CANADA S INTERMEDIATE GOLD PRODUCER

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Second Quarter 2018 Results Conference Call & Webcast July 26,

2 Cautionary Statement on 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 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 presentation speak only as of the date of this presentation or as of the date or dates specified in such statements. In particular, this presentation contain forward-looking statements including, without limitation, with respect to Detour Gold s production guidance; timing for the redesigned mantle; estimates of total cash costs and all-in-sustaining costs per ounce of gold sold; estimates of free cash flow before financing forecasts; estimated preliminary operational parameters for the period ; the conclusions and results of the mine plan assessment; the estimated net project value of the Detour Lake mining operation; the timing for the final revised mine plan; and expectations regarding future price assumptions, financial performance and other outlook or guidance. 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 final revised life of mine plan, gold price volatility, changes in debt and equity markets, the uncertainties involved in interpreting geological data, increases in costs, environmental compliance and changes in environmental legislation and regulation, support of the Company s Aboriginal 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 and available on SEDAR at 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 final revised life of mine plan 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 presentation. 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 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 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. 2

3 Notes to Investors Non-IFRS Financial Performance Measures The Company has included non-ifrs measures in this presentation: total cash costs, all-in sustaining costs (AISC), average realized price, adjusted net earnings, adjusted net earnings per share, and net debt. 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. Refer to the Company s related MD&A for the reconciliation of these measures. 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. Production costs include the costs associated with providing the royalty in-kind ounces. Other companies may calculate this measure differently. The Company believes that AISC more fully defines the total costs associated with producing gold. The Company calculates AISC as the sum of total cash costs (as described above), share-based compensation, corporate general and administrative expense, exploration and evaluation expenditures 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. Differences may also arise due to a different definition of sustaining versus non-sustaining capital. Average realized price per ounce sold is used by management and investors to better understand the gold price realized throughout a period. Average realized price is calculated as metal sales per the statement of comprehensive earnings and includes realized gains and losses on gold derivatives, less silver sales. Adjusted net earnings is defined as net earnings adjusted to exclude specific items that are significant, but not reflective of the underlying operations of the Company, including: the impact of foreign exchange gains and losses, unrealized and non-cash fair value gains and losses of financial instruments, accretion on long-term debt, impairment provisions and reversals thereof, and other unusual or non-recurring items. The tax effect of adjustments, as well as the impact of foreign exchange translation on non-monetary assets related to deferred taxes, is presented in the income and mining tax adjustments line. Adjusted basic net earnings per share is calculated using the weighted average number of shares outstanding under the basic method of earnings per share. Net debt is comprised of the face value of the Company s long-term debt less cash and cash equivalents. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, are used to evaluate the Company s financial position and its ability to take on new debt in the future, purchase new assets or withstand adverse economic conditions. IFRS Measures The Company has included the additional IFRS measure Earnings from mine operations in this document. The Company believes that this measure provides useful information to investors as an indication of the Company s principal business activities before consideration of how those activities are financed, sustaining capital expenditures, corporate administration expense, exploration and evaluation expenses, other operating (income) expenses, finance cost, and taxation. 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 Management Participants Second Quarter 2018 Results Conference Call and Webcast All monetary amounts are in U.S. dollars unless otherwise stated. MICHAEL KENYON Interim CEO & Director FRAZER BOURCHIER COO JAMES MAVOR CFO 4

5 Q Highlights GOLD PRODUCTION (oz) Q2 18 H , ,526 GOLD SALES (oz) AVG REALIZED GOLD PRICE 1 ($/oz) REVENUES ($ M) TCC 1 ($/oz sold) AISC 1 ($/oz sold) 146,856 $1,305 $191.8 $723 $1, ,916 $1,317 $393.2 $734 $1, Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the Q2 18 MD&A. 5

6 Q Operating Results Throughput rate at 56k tpd Mill throughput in line with plan with two planned shutdowns Mill recoveries impacted by plant reliability and higher talc ore blend New redesigned mantle installed in June Mining rates of 289k tpd Higher head grade with mining of Campbell pit crown pillar Mining rates below plan mainly due to lower availability of rope shovels MT ore milled G/T AU head grade % recovery 26.3 MT total mined 4.4 strip ratio 6.9 stockpiles 0.69 g/t Au 6

7 Q Costs TCC Milling costs reflected two planned shutdowns and associated contractor crushing costs during maintenance and installation of the new mantle Mining costs impacted by higher diesel fuel costs and additional required rope shovel repairs AISC Sustaining capex of $46.4 M, including $13.3 M of deferred stripping costs $1,104 $1,123 $723 $706 Q2'18 Q2'17 Q2 17 Q2'18 Q2'17 Q2 17 TCC 1 ($/oz sold) AISC 1 ($/oz sold) Unit Costs Q Mining (C$/t mined) $3.25 Processing (C$/t milled) $12.50 G&A (C$/t milled) $ Refer to the section on Non-IFRS Performance Measures on slide 3. 7

8 Operational Improvements Key Focus Areas Enhancing Organizational Effectiveness Audits, Capital Investment & Benchmarking Systems and Operational Improvements Automation and Analytics Expected Outcomes (Goals) Insert greater depth and experience to site leadership/management Improve departmental integration and communications Review camp roster rotation effectiveness of management staff Foster culture of change through realism, lateral thinking, empowerment and disciplined business approach Prioritized re-capitalization of portions of processing plant Advance mobile maintenance reliability & planning functions including improved preventative maintenance and condition monitoring Understand operational benchmarking and increase shared site visits Expand, better utilise and train mine site/planning operating systems Initiate Contractor selection and management overhaul Identify and develop critical mine/mill interface value drivers Upgrade basic pit mining operating practices Transform process plant operating procedures Investigate tele-remote drills, remote dozers, autonomous haul trucks Pursue financial upside to 2018 LOM Plan through scenario planning Identify and imbed short interval control metrics through data analyses 8

9 Q Financial Highlights $46.5 MILLION earnings from mine operations MILLION $8.8 net earnings or $0.05 per share MILLION $21.3 adjusted net earnings 1 or $0.12 per share $150.3 MILLION cash & cash equivalents Reduced debt by an additional $10 M Net debt¹ stands at approximately $100 M 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of this measure is described in the Q2 18 MD&A. 9

10 2018 Guidance 2018 guidance remains unchanged H Guidance Gold production (oz) 311, , ,000 Total cash costs 1 ($/oz sold) $734 $700-$750 AISC 1 ($/oz sold) $1,088 $1,200-$1,280 For H2 2018: Higher mining and milling rates Lower head grade than H Capital spending acceleration 1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation. 10

11 2018 Exploration Initial Mineral Resource for Zone 58N: Next Steps Tonnes (millions) Grade (g/t Au) Contained Gold Ounces Indicated ,300 Inferred ,100 Cost evaluation for an underground exploration project Pending positive outcome, determine appropriate timeline for the program Encouraging intersections from winter drilling program on targets northeast and west of Zone 58N Continuing drilling program with 5,500 m for H Burntbush Property Exploration program starting in Q

12 Closing Comments Focused on delivering value: Execution of the 2018 LOM Plan Implementing operational improvement action plans Objective to achieve sustainable results in months ATTRACTIVE VALUATION OPPORTUNITY 12

13 DETOUR GOLD INTERMEDIATE GOLD PRODUCER Q & A June

14 Additional Information Operational Statistics Q Financial Review Shareholder Information 14

15 Operational Statistics Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Ore mined (Mt) Waste mined (Mt) Total mined (Mt) Strip ratio (waste:ore) Mining rate (k tpd) Ore milled (Mt) Mill grade (g/t Au) Recovery (%) Mill throughput (tpd) 60,259 61,548 54,144 50,860 55,825 Ounces produced (oz) 150, , , , ,385 Ounces sold (oz) 142, , , , ,856 15

16 Q Financial Review Income Statement ($ M, except per share amount) Q2 18 Q2 17 Metal Sales $ $ Cost of sales Production costs Depreciation and depletion Earnings from mine operations Expenses Net finance cost Income and mining tax expense (recovery) 21.6 (1.4) Net Earnings $ 8.8 $ 24.5 Earnings per Share basic $ 0.05 $ 0.14 Note: Totals may not down add due to rounding. 16

17 Q Financial Review Adjusted Net Earnings per Share ($ M, except per share amount) Q2 18 Q2 17² Earnings before taxes $ 30.4 $ 23.1 Adjusted for: Fair value gain of the convertible notes (0.1) Accretion on debt Non-cash unrealized (gain) loss on derivative instruments 0.7 (2.2) Foreign exchange (gain) loss 2.2 (2.1) Adjusted earnings before taxes $ 33.5 $ 26.2 Income and mining taxes (expense) recovery (21.6) 1.4 Income and mining tax adjustments 9.4 (11.4) Adjusted income and mining tax expense $ (12.2) $ (10.0) Adjusted Net Earnings 1 $ 21.3 $ 16.2 Adjusted Basic Net Earnings per Share 1 $ 0.12 $ 0.09 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. 2. Comparative period was restated. Refer to Q1 18 MD&A for additional details. 17

18 Q Financial Review Cash Flows ($ M) Q2 18 Q2 17 Operations $ 75.7 $ 68.0 Working capital items (10.4) 13.3 Operating activities Investing activities (53.7) (60.9) Financing activities (11.9) (26.5) Effect of exchange rate changes (1.9) 1.3 Changes in cash and cash equivalents (2.2) (4.8) Cash and cash equivalents beginning of period Cash and cash equivalents end of period $ $ Note: Totals may not down add due to rounding. 18

19 Shareholder Information Share Structure (July 25, 2018) Share Structure (03/31/2014) M Issued & outstanding ~13% 4.6 M Share options & units M FULLY DILUTED Top Shareholders Van Eck Associates ~5% Paulson >80% INSTITUTIONS TOTAL $150.3 MILLION cash and cash equivalents at June 30,

20 Contact Information Michael Kenyon Interim CEO Phone: Laurie Gaborit VP Investor Relations Phone: