Recent Developments

Recent Developments (Updated July 29, 2016)

Q2 2016 Summary

Detour Gold reported second quarter 2016 operating results on July 28, 2016.

View the related press release:
160728 - Detour Gold Reports Second Quarter 2016 Results

2016 Second Quarter Operational Results

  • Gold production totaled 139,359 ounces, in line with the Company’s quarterly guidance range, based on mill throughput of 5.3 million tonnes (Mt) at an average grade of 0.92 grams per tonne (g/t) and average recoveries of 89%.
  • Recoveries were lower than plan in June mainly as a result of operational issues in the recovery circuit.
  • The processing plant averaged a record 58,466 tpd in the second quarter despite a significant planned shutdown in the first half of April to replace the 410-conveyor system. Following its successful installation and commissioning, throughput rates averaged nearly 65,000 tpd in May and June.
  • A total of 21.9 Mt (ore and waste) was mined in the second quarter (equivalent to mining rates of 241,000 tpd). With the transfer of a rope shovel (CAT7495) into waste mining at the end of June, mining rates are expected to average between 250,000 and 270,000 tpd for the second half of 2016.
  • At the end of the second quarter, run-of-mine stockpiles stood at 6.5 Mt grading 0.62 g/t (approximately 130,000 ounces).
  • The Company completed a 100,000 tonnes test from the ROM medium grade stockpile (average grade of approximately 0.60 g/t) in June to enhance the grade by screening the fines (at minus 2”). Preliminary results indicated a 90% improvement in the grade with 28% of the mass, validating prior survey results.
  • Total cash costs were US$691 per ounce sold for the quarter. All-in sustaining costs of US$1,030 per ounce sold were higher than the prior quarter mainly as a result of the timing of capital expenditures and a higher share-based compensation expense due to the significant share price appreciation during the quarter.
  • Mining unit costs were slightly lower than the first quarter as a result of more tonnes mined and processing unit costs were slightly higher as a result of the April scheduled shutdown partially offset by more tonnes milled.

Detour Lake Mine Operation Statistics:

Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015
Ore mined (Mt) 5.5 5.8 6.3 6.5 6.4
Waste mined (Mt) 16.4 15.2 15.7 17.0 19.1
Total mined (Mt) 21.9 21.0 22.0 23.5 25.5
Strip ratio (waste:ore) 3.0 2.6 2.5 2.6 3.0
Mining rate (tpd) 241,000 231,000 239,000 255,000 280,000
Ore milled (Mt) 5.3 4.7 5.1 5.2 5.2
Head grade (g/t Au) 0.92 0.91 0.98 0.86 0.82
Recovery (%) 89 91 91 90 91
Mill throughput (tpd) 58,466 52,165 55,522 56,015 57,015
Mill availability (%) 87 88 86 85 88
Ounces produced (oz) 139,359 127,136 146,417 128,222 125,348
Ounces sold (oz) 131,606 137,608 132,209 126,241 123,296
Average realized price (US$/oz) $1,230 $1,172 $1,102 $1,164 $1,215
Total cash cost per oz sold (US$/oz) $691 $637 $694 $766 $734
AISC per oz sold (US$/oz) $1,030 $824 $858 $1,071 $1,030
Mining (Cdn$/t mined) $2.75 $2.94 $2.63 $2.69 $2.42
Milling (Cdn$/t milled) $9.55 $9.08 $9.24 $8.64 $8.81
G&A (Cdn$/t milled) $3.03 $3.51 $3.15 $3.19 $2.72

Note: Mill availability is defined as mill operating time. Totals may not add up due to rounding.

Detour Lake Mine Operation Statistics:

2016 Guidance
Gold production (oz) 540,000-570,000
Total cash costs (US$/oz sold) $640-700
All-in sustaining costs (US$/oz sold) $920-980
Sustaining capital (US$M) $100-110

Note: Based on a review of the estimated useful life of components in the mine fleet, the Company has reclassified $30 million of costs from operating to sustaining capital. This re-classification had no impact on the change in guidance range for all-in sustaining costs and conforms with the financial statements.

Given the results for the first half of the year and projections for the second half of the year, the Company has narrowed its 2016 gold production guidance to between 540,000 and 570,000 ounces (previously 540,000 to 590,000 ounces). Due to slower mining progress in the area of the Campbell pit in the first half of the year, the Company does not anticipate accessing higher grade ore in that area during the second half of the year, which will negatively impact gold production by 15,000 to 20,000 ounces. The Company plans to start the processing of the medium grade fines in the second half of the year.

In addition, all-in sustaining costs are now expected to be between US$920 and $980 per ounce sold (previously US$840 to $940 per ounce sold), mainly as a result of lower production, higher sustaining capital expenditures of approximately US$10 million and higher shared-based compensation costs as a result of the increase in the Company’s share price from year-end. Approximately US$5 million of the increase in sustaining capital expenditures is for the lead nitrate project (for recovery improvements) which was initially planned for 2017. Capitalized stripping estimates remain unchanged at between US$5 and $10 million for 2016.

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”.

NI 43-101 Disclosure:
On January 25, 2016, 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 January 25, 2016. The report was prepared by the Detour Gold Technical Services Department, led by Drew Anwyll, Senior Vice President Technical Services, a Qualified Person (QP) under National Instrument 43-101.