Detour Gold Reports Third Quarter 2015 Results
/EINPresswire.com/ -- TORONTO, ONTARIO -- (Marketwired) -- 10/28/15 -- Detour Gold Corporation (TSX: DGC) ("Detour Gold" or the "Company") reports its operational and financial results for the third quarter of 2015. This release should be read in conjunction with the Company's third quarter 2015 financial statements and MD&A on the Company's website or on SEDAR. All amounts are in U.S. dollars unless otherwise indicated.
Q3 2015 Highlights
-- Record gold production of 128,222 ounces
-- Mill throughput and mining rates averaged 56,015 tpd and 255,000 tpd,
respectively
-- Total cash costs of $766 per ounce sold(1) and all-in sustaining costs
of $1,071 per ounce sold(1)
-- Revenues of $142.4 million on gold sales of 126,241 ounces at an average
realized price of $1,164 per ounce(1)
-- Net loss of $44.3 million ($0.26 per share) and adjusted net loss of
$13.3 million ($0.08 per share)(1)
-- Cash and short-term investments balance of $133.5 million at September
30, 2015
-- Positve results from first half of the 30,000 metre drilling program at
Lower Detour
"We are pleased with the third quarter performance of the operation as we successfully brought forward some of the fourth quarter production and continued to operate at above design capacity despite some unplanned shutdowns during the quarter," said Paul Martin, President and CEO of Detour Gold. "We are targeting the mid-point of our production guidance for the year as we expect to process higher grades in the last quarter and commence growing our cash balances."
Q3 2015 Summary Operational Results
-- Gold production totaled 128,222 ounces as a result of successfully
bringing forward a portion of the fourth quarter gold production into
the third quarter.
-- The mill facility processed 5.2 million tonnes (Mt) of ore or an average
of 56,015 tonnes per day (tpd). Although the mill reached record milling
rates of 2,750 tpoh during the quarter, mill operating time was at 85%
due to unscheduled downtime to replace the SAG mill pulp lifters and the
410-conveyor belt. Both were expected to last to the fourth quarter
planned shutdown.
-- Head grade averaged 0.86 grams per tonne (g/t) for the quarter, with
September averaging 0.92 g/t. Recoveries averaged 90%.
-- A total of 23.5 Mt (ore and waste) was mined in the third quarter
(equivalent to mining rates of 255,000 tpd for Phase 1 and 2), in line
with plan. Phase 2 pre-stripping totaled 1.9 Mt for the quarter.
-- At the end of the quarter, run-of-mine stockpiles increased to 3.3 Mt
grading 0.67 g/t.
-- During July and August, approximately 92,000 tonnes of 'fines' (enriched
portion of the low-grade stockpile) were incrementally fed into the
plant. This second test continued to support the economics of this
process, which is anticipated to be incorporated into the life of mine
plan update.
-- Total cash costs and all-in sustaining costs for the third quarter of
2015 were $766 per ounce sold(1) and $1,071 per ounce sold(1),
respectively. Total cash costs were higher than plan as a result of more
tonnes mined combined with an increased drilled and blasted inventory,
and repairs required at the processing plant. The further weakening of
the Canadian dollar benefitted costs despite the adverse impact of the
currency hedges for the quarter.
-- Unit costs were in line with plan for the third quarter. Processing
costs continued to trend downward as a result of favourable electricity
rates and lower consumables, which more than offset the costs related to
the two unplanned shutdowns during the quarter.
Detour Lake Mine Operation Statistics
Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
----------------------------------------------------------------------------
Ore mined (Mt) 6.50 6.37 3.82 4.30 4.20
Waste mined (Mt) 17.00 19.08 15.97 15.39 14.71
Total mined (Mt)(1) 23.49 25.45 19.79 19.69 18.91
Strip ratio (waste: ore) 2.6 3.0 4.2 3.6 3.5
Mining rate (tpd)(2) 255,000 280,000 220,000 214,000 206,000
Ore milled (Mt) 5.15 5.19 4.30 4.71 4.53
Head grade (g/t Au) 0.86 0.82 0.84 0.85 0.88
Recovery (%) 90 91 91 91 90
Mill throughput (tpd) 56,015 57,015 47,797 51,142 49,186
Mill availability (%) 85 88 78 83 81
Ounces produced (oz) 128,222 125,348 105,572 116,770 115,344
Ounces sold (oz) 126,241 123,296 104,497 124,913 106,334
Average realized price(3)
($/oz) $ 1,164 $ 1,215 $ 1,232 $ 1,240 $ 1,275
Total cash cost per oz
sold(2) ($/oz) $ 766 $ 734 $ 939 $ 886 $ 955
AISC per oz sold(2),(3)
($/oz) $ 1,071 $ 1,030 $ 1,321 - -
Mining (Cdn$/t mined) $ 2.69 $ 2.42 $ 3.16 $ 3.22 $ 2.98
Milling (Cdn$/t milled) $ 8.64 $ 8.81 $ 11.78 $ 10.17 $ 10.09
G&A (Cdn$/t milled)(4) $ 3.19 $ 2.72 $ 3.89 $ 3.30 $ 3.25
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(1) For 2015, total mined and mining rate include both Phase 1 and 2.
