CANADA S INTERMEDIATE GOLD PRODUCER

Transcription

1 CANADA S INTERMEDIATE GOLD PRODUCER Third Quarter 2018 Results Conference Call & Webcast October 25,

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. 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. 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, the costs, disruption and diversion of management s attention associated with campaigns commenced by activist investors, environmental compliance and changes in environmental legislation, regulation and policies, support of the Company's Aboriginal communities, receipt of permits, 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 the proposed development of the West Detour project and the continued development of the Detour Lake pit, other 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 Detour Gold'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 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. 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 Third 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) Q3 18 YTD , ,928 GOLD SALES (oz) AVG REALIZED GOLD PRICE 1 ($/oz) REVENUES ($ M) TCC 1 ($/oz sold) AISC 1 ($/oz sold) 139,821 $1,214 $170.0 $798 $1, ,737 $1,285 $563.2 $754 $1, Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the Q3 18 MD&A. 5

6 Q Operating Results Throughput rate at 59k tpd Mill throughput improvement from H1 Mill recoveries slightly lower than plan Mill capital projects progressing according to plan to improve plant efficiency Mining rates of 304k tpd Mining rates in line with plan Positive progress on maintenance and operating practices Drawdown of higher grade ROM stockpiles to feed plant MT ore milled G/T AU head grade % recovery 28.0 MT total mined 5.6 strip ratio MT g/t Au 6

7 Q Costs TCC/AISC Reflecting lower gold sales than projected Impacted by contractor and maintenance costs and higher consumables costs with inflation Higher capital spending in the quarter as planned Sustaining Capital Q3 18 YTD Mining $16.5 $61.6 Tailings $26.9 $47.1 Processing $5.1 $9.5 $1,377 $1,032 $798 $668 Q3'18 Q3'17 Q3 17 Q3'18 Q3'17 Q3 17 TCC 1 ($/oz sold) AISC 1 ($/oz sold) Unit Costs Q3 18 Mining (C$/t mined) $3.01 Processing (C$/t milled) $9.74 G&A (C$/t milled) $3.48 Infrastructure, G&A & other $4.5 $11.6 Total sustaining ($ M) $53.0 $129.8 Capitalized stripping ($ M) $21.8 $ 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 Key Lead Focus Areas Added depth and experience to site leadership Improving departmental integration and communications Foster culture of change through empowerment and disciplined business approach Re-assessing corporate structure and support to site Commenced re-capitalization of portions of processing plant Advancing mobile maintenance reliability & planning functions focused on preventative maintenance and condition-based monitoring Continue operational benchmarking 4 of 5 operational audits completed (Project Management outstanding) Expand, better utilize and train mine site/planning operating systems Initiated contractor selection and management overhaul Identifying critical mine/mill interface value drivers Upgrading basic pit mining operating practices including drill & blast, fleet management and shovel operation Improving process plant operating procedures Will investigate tele-remote drills, remote dozers, autonomous haul trucks Pursue financial upside to 2018 LOM Plan through scenario planning Identify and embed short interval control metrics through effective data analyses 8

9 Operational Focus Mining Rate (k tpd) $4.00 $3.00 Mining Unit Costs (Cdn$/t mined) $3.75 $3.25 $2.92 $2.99 $3.01 $2.83 $ $ $ Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $- Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3' Mill Throughput (k tpd) $15.00 $12.00 $9.00 $6.00 $3.00 Milling Unit Costs (Cdn$/t milled) $12.50 $11.60 $10.26 $10.51 $9.63 $9.74 $ Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $- Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 9

10 Q Financial Highlights $15.0 MILLION earnings from mine operations MILLION $12.7 net earnings or $0.07 per share MILLION $1.5 adjusted net loss 1 or $0.01 per share $156.3 MILLION cash & cash equivalents Net debt¹ stands at $94 M 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of this measure is described in the Q3 18 MD&A and/or the news release. 10

11 2018 Guidance YTD Guidance Gold production (oz) 462, , ,000 Total cash costs 1 ($/oz sold) $754 $700-$750 AISC 1 ($/oz sold) $1,181 $1,200-$1, gold production and AISC within guidance range while TCC at higher end or slightly above range For Q4 2018: Mining rates at minimum 300k tpd Further improvements for plant stability Similar capital spending as Q3, which will result in slightly lower sustaining capex for 2018 than guidance 1. Refer to the section on Non-IFRS Performance Measures on slide 3 of this presentation

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 September

14 Additional Information Operational Statistics Q Financial Review Shareholder Information 14

15 Operational Statistics Q3 17 Q4 17 Q1 18 Q2 18 Q3 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) 61,548 54,144 50,860 55,825 59,219 Ounces produced (oz) 139, , , , ,402 Ounces sold (oz) 128, , , , ,821 15

16 Q Financial Review Income Statement ($ M, except per share amount) Q3 18 Q3 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) (6.7) (8.6) Net Earnings $ 12.7 $ 41.1 Earnings per Share basic $ 0.07 $ 0.24 Note: Totals may not down add due to rounding. 16

17 Q Financial Review Adjusted Net Earnings per Share ($ M, except per share amount) Q3 18 Q3 17 Earnings before taxes $ 6.0 $ 32.5 Adjusted for: Fair value gain of the convertible notes Accretion on debt Non-cash unrealized (gain) loss on derivative instruments (1.1) 0.4 Foreign exchange (gain) loss (1.3) (3.2) Adjusted earnings before taxes $ 3.8 $ 37.5 Income and mining taxes (expense) recovery Income and mining tax adjustments (12.0) (19.0) Adjusted income and mining tax expense $ (5.3) $ (10.4) Adjusted Net Earnings (Loss) 1 $ (1.5) $ 27.1 Adjusted Basic Net Earnings (Loss) per Share 1 $ (0.01) $ 0.15 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. 17

18 Q Financial Review Cash Flows ($ M) Q3 18 Q3 17 Operations $ 52.1 $ 76.9 Working capital items 29.7 (15.6) Operating activities Investing activities (74.5) (45.5) Financing activities (1.7) (31.3) Effect of exchange rate changes Changes in cash and cash equivalents 6.0 (14.5) 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 (Oct 24, 2018) Share Structure (03/31/2014) M Issued & outstanding 4.1 M Share options & units M FULLY DILUTED Top Shareholders ~14% Van Eck Associates ~5% Paulson & Co ~4% Tocqueville >80% INSTITUTIONS TOTAL $156.3 MILLION cash and cash equivalents at September 30,

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