Q1 2015 Results Presentation
- 1. 1 CANADA’S INTERMEDIATE GOLD PRODUCER First Quarter 2015 Results Conference Call & Webcast – April 29, 2015
- 2. 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 2015 guidance for production, total cash costs, all-in sustaining costs, capital costs, deferred stripping costs, and exploration costs; expected throughput, mining and recovery rates; expected future production and mining activities; opportunities to optimize the mine operation; timeline for the life of mine plan update, second test for the processing of fines, and exploration program; opportunities to optimize the mine operation. 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 forward- looking statements. These risks, uncertainties and other factors include, but are not limited to, assumptions and parameters underlying the life of mine update 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 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 www.sedar.com. 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.
- 3. 3 Notes to Investors The scientific and technical content of this presentation was reviewed, verified and approved by Drew Anwyll, P.Eng., Senior Vice President Technical Services, and exploration results was reviewed, verified and approved by Guy MacGillivray, P.Geo.., Exploration Manager , both Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 “Standards of Disclosure for Mineral Projects”. Qualified Persons Non-IFRS Financial Performance Measures The Company has included non-IFRS measures in this presentation: total cash costs, all-in sustaining costs, adjusted net loss and adjusted net loss per share. 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, 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. Commencing in 2015, the Company adopted all-in sustaining costs on a prospective basis. 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 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. Adjusted net loss and adjusted basic loss per share are used by management and investors to measure the underlying operating performance of the Company. Presenting these measures from period to period helps management and investors evaluate earnings trends more readily in comparison with results from prior periods. Adjusted net loss is defined as net loss adjusted to exclude specific items that are significant, but not reflective of the underlying operations of the Company, including: fair value change of the convertible notes, the impact of foreign exchange gains and losses, including the foreign exchange on deferred income and mining taxes, non-cash unrealized gains and losses on derivative instruments, accretion on convertible notes, unwinding of discount on decommissioning and restoration provisions, impairment provisions and reversals thereof, and other non-recurring items. Adjusted basic net loss per share is calculated using the weighted average number of shares outstanding under the basic method of loss per share as determined under IFRS.
- 4. 4 Management Participants Paul Martin President and Chief Executive Officer Pierre Beaudoin Chief Operating Officer James Mavor Chief Financial Officer All monetary amounts are in U.S. dollars unless otherwise stated. First Quarter 2015 Results Conference Call and Webcast
- 5. 5 8 9 10 11 12 13 14 1,100 1,150 1,200 1,250 1,300 1,350 1,400 Spot Gold DGC Unique Investment Opportunity 13% $/oz C$/sh January February March Q1 2015 Share Price Increase of
- 6. 6 Q1 2015 Highlights 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 quarter ended March 31, 2015. $118.1 MILLION cash and short-term investments $127.4 MILLION total revenues 104,497 OZ GOLD sales from $63.1 net loss MILLION or $0.38 per share $23.5 adjusted net loss1 MILLION or $0.14 per share 105,572 OZ GOLD production $925/ OZ SOLD total cash costs1 Solid progress at end of quarter Drilling results confirm continuity of high-grade mineralization at Lower Detour
- 7. 7 $976 $925 $700 $750 $800 $850 $900 $950 $1,000 $1,050 $1,100 0 20 40 60 80 100 120 Q1 2015 Highlights Gaining momentum since March Mill operating at design capacity for last 82 days Mining rates exceeding budget at 250,000 tpd for last 69 days Balance sheet strengthened Proceeds from equity issue used to repay debt of $124.2 million Restructuring credit facility 2015 Guidance maintained 475,000-525,000 ounces TCC $780-850/oz sold1 AISC $1,050-1,150/oz sold1 1. Refer to the section on Non-IFRS Performance Measures on slide 3. Reconciliation of these measures is described in the MD&A for the quarter ended March 31, 2015. Q1’14 107 106 Q1’15 ■Total Cash Costs ($/oz sold)1 ■Gold Production (K oz) 0.84 91.0 4.3 MILLION tonnes milled G/T AU mill grade % gold recovery AISC of $1,307/oz sold1
- 8. 8 Results confirmed continuity of the high-grade gold mineralization Completed 8 holes totaling 5,700 m Higher grade gold mineralization of 58N zone extended to 250 m along strike and 550 m depth Open to east and at depth 30,000 m drilling program this summer 50-metre infill program totaling 50 holes to assess UG potential Budget of $5 M Q1 2015 Lower Detour Drilling Zone 58N 9.53 g/t/ 12.0 m 5.92 g/t/ 18.9 m 14.89 g/t/ 4.1 m 4.91 g/t/ 6.5 m 4.15 g/t/ 8.7 m
- 9. 9 Driving higher mining rates Production drilling rates: 3,100 m/d in March Blasted inventory: 3.1 Mt at end of March Shovel productivity: 10% improvement Results March mining rates at budget levels Q1 Phase 1 shortfall recovered in first half of April Q1 2015 Operating Results - Mine 1.7 2.3 3.1 2,300 2,640 3,100 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0.0 1.0 2.0 3.0 4.0 5.0 Jan Feb Mar Inventory (Mt) Drilling Rate (m/d)
- 10. 10 240 200 160 0 Q1 mining rate average of 220,000 tpd: Phase 1: 215,000 tpd Phase 2: Started in February; average of 5,000 tpd Last 97 days at budget of 238,000 tpd; last 69 days at 250,000 tpd 0 40 80 120 160 200 240 280 10 5 20 Q1E Q2E Q4EQ3E PHASE 1 2015 Mining Rates (ktpd) PHASE 2 Targets for improvement 222222 222222 1616 1616 280 120 80 40 30 Q1 2015 Operating Results - Mine 215 5 Q1A
- 11. 11 Q1 2015 Operating Results - Mill Q1’15 Performance Throughput rate of 47,797 tpd - record month in March at 58,661 tpd Operating time at 78% and mechanical availability at 89% Recovery at 91% Results Plant stabilization since mid-February: Last 82 days at design capacity of 55,000 tpd Targeting throughput rate of 54,000 tpd for 2015 Q1’14 Q2’14 Q3’14 Q1’15Q4’14 1. Mill operating time = mill availability 45.0 48.6 49.2 51.1 47.8 0 10 20 30 40 50 60 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Mill Throughput (ktpd) Mill Operating Time (%) 1 7883818380 Q1’14 Q2’14 Q4’14Q3’14 Q1’15 Mechanical Availability (%) 8985838684
- 12. 12 ~80% of costs in Cdn$ Q1 2015 Operating Costs Maintenance Labour & Contractors Power Fuel G&A and other Consumables 30% 15% 33% 7% 11% 4% Q1’2015 (C$) Mining ($/t mined) $3.16 Processing ($/t milled) $11.35 G&A ($/t milled) $3.89 Mining costs impacted by: shortfall in tonnes mined shovel mechanical failures Milling costs 5% higher due to: lower tonnes milled 410 conveyor belt replacement Breakdown of 2015 Operating Costs
- 13. 13 Breakdown of 2015 Sustaining Capital (US$): Mine $30 M TMA $34 M Other $13 M Mill $9 M Water Management $10 M 13 Q1 2015 Capital Expenditures Q1’15 Sustaining Capital $19.8 M Capitalized Stripping $10.0 M Total $29.8 M 2015 guidance maintained: $90-100 M sustaining capital $20-25 M capitalized stripping ~90% of costs in Cdn$
- 14. 14 Efficiency, optimization and growth Near-term Opportunities 1 LOM Plan Update in Q4 5 options being reviewed that include Block A 2 Low-grade Stockpiles (not in reserves) Second test in H2: 4,000 t of enriched material to be processed 3 Pebble Circuit Extractor Design completed; evaluating integration with operations 4 Increase exploration activities Start 30,000 metre drilling program at Lower Detour this summer
- 15. 15 Income Statement ($ millions, except per share amount) Q1’15 Q1’14 Metal Sales $ 127.4 $ 110.0 Cost of Sales Production costs 97.7 83.1 Depreciation and depletion 36.9 30.6 Loss from Mine Operations $ (7.2) $ (3.7) Corporate and administrative expense 7.4 7.4 Exploration and evaluation expense 0.7 1.3 Other operating expenses 0.1 - Loss from Operations $ (15.5) $ (12.5) Net finance income (cost) (20.3) (42.5) Income and mining tax expense (27.3) - Loss for the Period $ (63.1) $ (54.9) Basic Loss per Share $ (0.38) $ (0.38) Q1 2015 Financial Review Note: Totals may not down add due to rounding.
- 16. 16 Adjusted Net Loss per Share ($ millions, except per share amount) Q1’15 Q1’14 Net Loss $ (63.1) $ (54.9) Adjusted for: Fair value (gain) loss of the convertible notes 4.1 16.5 Foreign exchange (gain) loss 1.2 0.1 Foreign exchange on deferred income taxes 27.3 0.0 Non-cash unrealized (gain) loss on derivative instruments 0.0 4.3 Accretion on convertible notes 6.9 5.9 Unwinding of discount on decommissioning and restoration provisions 0.1 0.1 Adjusted Net Loss1 $ (23.5) $ (28.1) Adjusted Basic Loss per Share1 $ (0.14) $ (0.20) Q1 2015 Financial Review 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 quarter ended March 31, 2015. Note: Totals may not down add due to rounding.
- 17. 17 Q1 2015 Financial Review Cash Flows ($ millions) Q1’15 Q4’14 Q3’14 Operations $ 26.7 $ 39.9 $ 32.1 Working capital Items (10.2) 3.2 15.7 Operating activities $ 16.5 $ 43.2 $ 47.8 Investing activities (28.3) (18.7) (32.9) Financing activities (2.3) (25.3) (9.3) Effects of exchange rate changes (3.0) (2.8) (4.8) Changes in cash and cash equivalents $ (17.1) $ (3.6) $ 0.8 Cash and cash equivalents – beginning of financial period 133.5 137.1 136.3 Cash and cash equivalents – end of financial period $ 116.4 $ 133.5 $ 137.1 Note: Totals may not down add due to rounding.
- 18. 18 Balanced risk management strategy Prudent Financial Management DIESELCURRENCY Currency exchange contracts Hedge approx. 50% of next 6 months consumption GOLD Hedge up to 50% of 2015 gold production Forward sales on 85,000 oz @ $1,255/oz Zero-cost collars for $90 M with a ceiling of 1.20 Forward contracts for $50 M at 1.26 Purchasing diesel product (~12 M litres) at fixed price of $0.46/litre
- 19. 19 Unique Investment Opportunity Mining-friendly jurisdiction Large-scale, long mine life Largest gold producing mine not controlled by a senior producer Growing cash flow profile Production growth opportunities Favourable exposure to Canadian Dollar DOMINANT GOLD PRODUCER IN CANADA
- 20. 20 Detour Lake Mine 02-28-2015 Focus on ‘Quality’ Ounces Q&A
- 21. 21 Q1 2015 Operational Statistics Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Ore mined (Mt) 4.88 2.89 4.20 4.30 3.82 Waste mined (Mt) 14.29 16.11 14.71 15.39 15.97 Total mined (Mt) 19.17 19.00 18.91 19.69 19.79 Strip ratio (waste:ore) 2.9 5.6 3.5 3.6 4.2 Mining rate (tpd) 213,000 209,000 206,000 214,000 220,000 Ore milled (Mt) 4.08 4.42 4.53 4.71 4.30 Mill grade (g/t Au) 0.90 0.91 0.88 0.85 0.84 Recovery (%) 91 91 90 91 91 Mill throughput (tpd) 45,282 48,569 49,186 51,142 47,797 Mill operating time (%) 80 83 81 83 78 Mechanical availability (%) 84 86 83 85 89 Ounces produced (oz) 107,154 117,366 115,344 116,770 105,572 Ounces sold (oz) 84,560 107,206 106,334 124,913 104,497