CANADA S INTERMEDIATE GOLD PRODUCER. TD Securities Mining Conference January 26-27, 2016

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER TD Securities Mining Conference January 26-27,

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 include, but are not limited to, statements with respect to the 2016 guidance (gold production, total cash costs, all-in sustaining costs, and capital expenditures), updated mine plan and economic analysis of the Detour Lake mine including, but not limited to, the life of mine plan, the waste to ore ratio, processing and production rates, grades, metallurgical recovery rates, operating and capital costs, the projected life of mine, the net present value, opportunities to optimize the mine operation, the success and continuation of exploration activities, the future price of gold, reclamation obligations, government regulations and environmental risks. 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 forwardlooking statements. These risks, uncertainties and other factors include, but are not limited to, assumptions and parameters underlying the life of mine plan 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 related Technical Report and section entitled Description of Business - Risk Factors in Detour Gold s 2014 AIF and in the continuous disclosure documents filed by Detour Gold on and available on SEDAR at 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. 2

3 3 Notes to Investors Non-IFRS Financial Performance Measures Detour Gold has included non-ifrs measures in this presentation. 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. Other companies may calculate these measures differently as a result of differences in underlying principles and policies applied. Total site costs and total site costs per ounce Detour Gold reports total site costs and total site costs per ounce on a produced basis in this presentation. Total site costs include production and operating costs such as mining, processing, site general and administration, bullion shipment, refining, agreements with Aboriginal communities, capital costs (excluding closure costs) and net of silver sales. These are exclusive of depreciation and depletion. The Company calculates total site costs per ounce as the sum of total site costs (as described above) divided by the total gold ounces produced. Gold ounces produced is noted before delivering the royalty in kind ounces. Unit costs Detour Gold reports the following unit costs: Mining unit costs: calculated as mining costs divided by total tonnes mined (ore + waste). Processing unit costs: calculated as process costs (excluding bullion delivery and refining) divided by the total tonnes milled. G&A unit costs: calculated as site G&A costs (excluding costs related to agreements with Aboriginal communities) divided by total tonnes milled. 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 (also known as unwinding of the discount on decommissioning and restoration provisions), 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 Total cash costs are reported on a sales basis. Total cash costs include production costs such as mining, processing, refining and site administration, agreements with Aboriginal communities, less non-cash 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.

4 Notes to Investors Information Containing Estimates of Mineral Reserves and Resources The mineral reserve and resource estimates reported in this presentation were prepared in accordance with Canadian National Instrument Standards of Disclosure for Mineral Projects ( NI ), 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 , 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. Technical Report On January 25, 2016, Detour Gold announced an updated life of mine plan for the Detour Lake operation and filed a NI compliant Technical Report on SEDAR. The Technical report was prepared by the following Qualified Persons from Detour Gold: Drew Anwyll, P.Eng., Senior VP Technical Services (lead author); Andrew Croal, P.Eng., Director Technical Services; Ruben Wallin, P.Eng., Vice President Environment and Sustainability; David Ritchie, M.Eng., P.Eng., Principal Geotechnical Engineer for AMEC Foster Wheeler acting as TMA Engineer of Record; and Jacques McMullen, P.Eng. Corporate Technical Advisor. Qualified Persons The scientific and technical content of this presentation was 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 Standards of Disclosure for Mineral Projects. All costs are presented in United States dollars except as noted. 4

5 Unique Investment Opportunity DOMINANT GOLD PRODUCER IN CANADA Mining-friendly Jurisdiction Large-scale, long mine life Strong cash flow profile Production growth opportunities Favourable exposure to Canadian Dollar Largest gold producing mine not controlled by a senior producer 5

6 2015 Highlights Delivering strong performance at Detour Lake Mine Gold production of 505,558 ounces All-in sustainable costs declined ~35% during 2015 Debt reduced by $123 million Cash position increase to ~$161 M Electricity contract extended 5 years to end of 2024 Encouraging high-grade gold intercepts at Lower Detour Gold Production (k oz)

7 Year-Over-Year Improvements Total mined (Mt) Strip ratio (waste:ore) Mining rate (tpd) 249, ,000 Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 54,114 48,563 Ounces produced (oz) 505, ,634 11% Increase in Gold Production 7

8 2015 Key Targets Realized 2015 BUDGET 1 MINING RATE 2 MILL THROUGHPUT RATE 238,000 tpd (87 Mt total mined) ACHIEVED 54,000 tpd (2,600 tpoh at 87% availability) ACHIEVED 249,000 tpd (91 Mt total mined) 54,114 tpd (2,680 tpoh at 84% availability) 8

9 2015 Ending with Strong Q4 Record performance in last quarter Gold Production (k oz) Q1 Q2 Q3 Q4 Gold production: 146,417 oz Improved grades: 0.98 g/t Access to higher grades from Phase 1 pit 9

10 2015 All-in Sustaining Costs Meeting low end of 2015 guidance $1,321 $1, Estimated AISC 1, $1,030 $1,071 $ $1,200 $1,000 $800 $1,040-1,060 /oz sold with Q4 at $ /oz sold 100 $ Q1 Q2 Q3 Q4 Gold Production (k oz) AISC ($/oz sold) 1 $400 $200 $0 Estimated sustaining capital costs 2 $90 M Capitalized stripping costs $10 M 1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation estimates subject to year-end audit. 10

11 2016 Guidance Strong production growth ESTIMATED PRODUCTION Gold ounces 540, ,000 ESTIMATED COSTS AISC/oz sold 2 $840-$940 TCC 2 $675- $750 Cost assumptions: Gold price of $1,075/oz, US$/C$ exchange rate of 1.33, diesel fuel price of C$0.75/L, and power cost of C$0.04/kWh 1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. 11

12 2016 Operating Plan 1 MINE 2 MILL Mining target: Mt total Strip ratio (SR) projected: 3.3:1 Milling target: >20 Mt ore Plant improvement plan 410-conveyor: modify to 2 separate conveyor units Quarterly production range: k oz 12

13 2016 All-in Sustaining Costs (AISC) 2016 Sustaining Capital Forecast Total Cash Costs (TCC) $ /oz sold 1 Sustaining Capital $60-70 M Capitalized Stripping $5-10 M Corporate G&A $25 M Exploration $2-4 M AISC $ /oz sold 1 TMA $30 M Mine $15 M Other $10 M Mill $10 M Additional, non-sustaining capital of ~$8 M for West Detour & $8-10 M for Lower Detour definition drilling 1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation

14 New Life of Mine (LOM) Plan Detour Lake Mine Assumptions Long-Term Gold price $1,200/oz US$/C$ 1.23 Diesel C$0.80/L Power cost C$0.08/kWh 14

15 LOM Plan Goals De-risk execution plan Incorporate gained experience Include West Detour Improve production profile Defer near-term capital New LOM Plan: De-risks with West Detour Optimizes cash flow Improves NPV 15

16 De-risked New LOM Plan Key differences from prior study: Lowered maximum mining rate from 140 to 124 Mt Reduced operational risks: Reduced strip ratio for the first 9 yrs from 4.8:1 to 4.0:1 (deferring 160 Mt of waste) Incorporated second feed source from West Detour Increased plant throughput capacity to 23 Mt (post-2018) from 22.3 Mt (post-2017) Rationalized capital profile Added processing of fines Potential use West Detour pit for waste stockpiles and tailings deposition 16

17 LOM Summary Key Statistics 01/2016 Proven & Probable Reserves (M oz) Average gold grade (g/t) 0.99 Estimated gold recovery (%) 92 Mine life (years) 23 Average annual gold production (oz) 655,000 Total Site Costs 2 $690/oz Mining rates peaking at 124 Mt/yr with next 9 yrs averaging 114 Mt/yr Mill throughput increasing from 56,000 tpd to 63,000 tpd in 2019 West Detour mine life of ~10 yrs 1. Estimated using a gold price of $1,000/oz and a US$/C$ exchange rate of Refer to Slide 28 for additional details. 2. Total site costs are reported in per ounce produced. Refer to the section on Non-IFRS Performance Measures on slide 3. 17

18 LOM Gold Production Profile Yearly average gold production (k oz) per period Grade Average gold production over next 9 years: 648 k oz LOM 0.98 g/t 0.89 g/t 1.06 g/t 0.99 g/t Addition of West Detour provides second feed source (pre-stripping in 2018) Processing of fines adds third source of ore (starting in 2019 at maximum of 1 Mt/yr) 18

19 Unit Costs LOM Operating Costs Yearly Average Cost per Period LOM Mining (C$/t mined) Processing (C$/t milled) G&A (C$/t milled) Site Operating Costs 1 (C$ M) Higher LOM mining costs than prior study (C$2.76/t vs C$2.60/t) mined due to lower assumed productivities and increased operating costs for smaller sized West Detour fleet ~75% of costs in Canadian dollars 1. Includes all site costs including bullion delivery, refining and costs related to agreements with Aboriginal communities

20 LOM Capital Costs Yearly Average per Period (C$M) Total (C$M) LOM LOM Capital costs ,225 1 Total capital costs of ~C$314 M, including C$80 M for West Detour Total LOM capital of ~C$104 M for West Detour ~60% of capital costs in Canadian dollars 1. Includes closure costs. 20

21 LOM Economic Analysis 1 Yearly Average per Period Total (in C$) LOM LOM Pre-tax cash flow $242 M $278 M $481 M $381 M $8.8 B NPV 5% (pre-tax) $4.8 B NPV 5% (after tax) C$3.9 B Exchange Rate Gold price After Tax NPV 5% (C$ Billion) $1,000/oz $1,100/oz $1,200/oz $1,300/oz $1,400/oz Increase in $100/oz Increase C$500 M After-Tax NPV5% 1. LT gold price (2018+) and LT exchange rate (2018+). 21

22 LOM Opportunities Main opportunities not included in LOM Plan Mine Improve productivities and reduce maintenance costs Block model performance giving more ounces Plant Bring low grade fines earlier than 2019 Consider reclaim of fines from medium grade stockpiles Accelerate mill ramp-up and improve operating time (> 23 Mt/yr) Improve gold recovery (>92%) 22

23 2016 Drilling Program Zone 58N - Qtz-tourmaline stockworks in altered feldspar porphyry Zone 58N = 60,000 m 25-metre in-fill program Upper 250 metres Test continuity 50-metre in-fill program Lower 450 metres Define extent and tonnage Additional drilling if positive results Lower Detour trend = 8,000-10,000 m Test targets on 25 km trend Regional = 5,000-7,000 m 23

24 Near-term Strategic Focus Increase production Lower costs Optimize our assets Objectives Execute at Detour Lake Growing cash flows Disciplined capital allocation: Balance between internal growth Development of Block A Exploration of Lower Detour and large claim block and debt reduction Longer term assess when external growth opportunities are appropriate 24

25 A GREAT TIME TO BE A GOLD PRODUCER! PRODUCTION GROWTH / DECLINING UNIT COSTS REALIZE VALUE-ENHANCING OPPORTUNITIES GROWING CASH FLOW 25

26 ADDITIONAL information 2015 Safety Performance 2015 Operational Statistics LOM Production Plan Year-End 2015 Reserves and Resources Detour Lake & West Detour Processing of Fines Exploration Focus: Lower Detour Benefiting from a Weak $Cdn Shareholder Information Analyst Coverage Management & Directors Contact Information 26

27 2015 Safety Performance Total Recordable Injury Frequency Rate (TRIFR) ON Average Total recordable injury frequency rate = Total recordable injuries x 200,000 hours divided by total man hours worked Ontario Mining Industry average (source: Workplace Safety North, WSIB). 27

28 2015 Operational Statistics Q1 Q2 Q3 Q Ore mined (Mt) Waste mined (Mt) Total mined (Mt) Strip ratio (waste:ore) Mining rate (tpd) 220, , , , ,000 Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 47,797 57,015 56,015 55,522 54,114 Mill availability (%) Ounces produced (oz) 105, , , , ,558 Ounces sold (oz) 104, , , , ,243 28

29 LOM Production Plan Yearly Average per Period Total LOM LOM Ore milled (Mt) Head grade (g/t Au) Gold recovery (%) Gold production (k oz) ,072 Total mined (Mt) ,214 Strip ratio (waste:ore)

30 Year-end 2015 Reserves & Resources At Dec. 31, 2015 Reserves Tonnes (millions) Grade (g/t Au) Contained Gold Ounces (000 s oz) Detour Lake Mine Proven ,603 Probable ,779 Stockpiles Total P&P ,480 West Detour Proven Probable ,473 Total P&P ,529 LG Fines Probable Total P&P ,395 Resources Detour Lake Mine Measured Indicated ,125 M+I ,871 West Detour Measured Indicated ,005 M+I ,015 Total M+I ,886 Detour Lake Mine Inferred West Detour Inferred Total Inferred ,121 Notes: 1. Mineral resources and reserves were completed by Detour Gold in conformity with generally accepted definitions and guidelines given in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Mineral Reserves as required by NI Mineral reserves were estimated using a gold price of $1,000/oz and mineral resources were estimated using a gold price of $1,200/oz at a US$/C$ exchange rate of Mineral reserves and resources were based on a cut-off grade of 0.50 g/t Au. 4. Mineral reserves included an average mining dilution of 5.3% from 2016 to 2018 and 4% for 2018+, at a diluting grade of 0.20g/t Au. Mining ore loss of 5% also included. 5. Only Probable LG Fines scheduled in the mine plan were reported as mineral reserves. The LG fines reserves were based on a cut-off grade of 0.40 g/t Au. 6. Mineral resources are reported exclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. 7. Totals may not add due to rounding. 30

31 Detour Lake & West Detour Total P+P = g/t Au 1 P+P g/t Au US$1,200/oz P+P g/t Au Phase 1 Pit US$1,000/oz ~5.5 km 1. Includes LG Fines (386, g/t Au). Mineral reserves as of December 31,

32 Processing of Fines (LG Fines) Segregation of fines Gold concentrates in the fine material on the top portion of the low grade stockpile Natural segregation of fines from unloading truck Tests validating grade and milling rate improvement 41% grade improvement (from 0.44 g/t to 0.62 g/t) 25% of fine material displaces fresh feed ore Incorporated into LOM plan Up to 1 Mt/yr starting in 2019 Low-grade stockpile (avg. grade 0.44 g/t) 32

33 Exploration Focus: Lower Detour 630 km 2 Block A Resource Detour Lake OP Mine Lower Detour Area 33

34 Exploration Focus: Lower Detour* *For 2015 results for holes previously released, refer to long section in press release dated October 20,

35 Benefiting from a Weak Cdn $ Gold Price in US Dollars vs Canadian Dollars $1,467 Now $1,551 Gold Performance 2015 to Date $Cdn: +13% $US: -7% $1,372 $1,182 $1,060 $1,096 1-Jan Dec Jan-16 FX rate $US $Cdn 35

36 Shareholder Information Share Structure (December 31, 2015) Share Structure (03/31/2014) M Issued & outstanding 8.1 M Share options 13.0 M Convertible notes M FULLY DILUTED Top Shareholders 10% Top Shareholders Blackrock 9% Paulson & Co. >80% INSTITUTIONS TOTAL $161.0 MILLION cash position 2 C$2.6 6 BILLION market cap Conversion price for the Notes is $ Approximate cash and short-term investments at December 31, 2015.

37 Analyst Coverage (19) Initiating Firm Analyst Target Price at Research January 25, Haywood Kerry Smith $ Paradigm Don Blyth/Don MacLean $ Raymond James Phil Russo $ National Bank Steve Parsons $ Macquarie Mike Siperco $ Canaccord Rahul Paul $ TD Dan Earle $ RBC Dan Rollins $ BMO NB Brian Quast $ Laurentian Pierre Vaillancourt $ CIBC World Markets Cosmos Chiu $ Credit Suisse Anita Soni $ Scotiabank Trevor Turnbull $ Desjardins Michael Parkin $ Beacon Securities Michael Curran $ GMP Securities Ian Parkinson $ Cormark Securities Richard Gray/Tyron Breytenbach $ Goldman Sachs Andrew Quail $ Dundee Capital Markets Josh Wolfson $22.50 Average target C$

38 Management & Directors Management Paul Martin President and CEO Pierre Beaudoin COO James Mavor CFO Drew Anwyll Sr VP Technical Services Julie Galloway Sr VP General Counsel & Corporate Secretary Derek Teevan Sr VP Corporate & Aboriginal Affairs Jean-François Métail VP Mineral Resource Management Rachel Pineault VP HR & Aboriginal Affairs Ruben Wallin VP Environment & Sustainability Charles Hennessey Mine General Manager Laurie Gaborit Director Investor Relations Alberto Heredia Controller Directors Lisa Colnett Robert E. Doyle André Falzon Ingrid Hibbard Michael Kenyon Paul Martin Alex G. Morrison Jonathan Rubenstein Graham Wozniak 38

39 Contact Information Paul Martin President and Chief Executive Officer Phone: Laurie Gaborit Director Investor Relations Phone: