Dgc 14 05_01 _ q12014
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Transcript of Dgc 14 05_01 _ q12014
1
Q1 2014 Results
Conference Call & Webcast - May 1, 2014
CANADA’S INTERMEDIATE GOLD PRODUCER
2
Forward Looking Information This presentation contains certain forward-looking information and statements as defined in applicable securities law (referred to herein as
“forward-looking statements”). Forward-looking statements are statements that are not historical facts and are generally, but not always,
identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates”, “projects”, “potential”, “believes” or variations of such words and phrases or statements that certain actions, events
or results “may”, “could”, “would”, “should”, “might” or “will be taken”, “occur” or “be achieved” or the negative connotation of such terms.
Forward-looking statements include, but are not limited to, statements with respect to Detour Gold’s future financial or operating
performance; guidance for production, total cash costs, capital costs, exploration costs; expected throughput, mining and recovery rates;
expected future production and mining activities; and opportunities to optimize the mine operation.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance
or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-
looking statements. These risks, uncertainties and other factors include, but are not limited to, assumptions and parameters underlying the
life of mine update not being realized, a decrease in the future gold price, discrepancies between actual and estimated production, changes
in costs (including labour, supplies, fuel and equipment), changes to tax rates; environmental compliance and changes in environmental
legislation and regulation, exchange rate fluctuations, general economic conditions and other risks involved in the gold exploration and
development industry, as well as those risk factors discussed in the section entitled “Description of Business - Risk Factors” in Detour
Gold’s 2013 AIF and in the continuous disclosure documents filed by Detour Gold on and available on SEDAR at www.sedar.com.
Such forward-looking statements are also 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 sustaining capital
costs; the Company’s ability to attract and retain skilled staff; sensitivity to metal prices and other sensitivities; the supply and demand for,
and the level and volatility of the price of, gold; the supply and availability of consumables and services; the exchange rates of the Canadian
dollar to the U.S. dollar; energy and fuel costs; the accuracy of reserve and resource estimates and the assumptions on which the reserve
and resource estimates are based; market competition; ongoing relations with employees and impacted communities and general business
and economic conditions. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking
statements contained herein are made as of the date hereof, or such other date or dates specified in such statements.
All forward-looking statements in this presentation are necessarily based on opinions and estimates made as of the date such statements
are made and are subject to important risk factors and uncertainties, many of which cannot be controlled or predicted. Detour Gold and the
Qualified Persons who authored the associated Technical Report undertake no obligation to update publicly or otherwise revise any
forward-looking statements contained herein whether as a result of new information or future events or otherwise, except as may be
required by law.
3
Notes to Investors
The mineral reserve and resource estimates reported in this presentation were prepared in accordance with Canadian National Instrument 43-
101Standards of Disclosure for Mineral Projects (“NI 43-101”), as required by Canadian securities regulatory authorities. For United States reporting
purposes, the United States Securities and Exchange Commission (“SEC”) applies different standards in order to classify mineralization as a
reserve. In particular, while the terms “measured,” “indicated” and “inferred” mineral resources are required pursuant to NI 43-101, the SEC does
not recognize such terms. Canadian standards differ significantly from the requirements of the SEC. Investors are cautioned not to assume that
any part or all of the mineral deposits in these categories constitute or will ever be converted into reserves. In addition, “inferred” mineral resources
have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that
all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities laws, issuers must not make
any disclosure of results of an economic analysis that includes inferred mineral resources, except in rare cases.
On February 4, 2014, Detour Gold announced an updated life of mine plan for the Detour Lake mine. 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.
The scientific and technical content of this presentation 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”.
Information Containing Estimates of Mineral Reserves and Resources
Non-IFRS Financial Performance Measures The Company has included “Total cash cost per gold ounce sold (TCC)” , “Average realized gold price” and “Adjusted net loss” in this presentation
which are non-IFRS measures. 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 and its ability to generate operating earnings
and cash flow from its mining operations.
Detour Gold reports total cash costs on a sales basis. Total cash costs per gold ounce sold include production costs such as mining, processing,
refining, site administration, costs associated with providing royalty in-kind ounces, and costs for agreements with Aboriginal communities, but are
exclusive of depreciation and depletion, reclamation, non-cash share-based compensation and deferred stripping. Total cash costs are reduced by
silver sales and divided by gold ounces sold to arrive at total cash costs per gold ounce sold. Total cash costs plus total capital per gold ounce sold
includes TCC as calculated above plus sustaining capital and deferred stripping divided by gold ounces sold. These 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. Other companies may calculate this measure differently.
4
Management Participants
Paul Martin President and
Chief Executive Officer
Pierre Beaudoin Chief Operating Officer
James Mavor Chief Financial Officer
First Quarter 2014
Operational & Financial Results
Conference Call
and Webcast
All monetary amounts are in U.S. dollars unless otherwise stated.
5
Q1 2014 Highlights
Ramp-up Progressing Well
Gold production of 107,154 ounces
Revenues of $110 million on sales of 84,560 oz
Total cash costs of $976 per gold ounce sold1
Net loss of $54.9 million or $0.38 per share
Adjusted net loss of $28.1 M or $0.20 per share1
Signed a 6-yr fixed rate electricity contract at Cdn$0.05/kWh
Closed equity financing for net proceeds of $149 million
Repaid $40 million of debt
Cash and short-term investment balance of $145.2 million at March 31,
2014
1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the
first quarter ended March 31, 2014.
6
Q1 2014 Operating Results
0
1
2
3
4
5
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14
1.0
0.8
0.2
0.0
0.4
0.6
To
nn
es
Mille
d (
Mt)
Q1’13 Q2’13 Q3’13 Q1’14
1’14
Q4’13
80 82 85 92 91
Mill production
Hea
d G
rad
e (
g/t
Au
) Recovery %
0.90 G/T GOLD mill grade 4.07 MILLION
tonnes milled 91 % GOLD recovery
Q1’14 Performance:
Positive ramp-up progress
Gold production of 107,154 ounces
met expectations
4.1 Mt of ore processed:
Head grade in-line with model
Recovery rates as expected
Dilution reduced to 4.6% below 2014
budget of 7%
7
Q1 2014 Operating Results - Mine
Q1’14 Performance:
4.9 Mt ore mined; strip ratio 2.9:1
Total of 19.2 Mt mined vs 20.9 Mt
planned; shortfall of 1.7 Mt due to:
› In-pit rehandling to advance
southwall pushback & complete
optimal south ramp access
› Shovel allocation to process HG
stockpile
Avg. mining rates of 213,000 tpd
Increase of 500,000 t to ROM stockpile
= 2.8 Mt @ 0.78 g/t at end of Q1
Mining Rates (K tpd)
Q1’13 Q2’13 Q3’13 Q1’14 Q4’13
Ex-P
it
In-l
ine
wit
h
Bu
dg
et
0
50
100
150
200
250
In-pit
rehandling
Shovel
test
231 5 13 213
8
Q1 2014 Operating Results - Mine
Next steps:
Moving one 6060 shovel from
overburden to rock
Improving availability of large
shovels
Mining rates to average approx.
230,000 tpd in Q2
Complete southwall pushback and
final south ramp access this
summer to provide better exposure
to higher grade ore for H2 mining
Q1’13 Q2’13 Q3’13 Q1’14 Q4’13
9
Q1 2014 Operating Results - Mill
Q1’14 Performance:
Plant throughput rates at 45,282 tpd
› Optimize secondary crushers and
liner profiles
› Last 68 days averaged 49,750 tpd
Mill availability 80% vs 82%
› Slower start up following December
shutdown
› March availability in-line with plan
Next steps:
Further improve mill availability
Increase milling rate to 2,500 tpoh
Th
rou
gh
pu
t (K
tpd
)
0
10
20
30
40
50
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Availability %
Q1’13 Q2’13 Q3’13 Q1’14 Q4’13
Mill productivity
80 66 78 68 66
10
Q1 2014 Operating Results - Costs
Total Cash Costs:
Q1’14 Q4’13
Production costs $83.1 M $98.0 M
Total cash costs $82.5 M $111.5 M
Gold oz sold 84,560 oz 95,000 oz
TCC/ oz sold1 $976/oz $1,174/oz
Q1 Progress:
Higher mining costs as a result of ex-pit tonnes shortfall
Processing costs improving with lower reagents consumption
Next steps:
Downward trend to continue with throughput and production increase
$-
$5
$10
$15
$20
$25
$30
Q1-14 Q4-13
Unit Costs (C$/t milled)
G&A $3.57/t G&A $4.13/t
Processing
$11.13/t
Processing
$11.75/t
Mining
$2.87/t
mined
Mining
$2.60/t
mined
$28.22/t $29.15/t
Q4’13 Q1’14
1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in
the MD&A for the first quarter ended March 31, 2014 or year-ended December 31, 2013.
$0
11
Q1 2014 Financial Review
Revenues:
Q1’14 Q4’13
Ounces sold 84,560 oz 95,000 oz
Gold sales $110.0 M $120.8 M
Avg realized price1 $1,301/oz $1,269/oz
9,929
1,945 10,720
0
20,000
40,000
60,000
80,000
100,000
120,000
Circuit
inventory
re-build Unsold
finished
metal &
adjustments,
including
carbon fines
2% royalty
in-kind G
old
Pro
du
cti
on
Go
ld S
ale
s
107,154
84,560
1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures
is described in the MD&A for the first quarter ended March 31, 2014.
Q1’14 Gold Ounces
Produced vs Sold
12
Adjusted net earnings (loss) per share: is calculated using the weighted average
number of share outstanding under the basic method of earnings (loss) per share as determined under IFRS.
2014 2013
Net earnings (loss) $(54,943) $23,413
Adjusted for:
Fair value (gain) loss of the convertible notes 16,479 (38,635)
Foreign exchange (gain) loss 73 2,283
Non-cash unrealized (gain) loss on derivative instruments 4,252 -
Accretion on convertible notes 5,953 -
Unwinding of discount on decommissioning and restoration provisions 94 31
Adjusted net earnings (loss)1 $(28,092) $(12,908)
Adjusted basic earnings (loss) per share1 $(0.20) $(0.11)
Three months ended
March 31
Q1 2014 Financial Review
1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the
first quarter ended March 31, 2014.
13
Q1 2014 Financial Review
Cash Flows:
Cash Flow US$’000 2014 2013
Operating Activities (32,090) (6,912)
Investing Activities (22,002) (130,046)
Financing Activities 110,353 92,720
Changes in cash and cash equivalents 56,261
Effects of exchange rate changes (985) (2,962)
Cash and cash equivalents – beginning of financial period 88,130 197,807
Cash and cash equivalents – end of financial period 143,406 150,607
Three months ended
March 31
14
Maintaining 2014 Guidance
450-500 estimated gold production
THOUSAND oz
$800-900 estimated total cash costs
TCC per oz sold
$131 estimated capital expenditures
MILLION capex
Other
$19 M Corporate G&A
$3 M Exploration program
3
1. Refer to the section on Non-IFRS Financial Performance Measures on slide 3 of this presentation.
2. The following price and cost assumptions were used to forecast 2014 production and costs: diesel fuel price of
C$0.95 per litre; power cost of C$0.05 per kilowatt hour; and exchange rate of $1US:$1.05C.
3. Includes deferred stripping costs of $35 M.
1, 2
second year
of operation
2014