CANADA S INTERMEDIATE GOLD PRODUCER

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Denver Gold Forum September 24-26, 2018 Colorado Springs 1

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 ). These 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 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 contained in this presentation include, without limitation, statements with respect to: guidance for production, operating expense, cash costs, all-in sustaining costs, and the factors contributing to those expected results, including mine output, mill throughput, gold recoveries, and expected capital and other expenditures; planned development activities and exploration; estimation of mineral reserves and mineral resources; and permitting timelines. 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. The forward-looking statements contained are made as of the date hereof, or as of the date or dates specified in such statements. 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, 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, 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 listed in the section entitled "Description of Business - Risk Factors" in Detour Gold's 2017 Annual Information Form 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 are likely to differ, and may differ materially, from those expressed or implied by forward-looking statements, including those contained in this news release. 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; 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. 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 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 Company undertakes no obligation to update publicly or otherwise revise any forwardlooking 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), total site costs, average realized price, adjusted net earnings, adjusted net earnings per share, net debt, and free cash flow before financing activities. 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. 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 divided by the total gold ounces sold. Gold ounces produced is noted before delivering the royalty in kind ounces. 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 IFRS measures in this presentation: earnings from mine operations and free cash flow before financing activities. The Company believes that earnings from mine operations 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. Free cash flow before financing activities 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. It is calculated as cash flow from operations less cash flow from investing activities. 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 Unique combination of long life and large scale production profile Top-ranked jurisdiction Competitive cost profile delivers significant free cash flow Production growth Strong exploration potential 4

5 Detour Lake was Successfully Brought into Production Within 6 Years of Acquisition Detour Gold successfully navigated the technical and permitting challenges of bringing on one of the world s largest gold mines ACQUISITION / RESOURCE GROWTH PRE-FEASIBILITY FEASIBILITY & PERMITTING DEVELOPMENT PRODUCTION 2013 H M oz of gold produced since start of production 5

6 Detour Gold has Added to its Value and Mine Life by Growing its Reserve Base Since commencing production, Detour Gold has added to its reserves, while increasing annual production Cumulative production since commercial production (M oz) Beginning year reserves (M oz) ~2.6 M oz of gold production, while delivering a net increase in total reserves Cumulative production as at H

7 Detour Lake Property 646 km 2 7

8 Detour Lake Exceptionally Long Mine Life Largest gold mining operation in Canada and among the largest gold reserve endowments in the world Implied Mine Life # of Assets Detour Lake reserve life 2X industry average Reserve Life (Years) Average: 11.1 years DGC TMR PVG ELD GUY GG ASR CG ABX DPM OGC NEM NGD AGI IMG SSRM AUY AEM THO EDV TGZ TXG BTO KGC KL PG ALO Source: Company filings, street consensus. Note: Mine life calculated based on gold reserves divided by average gold production over the next 5 years; includes only assets in production and in construction; number of assets exclude non primary gold assets. 8

9 Detour Gold Has Created Significant Shareholder Value Over Time Detour Gold has outperformed the gold price and GDX since Detour Lake s first full year of production Detour Gold Share Price (C$) $36 $30 $24 $18 $12 $6 -- Detour Gold Share Price (C$) GDX (Indexed) Gold Price (Indexed) 21-Oct-15 1 Moz Produced 30-Jun-17 2 Moz Produced Jun LOM Plan News Release Source: Factset. 9

10 Detour Lake Revised Mine Plan Driven by Permitting Delays Long mine life provided flexibility to modify mine plan while maintaining strong production profile Mine plan revisions were driven by longer permitting expectations Lack of unanimous support from First Nations Longer period to receive environmental permits from governments Not unique to Detour Gold Mine resequencing required impacting grade profile and costs 2018 LOM plan designed to give permitting flexibility West Detour project delayed to 2025 Represents the most optimized mine plan in the current environment 10

11 Executing 2018 LOM Plan is Best Value- Maximizing Strategy Today On the right track to ensure that Detour Lake becomes a consistently profitable operation Detour Gold management and Board focused on LOM plan execution Implementing operational improvement action plans Objective to achieve sustainable results in months With solid balance sheet, solidifies path to deliver value $ $ Detour Share Price (C$) 2018 LOM Plan NAVPS (C$) 1. Detour Lake 2018 LOM Plan NPV less balance sheet adjustments (as at June 30, 2018). 2. Share price as of September 17,

12 Financial Strength and Cash Flow Generation As at June 30, Financial Position Cash: LT Debt: Net Debt: 3. $500 M Credit Facility $150 M $249 M $99 M $80 M on Revolver (debt and LC s) $200 M Term Loan $220 M Available and Undrawn 2. Financial Covenants Leverage Ratio 0.5:1 Interest Coverage 4. LOM Pre-tax Cash Flow Estimates : C$1.1 B C$1.0 B Beyond 2028 C$6.2 B C$8.3 B LOW NET DEBT AND STRONG COVERAGE OF FINANCIAL COVENANTS 1. Detour Lake 2018 LOM Plan: economic assumptions based on a gold price of $1,300/oz and exchange rate of US$/C$ of

13 H Highlights PRODUCTION COSTS FINANCIALS 312 K OZ gold $734 TCC 1 /oz sold $98 EARNINGS FROM MINE OPERATIONS 2 million 48.8 MT mined $1,088 AISC 1 /oz sold $43 FREE CASH FLOW2 million 9.7 MT milled Initial mineral resource for Zone 58N: 534,300 oz Indicated & 136,100 oz Inferred 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. 2. Refer to the section on IFRS Measures on slide 3. 13

14 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 (in accordance with LOM Plan) Higher capital spending with TMA construction and plant projects 1. Refer to the section on Non-IFRS Performance Measures on slide 3. 14

15 2018 LOM Plan Highlights Mine life (22.6 years) 1 Avg. annual production of 659,000 oz 614,000 oz for next 12 years 725,000 oz subsequent 10 years Avg. total site costs of $843/oz sold 2 LOM pre-tax cash flows of C$8.4 B Period (5 years) Avg. annual production of 608,000 oz Avg. total site costs of $983/oz sold 2 Total pre-tax cash flows of C$1.1 B Gold Production (k oz) Mine life from 2018 to Refer to the section on Non-IFRS Performance Measures on slide 3. 15

16 2018 LOM Plan Offers Significant Upside Immediate to Near-term Opportunities Building new operational leadership at mine site Operational gap analyses completed for maintenance and plant Operational gap analyses near completion for mine and projects Efficiency improvements with sustainable benefits in months Strengthening site operating systems/processes for stability by end of 2019 Capital projects started at processing plant People & Organization Structure/Effectiveness Immediate impact Sustained improvement within months (by end of 2019) Benchmarking & Gap Analyses Gap analyses completed Capital injection progressing Sustainable benefits expected in months Systems Focus & Data Analytics Improve stability of operation and operational predictability (12-24 months) Improve use of real time data, analyses and short interval control 16

17 2018 LOM Plan Offers Significant Upside Additional Opportunities Beyond LOM Plan Long mine life provides significant leverage to gold price cycles Additional efficiencies through implementation of automation Opportunities to exploit the deportment of gold in fines along with beneficiation of ore sorting Potential underground development of Zone 58N Scoping investigation for an underground below the open pit Strong exploration potential on large prospective property 1717

18 Contact Information Michael Kenyon Interim Chief Executive Officer Phone: Laurie Gaborit VP Investor Relations Phone: