TORONTO, Jan. 22, 2019 /CNW/ - Detour Gold Corporation (TSX: DGC) ("Detour Gold" or the "Company") provides guidance for 2019. Overall, it is in line with the Detour Lake operation's life of mine plan released in June 2018. The Company will host a conference call on Wednesday, January 23, 2019 at 11:00 AM ET.
All amounts are in U.S. dollars unless otherwise indicated. Refer to the end of this news release for an explanation and discussion of the non-IFRS measures total cash costs and all-in sustaining costs ("AISC").
Gold production (oz)
Total cash costs ($/oz sold)
AISC ($/oz sold)
"The Company will continue to execute on its operational strategy for 2019 with the goal of stabilizing the operations by year-end," said Bill Williams, Interim CEO. "The operational initiatives that Frazer Bourchier, COO, put in place during 2018 have produced positive results. We are building on this momentum to further improve efficiencies that will lead to steady-state operations and position the Company towards a strong future."
2019 Guidance Review
Full year projected gold production of between 570,000 and 605,000 ounces.
The mine plan calls for approximately 115 Mt to be mined from the Detour Lake pit in 2019.
Mill throughput is expected to range between 21.5 and 22.0 Mt for 2019. Head grade is projected to range between 0.90 and 1.00 g/t, with the lowest grade projected during the second quarter. Mill recoveries are expected to range between 90.5% and 91.5%.
2019 AISC are expected to range from $1,175 to $1,250 per ounce sold, with total cash costs of $790 to $840 per ounce sold. The AISC are forecast to be above the yearly guidance in the second and third quarter of the year, mainly due to the timing of capital expenditures for the tailings facility construction.
Capital expenditures are estimated to range between $190 and $210 million. Higher sustaining capital is anticipated for accelerating the construction of Cell 2 of the tailings facility mainly due to slower progress than planned in 2018.
Capital Expenditures ($ millions)
Tailings Management Area
Site infrastructure, G&A & other
Total sustaining expenditures
Total capital expenditures
Exploration budget of approximately $5 million to focus mainly on drilling and geophysical surveys at a number of key targets on the Detour Lake property. The Company plans to complete approximately 2,500 metres of drilling to better define the northeast and western extensions of Zone 58N. In addition, the Company plans to complete an internal scoping study this year to assess the viability of pursuing an underground exploration and bulk sampling program.
Corporate general and administrative expense estimated at $21 million and excludes share-based compensation.
Interest expense estimated at approximately $15 million.
Depreciation expense expected to be approximately $300 per ounce of gold sold, subject to the Company completing its 2018 year-end reserve and resource estimate.
Principal assumptions used for the 2019 guidance include:
Gold price: $1,250/oz
CAD vs US FX rate: 1.28
Diesel fuel price: CAD$0.95 per litre
Power cost: CAD$35 per megawatt hour
Sensitivity Analysis for changes affecting full year:
A $50/oz change in the gold price impacts closing cash by approximately $30 million.
A $0.05 change in the CAD vs US exchange rate impacts closing cash by approximately $20 million.
2019 Operational Focus and Initiatives
We expect to further embed critical initiatives commenced in 2018 during the year to progress process plant capital projects and to introduce value-added business improvement plans. The focus remains on increasing production efficiencies while targeting the life of mine plan's benchmark production and cost metrics. Top focus areas for 2019 include:
Employee retention and performance management
Tailings dam earthworks construction for Cell 2 including improved project management
Drill, blast and truck cycle efficiencies including fleet management
Condition-based maintenance processes for mine and plant
Business mine planning cycles together with data analytics and short interval controls
Cost controls including contractor management
Critical risk awareness and mitigation controls
2019 Financial Risk Management
The Company has established financial risk management programs for its gold sales, Canadian dollar expenditures, and diesel fuel exposures. These programs are to reduce a portion of the Company's exposure to volatile markets and to lock-in known rates for budgeting purposes.
As of January 22, 2019, the Company has the following positions:
120,000 gold ounces of collars have been added giving protection on gold sales at $1,250/oz and participation up to $1,400/oz. These collars mature evenly over 2019.
$315 million of collars are in place that allow the Company to sell US dollars at no worse than 1.27 and have upside to 1.35. These collars mature relatively evenly over 2019. These contracts along with other spot transactions completed to date in January have secured prices for approximately 60% of the Company's estimated 2019 Canadian dollar requirements.
35 million litres of diesel fuel contracts at an average rate of CAD$0.85/litre, which settle on a net basis. These contracts are predominantly weighted in the first nine months of 2019 and represent approximately 45% of the Company's 2019 diesel fuel requirements.
The Company will host a conference call on Wednesday, January 23, 2019 at 11:00 AM ET. Access to the conference call is as follows:
Via webcast, go to www.detourgold.com and click on the "2019 Guidance Conference Call and Webcast" link on the home page
By phone toll free in North America 1-800-319-4610
By phone Toronto local and internationally 416-915-3239
A playback will be available until February 23, 2019 by dialing 604-674-8052 or 1-855-669-9658 within Canada and the United States, using pass code 2910. The webcast and presentation slides will be archived on the Company's website.
The scientific and technical content of this news release was reviewed, verified and approved by David Londono, Senior Manager Mining, a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of Disclosure for Mineral Projects."
About Detour Gold
Detour Gold is an intermediate gold producer in Canada that holds a 100% interest in the Detour Lake mine, a long life large-scale open pit operation. Detour Gold's shares trade on the Toronto Stock Exchange under the trading symbol DGC.
For further information, please contact:
Bill Williams, Interim CEO
Laurie Gaborit, VP Investor Relations
Detour Gold Corporation, Commerce Court West, 199 Bay Street, Suite 4100, P.O. Box 121, Toronto, Ontario M5L 1E2
Non-IFRS Financial Performance Measures The Company has included certain Non-IFRS measures in this document with no standard meaning under International Financial Reporting Standards ("IFRS"). Refer to Non-IFRS Financial Performance Measures in the Company's latest MD&A for further information.
The Company believes that these measures, 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.
All-in sustaining costs The Company believes this measure more fully defines the total costs associated with producing gold. The Company calculates all-in sustaining costs as the sum of total cash costs (as described below), share-based compensation, corporate general and administrative expense, exploration and evaluation expenses that are sustaining in nature, reclamation cost accretion, sustaining capital including deferred stripping, and realized gains and losses on hedges due to operating and capital costs, all divided by the total gold ounces sold to arrive at a per ounce figure.
Total cash costs Detour Gold reports total cash costs on a sales basis. Total cash costs include production costs such as mining, processing, refining and site administration, agreements with Indigenous communities, less share-based compensation and net of silver sales divided by gold ounces sold to arrive at total cash costs per gold ounce sold. The measure also includes other mine related costs incurred such as mine standby costs and current inventory write downs. Production costs are exclusive of depreciation and depletion. Production costs include the costs associated with providing the royalty in kind ounces.
All-in sustaining costs and total cash costs do not have any standardized meaning whether under IFRS or otherwise and therefore may not be comparable to other issuers. Accordingly, other companies may calculate these measures differently as a result of differences in underlying principles and policies applied. Differences may also arise to a different definition of sustaining versus non-sustaining capital. These 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.
Cautionary Note regarding Forward-Looking Information This news release contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). Forward-looking statements reflect current expectations or beliefs regarding future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates", "targets" or "believes", or variations of, or the negatives of, such words and phrases or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements, including those herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release speak only as of the date of this news release or as of the date or dates specified in such statements.
Specifically, this press release contains forward-looking statements regarding 2019 gold production of between 570,000 and 605,000 ounces, total cash costs of between $790 and $840 per ounce sold and AISC of between $1,175 and $1,250 per ounce sold; the Company continuing to execute on its operational strategy in 2019 with the goal of stabilizing the operations by year-end; further improving efficiencies that will lead to steady-state operations and position the Company towards a strong future; mining 115 Mt from the Detour Lake pit, mill throughput of between 21.5 and 22.0 Mt, head grade of between 0.90 to 1.00 g/t, with the lowest grade projected during the second quarter, mill recoveries of between 90.5% and 91.5%, AISC being above the yearly guidance in the second and third quarter of the year, capital expenditures of between $190 to $210 million and the use and classification of such expenditures, higher sustaining capital for accelerating the construction of Cell 2 of the tailings facility, exploration activities, corporate general and administrative expenses of $21 million (excluding share-based compensation), an interest expense of approximately $15 million, and a depreciation expense of approximately $300 per ounce of gold sold; further embedding critical initiatives commenced in 2018 to progress process plant capital and to introduce value-added business improvement plans; and increasing production efficiencies while targeting the life of mine plan's benchmark production and cost metrics.
Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company's ability to predict or control. These risks, uncertainties and other factors include, but are not limited to, the results of the life of mine plan released in June 2018, gold price volatility, changes in debt and equity markets, the uncertainties involved in interpreting geological data, increases in costs, the costs, environmental compliance and changes in environmental legislation and regulation, support of the Company's Indigenous communities, interest rate and exchange rate fluctuations, general economic conditions and other risks involved in the gold exploration, development and production industry, as well as those risk factors listed in the section entitled "Description of Business - Risk Factors" in Detour Gold's 2017 Annual Information Form ("AIF") and in the continuous disclosure documents filed by Detour Gold on SEDAR at www.sedar.com. Readers are cautioned that the foregoing list of factors is not exhaustive of the factors that may affect forward-looking statements. Actual results and developments and the results of the life of mine plan released in June 2018 are likely to differ, and may differ materially or materially and adversely, from those expressed or implied by forward-looking statements, including those contained in this news release. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about the following: the availability of financing for exploration and development activities; operating and capital costs; results of operations; the Company's available cash resources; the Company's ability to attract and retain skilled staff; the mine development and production schedule and related costs; dilution control; sensitivity to metal prices and other sensitivities; the supply and demand for, and the level and volatility of the price of, gold; timing of the receipt of regulatory and governmental approvals for development projects and other operations; the timing and results of consultations with the Company's Indigenous partners; the supply and availability of consumables and services; the exchange rates of the Canadian dollar to the U.S. dollar; energy and fuel costs; required capital investments; estimates of net present value and internal rate of returns; the accuracy of mineral reserve and mineral resource estimates, production estimates and capital and operating cost estimates and the assumptions on which such estimates are based; market competition; ongoing relations with employees and impacted communities and general business and economic conditions; and general business and economic conditions.
The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.
SOURCE Detour Gold
For further information: Bill Williams, Interim CEO, Tel: 416-304-0800; Laurie Gaborit, VP Investor Relations, Tel: 416-304-0581