dgc 16 04_07 - laurentian 1x1 presentation
TRANSCRIPT
1
CANADA’S INTERMEDIATE GOLD PRODUCER
Laurentian Bank Securities
Annual Institutional Investor Conference Montréal – April 7, 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 full year 2015
estimated all-in sustaining costs and total cash costs, strategic focus, 2016 guidance (gold production, total cash costs, all-in sustaining
costs, capital expenditures and exploration), new life of mine plan and economic analysis of the Detour Lake operation including, but not
limited to, the mine plan, processing and production rates, grades, metallurgical recovery rates, operating and capital costs, the projected
mine life, the net present value, opportunities to optimize the mine operation, the success and continuation of exploration activities, the
future price of gold, reclamation obligations, permitting schedule, 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
forward-looking 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.
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.
The footnotes, endnotes and additional information to this presentation contain important information. Refer to the disclosure on our
website and corresponding period MD&A.
All amounts are in US dollars except as noted.
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‘CORE’ GOLD HOLDING
DISTRICT SCALE
EXPLORATION
POTENTIAL
FOCUSED
MANAGEMENT
TEAM
STRONG
UNDERLYING
FUNDAMENTALS
GROWING
FREE
CASH FLOW
4
STRONG UNDERLYING FUNDAMENTALS
LARGE
SCALE/ LONG
MINE LIFE
16.4
LARGE
PRODUCTION
PROFILE
655 K OZ per year
DECLINING
AISC Zone 58N
High grade
<$900 /OZ sold
ORGANIC GROWTH
POTENTIAL
DETOUR LAKE
A COMPANY MAKER
4 M OZ M+I resources
M OZ reserves
5
DEBT
MANAGEMENT
ORGANIC GROWTH
EVALUATION
OPERATIONAL
EXECUTION
Optimization:
increase mine and
plant output
Permit West Detour
Debt repayment
and refinancing
Focus on
Lower Detour
Start regional
exploration
STRATEGIC FOCUS
1-2 Yrs
6
EVALUATE LOW-
RISK EXTERNAL
GROWTH
ADVANCE INTERNAL
GROWTH
OPPORTUNITIES
REALIZE ON
ECONOMIES
OF SCALE
Commence
West Detour
Test ultimate
plant capacity
Preference for
early-stage
projects
Find and develop
higher grade
satellite deposits
STRONG
BALANCE
SHEET
Financial
flexibility
Shareholder
value
enhancement
3-5 Yrs
STRATEGIC FOCUS
7
2015: Delivered Strong Performance
1. Refer to the section on Non-IFRS Performance Measures at the end of this presentation.
Gold production of 505,558 oz
Significant operational improvements
Earnings from mine operations of
$12.7 M
All-in sustaining costs declined 35%
during 2015 to $858/oz sold1 in Q4
Electricity contract extended 5 years
to end of 2024
Exploration success at Lower Detour
Operational execution
■ AISC ($/oz sold)1
■ Gold Production (k oz)
106 125 128 146
$1,321
$1,030 $1,071
$858
Q1 Q2 Q3 Q4
2015
8
2015: Strengthened Balance Sheet
Repaid $123 M of debt
Year over year cash increase of $30 M
Undrawn credit facilities of ~$62 M
$161 M
$62 M
$223 M
UNDRAWN
CREDIT
FACILITIES
CASH &
CASH EQUIVALENTS
2015
IN A STRONG POSITION TO
ADDRESS REMAINING DEBT
$500 M MATURING IN NOV 2017
Started FCF generation
9
2016 Guidance
of strong production growth
ESTIMATED AISC COSTS1
$840-$940/oz sold
1. Refer to the section on Non-IFRS Performance Measures at the end of this presentation.
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.
Quarterly production ranging from 125,000-150,000 oz
4thYr
232
457 506
2013 2014 2015 2016
ESTIMATED PRODUCTION
540,000-590,000 oz
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2016 Guidance
1. Refer to the section on Non-IFRS Performance Measures at the end of this presentation.
of strong production growth 4thYr
Additional non-sustaining capital of ~$8 M for West Detour
& $8-10 M for Lower Detour definition drilling
Total Cash Costs1 $675-750/oz sold
Sustaining Capital $60-70 M
Capitalized Stripping $5-10 M
Corporate G&A $25 M
Exploration $2-4 M
AISC1 $840-940/oz sold
Mine
$15 M
TMA
$30 M
Mill
$10 M
Other
$10 M
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11
2016 Upside Leverage
Further operational improvements
FX and diesel price tailwinds
Electricity costs similar to 2015
Approximate Impact on1:
2016 Assumptions Upside FCF ($ M) AISC($/oz sold)
Gold ($/oz) $1,075 $1,200 +$70 -
Canadian dollar $0.75 $0.71 +$20 -$45
Potential upside to budget 2016
1. Excludes the effects of hedging.
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New LOM Plan1
OBJECTIVES
ACHIEVED
1. Long term cost assumptions: gold price of $1,200/oz, US$/C$ exchange rate of 1.23, diesel fuel price of C$0.80/L, and power cost of
C$0.08/kWh (post 2024).
Development of
West Detour
Incorporate
experience gained
to date
Defer capital
Optimize cash flow
Improve NPV
De-risked operation 23 Yrs
13
398
617 607
721 655
2013-15 2016-18 2019-21 2022-24 LOM
New LOM Gold Production Profile
Grade g/t 0.85 0.98 0.89 1.06 0.99
Detour Lake mine 14.5 M oz
West Detour 1.5 M oz
Low Grade Fines 0.4 M oz
Total Reserves 16.4 M oz
~650 koz/yr
for next 9 yrs
3 FEED
SOURCES
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New LOM with West Detour
Ability to defer 160 Mt of waste over next 9 yrs
Low capital of ~$80 M
Potential use of pit for waste stockpiles and
tailings deposition
200
400
600
800
16-18 19-21 22-24 25-27 28-30 31-33 34-36 37-38
Low-Grade Fines
West Detour
Detour Lake
Production
(koz) ~650 koz/yr
for next 9 yrs
YEAR 20’
WEST
DETOUR
ADVANTAGES
15
$812 $803
$632 $690
2016-18 2019-21 2022-24 LOM
New LOM Costs Based on Experience
Total site costs1
($/oz)
~75% of operating and ~60% of capital costs in Canadian dollars
TONNES MINED (Mt) 105 119 119 96
TONNES MILLED (Mt) 21.4 23.0 23.0 22.4
1. Total site costs are reported in per ounce produced. Refer to the section on Non-IFRS Performance Measures at the end
of this presentation.
(operating+capital)
16
8-Yr Plan Grow by the drill-bit
OBJECTIVES
Find and develop
satellite deposits to
feed plant with higher
grade
Modest funding
requirement until
discovery
PLAN
Organic Growth Potential
625 km2
Zone 58N
Detour Lake Mine
West Detour
Geophysical surveys completed
on entire property
Prioritize and drill test targets
Fast-track best opportunities
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LOWER DETOUR: ZONE 58N
REGIONAL EXPLORATION
Assess continuity and size of UG
target with +60,000 m delineation
drilling program:
› 25 m spacing upper 250 m
› 50 m spacing below 250 m
Expand drilling on positive results
Decision to drive a ramp by year-end
8,000-10,000 m of drilling on Lower
Detour 25 km trend
5,000-7,000 m of drilling on property
Organic Growth Potential
2016 Advance Lower Detour
Zone 58N
Detour Lake Mine
West Detour
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Detour Lake – A Company Maker
Q4’15
2014 2015 $0
$10
$20
$30
DGC Share Price
Production growth
Declining costs
C
C
C
19
ADDITIONAL information
Safety Performance
LOM Production Plan
LOM Operating & Capital Costs
LOM Opportunities
Year-End 2015 Reserves and
Resources
Detour Lake & West Detour
Processing of Fines
Lower Detour Exploration:
Zone 58N
Shareholder Information
Analyst Coverage
Management & Directors
End Notes
Contact Information
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3.9
2.5 2.3
0
0.5
1
1.5
2
2.5
3
3.5
4
2014 ON
Average2
Total Recordable Injury
Frequency Rate (TRIFR)1
Safety Performance
2015 2014
1. Total recordable injury frequency rate = Total recordable injuries x 200,000 hours divided by total man hours worked.
2. 2014 Ontario Mining Industry average (source: Workplace Safety North, WSIB).
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LOM Production Plan
Yearly Average per Period Total
2016-
18
2019-
21
2022-
24
2025-
27
2028-
30
2031-
33
2034-
36
2037-
38 LOM LOM
Ore milled (Mt) 21.4 23.0 23.0 23.0 23.0 23.0 23.0 18.1 22.4 514
Head grade (g/t Au) 0.98 0.89 1.06 0.89 0.87 1.06 1.15 1.08 0.99 0.99
Gold recovery (%) 91.5 92.0 92.0 92.0 92.0 92.0 92.0 92.0 91.9 91.9
Gold production (k oz) 617 607 721 604 589 719 781 580 655 15,072
Total mined (Mt) 104.8 119.4 118.8 123.2 118.7 88.5 51.5 19.4 96.3 2,214
Strip ratio (waste:ore) 3.8 4.9 3.5 4.9 5.5 2.5 1.4 0.5 3.5 3.5
22
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LOM Operating & Capital Costs
1. Includes all site costs including bullion delivery, refining and costs related to agreements with Aboriginal communities.
2. Includes closure costs.
3. Refer to Non-IFRS Financial Performance Measures defined at the end of this presentation.
4. US$/C$ exchange rate of 1.33 in 2016, 1.25 in 2017, and 1.23 in 2018+.
Yearly Average Cost per Period
2016-18 2019-21 2022-24 LOM
Mining (C$/t mined) 2.74 2.58 2.54 2.76
Processing (C$/t milled) 8.34 7.20 7.19 8.14
G&A (C$/t milled) 2.83 2.45 2.43 2.47
Site Operating Costs1 (C$ M) 529 539 534 512
Capital Costs2 (C$ M) 105 62 28 53
Total Site Costs3,4 (C$ M) 634 601 562 565
(US$/oz) 812 803 632 690
Un
it C
osts
23
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%)
24
Year-end 2015 Reserves & Resources 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 43-
101.
2. 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 1.10.
3. 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.
At Dec. 31, 2015
Reserves Tonnes
(millions)
Grade
(g/t Au)
Contained
Gold Ounces
(000’s oz)
Detour Lake Mine Proven 89.2 1.26 3,603
Probable 351.6 0.95 10,779
Stockpiles 4.8 0.64 98
Total P&P 445.5 1.01 14,480
West Detour Proven 1.8 0.99 56
Probable 47.0 0.97 1,473
Total P&P 48.8 0.98 1,529
LG Fines Probable 20.0 0.60 386
Total P&P 514.3 0.99 16,395
Resources
Detour Lake Mine Measured 17.4 1.33 746
Indicated 66.2 1.00 2,125
M+I 83.6 1.07 2,871
West Detour Measured 0.4 0.85 10
Indicated 36.5 0.86 1,005
M+I 36.9 0.86 1,015
Total M+I 120.5 1.00 3,886
Detour Lake Mine Inferred 33.7 0.81 875
West Detour Inferred 8.6 0.89 246
Total Inferred 42.3 0.82 1,121
25
Detour Lake & West Detour
US$1,000/oz
US$1,000/oz
14.5 Moz
@ 1.01 g/t Au P+P
1.5 Moz
@ 0.98 g/t Au P+P
~5.5 km
Phase 1 Pit
1. Includes LG Fines (386,000 oz @ 0.60 g/t Au). Mineral reserves as of December 31, 2015.
Total P+P = 16.4 Moz @ 0.99 g/t Au1
26
Segregation of fines
Gold concentrates in the fine material on the
top portion of the low grade stockpile
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
Processing of Fines (LG Fines)
Low-grade stockpile
(avg. grade 0.44 g/t)
Natural segregation of fines
from unloading truck
27
Lower Detour Exploration: Zone 58N*
*For 2015 results for holes previously released, refer to long section in press release dated October 20, 2015.
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1. Conversion price for the Notes is $38.50.
2. Cash and short-term investments at December 31, 2015.
Shareholder Information
>80% INSTITUTIONS TOTAL
8.1 M Share options
13.0 M Convertible notes 1
192.1 M FULLY DILUTED
171.0 M Issued & outstanding
Share Structure (03/31/2014) Top Shareholders
10%
C$3.5 BILLION market cap $161 MILLION
cash position2
Share Structure (December 31, 2015) Top Shareholders
Blackrock
7% Van Eck Associates
29
Initiating
Research Firm Analyst Target Price at
April 1, 2016
07.06.11 Haywood Kerry Smith $24.00
07.07.09 Paradigm Don Blyth/Don MacLean $22.50
07.08.07 Raymond James Phil Russo $29.00
07.11.26 National Bank Steve Parsons $28.00
07.12.20 Macquarie Mike Siperco $26.00
08.01.14 Canaccord Rahul Paul $27.00
08.07.14 TD Dan Earle $30.00
08.09.04 RBC Dan Rollins $23.00
08.11.06 BMO NB Brian Quast $24.00
09.06.17 Laurentian Pierre Vaillancourt $24.00
10.05.19 CIBC World Markets Cosmos Chiu $24.00
10.07.22 Credit Suisse Anita Soni $21.50
13.04.16 Scotiabank Trevor Turnbull $19.00
13.08.14 Desjardins Michael Parkin $21.50
13.11.12 Beacon Securities Michael Curran $22.50
13.12.09 GMP Securities Ian Parkinson $19.00
14.02.06 Cormark Securities Richard Gray/Tyron Breytenbach $24.50
14.04.22 Goldman Sachs Andrew Quail $18.50
14.06.17 Dundee Capital Markets Josh Wolfson $25.00
Average target C$23.84
Analyst Coverage (19)
30
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
Lisa Colnett
Robert E. Doyle
André Falzon
Alex G. Morrison
Jonathan Rubenstein
Graham Wozniak
Ingrid Hibbard
Michael Kenyon
Paul Martin
Management & Directors
Management
Directors
31
End Notes 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 43-101 “Standards of
Disclosure for Mineral Projects”.
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.
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 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.
Total site costs per ounce are reported 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.
32
End Notes 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
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.
Technical Report On January 25, 2016, Detour Gold announced an updated life of mine plan for the Detour Lake operation and filed a NI 43-101 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.
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Laurie Gaborit Director Investor Relations
Email: [email protected]
Phone: 416.304.0581
Paul Martin President and Chief Executive Officer
Email: [email protected]
Phone: 416.304.0800
www.detourgold.com
Contact Information