 haul trucks, three hydraulic shovels (CAT 6060), one excavator (CAT 6030), and two rope shovels (CAT 7495). The Company has ordered a second excavator (CAT 6030), which is expected to be delivered in the second quarter.

Notes:
(1) Gold ounces sold exclude the 2% royalty paid in-kind.
(2) Refer to Non-IFRS Financial Performance Measures section at the end of this page.

Detour Lake Mine Plan Update

Detour Gold released an updated life of mine plan on February 4, 2014 (refer to Technical Report below). The table below summarizes the assumptions and parameters:

 

Economic Assumptions

Gold price (US$/oz)

$1,200

Foreign exchange rate (US$/Cdn$)1

1.10

Electricity ($/kWh)2

0.05/0.08

Diesel fuel ($/l)

0.95

Income/mining tax rate (%)

25/10

Net Smelter Royalty (%)3

2.0

Mine Parameters

 

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)

15.5

Estimated gold recovery (%)

92.2

Total recovered gold (M oz) 4

14.3

Mine life (years)

21.7

Average annual gold production (oz)

660,000

Costs

 

Sustaining capital ($ M)

1,143

Deferred stripping ($ M)

614

Total cash costs before adj. below5 ($/oz sold)

767

Less deferred stripping adjustment

(44)

Total cash costs5 ($/oz sold)

723

Notes:
(1)  Exchange rate of 1.05 for 2014, 1.07 for 2015, and 1.08 for 2016, and 1.10 for 2017 onwards.
(2)  $0.05/kWh for 2014-19 and $0.08/kWh for 2020 onwards.
(3)  2% royalty is assumed to be paid in-kind.
(4)  Includes approximately 58,000 ounces to be recovered from stockpiles as of December 31, 2013.
(5)  Refer to the section on Non-IFRS Performance Measures at end of this section.

The Company continues to stockpile material grading between 0.4 to 0.5 g/t Au (estimated at 107.3 million tonnes averaging 0.45 g/t Au over LOM). This ‘mineralized waste’ is not included in the mineral resources or in the current mine plan. It could potentially be processed at the end of the mine life depending on the gold price environment.

Mining rates are expected to average 252,000 tpd in 2014 and increase to a peak of 389,000 tpd in 2020. The haulage truck fleet is projected to increase from the current 23 to 41 trucks at the peak of the mine operation (2026-31) with no additional shovels beyond the current two electric rope shovels and three hydraulic shovels. The mining fleet will be supported by two smaller shovel/excavators.

 

The Company will also be initiating a step-by-step process (over the next four years) to gradually increase throughput to 61,000 tpd in 2017.

Total cash costs over the life of mine:


Life of Mine

C$/t milled

C$/t mined

C$/oz sold

Mining costs

11.55

2.56

392

Processing cost

7.82

-

266

General and administration

2.44

-

83

Sub-total

21.81

-

741

Other adjustments1

-

-

(18)

Total cash costs (LOM)2

-

-

723

 Notes:
(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 Performance Measures at end of this section.  

The gold production/cost profile for the life of mine:

 (1) Refer to Non-IFRS Financial Performance Measures section at the end of this page.
 

Sustaining capital expenditures over the life of mine:

 

Sustaining Capital

Period 2014-18

($ millions)

Life of mine

($ millions)

Mining

168

535

Process plant

71

126

Tailings management

203

454

G&A

14

28

Total

456

1,143

Mine closure

 

70

Deferred stripping

226

614

 

The economic cash flow model is based on a gold price of US$1,200/oz and generates an undiscounted pre-tax and after capital life of mine net cash flow of $6.5 billion and after-tax net cash flow of $5.1 billion. Using a discount rate of 5% the discounted pre-tax and after capital life of mine net cash flow produces a discounted cash flow of $3.4 billion and after-tax net cash flow of $2.8 billion. The project economics are most sensitive to changes in the gold price, the Canadian and US dollar exchange rate and operating cost changes.   

 

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 year ender December 31, 2013 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.