CANADA S INTERMEDIATE GOLD PRODUCER

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Fourth Quarter and Full Year 2016 Operating Results and 2017 Guidance Conference Call & Webcast January 31,

2 Forward Looking Information This presentation 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 relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of mineral resources and mineral reserves and exploration targets; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of mining operations; (iv) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the technical reports, studies and disclosure of the Company; (v) assumptions relating to revenues, operating cash flow and other revenue metrics set out in the Company s disclosure materials (vi) mine expansion potential and expected mine life; (vii) expected time frames for completion of permitting and regulatory approvals; (viii) future capital and operating expenditures; (ix) future exploration plans; (x) future gold prices; and (xi) sources of and anticipated financing requirements. 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 actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this presentation speak only as of the date of this presentation or as of the date or dates specified in such statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which are beyond Detour Gold's ability to predict or control and may cause Detour Gold's 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, the ability of the Company to refinance its convertible notes and credit facility on or before maturity (November 30, 2017 and August 31, 2017, respectively) on acceptable terms, gold price volatility, changes in debt and equity markets, a reduction in the company s available cash resources, the uncertainties involved in interpreting geological data, risks relating to variations in recovered grades and mining dilution, variations in rates of recovery, changes or delays in mining development and exploration plans, the success of mining, development and exploration plans, changes in project parameters, risks related to the receipt of regulatory approvals, increases in costs, environmental compliance and changes in environmental legislation and regulation, delays in the consultation and permitting process for West Detour, interest rate and 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: a constant gold price of $1,200/oz in 2017, a constant CAD/US exchange rate of 1.30 in 2017, a constant diesel fuel price of C$0.70/L in 2017, and a constant power cost of C$0.30/kWhr in 2017, the ability of the Company to refinance its convertible notes and credit facility on or before maturity (November 30, 2017 and August 31, 2017, respectively) on acceptable terms, the availability of financing for exploration and development activities; operating and capital costs; the Company s available cash resources in 2017; the Company's ability to attract and retain skilled staff; the mine development schedule and related costs; the mine production schedule; year-end face position in the Campbell pit area; the success and timing of the Company s mining and development plans, including the Campbell pit recovery plan and the ability of the Company to process fines from low and medium grade stock piles; 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 Aboriginal 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 reserve and 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. 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. 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. 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. The forward-looking statements contained herein are made as of the date hereof, or such other date or dates specified in such statements. 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. 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. 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. 3

4 Management Participants Fourth Quarter and Full Year 2016 Operating Results, 2017 Guidance and West Detour Update Conference Call and Webcast All monetary amounts are in U.S. dollars unless otherwise stated. PAUL MARTIN President and CEO PIERRE BEAUDOIN COO JAMES MAVOR CFO 4

5 Safety Performance 2016 Achievements: Established leading indicators for Managers Partnered with Dupont Safety Systems Improved Visible Felt Leadership methodology Total Recordable Injury Frequency Rate (TRIFR) Plans: Roadmap and actions for our 5-Year Safety Journey Detailing procedural and cultural improvements TRIFR: Total recordable injuries x 200,000 hours divided by total man hours worked. 5

6 2016 Highlights Detour Lake Mine $1,056 $1, Gold Production (K oz) AISC ($/oz sold) 1 $1,000 $600 $200 Finishing 2016 on a Positive Note Gold production of 537,765 oz; Q4 gold production 143,512 ounces Estimated AISC 1 of $1,005/oz sold; Q4 AISC 1 of $1,124/oz sold Debt reduction of $142 million Year-end cash and short-term investments balance of ~$129 M Positive drilling results from Zone 58N 1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. Subject to year-end closing. 6

7 2016 Operating Results Throughput rate at 56,792 tpd Record mill performance Head grade and recovery below plan for the year Processed 0.7 Mt of fines (<2 ); 65% grade improvement Mining rates of 239,000 tpd Below projections for the year; 9 Mt behind mine plan Campbell pit recovery plan on schedule Addition of a CAT6060 shovel and haul trucks for MT ore milled G/T AU head grade % recovery 87.4 MT total mined 2.9 strip ratio 7.0 stockpiles 0.65 g/t Au 7

8 2016 Capital Costs Sustaining capital ~$100 M Include Q4 capital purchases of $16 M originally planned in (i.e. 3 haul trucks and first payment on a new camp) Capitalized stripping ~3 M Non-sustaining expenditures ~2 M AISC 1 ($/oz sold) $1,124 $1,005 Q4'16 Q Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. Subject to year-end closing. 8

9 2017 Guidance Estimated production THOUSAND oz gold 2017 fifth year of operation Estimated costs Total cash costs $ TCC 1 per oz sold All-in sustaining costs $1,025-1,125 1 AISC per oz sold Key Assumptions Gold price of $1,200/oz, diesel fuel price of C$0.70 per litre; power cost of C$0.03/kWh; and CAD/US FX rate of Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. 9

10 2017 Operating Plan 1 MINE: 100 Mt 2 Mining rate increase in Q2 with additional shovel, 4 haul trucks, and ROM fleet (total fleet: 6 shovels & 32 haul trucks) Campbell pit mining to Bench 148 Strip ratio at 3.6:1 MILL: Mt Head grades improving after Q1 Recovery improvement after Q2 with lead nitrate/oxygen control system No processing of fines Higher Gold Production After Q1 10

11 2017 Expenditures Sustaining Capital Capitalized Stripping 2017 Budget $155 M $14 M Mine $78 M Other* $31 M Development (West Detour) $5 M Total Capital Expenditures $ M TMA $40 M Mill $6 M Corporate G&A Share-based Compensation Exploration $21 M $11 M $6 M ~65% of costs in Cdn$ Sustaining capex include: $40 M for mining equipment, $30 M of accelerated capital mainly for TMA Cell #2 ($9 M) and new camp ($17 M) ~$23 M of these expenses to be paid in Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation

12 West Detour Project Update Permitting Process Provincial Environmental Study Report (ESR) filed on January 30, 2017 to trigger commencement of provincial Environmental Assessment (EA) process Aboriginal partner has requested federal EA process Canadian Environmental Assessment Agency (CEAA) advised in 2015 that a federal EA process was not required Awaiting response from CEAA Company believes ESR meets both provincial and federal requirements Both provincial and federal processes reflect high environmental standards 12

13 West Detour Project Update New Life of Mine Plan Provides Flexibility Allows for optionality in LOM plan based on timing of receiving permits West Detour pit not before 2021 North satellite pit in offers flexibility with a contractor based approach as it reduces implementation time In both cases, annual mining rate ramp up to 120 Mt No change to prelim. guidance of 600, ,000 oz in 2018 Lower gold production projected in Capital and operating costs to be re-evaluated New LOM Plan and Technical Report prior to March 31,

14 450 m Exploration Program - Zone 58N Preliminary Model and Conceptual Design Model assumes 3 metre min. horizontal thickness Evaluation underway for potential wider mining areas Conceptual UG advanced exploration program prepared; cost estimated at C$30-50 M over 5 years Advanced exploration permit required for U/G access 2017 Drilling Program Underway 30,000 m of infill drilling between m below surface Selective holes deeper to delineate continuity 14

15 Detour Gold s Balance Sheet Repaid $142 M in 2016 Net debt at December 31, 2016 = $229 M Not highly leveraged Net debt/ebitda 2016 ~1.4:1 Preferred Re-financing Alternatives for the Notes: Bank Syndicate (currently 5 bankers) Equipment Provider Non-covenant Driven Debt 15

16 DETOUR GOLD INTERMEDIATE GOLD PRODUCER Q & A 16