CANADA S INTERMEDIATE GOLD PRODUCER

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Third Quarter 2015 Results Conference 1 Call & Webcast October 29, 2015

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 2015 guidance for production, total cash costs, all-in sustaining costs, capital costs, deferred stripping costs, and exploration costs; expected throughput, mining and recovery rates; expected future production and mining activities; opportunities to optimize the mine operation; and timeline for the life of mine plan update. 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 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 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. 2

3 Notes to Investors Non-IFRS Financial Performance Measures The Company has included non-ifrs measures in this presentation: total cash costs, all-in sustaining costs, adjusted net loss and adjusted net loss per share. 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. Commencing in 2015, the Company adopted all-in sustaining costs on a prospective basis. 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 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. Adjusted net earnings (loss) and adjusted basic earnings (loss) per share are used by management and investors to measure the underlying operating performance of the Company. Presenting these measures from period to period helps management and investors evaluate earnings trends more readily in comparison with results from prior periods. Adjusted net earnings (loss) is defined as net earnings (loss) adjusted to exclude specific items that are significant, but not reflective of the underlying operations of the Company, including: fair value change of the convertible notes, the impact of foreign exchange gains and losses, including the foreign exchange on deferred income and mining taxes, non-cash unrealized gains and losses on derivative instruments, accretion on convertible notes, unwinding of discount on decommissioning and restoration provisions, impairment provisions and reversals thereof, and other non-recurring items. Adjusted basic net earnings (loss) per share is calculated using the weighted average number of shares outstanding under the basic method of loss per share as determined under IFRS. 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, and exploration results was reviewed, verified and approved by Guy MacGillivray, P.Geo., Exploration Manager, both Qualified Person as defined by Canadian Securities Administrators National Instrument Standards of Disclosure for Mineral Projects. 3

4 Management Participants Third Quarter 2015 Results Conference Call and Webcast All monetary amounts are in U.S. dollars unless otherwise stated. Paul Martin President and CEO Drew Anwyll Sr VP Technical Services James Mavor CFO 4

5 2015 Safety Performance Total Recordable Injury Frequency Rate (TRIFR) TRIFR 2.4 average for Q1-Q3 1.7 average for Q ON Average Q1-Q 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). 5

6 Q Highlights Continued Progress GOLD PRODUCTION (oz) GOLD SALES (oz) Q , ,241 Q1-Q , ,034 REVENUES ($ M) $142 $417 TCC 1 ($/oz sold) $766 $806 AISC 1 ($/oz sold) $1,071 $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

7 Q Operating Results Mill Throughput rate of 56,015 tpd Impacted by unplanned replacement of SAG mill pulp lifters and 410-conveyor belt Exceeding design capacity since March Record milling rates at 2,750 tpoh with operating time at 85% 10% over design rate of 2,500 tpoh Q3 15 Performance MT ore milled G/T AU head grade % gold recovery 2015 Mill Throughput (k tpd) Q1'15 Q2'15 Q3'15 Q4E

8 Q Operating Results Mine Mining rates averaged 255,000 tpd Mineable and drilled inventory at 8.5 Mt at end of Q3 YTD ahead of mine plan in Phase 1 by approximately 5 Mt Q3 15 Performance total mined 23.5 MT 2.6 strip ratio Mining Rates (k tpd) Q1-Q3 Achieved Q4 Target Q1A Q2A Q3A Q4E 170 8

9 9 Q Detour Lake Pit (Sept. 26)

10 Q Operating Results Met objectives for the quarter: Accessing higher grade ore from east end of pit (former Campbell pit area) Preparation for mining west end of pit (calcite zone) Increasing ROM stockpiles to 3.3 Mt grading 0.67 g/t at Q3-end Advancing Phase 2 pre-stripping TMA activities on plan and on budget 10

11 Q Operational Focus 2015 Mine Plan Targets MT ore milled G/T AU head grade % gold recovery Q4 Focus Process ~5 Mt of ore at higher grade (>0.9 g/t Au) Planned shutdown for liner replacement extended to replace damaged ball mill trunnion Continue efforts to improve mill availability 410-conveyor modifications planned for H Mining rates of 250,000 to 260,000 tpd Including 2 shovels allocated to Phase 2 pre-stripping 11

12 Q Operating Costs Q YTD 2015E Mining (C$/t mined) $2.69 $2.54 $2.60 Processing (C$/t milled) $8.64 $9.79 $9.87 G&A (C$/t milled) $3.19 $3.23 $3.05 Higher production costs due to more tonnes mined and increased drilled & blasted inventory Lower electricity costs more than offset the costs of unplanned plant shutdowns AISC impacted by realized losses on currency hedges TCC & AISC 1 ($/oz sold) $1,321 $942 $939 $1,030 $734 $1,071 $ Q1'15 Q2'15 Q3'15 Total Cash Costs 1 Other (sustaining capital, G&A and exploration) Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the relevant periods.

13 2015 Guidance Third year of operation ESTIMATED PRODUCTION Gold ounces Targeting mid-point ESTIMATED COSTS AISC/oz sold 2 $1,050-$1, , ,000 TCC 2 $780- $850 No change Sustaining capital: $ M Revised Deferred stripping: $10 M 1. Cost assumptions (US$): Gold price of $1,200/oz, diesel fuel price of $0.82 per litre; power cost of $0.04 per kilowatt hour; and exchange rate of $1.00US:$1.15Cdn. 2. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. 13

14 LOM Plan Update January Target Maximize NAV & Returns for Next 5-10 yrs LOM Plan Update to Focus on a Lower Risk Operational Profile Mining rate reduction from max. of 140 Mt/yr (2014 TR) Higher plant throughput capacity than 22.3 Mt/yr (2014 TR) Adding Block A as a second feed source (expecting to start pre-stripping in 2018) Adding processing of fines (enriched low-grade stockpile) 14

15 Exploration Lower Detour Qtz-tourmaline stockworks in altered feldspar porphyry 30,000 m drilling program near completion Positive results from first half of program Confirming continuity of gold mineralization within Zone 58N 29 out of 34 holes with visible gold Results from second half of the program expected in December Once received assess underground potential: Surface infill drilling of upper 200 m Underground definition drilling 15

16 Q Financial Highlights $3.4 MILLION mine operating profit MILLION $44.3 net loss or $0.26 per share MILLION $13.3 adjusted net loss 1 or $0.08 per share $133.5 MILLION cash & short-term investments Operating profit of $3.4 M Q3 adjusted net loss higher than Q2 due to lower realized gold price and higher TCC Added $50 M to currency hedging position Sustaining capex of $27.4 M, mainly related to TMA activities No deferred stripping 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

17 Near-term Strategic Focus Increase production Lower costs Optimize our assets Objectives Execute at Detour Lake Growing cash flows Disciplined capital allocation Balancing between internal growth (Block A, Lower Detour, and claim block) and debt reduction Next, look at external growth opportunities Building and monitoring a database of projects (exploration to development) 17

18 A GREAT TIME TO BE A GOLD PRODUCER! PRODUCTION GROWTH / DECLINING UNIT COSTS REALIZE VALUE-ENHANCING OPPORTUNITIES MATERIAL INPUTS TRENDING FAVOURABLY GROWING CASH FLOW 18

19 Focus on Quality Ounces Q & A 19 Detour Lake Mine - September 2015

20 Q Operational Statistics Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Ore mined (Mt) Waste mined (Mt) Total mined (Mt) Strip ratio (waste:ore) Mining rate (tpd) 206, , , , ,000 Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 49,186 51,142 47,797 57,015 56,015 Mill operating time (%) Ounces produced (oz) 115, , , , ,222 Ounces sold (oz) 106, , , , ,241 20

21 Q1-Q Capital Expenditures Q1-Q E Sustaining Capital $73.0 $ Capitalized Stripping $10.0 $10 Total ($M) $83.0 $ YTD Breakdown of 2015 Sustaining Capital Mine $24 M TMA $30 M Mill $9 M Other $8 M $3 M Water Management ~90% of costs in Cdn$ Q3 sustaining capital of $27 M $16.8 M for TMA $8.1 M for mine equipment No capitalized stripping in Q3 or planned for Q4 21

22 Q Financial Review Income Statement ($ millions, except per share amount) Q3 15 Q3 14 Metal Sales $ $ Cost of Sales Production costs (98.0) (100.6) Depreciation and depletion (41.1) (37.3) Earnings from Mine Operations $ 3.4 $ (1.7) Corporate and administrative expense (6.7) (5.7) Exploration and evaluation expense (3.4) (0.5) Other operating expenses - - Loss from Operations $ (6.8) $ (7.9) Net finance income (cost) (8.2) 7.1 Income and mining tax expense (29.3) - Net Loss for the Period $ (44.3) $ (0.8) Net Loss per Share (basic) $ (0.26) $ 0.00 Note: Totals may not down add due to rounding. 22

23 Q Financial Review Adjusted Net Loss per Share ($ millions, except per share amount) Q3 15 Q3 14 Net Loss $ (44.3) $ (0.8) Adjusted for: Fair value gain of the convertible notes (9.2) (14.6) Foreign exchange (gain) loss (2.2) 1.3 Foreign exchange on deferred income taxes Non-cash unrealized (gain) loss on derivative instruments 5.5 (8.9) Accretion on convertible notes Unwinding of discount on decommissioning and restoration provisions Electricity Adjustment - (1.4) Adjusted Net Loss 1 $ (13.3) $ (17.9) Adjusted Basic Loss per Share 1 $ (0.08) $ (0.11) Note: Totals may not down add due to rounding. 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

24 Q Financial Review Cash Flows ($ millions) Q3 15 Q2 15 Q1 15 Operations $ 38.6 $ 44.4 $ 26.7 Working capital Items (9.1) 7.6 (10.2) Operating activities $ 29.5 $ 52.0 $ 16.5 Investing activities (26.3) (24.2) (28.3) Financing activities (0.1) (13.2) (2.3) Effects of exchange rate changes (1.2) 0.6 (3.0) Changes in cash and cash equivalents $ 1.9 $ 15.2 $ (17.1) Cash and cash equivalents beginning of financial period Cash and cash equivalents end of financial period $ $ $ Note: Totals may not down add due to rounding. 24