TORONTO, Jan. 22, 2019 /CNW/ - Detour Gold Corporation
(TSX: DGC) ("Detour Gold" or the "Company") provides guidance
for 2019. Overall, it is in line with the Detour Lake operation's
life of mine plan released in June
2018. The Company will host a conference call on
Wednesday, January 23, 2019 at
11:00 AM ET.
All amounts are in U.S. dollars unless otherwise indicated.
Refer to the end of this news release for an explanation and
discussion of the non-IFRS measures total cash costs and all-in
sustaining costs ("AISC").
2019 Guidance
|
2019
Guidance
|
Gold production
(oz)
|
570,000-605,000
|
Total cash costs
($/oz sold)
|
$790-$840
|
AISC ($/oz
sold)
|
$1,175-$1,250
|
"The Company will continue to execute on its operational
strategy for 2019 with the goal of stabilizing the operations by
year-end," said Bill Williams,
Interim CEO. "The operational initiatives that Frazer Bourchier,
COO, put in place during 2018 have produced positive results. We
are building on this momentum to further improve efficiencies that
will lead to steady-state operations and position the Company
towards a strong future."
2019 Guidance Review
- Full year projected gold production of between 570,000 and
605,000 ounces.
- The mine plan calls for approximately 115 Mt to be mined from the Detour Lake pit in
2019.
- Mill throughput is expected to range between 21.5 and 22.0 Mt
for 2019. Head grade is projected to range between 0.90 and 1.00
g/t, with the lowest grade projected during the second quarter.
Mill recoveries are expected to range between 90.5% and 91.5%.
- 2019 AISC are expected to range from $1,175 to $1,250
per ounce sold, with total cash costs of $790 to $840 per
ounce sold. The AISC are forecast to be above the yearly guidance
in the second and third quarter of the year, mainly due to the
timing of capital expenditures for the tailings facility
construction.
- Capital expenditures are estimated to range between
$190 and $210
million. Higher sustaining capital is anticipated for
accelerating the construction of Cell 2 of the tailings facility
mainly due to slower progress than planned in 2018.
Capital
Expenditures ($ millions)
|
|
Sustaining
expenditures
|
|
Mining
|
$55
|
Processing
|
$12
|
Tailings Management
Area
|
$80-90
|
Site infrastructure,
G&A & other
|
$8
|
Total sustaining
expenditures
|
$155-165
|
Capitalized
stripping
|
$35-40
|
Non-sustaining
expenditures
|
$3
|
Total capital
expenditures
|
$190-$210
|
- Exploration budget of approximately $5
million to focus mainly on drilling and geophysical surveys
at a number of key targets on the Detour Lake property. The Company
plans to complete approximately 2,500 metres of drilling to better
define the northeast and western extensions of Zone 58N. In
addition, the Company plans to complete an internal scoping study
this year to assess the viability of pursuing an underground
exploration and bulk sampling program.
- Corporate general and administrative expense estimated at
$21 million and excludes share-based
compensation.
- Interest expense estimated at approximately $15 million.
- Depreciation expense expected to be approximately $300 per ounce of gold sold, subject to the
Company completing its 2018 year-end reserve and resource
estimate.
Principal assumptions used for the 2019 guidance
include:
Gold price:
$1,250/oz
|
CAD vs US FX rate:
1.28
|
Diesel fuel price:
CAD$0.95 per litre
|
Power cost: CAD$35
per megawatt hour
|
Sensitivity Analysis for changes affecting full year:
- A $50/oz change in the gold price
impacts closing cash by approximately $30
million.
- A $0.05 change in the CAD vs US
exchange rate impacts closing cash by approximately $20 million.
2019 Operational Focus and Initiatives
- We expect to further embed critical initiatives commenced in
2018 during the year to progress process plant capital projects and
to introduce value-added business improvement plans. The focus
remains on increasing production efficiencies while targeting the
life of mine plan's benchmark production and cost metrics. Top
focus areas for 2019 include:
-
- Employee retention and performance management
- Tailings dam earthworks construction for Cell 2 including
improved project management
- Drill, blast and truck cycle efficiencies including fleet
management
- Condition-based maintenance processes for mine and plant
- Business mine planning cycles together with data analytics and
short interval controls
- Cost controls including contractor management
- Critical risk awareness and mitigation controls
2019 Financial Risk Management
- The Company has established financial risk management programs
for its gold sales, Canadian dollar expenditures, and diesel fuel
exposures. These programs are to reduce a portion of the Company's
exposure to volatile markets and to lock-in known rates for
budgeting purposes.
- As of January 22, 2019, the
Company has the following positions:
-
- 120,000 gold ounces of collars have been added giving
protection on gold sales at $1,250/oz
and participation up to $1,400/oz.
These collars mature evenly over 2019.
- $315 million of collars are in
place that allow the Company to sell US dollars at no worse than
1.27 and have upside to 1.35. These collars mature relatively
evenly over 2019. These contracts along with other spot
transactions completed to date in January have secured prices for
approximately 60% of the Company's estimated 2019 Canadian dollar requirements.
- 35 million litres of diesel fuel contracts at an average rate
of CAD$0.85/litre, which settle on a
net basis. These contracts are predominantly weighted in the first
nine months of 2019 and represent approximately 45% of the
Company's 2019 diesel fuel requirements.
Conference Call
The Company will host a conference call on Wednesday, January 23, 2019 at 11:00 AM ET. Access to the conference call is as
follows:
- Via webcast, go to www.detourgold.com and click on the "2019
Guidance Conference Call and Webcast" link on the home page
- By phone toll free in North
America 1-800-319-4610
- By phone Toronto local and
internationally 416-915-3239
A playback will be available until February 23, 2019 by dialing 604-674-8052 or
1-855-669-9658 within Canada and
the United States, using pass code
2910. The webcast and presentation slides will be archived on the
Company's website.
Technical Information
The scientific and technical content of this news release was
reviewed, verified and approved by David
Londono, Senior Manager Mining, a Qualified Person as
defined by Canadian Securities Administrators National Instrument
43-101 "Standards of Disclosure for Mineral Projects."
About Detour Gold
Detour Gold is an intermediate gold producer in Canada that holds a 100% interest in the
Detour Lake mine, a long life large-scale open pit operation.
Detour Gold's shares trade on the Toronto Stock Exchange under the
trading symbol DGC.
For further information, please contact:
Bill Williams,
Interim CEO
|
Laurie Gaborit, VP
Investor Relations
|
Tel:
416-304-0800
|
Tel:
416-304-0581
|
Detour Gold Corporation, Commerce Court West, 199 Bay Street,
Suite 4100, P.O. Box 121, Toronto,
Ontario M5L 1E2
Non-IFRS Financial Performance Measures
The Company
has included certain Non-IFRS measures in this document with no
standard meaning under International Financial Reporting Standards
("IFRS"). Refer to Non-IFRS Financial Performance Measures in the
Company's latest MD&A for further information.
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.
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, 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
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 Indigenous communities, less
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.
All-in sustaining costs and total cash costs do not have any
standardized meaning whether under IFRS or otherwise and therefore
may not be comparable to other issuers. Accordingly, other
companies may calculate these measures differently as a result of
differences in underlying principles and policies applied.
Differences may also arise to a different definition of sustaining
versus non-sustaining capital. These 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.
Cautionary Note regarding Forward-Looking
Information
This news release 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
reflect current expectations or beliefs regarding future events or
the Company's future performance. 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 the Company's
actual results, performance or achievements to differ materially
from those expressed or implied by such forward-looking
statements. All forward-looking statements, including those
herein are qualified by this cautionary statement.
Accordingly, readers should not place undue reliance on
forward-looking statements. The forward-looking statements in this
news release speak only as of the date of this news release or as
of the date or dates specified in such statements.
Specifically, this press release contains forward-looking
statements regarding 2019 gold production of between 570,000 and
605,000 ounces, total cash costs of between $790 and $840 per
ounce sold and AISC of between $1,175
and $1,250 per ounce sold; the
Company continuing to execute on its operational strategy in 2019
with the goal of stabilizing the operations by year-end; further
improving efficiencies that will lead to steady-state operations
and position the Company towards a strong future; mining
115 Mt from the Detour Lake pit, mill
throughput of between 21.5 and 22.0 Mt, head grade of between 0.90
to 1.00 g/t, with the lowest grade projected during the second
quarter, mill recoveries of between 90.5% and 91.5%, AISC being
above the yearly guidance in the second and third quarter of the
year, capital expenditures of between $190 to $210
million and the use and classification of such expenditures,
higher sustaining capital for accelerating the construction of Cell
2 of the tailings facility, exploration activities, corporate
general and administrative expenses of $21
million (excluding share-based compensation), an interest
expense of approximately $15 million,
and a depreciation expense of approximately $300 per ounce of gold sold; further embedding
critical initiatives commenced in 2018 to progress process plant
capital and to introduce value-added business improvement plans;
and increasing production efficiencies while targeting the life of
mine plan's benchmark production and cost metrics.
Inherent in forward-looking statements are risks, uncertainties
and other factors beyond the Company's ability to predict or
control. These risks, uncertainties and other factors
include, but are not limited to, the results of the life of mine
plan released in June 2018, gold
price volatility, changes in debt and equity markets, the
uncertainties involved in interpreting geological data, increases
in costs, the costs, environmental compliance and changes in
environmental legislation and regulation, support of the Company's
Indigenous communities, interest rate and exchange rate
fluctuations, general economic conditions and other risks involved
in the gold exploration, development and production industry, as
well as those risk factors listed in the section entitled
"Description of Business - Risk Factors" in Detour Gold's 2017
Annual Information Form ("AIF") and in the continuous disclosure
documents filed by Detour Gold on SEDAR at www.sedar.com. Readers
are cautioned that the foregoing list of factors is not exhaustive
of the factors that may affect forward-looking statements. Actual
results and developments and the results of the life of mine plan
released in June 2018 are likely to
differ, and may differ materially or materially and adversely, from
those expressed or implied by forward-looking statements, including
those contained in this news release. Such statements are
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 capital costs; results of operations; the
Company's available cash resources; the Company's ability to
attract and retain skilled staff; the mine development and
production schedule and related costs; 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 Indigenous 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 mineral reserve and
mineral 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; and general business and economic
conditions.
The Company undertakes no obligation to update publicly or
otherwise revise any forward-looking statements 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.
SOURCE Detour Gold