CANADA S INTERMEDIATE GOLD PRODUCER. Corporate Presentation Denver Gold Forum Colorado Springs, CO September 18-21, 2016

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Corporate Presentation Denver Gold Forum Colorado Springs, CO September 18-21, 2016

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 strategic focus; 2016 guidance (gold production, total cash costs, all-in sustaining costs, and sustaining capital); refinancing <$300 million of the Convertible Notes before due date; expected future production and mining activities, including development plan for West Detour; life of mine plan; sustaining plant throughput of > 60,000 tpd in H2 2016; processing MG fines in H2 2016; decision to proceed with underground exploration program for Zone 58N in Q4 2016; and continuation of exploration activities. 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 section entitled Description of Business - Risk Factors in Detour Gold s 2015 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 undertakes 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. All amounts are in US dollars except as noted. 2

3 Notes to Investors Non-IFRS Financial Performance Measures The Company has included non-ifrs measures in this presentation: total cash costs and all-in sustaining costs. 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 measure differently. 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 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. The Company believes the measure all-in sustaining costs 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 above), 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 gold ounces sold to arrive at a per ounce figure. Costs excluded from all-in sustaining costs are non-sustaining capital expenditures and exploration costs that are expected to materially increase production, financing costs and tax expense. Consequently, this measure is not representative of all of the Company s cash expenditures. In addition, the calculation of all-in sustaining costs does not include depreciation and depletion expense as it does not reflect the impact of expenditures incurred in prior periods. 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. 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. 3

4 Strategic Focus OPERATIONS GROWTH BALANCE SHEET Mine and mill optimization Realize on economies of scale Organic growth valuation Add value with: Satellite deposit development Early-stage project acquisition Debt reduction Maintain capital discipline Shareholder returns 4 4

5 Company Maker Asset DETOUR LAKE Long-life asset 16.4 M OZ gold reserves Large scale 655 production K OZ/YR Declining AISC 1 <$900 /OZ sold 2 Organic Growth Potential 625 KM2 prospective Gold Production (k oz) E 1. Refer to the section on Non-IFRS Performance Measures on slide Based on life of mine plan dated January

6 #1 Large scale/long Life Mine 100% ownership in Quality Asset DGC Detour Lake AEM/YRI Canadian Malartic G Redlake AEM Meadowbank AEM/YRI Canadian Malartic DGC Detour Lake G Red Lake AEM Meadowbank 2015YE Reserves (M oz) 2016 Production Guidance (K oz) 6

7 H Highlights PRODUCTION COSTS FINANCIALS 266 K OZ gold $664 TCC 1 /oz sold $65 OPERATING PROFIT million 42.9 MT mined $925 AISC 1 /oz sold $154 CASH BALANCE million 10.0 MT milled $82 DEBT REDUCTION million Positive infill drilling results from prospective Zone 58N 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for Q

8 Debt Reduction Plan 47% DEBT REDUCTION SINCE 2013 YTD repaid $142 M from surplus cash $1,800 C$1,730 $1,600 $681 $623 $1,400 Gold price $/oz $1,200 $500 US$1,327 $358 Refinancing Goal <$300 $1,000 $ YTD 2016 Nov 2017 Note: Cash and short-term investments as at year-end. Gold price as at September 15. 8

9 H Operational Focus MINE Progress around Campbell pit Access to Calcite Zone 2X Focus on dilution control MILL Sustain throughput of >60,000 tpd Large-scale processing of MG fines test Fast track implementation of oxygen control with lead nitrate for 2017 to improve recovery 9

10 2016 Revised Guidance (Sept 6, 2016) PRODUCTION COSTS K OZ gold TCC $ /oz sold $970-1,020 AISC1 /oz sold SUSTAINING CAPITAL $ million No change Prior k oz; Access to higher grade Calcite Zone delayed to Q4 due to flooding in pit caused by heavy rainfalls in mid-august Q3: ~120,000 oz / Q4: 138, ,000 oz Prior TCC $ /oz sold Prior AISC $ /oz sold Additional non-cash charge of C$10 M to account for stockpile drawdown; Additional C$12 M charge for the cost of processing the fines 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Revised guidance at US$/C$ exchange rate of 1.28 (prior at 1.33). 10

11 Organic Growth Pipeline WEST DETOUR DEVELOPMENT 1 2 Reserves: 1.5 M oz Permitting and FN consultation underway Pre-stripping 2018 Gold production 2019 ZONE 58N LOWER DETOUR Potential for high-grade UG mine Infill drilling program underway (at 25 & 50 m spacing) Preliminary cost analysis expected in Q4 11

12 Organic Growth Pipeline 3 DETOUR LAKE (525 km 2 ) 4 REGIONAL EXPLORATION BURNTBUSH PROPERTY (494 km 2 ) NEW Underexplored ~10,000 m completed on Lower Detour trend ~6,500 m underway on TMA targets Geophysical surveys completed on several targets Prospective underexplored ground at west end of Casa Berardi fault Gold anomalies identified in old drill holes and till samples Start geophysical surveys and field work in

13 3 Regional Exploration H1 REGIONAL PROGRAM Completed 9,977 m in 36 holes on Lower Detour trend Anomalous to up to 5 g/t intersected over narrow widths IP surveys completed West Detour Detour Lake Mine DRILLING PROGRAM UNDERWAY ~6,500 m of drilling east of current tailings facility Zone 58N 13

14 4 Burntbush Property GRASSROOT PROPERTIES Cover more than 80 km of primary (EW) and secondary (NE-SW) subsidiary faults Casa Berardi Mine 1.3 M oz Reserves Past Production 1.9 M oz Detour Lake Burntbush Felsic to Intermediate Intrusives Mafic Intrusives Felsic to Intermediate Volcanics Intermediate to Mafic Volcanics Sediments Basement Gneiss Gold Occurrences 14

15 2 Zone 58N Lower Detour ZONE 58 N: H DRILLING Completed 36,830 m in 119 holes Results confirm good continuity in upper 250 m where drilled at 25 m intervals NEXT STEPS Complete infill drilling Initial environmental baseline work started Surface and UG infrastructure design work started; preliminary results expected in Q4 Looking West - Surface m m m m 15

16 INTERMEDIATE GOLD PRODUCER STRONG FUNDAMENTALS LONG-LIFE ASSET WITH LARGE PRODUCTION PROFILE PRODUCTION GROWTH DECLINING AISC GROWING FREE CASH FLOW ORGANIC GROWTH POTENTIAL 16

17 ADDITIONAL information Safety Performance Quarterly Operational Statistics H AISC Gold & Currency Contracts at June 30, 2016 LOM Production Plan Year-end 2015 Reserves & Resources Detour Lake Property Map Shareholder Information Analyst Coverage Management & Directors Contact Information 17

18 Safety Performance COMMITTED TO ZERO-HARM: Initiatives implemented to improve safety culture and performance: Visible Felt Leadership (VFL) Life Saving Rules Leading Indicators: Workplace inspections Job observations Housekeeping audits PPE audits Safety equipment inspections VFL interactions At corporate and site, SAFETY performance is part of the KPIs Total Recordable Injury Frequency Rate (TRIFR) Q1'16 Q2'16 Q Month Rolling Avg: TRIFR: Total recordable injuries x 200,000 hours divided by total man hours worked. 18

19 Quarterly Operational Statistics Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Ore mined (Mt) Waste mined (Mt) Total mined (Mt) Strip ratio (waste:ore) Mining rate (tpd) 280, , , , ,000 Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 57,015 56,015 55,522 52,165 58,466 Mill availability (%) Ounces produced (oz) 125, , , , ,359 Ounces sold (oz) 123, , , , ,606 TCC (US$/oz sold) $734 $766 $694 $637 $691 AISC (US$/oz sold) $1,030 $1,071 $858 $824 $1,030 19

20 H AISC 1 QΔQ RECONCILAITION OF AISC 1 ($/oz sold) $36 $45 $95 SBC FX Rate $25 $5 Opex Other $1,030 $824 Q1 16 Sustaining Capital AISC 1 YTD $925/oz SOLD Q2 16 MAJOR VARIANCES QΔQ Sustaining capital spending of $27.6 M in Q2: epuipment rebuilds and overhauls 2, addition of 1 CAT795 truck and April scheduled shutdown FX rate:1.29 in Q2 vs in Q1 Share-based compensation (SBC): share price +58% in Q2 = +$4.4 M in G&A expenses 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for Q For the 2016 guidance, these costs were included in opex and have no impact on reported AISC 1. 20

21 Prudent Financial Management FOR H2 16: Maintain a <40% gold hedge coverage ratio All gold hedge positions expire in 2016 Contracts at June 30, 2016 Amount Rate/Price Gold Forwards 65,000 oz $1,190/oz Zero cost collars 40,000 oz $1,243-$1,359/oz Currency Zero cost collars $65 M

22 LOM Production Plan 3-Year Average 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) Technical Report filed on January 25,

23 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. 23

24 Detour Lake Property 625 km 2 West Detour Detour Lake Mine Zone 58N 24

25 Shareholder Information Share Structure (August 23, 2016) Share Structure (03/31/2014) M Issued & outstanding 5.2 M Share options 9.3 M Convertible notes M FULLY DILUTED Top Shareholders Top Shareholders 12% BlackRock 5% Van Eck Associates 5% Fidelity Management >80% INSTITUTIONS TOTAL $154 MILLION cash position 2 C$4.8 BILLION market cap 1. Conversion price for the Notes is $ Cash and short-term investments at June 30,

26 Analyst Coverage (20) Initiating Firm Analyst Target Price at Research September 15, 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 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 $ Bank of America Merrill Lynch Michael Jalonen $45.00 Average target C$

27 Management & Directors MANAGEMENT Paul Martin President and CEO Pierre Beaudoin COO James Mavor CFO Julie Galloway General Counsel & Corporate Secretary Drew Anwyll Sr VP Technical Services Derek Teevan Sr VP Corporate & Aboriginal Affairs Jean-François Métail VP Mineral Resource Management Ruben Wallin VP Environment & Sustainability Charles Hennessey Mine General Manager Laurie Gaborit Director Investor Relations Alberto Heredia Controller DIRECTORS Lisa Colnett Edward C. Dowling Robert E. Doyle André Falzon Ingrid Hibbard Michael Kenyon Paul Martin Alex G. Morrison Jonathan Rubenstein Graham Wozniak 27

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