CANADA S INTERMEDIATE GOLD PRODUCER Global Metals, Mining & Steel Conference May 9-12, 2016

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Global Metals, Mining & Steel Conference May 9-12, 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, additional non-sustaining capital, capital expenditures, capitalized stripping, corporate G&A and exploration costs), repayment of $125 M and refinancing <$300 million of the Convertible Notes before due date, expected future production and mining activities, opportunities to optimize the operation, life of mine plan (gold production profile), testing plant capacity, filing an EA for West Detour in Q3 16, proceeding with a preliminary cost estimate and infrastructure design for Zone 58N, 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, 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. 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 Core Gold Holding STRONG FUNDAMENTALS Long-life asset 16.4 M OZ gold reserves Large low-cost production 655 K OZ/YR production GROWING FREE CASH FLOW Declining AISC <$900 /OZ sold Strong balance sheet ORGANIC GROWTH POTENTIAL Pipeline projects West Detour open pit High grade Zone 58N Large prospective claim block 4 Mining-friendly jurisdiction

5 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 5

6 2016 Guidance GOLD PRODUCTION K oz $ TCC1 /oz sold $ AISC 1 /oz sold Other $60-70 M sustaining capital $12 M exploration (25% nonsustaining capital) E Gold Production (K oz) 1. Refer to the section on Non-IFRS Performance Measures on slide 3. 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. 6

7 Q Highlights $30.8 $637 $824 $214 EARNINGS FROM MINE OPERATIONS million TCC 1 /oz sold AISC 1 /oz sold CASH BALANCE million Gold production of 127,136 oz Gold sales of 137,608 oz Strong cash balance of $214 M: +$7.4 M from flow through financing +$9.3 M from proceeds of stock option exercises 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 Q Operating Results Mill Throughput rate at 52,165 tpd: Limited power draw on one SAG mill (now back to full power) Coarser material being processed MT ore milled G/T AU head grade % recovery Mine Mining rates of 231,000 tpd Lower availability of rope shovels Slower progress in Phase 2 ROM stockpiles of 6.1 Mt at 0.64 g/t Au 21.0 MT total mined 2.6 strip ratio 8

9 Q Operating Costs Unit Costs Mining costs higher than budget due to less tonnes mined Processing costs benefitting from favourable electricity costs All in Sustaining Costs Lowest total cash costs 1 and all-in sustaining costs 1 since start of operations Sustaining capex of $14.8 M $858 $824 Q Q Mining (C$/t mined) $2.63 $2.94 Processing (C$/t milled) $9.24 $9.08 G&A (C$/t milled) $3.15 $3.51 $694 $ Refer to the section on Non-IFRS Performance Measures at the end of this presentation. Reconciliation of these measures is described in the MD&A for Q1 16. Q4'15 Q1'16 Q1 16 Q4'15 Q1'16 Q1 16 TCC ($/oz sold) AISC ($/oz sold) 9

10 Plan for Further Debt Reduction April 2016: Purchased $75 M of Convertible Notes $181 $123 $500 $500 $500 $425 ~$200 M debt reduction in just over 1 year <$300 On or before Convertible Notes due date: Pay back >$125 M Re-finance <$300 M Apr. '16 Nov. 17 '17E Short-term Debt ($M) Convertible Notes ($M) 10

11 April 2016 Plant Optimization Successful planned shutdown completed 1 st half of April: 410-conveyor system split into 2 conveyors designed to: Minimize downtime Increase throughput (from 4,000 to a max. of 5,000 tpoh) With front end bottleneck resolved, plant capacity to be tested 11

12 New LOM Gold Production Profile ~650 koz/yr for next 9 yrs Grade g/t LOM DE-RISKED OPERATION Development of West Detour Incorporate experience gained to date Defer capital Optimize cash flow Improve NPV 12

13 New LOM with West Detour ~650 koz/yr for next 9 yrs Production (koz) YEAR 20 Low-Grade Fines West Detour 400 Detour Lake WEST DETOUR ADVANTAGES 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 13

14 West Detour Permitting Schedule Gold Production Projected in Q Permitting Schedule Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Baseline Studies Consultation & EA Operating Permits Operation Readiness Pre-stripping (Phase 1) Gold Production 2019 Start equipment procurement this year File Provincial EA in Q3 14

15 Organic Growth Valuation 8-Year Plan: Find and develop satellite deposits to feed plant with higher grade Modest funding requirement until discovery 625 km 2 West Detour Detour Lake Mine Pipeline Projects West Detour (pre-strip in 2018) Zone 58N (infill drilling) Zone 58N 15

16 Organic Growth Valuation Resource / Reserve Shells W West Detour 1.5 M oz Detour Lake 14.5 M oz E ~600 K oz to 1 M oz Inferred resource between the two pits Reserves pit $1,000/oz (elevated cut-off grade of 0.50 g/t Au) 16

17 17 Organic Growth Valuation Zone 58N 61% of infill drilling program completed 36,830 m in 119 holes Program resuming this summer Results received to date are in line with prior results Metallurgical testing underway Proceeding with a preliminary cost estimate for UG exploration program >3 g/t Au Isometric View (3D) Looking West

18 Organic Growth Valuation Q1 Regional Program Lower Detour trend drilling: Completed 9,977 m in 36 holes Geophysical survey: ~147 line km of IP at east end of Lower Detour trend and in tailings facility area Drilling program resuming this summer 5,000-7,000 m to test additional targets along Lower Detour trend and tailings facility area West Detour Detour Lake Mine Zone 58N 18

19 INTERMEDIATE GOLD PRODUCER Good start to 2016 RECORD OPERATING PROFIT OF $31 M DEBT LEVELS REDUCED BY 15% SUCCESSFUL COMMISSIONING OF NEW 410-CONVEYOR SYSTEM ADVANCING WORK ON PROSPECTIVE ZONE 58N 19

20 ADDITIONAL information Safety Performance Q1 Financial Summary Q1 Operational Statistics LOM Production Plan Year-End 2015 Reserves and Resources Shareholder Information Analyst Coverage Management & Directors Contact Information 20

21 Safety Performance Total Recordable Injury Frequency Rate (TRIFR) Q1'16 12 Month Rolling Avg: TRIFR: Total recordable injuries x 200,000 hours divided by total man hours worked. 21

22 Q Financial Summary Key Financial Statistics ($M, except per share amounts) Q1 16 Metal sales $163.0 Production costs $89.4 Depreciation $42.8 Earnings from mine operations $30.8 Net income/adjusted net earnings 1 $27.6 / $11.3 Net income/adjusted net earnings per share 1 $0.16 / $0.07 Cash & short-term investments $ Refer to the section on Non-IFRS Financial Performance Measures on slide 3. 22

23 Q Operational Statistics Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Ore mined (Mt) Waste mined (Mt) Total mined (Mt) Strip ratio (waste:ore) Mining rate (tpd) 220, , , , ,000 Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 47,797 57,015 56,015 55,522 52,165 Mill availability (%) Ounces produced (oz) 105, , , , ,136 Ounces sold (oz) 104, , , , ,608 23

24 LOM Production Plan Yearly Average per Period 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,

25 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. 25

26 Shareholder Information Share Structure (April 27, 2016) Share Structure (03/31/2014) M Issued & outstanding 7.1 M Share options 11.0 M Convertible notes M FULLY DILUTED Top Shareholders <10% Top Shareholders BlackRock 6% Van Eck Associates 5% Tocqueville >80% INSTITUTIONS TOTAL $214 MILLION cash position 2 C$5.0 2 BILLION market cap 1. Conversion price for the Notes is $ Cash and short-term investments at March 31,

27 Analyst Coverage (19) Initiating Firm Analyst Target Price at Research May 1, 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 NB 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 $32.00 Average target C$

28 Management & Directors Management 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 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 28

29 Contact Information James Mavor Chief Financial Officer Phone: Laurie Gaborit Director Investor Relations Phone: