CANADA S INTERMEDIATE GOLD PRODUCER

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER CIBC 2018 Whistler Institutional Investor Conference January 24-27, 2018

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 forwardlooking 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: 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. Detour Gold reports total site costs and total site costs per ounce on a sales basis. 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 (including closure costs) and net of silver sales. The Company calculates total site costs per ounce as the sum of total site costs (as described above) divided by the total gold ounces sold. Gold ounces produced is noted before delivering the royalty in kind ounces. IFRS Measures The Company has included IFRS measure in this presentation: Free cash flow before financing activities, which is calculated as cash flow from operations less cash flow from investing activities. It provides useful information to management and investors as an indicator of the cash generated from the Company s operations before consideration of how those activities are financed. 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. All monetary amounts are in U.S. dollars unless otherwise stated. 3

4 DGC Investment Thesis Unmatched combination of long life and large production profile Top-ranked jurisdiction Competitive cost profile relative to industry peers Production growth Strong exploration potential 4

5 DGC Strategic Focus OPERATIONS GROWTH BALANCE SHEET Mine and mill optimization Realize on economies of scale Organic growth Add value with Zone 58N Early-stage project acquisition/jv Continue debt reduction Maintain capital discipline Shareholder returns Gold Production (K oz) E 5

6 2017 Highlights¹ PRODUCTION COSTS FINANCIALS 571 K OZ gold $716 TCC² /oz sold CASH BALANCE $134 million MT mined $1,065 AISC² /oz sold $136 NET DEBT million 21.4 MT milled ACHIEVED ANNUAL GUIDANCE GENERATED STRONG FREE CASH FLOW 2 OF $ 115 M 1. All 2017 numbers are preliminary figures, unaudited and subject to final adjustment. 2. Refer to the section on Non-IFRS Performance Measures on slide 3. 6

7 2017 Operating Results¹ Gold Production: 571,463 ounces Record mining and throughput rates: Strong end of the year with Q4 average of 294k tpd and record day of 421k tpd Mill throughput average of 58,500 tpd in-line with guidance Record Q4 head grade of 1.04 g/t Au MT ore milled G/T AU head grade % recovery MT total mined 4.1 strip ratio MT g/t Au 1. All 2017 numbers are preliminary figures and subject to final adjustment. 7

8 2017 Costs¹ TCC & AISC 2 : Consistent with full year guidance $716 $746 Capital Expenditures: Consistent with full year guidance ($ M) Actual Guidance TCC² ($/oz sold) Sustaining Capital $141 $155 Capitalized Stripping $34 $14 Non-sustaining Capital $3 $5 Total Capital $178 $ $1,065 $1,007 AISC² ($/oz sold) 1. All 2017 numbers are preliminary figures, unaudited and subject to final adjustment. 2. Refer to the section on Non-IFRS Performance Measures on slide 3. 8

9 Stronger Balance Sheet 1 Year-end cash and cash equivalents of ~$134 M After having paid $88 M of debt Net debt of $136 M Following closing a $500 M bank facility in July $250 $150 $50 Cumulative FCF before financing activities ($M) 2 Cumulative Debt repayments ($M) $178 $194 $157 $133 $109 $93 $76 $40 $248 Interest carrying cost reduced by ~1.5% Net debt:ebtida < 1 -$50 -$150 -$250 -$82 -$142 -$142 -$162 -$180 -$200 -$230 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 1. All 2017 numbers are preliminary figures, unaudited and subject to final adjustment. 2. Refer to the section on Non-IFRS Performance Measures on slide 3. 9

10 Detour Lake Open Pit Phase 2 Phase 1: Campbell Pit Area 2018 Mine Equipment 2 x CAT 7495 shovels 5 x CAT 6060 shovels 34 x CAT 795 trucks Phase 1: West (calcite zone) Phase 2 (pre-stripping) October 13,

11 2018 Guidance Change photo; same as last year Estimated production THOUSAND oz gold Estimated costs Total cash costs $ TCC 1 per oz sold All-in sustaining costs $1,050-1,150 1 AISC per oz sold Key Assumptions Gold price of $1,250/oz and CAD vs US FX rate of 1.25 (=C$1,562/oz); diesel fuel price of C$0.75/L; power cost of C$0.03/kWh 1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. 11

12 2018 Operating Plan Mine: 112 Mt Fleet to increase to 7 shovels and 34 trucks supported by a ROM fleet ~1.7 Mt of ore expected to be mined and stockpiled Strip ratio at 3.7:1 Mill: 22 Mt Head grade expected to average 0.99 g/t Au Mill recoveries expected to range between 90% and 91.5% Gold Production: 600, ,000 oz 12

13 2018 Expenditures Mine $90 M Mine Equipment $44 M PCR/MARC² $46 M 2018 Budget Sustaining Capital $190 M Crushing Plant $9 M Capitalized Stripping Non-sustaining Capital Total Capital Expenditures Corporate G&A Share-based Compensation $21 M $8 M $ M $21 M $11 M Cell 1 $24 M TMA $81 M Cell 2 $38 M Other $10 M Site Infra., G&A¹ $10 M Mill $9 M Exploration $10 M Note: ~85% of costs in Cdn$. 1. Includes Site infrastructure, G&A & other; and a Contingency of $4 M. 2. PCR Planned component replacements. Capitalized MARC Maintenance and repair contract. 13

14 Detour Lake Optimization Plan Evaluate option of improving period LOM Plan Targets Gold Production (k oz/yr) Can we bring ounces forward from with objective of improving production and cash flow profile? Assessment expected to be completed in Q2 2018E E¹ E¹ 1. As per LOM plan dated March 2017 for 2018 onwards. 14

15 Organic Growth WEST DETOUR DEVELOPMENT ZONE 58N LOWER DETOUR BURNTBUSH CLAIM BLOCK Reserves: 1.8 M oz Provincial ESR approval by H In LOM plan West Detour production in 2025 Potential for highgrade UG mine Finalize options for mining widths and cut-off grade for different UG mining scenarios Claim block 70 km south of Detour Lake Drilling program in summer

16 West Detour Project Permitting and Consultation Progress Targeting provincial approval by H Agreement signed with TTN Agreement in principle with WFN; signing expected in Q MCFN alignment on West Detour development anticipated in Q Walter Lake West Detour Project 16

17 Zone 58N Next steps leading to decision to proceed with Advanced Exploration program Completed 4,750 m of drilling at 12.5 m spacing in Q for further testing of block model Completing block model with improved geological interpretation Pending the results, the Company would proceed with: An initial mineral resource estimate Defining an advanced exploration program to test the underground mining potential of Zone 58N Conceptual UG Design for Zone 58N 17

18 Closing Comments 2018 to be another solid Year for Detour Gold: Expecting a 9% production growth from 2017 with operational improvements Continued free cash flow growth Financial strength and flexibility Leverage to gold price ATTRACTIVE VALUATION OPPORTUNITY 18

19 Additional Information Safety Performance Shareholder Information Operational Statistics Detour Lake Property Burntbush Property Summary LOM Plan Year-end 2016 Reserves & Resources Analyst Coverage Management & Directors Contact Information 19

20 Safety Performance 2017: TRIFR of 1.78 for the year Total Recordable Injury Frequency Rate (TRIFR) 1 (12 Month Rolling Average) Safety performance improvement in Q4 Completed hiring to bolster the Safety team DGC Target Contractor Establish Safety Journey Plan for 2018 including a commitment to undertake behavioral safety training across workforce 0.0 Q1 17 Q2 17 Q3 17 Q TRIFR: Total recordable injuries x 200,000 hours divided by total man hours worked. 20

21 Shareholder Information Share Structure (December 31, 2017) Share Structure (03/31/2014) M Issued & outstanding 10% 4.7 M Share options & Units M FULLY DILUTED Top Shareholders Van Eck Associates 8% BlackRock >80% INSTITUTIONS TOTAL $134 MILLION cash and cash equivalents at December 31, 2017¹ 1. All 2017 numbers are preliminary figures, unaudited and subject to final adjustment. 21

22 2017 Operational Statistics Q1 17 Q2 17 Q3 17 Q Ore mined (Mt) Waste mined (Mt) Total mined (Mt) Strip ratio (waste:ore) Mining rate (tpd) 242, , , , ,000 Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 58,114 60,259 61,548 54,144 58,508 Ounces produced (oz) 131, , , , ,463 Ounces sold (oz) 134, , , , ,974 22

23 Detour Lake Property 23

24 Burntbush Property Detour Lake Burntbush Felsic to Intermediate Intrusives Mafic Intrusives Felsic to Intermediate Volcanics Intermediate to Mafic Volcanics Sediments Basement Gneiss 24

25 LOM Plan Summary (issued March 2017) Key Statistics LOM Plan Proven & Probable Reserves (M oz) Average gold grade (g/t) 0.97 Estimated gold recovery (%) 92.7 Mine life (years) ~23 Average annual gold production (oz) 656,000 Total Site Costs 2 $758/oz sold Mining rates ramping up from 100 Mt in 2017 to 125 Mt in 2022 Mill throughput increasing from 21.5 Mt in 2017 to 23 Mt in Estimated using a gold price of $1,000/oz and a US$/C$ exchange rate of Refer to Slide 27 for additional details. 2. Refer to the section on Non-IFRS Performance Measures on slide 3. 25

26 LOM Production Plan Yearly Average per Period Total LOM LOM Ore milled (Mt) Head grade (g/t Au) Gold recovery (%) Gold production (k oz) ,250 Total mined (Mt) ,175 Strip ratio (waste:ore) Average for the last years at 2.25 years. 26

27 LOM Plan Financial Summary 2-Year Average 2017LOM Units Average Total Gold Production k oz ,250 Gold Sales 4 k oz ,937 Site Costs Operating Costs 1 C$ M ,960 Sustaining Capital 2 C$ M ,488 Deferred Stripping C$ M Total Capital Costs C$ M ,372 Total Site Costs C$ M ,332 US$/oz sold 980 1, Cash Flow Site Cash Flow 3 (after Tax) NPV5% (after tax) = C$3.7 B C$ M , Includes all site costs including bullion delivery, refining and costs related to agreements with Aboriginal communities. 2. Includes closure costs. 3. US$/C$ exchange rate of 1.30 in 2017, 1.27 in 2018, and 1.25 in Ounces sold = Production x 97.95% (= 100% - 2% NSR % Refiners take). 27

28 Year-end 2016 Reserves & Resources At Dec. 31, 2016 Reserves Tonnes (millions) Grade (g/t Au) Contained Gold Ounces (000 s oz) Detour Lake Pit Proven ,579 Probable ,490 Stockpiles Total P&P ,214 West Detour Pit Proven Probable ,596 North Pit Probable Total P&P ,843 LG Fines Probable Total P&P ,460 Resources Detour Lake Pit Measured Indicated ,255 M+I ,991 West Detour Pit Measured Indicated North Pit Indicated M+I Total M+I ,869 Detour Lake Mine Inferred West Detour Pit Inferred North Pit Inferred Total Inferred ,188 Notes: 1. The Company s mineral resources and reserves conform 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 US$1,000/oz and mineral resources were estimated using a gold price of US$1,200/oz at a US$/C$ exchange rate of Mineral reserves and resources were based on a cut-off grade of 0.50 g/t Au. 4. LG Fines (sourced from material grading g/t Au) classified as Measured and Indicated were reported as Probable mineral reserves and included in the mine plan. 5. Further information, including key assumptions, parameters, and methods used to estimate mineral resources and mineral reserves are described in the Technical Report on the Detour Lake operation, dated March 22, 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. 28

29 Analyst Coverage (19) Firm Analyst Target Price at January 17, 2018 Bank of America Merrill Lynch Michael Jalonen $19.50 Beacon Securities Michael Curran $17.75 BMO Brian Quast $26.00 Canaccord Rahul Paul $22.50 CIBC World Markets Cosmos Chiu $20.00 Cormark Securities Richard Gray $20.00 Credit Suisse Anita Soni $16.00 Desjardins Josh Wolfson $15.50 Eight Capital Research Craig Stanley $16.65 Global Mining Research David Radclyffe/David Cotterell $18.00 GMP Securities Ian Parkinson $19.00 Haywood Kerry Smith $26.00 Macquarie Mike Siperco $22.00 National Bank Mike Parkin $21.50 Paradigm Don Blyth/Don MacLean $25.50 Raymond James Farooq Hamed $23.00 RBC Dan Rollins $20.00 Scotiabank Trevor Turnbull $19.00 TD Dan Earle $23.00 Average target $

30 Management & Directors MANAGEMENT Paul Martin President and CEO Frazer Bourchier COO James Mavor CFO Julie Galloway General Counsel & Corporate Secretary Drew Anwyll Sr VP Technical Services Derek Teevan Sr VP Corporate & Aboriginal Affairs Charles Hennessey Mine General Manager Laurie Gaborit VP Investor Relations Ruben Wallin VP Environment & Sustainability Alberto Heredia Controller Jacques McMullen Corporate Technical Advisor DIRECTORS Lisa Colnett Edward C. Dowling Robert E. Doyle André Falzon Ingrid Hibbard Michael Kenyon Paul Martin Alex G. Morrison Jonathan Rubenstein 30

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