CANADA S INTERMEDIATE GOLD PRODUCER

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Third Quarter 2017 Results Conference Call & Webcast October 26,

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, gold price volatility, changes in debt and equity markets, 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, 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 2016 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 capital costs; 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 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. All monetary amounts are in U.S. dollars unless otherwise stated. 2

3 Notes to Investors Non-IFRS Financial Performance Measures The Company has included non-ifrs measures in this presentation: average realized gold price, 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. Average realized gold price per ounce sold is calculated as metal sales per the statement of comprehensive income (loss) and includes realized gains and losses on gold forwards, less silver sales, divided by gold ounces sold. 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. Adjusted 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 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, impact of foreign exchange gains and losses, deferred income and mining taxes, non-cash unrealized gains and losses on derivative instruments, accretion on convertible notes and 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, a Qualified Person as defined by Canadian Securities Administrators National Instrument Standards of Disclosure for Mineral Projects. 3

4 Management Participants Third Quarter 2017 Results Conference Call and Webcast All monetary amounts are in U.S. dollars unless otherwise stated. PAUL MARTIN President and CEO JAMES MAVOR CFO DREW ANWYLL SVP Tech. Services 4

5 Safety Performance Q3 2017: Safety performance below Q3 target Hazardous Operations Review: All chemical mixing and distribution systems Total Recordable Injury Frequency Rate (TRIFR) 1 (12 Month Rolling Average) DGC Target Contractor Informs Management of Change for SOP s, redesign and training 0.0 Q4 16 Q1 17 Q2 17 Q3 17 Job Task Observations to drive further refinement 1. TRIFR: Total recordable injuries x 200,000 hours divided by total man hours worked. 5

6 Q Highlights AVG REALIZED GOLD PRICE 1 ($/oz) Q3 17 YTD 17 $1,273 $1,248 GOLD PRODUCTION (oz) GOLD SALES (oz) REVENUES ($ M) TCC 1 ($/oz sold) AISC 1 ($/oz sold) 139, ,498 $164 $668 $1, , ,681 $508 $721 $1, Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the Q3 17 MD&A. 6

7 Q Financial Highlights $46.7 MILLION earnings from mine operations MILLION $41.1 net earnings or $0.24 per share MILLION $37.4 adjusted earnings 1 or $0.21 per share $114 MILLION cash & cash equivalents YTD debt reduction of $58 M Positive impact from currency hedging program 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of this measure is described in the Q3 17 MD&A. 7

8 Q Operating Results Throughput rate at 61,548 tpd Record quarterly throughput Head grade impacted by unfavorable grade reconciliation in Central Zone and higher mining dilution Commissioning of lead nitrate system continuing MT ore milled G/T AU head grade % recovery Mining rates of 283,000 tpd Record quarterly mining rates Campbell pit on schedule to mine Bench 148 by year-end On target for 100 Mt in MT total mined 3.8 strip ratio 5.7 stockpiles 0.68 g/t Au 8

9 Mine Ops Initiatives (with USC) Consulting started in April 2017 Project Schedule Summary Now here No. of Weeks Drill Load/Blast Shovel Truck/Dispatch Muck Bench Clean-up & Pattern Prep Mine Mobile Maintenance Materials Management Review to commence in 2018 at processing plant 9

10 Q Costs Q3 AISC: AISC decreased by $91/oz from prior quarter mainly due to lower milling costs and lower corporate administration Q3 Sustaining Capital Q3 17 $668 Q2 17 $706 On track with budget for full year TCC 1 ($/oz sold) Q3 17 YTD Mining $14.8 $73.6 Tailings $14.3 $22.6 Processing $2.2 $6.8 Infrastructure, G&A & other $7.9 $12.9 $1,032 $1,123 Total sustaining ($ M) $39.2 $115.9 Capitalized stripping ($ M) $6.3 $18.3 AISC 1 ($/oz sold) 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the Q3 17 MD&A. 10

11 2017 Guidance Targeting Mid-range of Guidance Estimated production THOUSAND oz gold Total cash costs $ TCC 1 per oz sold All-in sustaining costs $1,025-1,125 1 AISC per oz sold Key budget 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. 11

12 2017 Cash Flows Positive Cash Flow Relative good correlation between strength of Canadian dollar met with higher US dollar gold price Q3 cash flows (before financing activities) of $16 M End 2017 with $ M cash & cash equivalents Gold US$ Gold CDN$ FX $1, $1, $1, $1, $1,000 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q Note: FX rates and gold prices are monthly averages. 12

13 Development & Exploration West Detour Project Agreement signed with TTN Positive progress with other Aboriginal groups Targeting provincial approval by mid-2018 Zone 58N Summer drilling program completed Adding 4,000 m drilling for further testing of block model Burntbush Property Airborne geophysical survey completed: 16 anomalies identified from preliminary review Prospecting underway Zone 58N 13

14 Strong Balance Sheet Closed $500 M bank facility in July ~$330 M deposited with Note Trustee to be paid to holders at maturity Carry cost of interest reduced by ~2% Future earnings to benefit from elimination of accretion charges: YTD represents $0.13 on EPS $200 $100 $0 -$100 -$200 $40 Cumulative FCF before financing activities ($M) Cumulative Debt repayments ($M) $76 $93 -$82 $109 $133 $157 $178 -$142 -$142 -$162 -$180 $194 -$200¹ Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 1. $20.5 M is on deposit with Note Trustee until maturity (November 31, 2017). 14

15 Closing Comments 2017 to be Strongest Year for Detour Gold: Operational improvements (record mining and milling rates) and more consistent results Achieved target of having not more than $300 M in debt (post Notes repaid) End 2017 with $ M of cash & cash equivalents Well Positioned for a Stronger

16 DETOUR GOLD INTERMEDIATE GOLD PRODUCER Q & A October 14,

17 ADDITIONAL information Operational Statistics Q Financial Review Shareholder Information 17

18 Operational Statistics Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Ore mined (Mt) Waste mined (Mt) Total mined (Mt) Strip ratio (waste:ore) Mining rate (tpd) 256, , , , ,000 Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 56,453 60,052 58,114 60,259 61,548 Mill availability (%) Ounces produced (oz) 127, , , , ,861 Ounces sold (oz) 113, , , , ,498 18

19 Q Financial Review Income Statement ($ M, except per share amount) Q3 17 Q3 16 Metal Sales $ $ Cost of sales Production costs Depreciation Earnings from Mine Operations Corporate and administrative expense Exploration and evaluation expense Other operating (income) expenses Earnings before Finance Items and Taxes Net finance income (cost) (6.5) (0.8) Income and mining tax recovery 8.6 (6.5) Net Earnings $ 41.1 $ 9.7 Earnings per Share basic $ 0.24 $ 0.06 Note: Totals may not down add due to rounding. 19

20 Q Financial Review Adjusted Earnings per Share ($ M, except per share amount) Q3 17 Q3 16 Net Earnings $ 41.1 $ 9.7 Adjusted for: Fair value (gain) loss of the convertible notes 0.0 (16.8) Accretion on long-term debt Accretion on decommissioning and restoration provision Non-cash unrealized (gain) loss on derivative instruments 0.3 (6.2) Foreign exchange (gain) loss (3.2) 0.2 Deferred income and mining taxes (8.6) 6.5 Adjusted Earnings 1 $ 37.4 $ 1.3 Adjusted Basic Earnings per Share 1 $ 0.21 $ 0.01 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 the relevant period. 20

21 Q Financial Review Cash Flows ($ M) Q3 17 Q3 16 Operations $ 76.9 $ 47.9 Working capital Items (15.6) (9.6) Operating activities Investing activities (45.5) (22.0) Financing activities (31.4) (54.7) Effects of exchange rate changes Changes in cash and cash equivalents (14.5) (38.1) Cash and cash equivalents beginning of period Cash and cash equivalents end of period $ $ Note: Totals may not down add due to rounding. 21

22 Shareholder Information Share Structure (October 25, 2017) Share Structure (03/31/2014) M Issued & outstanding 4.8 M Share options 8.3 M Convertible notes M FULLY DILUTED Top Shareholders Top Shareholders 10% Van Eck Associates 8% BlackRock 6% Fidelity 2 >80% INSTITUTIONS TOTAL $113.7 MILLION cash and cash equivalents at September 30, Conversion price for the Notes is $ Includes Fidelity Investments Canada, Fidelity Management & Research Company and Fidelity Institutional Asset Management. 22

23 Contact Information Paul Martin President and Chief Executive Officer Phone: Laurie Gaborit VP Investor Relations Phone: