CANADA S INTERMEDIATE GOLD PRODUCER LOM Presentation / Workshop 25 January 2016

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER LOM Presentation / Workshop 25 January 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 the 2016 guidance (gold production, total cash costs, all-in sustaining costs, and capital expenditures), updated mine plan and economic analysis of the Detour Lake mine including, but not limited to, the life of mine plan, the waste to ore ratio, processing and production rates, grades, metallurgical recovery rates, operating and capital costs, the projected life of mine, the net present value, opportunities to optimize the mine operation, the success and continuation of exploration activities, the future price of gold, reclamation obligations, 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 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 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 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 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. 2

3 3 Notes to Investors 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. Total site costs and total site costs per ounce Detour Gold reports total site costs and total site costs per ounce 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. Unit costs Detour Gold reports the following unit costs: Mining unit costs: calculated as mining costs divided by total tonnes mined (ore + waste). Processing unit costs: calculated as process costs (excluding bullion delivery and refining) divided by the total tonnes milled. G&A unit costs: calculated as site G&A costs (excluding costs related to agreements with Aboriginal communities) divided by total tonnes milled. 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 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.

4 Notes to Investors 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. Technical Report On January 25, 2016, Detour Gold announced an updated life of mine plan for the Detour Lake operation and filed a NI 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. 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 costs are presented in Canadian dollars except as noted. 4

5 Where Are We After 3 Years? Delivered strong performance in 2015 Gold production >500,000 oz Mining rates at 250,000 tpd; achieved 280,000 tpd in Q2 Throughput rates exceeding design capacity Proven higher grades (>0.95 g/t) in Detour Lake pit AISC trending down Gold Production (k oz) ,000 oz is within reach

6 Goals of the LOM Plan De-risk execution plan Incorporate gained experience Include West Detour Improve production profile Defer near-term capital New LOM Plan: DE-RISK With WEST DETOUR Optimize CASH FLOW IMPROVE NPV 6

7 7 The LOM Plan

8 Completed over 15 detailed LOM Plan September 2014 Good understanding of Detour Lake and West Detour pits Optimize strip ratio Allowed for reduce max. mining rate Costs reflective of actuals and productivities Confidence in ultimate plant capacity September Delivered Optimal LOM Plan

9 LOM Plan Assumptions and Outcomes Assumptions Reserves 2016 Long-Term Gold price (US$/oz) 1,000 1,075 1,200 US$/C$ Gold price (C$/oz) 1,100 1,430 1,476 Diesel 2016 LOM $0.75 /L $0.80 / L Power cost costs $0.04 /kwh $0.08 /kwh Outcomes Reserves Proven & Probable Mine Life LOM average annual gold production Average annual production (next 9 years) Total Site Costs Moz 23 years ~10 years for West Detour 655 koz 648 koz US$690/oz 9 (1) Total site costs are reported in per ounce produced. Definition of this Non-IFRS Financial Performance Measures defined on slide 3.

10 LOM Plan Assumptions and Outcomes Key Operating Parameters Annual 124 Mtpa Mine Tonnage Daily 340 ktpd Max. Strip Ratio waste:ore 3.5:1 Avg. Feed Grade Ore 1.01 g/t Including LG fines 0.99 g/t Mill Throughput Annual 23 Mtpa Daily 63 ktpd Avg. Max. Mill Recovery 92.0% Max. 10

11 Increased Reserve Reserves 1 Tonnes (millions) Grade (g/t) Contained Gold Ounces (koz) Detour Lake pit ,480 West Detour pit ,529 Low Grade fines Total Proven and Probable ,395 Reserves shell at US$1,000/oz and US$/C$ of 1.10 (C$1,100/oz) Elevated cut-off grade of 0.50 g/t Au Long-term dilution of 4% (@ 0.2 g/t) and 5% ore loss 11 (1) Only Probable LG Fines scheduled in the mine plan were reported as mineral reserves. The LG Fines uses a CoG of 0.40 g/t Au.

12 W Increased Reserve Resource / Reserve Shells E Resource Shell (at US$1,200/oz and US$/C$ 1.10) West Detour including North Satellite pit Detour Lake pit 12

13 LOM Plan High Level Summary Units 3-Year Average LOM Average Production Tonnes Mined millions Head Grade g/t Au Tonnes Milled millions Recovery % Gold Production k oz Site Costs Site Operating Costs 1 $ M Capital Costs 2 $ M Total Site Costs 3,4 $ M US$/oz (1) Includes all site costs including bullion delivery, refining and costs related to agreements with Aboriginal communities. (2) Includes closure costs. (3) Refer to Non-IFRS Financial Performance Measures defined on slide 3. (4) US$/C$ exchange rate of 1.33 in 2016, 1.25 in 2017, and 1.23 in

14 Improved Production Profile Addition of West Detour provides a second feed source to smooth production Approx. 10 year mine life Mined with smaller fleet Equipment shared between Detour Lake and West Detour pits West Detour pit available for long-term storage of tailings and waste Stockpiling strategy allows for additional flexibility Gold Production ~650 koz / year for next 9 years 14

15 West Detour Into the LOM Plan 160 Mt less stripping in the next 9 years Lower Strip Ratio in next 9-Years West Detour allows lower strip ratio (4.0) Prior fleet expansion not required Less CAT 795 trucks Reduction of 160 Mt of waste In 9-Year window 2016LOM 2014LOM Prior Plan High mining rate to maintain ore feed High strip ratio (4.8) Required mining at 140 Mtpa 15

16 Incorporating Learnings - Fleet Productivity Decreased risk for fleet productivities Prior LOM had 38 x CAT 795 trucks in 2017 Improved modelling of truck cycle time Fleet productivities based on actuals with slight improvements to 2020 Adjusted shovel productivity with O/B mining Shared mining fleets for Detour Lake and West Detour pit West Detour uses smaller equipment (CAT6030 / CAT777) Equipment CAT 7495 Rope Shovel CAT 6060 Hydraulic Shovel CAT 6030 Excavator Cat 795 Haul Trucks CAT 777 Haul Trucks 30 Mtpa 15 Mtpa 7 Mtpa 300 t capacity 85 t capacity 16

17 Processing Plant Capacity Plant already tested beyond LOM assumption Processed up to 72,000 tonnes in a day no volumetric issues Averaged above 60,000 tpd for complete months (best month >62,700 tpd) LOM is 60,000 tpd ROM + 3,000 tpd LG Fines Equivalent to 60,700 tpd ROM LG Fines require only 22% of ROM ore energy Proven milling rate above LOM assumption Increase operating time to 92% over next 3 years First priority: 410-conveyor in

18 LG Fines into Production Profile Natural Segregation Process Actual Size Distribution Addition of LG Fines Gold concentrates in the fines Grade in the fines is concentrated at a factor of 35% Fines recovered from stockpile with flitch mining of top portion When trickle fed only displaces approx. 25% of fresh feed LG Fines include $3/t rehandling and incremental feed cost LOM plan includes 1 Mt per year starting in

19 19 Costs

20 Incorporating Learnings - Operating Cost Mining Costs Drivers Material movement tonnage Fleet efficiency Fleet operating and maintenance costs Truck cycle times and diesel fuel consumptions Long-term diesel price at $0.80/L Tonnage processed Plant Costs Drivers Reagent and consumable (CN, SO 2, grinding media) Power costs at $40/MWh until 2025 Maintenance and operating time Past Quarterly Performance Proves the Operation Can Deliver Operating Costs in LOM 20

21 Improved Capital Allocation Looking at the next 9 years ( ) 2014 LOM 2016 LOM Comments Mining Detour Lake West Detour $214 M $148 M $104 M $252 M Reduced number of CAT 795 trucks Not previously in mine plan / De-risk Plant $65 M $33 M Reduced debottlenecking costs TMA $245 M $264 M More accurate costs, increased tonnage G&A $17 M $34 M Increase in Camp capacity / quality Total $540 M $583 M Overall $43 M Additional Capital With an Increase of 1.5 Moz and Reduced Risk 21

22 Improved Capital Allocation Capital costs maintained with reduced risk Lower mining tonnage, less CAT 795 truck numbers = decreased Detour Lake pit capital 8 Less CAT 795 trucks in the next 9 years West Detour pit uses smaller equipment 15 additional CAT 777 included Less capital required for plant debottleneck Camp size and quality improvements included 22

23 Improved Capital Allocation Mining Largely related to pit equipment replacement costs Includes truck shop expansion, pit electrical expansion Equipment shared between pits are largely accounted for in Detour Lake pit capital CAT 795 Trucks priced in US$ does not benefit from the weaker C$ dollar Plant Costs for 410-conveyor system improvements Lead nitrate and oxygen system optimization projects Debottlenecking projects to get to 23 Mtpa General Cost for Walter Lake compensation, allowances and contingency included in estimates Annual US$ exposure changes with timing of equipment purchases LOM capital US$ exposure approx. 40% 23

24 24 Economic Analysis

25 Economic Analysis Detour Lake Operation Economic Evaluation Description Unit Yearly Average per Period LOM Total LOM Gold production k oz Moz Revenue $ M , $21.8 B Operating costs $ M $11.8 B Capital costs 1 $ M $1.2 B Pre-tax cash flow $ M $8.8 B NPV 5% (pre-tax) NPV 5% (after tax) $4.8 B $3.9 B This NPV is based on long-term gold price: C$1,476 / oz Spot Gold Price on last Friday: +C$1,550 / oz (1) Includes closure costs. 25

26 Sensitivity Sensitivity of NPV on Gold Price and F/X Rate Gold price and Exchange Rate 1 After Tax NPV 5% (C$ Billion) US$1,000/oz US$1,100/oz US$1,200/oz US$1,300/oz US$1,400/oz Increase in $100/oz Au Increase $500 M After-Tax NPV5% (1) Long-term gold price (2018+) and long-term exchange rate (2018+). 26

27 27 Risks and Opportunities

28 LOM Main Risks and Uncertainties Risk Description Potential Impact Risk Mitigation Delay in West Detour Permitting Declining gold price or increase value of C$ vs US$ Change to production profile Higher variability in the years (depending on the delay) Reduced capital and operating costs without the stripping of West Detour overburden Decrease in US$ revenue in the event of a falling gold price or a strengthening C$ Increase priority on Detour Lake Stage 2 pit Total value will be impacted by timing of benefit Re-allocation of capital Pit shell selected is robust at low gold price Opportunistic gold, currency and diesel hedging strategy 28

29 LOM Main Mine Opportunities Description Comment Open pit unit costs Open pit fragmentation Block model reconciliation Potential to lower maintenance costs Improved productivity Continuous Improvement (CI) projects focusing on costs improvements and productivity gains Improved blasting to increase number of fines will increase plant throughput Block model gives additional ore tonnage to date Continued trend would extend mine life or add to increased ore production 29

30 LOM Main Plant Opportunities Description LG Fines prior to 2019 Medium grade fines Comment Bringing LG Fines earlier will bring benefits earlier. Using same methodology recover fines from medium grade stockpiles at a similar concentration of grade Additional tonnage possible with: Throughput above 23Mtpa Recovery beyond 92% - Improved crushers operating times - Increased power draw on Ball Mills - MG Fines - Improved Pit Fragmentation Metallurgical Improvement Plan - Leach circuit optimization (lead nitrate, oxygen control and grind/recovery relationship) - Gravity circuit optimization - Carbon circuit management 30

31 2016 Guidance 31

32 2016 Guidance 2016 Strong production growth ESTIMATED PRODUCTION Gold ounces 540, ,000 ESTIMATED COSTS AISC/oz sold 1 US$840-$940 TCC 1 US$675- $750 Cost assumptions: Gold price of US$1,075/oz, diesel fuel price of $0.75 per litre, power cost of $0.04 per kilowatt hour and a US$/C$ exchange rate of (1) Definition of Non-IFRS Financial Performance Measures defined on slide 3. 32

33 2016 Operating Plan 1 MINE 2 PLANT Mining target: Mt total Strip ratio (SR) projected: 3.3:1 Milling target: >20 Mt ore Plant improvement plan 410-conveyor: modify to 2 separate conveyor units 33

34 2016 All-in Sustaining Costs (AISC) 2016 Sustaining Capital (US$) Forecast (US$) Total Cash Costs (TCC) $ /oz sold 1 Sustaining Capital $60-70 M Capitalized Stripping $5-10 M Corporate G&A $25 M Exploration $2-4 M AISC US$ /oz sold 1 TMA $30 M Mine $15 M Other $10 M Mill $10 M Additional non-sustaining expenditures of US$16-18 M for West Detour development & Lower Detour definition drilling (1) Definition of Non-IFRS Financial Performance Measures defined on slide

35 35 Exploration

36 Exploration Focus Qtz-tourmaline veining in altered feldspar porphyry Balanced Approach in Organic Growth Regional Exploration Target delineation Predominantly through geophysics Lower Detour Drill testing Test IP anomalies and structural trend Zone 58N Definition drilling Assess mining potential 36

37 450m 250m Exploration Zone 58N 58N Infill Program ~30,000 m winter drilling program 25-metre in-fill program Upper 250 metres Test continuity of geology and grade 50-metre in-fill program Lower 450 metres Define extent and tonnage Currently drilling with 5 drills Prioritize areas not accessible during summer season 37

38 Exploration Lower Detour 8,000 m winter drilling program on Lower Detour Most prospective area at this time Trend is over 25 km long on the property Significantly underexplored Focus of regional drilling with up to 14,000 m for

39 Regional Exploration Completed property-wide airborne survey in Year Plan Prioritization of prospective areas Use of geophysics to identify main structures and geology Follow up with local IP surveys, prospecting and trenching 39

40 40 Q&A

41 Contact Information Paul Martin President and Chief Executive Officer Phone: Laurie Gaborit Director Investor Relations Phone: