Recent Developments

Recent Developments (at November 2, 2016)
Q3 2016 Summary

Detour Gold reported third quarter 2016 operating results and provided preliminary 2017 outlook on November 1, 2016.

View the related press releases:
161101 - Detour Gold Reports Third Quarter 2016 Results
161101 - Detour Gold Provides Preliminary 2017 Outlook

2016 Third Quarter Operational Results

  • Gold production totaled 127,758 ounces, exceeding the Company’s guidance of 120,000 ounces for the quarter (refer to news release September 6, 2016).
  • Mill throughput totaled 5.2 million tonnes (Mt) at an average grade of 0.88 grams per tonne (g/t) and average recoveries of 87%. Grade was higher than planned as result of mining the higher grade Calcite Zone faster than projected following the heavy rainfalls in mid-August.
  • Recoveries were impacted during the quarter by operational issues in the recovery circuit, including a contaminant in the cyanide delivery system. Recoveries are expected to return to 90% in the fourth quarter.
  • The processing plant averaged 56,453 tpd in the third quarter, slightly lower than projected as a result of an extended planned shutdown during the period (8 days equivalent vs 6 days equivalent), which included a major electrical shutdown of 24 hours, replacing the primary crusher concave, rebuilding the 410-conveyor apron feeder, and replacing the SAG and ball mills liners.
  •  A total of 23.5 Mt (ore and waste) was mined in the third quarter (equivalent to mining rates of 256,000 tpd). Mining sequence was negatively impacted by the rainfall event of mid- August with mining of the Calcite Zone resuming on September 24.
  • At the end of the third quarter, run-of-mine stockpiles stood at 6.1 Mt grading 0.63 g/t (approximately 124,000 contained gold ounces).
  • At the end of September, the Company commenced processing the screened portion (<2 inches) of both the low and medium grade stockpiles. The Company plans to process approximately 400,000 tonnes by year-end. The results of the fines test, which are expected by year-end, will determine costs and how to best integrate the processing of fines in the mine plan and assess the use of the by-products for road and tailings construction.
  • The Company increased its water pumping capacity for the pit from 14,000 cubic metres per day to 28,000 cubic metres per day and added stand-by (emergency) pumps. The Company is expecting to have an updated water management plan by year-end, which will address future sump design and ultimate pumping capacity in each development phase of the pit.
  • All-in sustaining costs1 of US$1,042 per ounce sold for the quarter were lower than expected as a result of a slower capital spending profile during the quarter despite higher costs for the planned mill shutdown.
  • Mining unit costs were slightly lower than prior quarter due to more tonnes mined despite higher unplanned maintenance costs. Processing unit costs were higher than prior quarter due to the added contractor cost for the fines project, higher costs for the planned mill shutdown and higher consumables to regain recovery levels.

Detour Lake Mine Operation Statistics:

Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015
Ore mined (Mt) 5.0 5.5  5.8 6.3 6.5
Waste mined (Mt) 18.5 16.4 15.2 15.7  17.0
Total mined (Mt) 23.5 21.9 21.0 22.0 23.5
Strip ratio (waste:ore) 3.7 3.0 2.6 2.5  2.6
Mining rate (tpd) 256,000 241,000 231,000 239,000 255,000
Ore milled (Mt) 5.2 5.3  4.7 5.1 5.2
Head grade (g/t Au) 0.88 0.92 0.91 0.98 0.86
Recovery (%) 87 89 91 91 90
Mill throughput (tpd) 56,453 58,466 52,165 55,522 56,015
Mill availability (%) 84 87 88 86 85
Ounces produced (oz) 127,758 139,359 127,136 146,417 128,222
Ounces sold (oz) 113,845 131,606 137,608 132,209 126,241
Average realized price (US$/oz)1 $1,281 $1,230 $1,172 $1,102 $1,164
Total cash cost per oz sold (US$/oz)1 $802 $691 $637 $694 $766
AISC per oz sold (US$/oz)1 $1,042 $1,030 $824 $858 $1,071
Mining (Cdn$/t mined) $2.66 $2.75 $2.94 $2.63 $2.69
Milling (Cdn$/t milled) $11.74 $9.55 $9.08 $9.24 $8.64
G&A (Cdn$/t milled) $3.46 $3.03 $3.51 $3.15 $3.19

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

2016 Guidance:

​On September 6, 2016, the Company revised its 2016 guidance as a result of having to delay access to the Calcite Zone (main source of ore for the second half of 2016) due to the heavy rainfalls experienced in mid-August

Gold production for 2016 is expected to be at the mid-point of the revised guidance.

Prior Guidance Revised Guidance
Gold production (oz) 540,000-570,000 525,000-545,000
Total cash costs (US$/oz sold)1 $640-700 $700-750
All-in sustaining costs (US$/oz sold)1 $920-980 $970-$1,020

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.

Although mining rates improved quarter over quarter in 2016, year-to-date the operation is approximately 4.8 Mt behind its budgeted mine plan. In 2017, the Company will be working towards further increasing its mining rate by adding equipment to the ancillary and ore re-handling fleets, increasing efficiency of haulage fleet, and implementing area-based planning for the entire Detour Lake pit.

With the slower progress in the area of the Campbell pit to date (reported on July 28, 2016), the Company commenced a recovery plan in September to recoup 0.5 Mt in this area by year-end. The success of this plan is key in de-stacking the north area of the Campbell pit to expose the higher grade benches for 2017

2017 Preliminary Outlook

Preliminary gold production for 2017 is estimated to be between 540,000 and 590,000 ounces, reflecting a reduction of 40,000 ounces from the current life of mine (“LOM”) and assuming approximately 10,000 ounces (using the mid-point of the guidance) for downside risk. Approximately 30,000 ounces of the reduction from LOM plan is attributable to face position (mainly due to slower development progress around the Campbell pit in 2016) and 10,000 ounces due to a slightly lower assumption for recovery and slightly higher assumption for dilution.

The preliminary 2017 mine plan is dependent on the year-end face position in the Campbell pit area. The mining rate in this area has increased quarter over quarter in 2016 and is expected to further increase with the recovery plan implemented in September 2016.

At this point, this preliminary outlook does not include the processing of the low and/or medium grade fines pending the results of the large scale test currently underway.

2017 Preliminary Guidance LOM Plan for 2017
Gold production (oz) 540,000-590,000 614,000
Total mined (Mt) 92-102 101
Ore milled (Mt) 21-22 21.6
Average grade (g/t) 0.88-0.92 0.97
Dilution (%) 5-7 5
Recovery (%) 90-91 91.5

 All-in sustaining costs1 are estimated to range from US$1,050 to US$1,150 per ounce sold, using a US dollar to Canadian dollar exchange rate of 1.30.

Site-wide expenditures (operating and sustaining capital costs) are expected to range from C$685 to C$745 million as compared to the LOM plan estimate of C$640 million. While the range provided is preliminary and still under review, the sustaining capital expenditures include approximately C$45 million of accelerated capital (C$22 million for the construction of Cell 2 of the tailing facility, C$17 million for the replacement of the contractor camp and C$6 million for the lead nitrate project). In addition, the Company plans to invest C$10 million in additional mining fleet to increase ex-pit tonnage. The increase in operating costs includes a C$20 million accounting charge for processing 2 million tonnes of medium grade stockpiled ore.

2018 Preliminary Gold Production Forecast 

Preliminary gold production for 2018 is expected to range from 600,000 to 670,000 ounces (attributing no ounces to West Detour) compared to the LOM plan of 658,000 ounces (which attributes 13,000 ounces to West Detour). 

The Company does not intend to provide final production and cost guidance for 2018 in January 2017.

1. Reconciliation of this Non-IFRS Performance Measure is described in the MD&A for corresponding financial reporting period.

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.