detour-lake-mine-recent-development

Recent Developments

Recent Developments (Updated May 12, 2014)

Q1 2014 Summary

Detour Gold reported its first quarter operational and financial results on the Detour Lake mine on April 30, 2014.

View the related press release:
14 04 30 - Detour Gold Reports First Quarter 2014 Results



Detour Lake Mine – Q1 2014 Operational Summary

In the first quarter of 2014, gold production met expectations at 107,154 ounces. The mill processed 4.1 million tonnes (Mt) of ore at an average grade of 0.90 g/t with recoveries of 91%.

The mill facility processed an average of 45,282 tonnes of ore per day (tpd) in the first quarter with 80% availability versus the targeted rate of 82%.

During the first quarter, a total of 19.2 Mt was mined versus budget of 20.9 Mt with mining rates averaging 213,000 tpd. The 1.7 Mt shortfall resulted mainly from in-pit rehandling to advance the southwall pushback, which is expected to be completed this summer and will provide improved access to higher grade ore. In addition, one shovel was removed from the pit  for 10 consecutive days for the processing of a higher grade stockpile to test grade control. Despite the shortfall, the run-of-mine ore stockpiles increased by approximately 500,000 tonnes during the quarter for a total of 2.8 Mt grading 0.78 g/t.

Total cash costs for the first quarter of 2014 were $976 per ounce sold2, in-line with expectations, and $198 per ounce less than the fourth quarter of 2013 (first quarter of commercial production).

Detour Lake Mine Operation Statistics: 

 

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Ore mined (Mt)

1.29

2.70

4.16

4.09

4.88

Waste mined (Mt)

9.12

9.96

12.42

16.80

14.29

Total mined (Mt)

10.41

12.66

16.58

20.89

19.17

Strip ratio (waste:ore)

7.1

3.7

3.0

4.1

2.9

Mining rate (tpd)

123,000

160,000

180,000

203,000

213,000

 

 

 

 

 

 

Ore milled (Mt)

1.02

2.87

3.88

3.41

4.08

Head grade (g/t Au)

0.64

0.76

0.72

0.81

0.90

Recovery (%)

80

82

85

92

91

Mill throughput (tpd)

12,941

31,513

42,141

37,090

45,282

Mill availability (%)

66

68

78

66

80

Ounces produced[i] (oz)

16,841

57,897

75,672

81,877

107,154

Ounces sold (oz)

4,052

37,870

75,600

95,000

84,560

 

 

 

 

 

 

Average realized price2 ($/oz)

-

-

$1,340

$1,269

$1,301

Total cash cost per oz sold2 ($/oz)

-

-

$1,214

$1,174

$976

 

 

 

 

 

 

Mining (Cdn$/t mined)

-

-

-

$2.60

$2.87

Milling (Cdn$/t milled)

-

-

-

$11.75

$11.13

G&A (Cdn$/t milled)

-

-

-

$4.13

$3.57

Total unit costs (Cdn$/t milled)

 

 

 

$29.15

$28.22


Unit operating costs totaled Cdn$28.22 per tonne milled, approximately 5% above budget, due to the slightly lower mill throughput. Unit mining costs were higher than plan due to the shorfall in ex-pit tonnes. Unit milling costs improved with lower reagents consumption. It is anticipated that unit operating costs will continue to trend downward through 2014 with increasing mine and mill throughput rates.

 Notes:

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 at end of the section. Reconciliation of these measures is described at end of the press release and in the MD&A for the relevant periods.

Detour Lake LOM 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 quarter ended March 31, 2014 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.