(2) Refer to the section on Non-IFRS Financial Performance Measures at end
of the news release. Reconciliation of these measures is described at
end of the news release and in the MD&A for the relevant periods.
(3) For AISC, the Company adopted this measure effective January 1, 2015.
(4) G&A costs include site G&A, infrastructure, environmental and
Aboriginal costs.
Note: Mill availability is defined as mill operating time. Totals may not add up due to rounding.
-- For the fourth quarter, mining rates are expected to range between
250,000 and 260,000 tpd. The scheduled November plant shutdown for the
liner replacement has been extended to replace the damaged ball mill
trunnion on one of the grinding lines. The plant is still expected to
process approximately 5 Mt of ore during the fourth quarter.
Q3 2015 Selected Financial Information
Summary Financial Data
(in $ millions unless
specified) Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014
----------------------------------------------------------------------------
Metal sales 142.4 147.5 127.4 150.6 136.2
Production costs 98.0 100.2 97.7 110.3 100.6
Depreciation and depletion 41.1 39.8 36.9 43.1 37.3
Cost of sales 139.1 140.0 134.6 153.4 137.8
Earnings (loss) from mine
operations 3.4 7.5 (7.2) (2.8) (1.7)
Net loss (44.3) (15.4) (63.1) (58.7) (0.8)
Net loss per share (0.26) (0.09) (0.38) (0.37) (0.00)
Adjusted net earnings (loss)(1) (13.3) 0.5 (24.9) (17.1) (17.9)
Adjusted net earnings (loss)
per share(1) (0.08) 0.00 (0.15) (0.11) (0.11)
----------------------------------------------------------------------------
(1) Refer to the section on Non-IFRS Financial Performance Measures at end
of the news release. Reconciliation of these measures is described at
end of the news release and in the MD&A for the relevant periods.
Note: Totals may not add up due to rounding.
Q3 2015 Financial Performance
-- Metal sales for the third quarter were $142.4 million. The Company sold
126,241 ounces of gold at an average realized price of $1,164 per
ounce(1), higher than the average London PM fix gold price of $1,124 per
ounce due to the Company's gold hedging program.
-- Cost of sales for the third quarter was $139.1 million, including $41.1
million of depreciation and depletion expense or $325 per ounce sold.
-- The Company recorded a net loss of $44.3 million ($0.26 per share) in
the third quarter. Adjusted net loss in the third quarter amounted to
$13.3 million ($0.08 per share)(1) and excludes non-cash items such as
the impact of foreign exchange resulting in a deferred tax expense and
change in the fair value of the Company's convertible notes.
Q3 2015 Liquidity and Capital Resources
-- Operating cash flow for the quarter was $29.5 million. The Company had
expected to receive Harmonized Sales Tax (HST) claims of $9.1 million in
the third quarter and as a result of longer delays than usual they were
received in October.
-- During the quarter, sustaining capital expenditures were $27.4 million,
including $8.1 million for the mine, $0.5 million for the plant, $16.8
million for the tailings facility and $2.0 million for water management
and others. There were no cash deferred stripping costs for the period.
-- Cash and short term investments totaled $133.5 million at September 30,
2015. The Company's Cdn$85 million revolver facility remains undrawn.
Financial Risk Management
-- As at September 30, 2015, the Company had no outstanding gold hedges.
-- As at September 30, 2015, the Company had foreign exchange zero-cost
collars to hedge a total of $20 million at a rate of no worse than 1.26
and can participate at a rate of up to 1.35. In addition, the Company
has $30 million of forward contracts at an average exchange rate of
1.25.
-- The Company has entered into hedges for approximately 50% of its diesel
consumption for the fourth quarter, representing approximately 6 million
litres.
Outlook
-- Detour Gold is targeting the mid-point of its 2015 guidance of between
475,000 and 525,000 ounces of gold at total cash costs(1) of $780 to
$850 per ounce sold and all-in sustaining costs(1) of $1,050 to $1,150
per ounce sold.
-- Expected sustaining capital expenditures for 2015 remain as previously
stated at approximately $90 to $100 million. With no cash deferred
stripping costs expected for the fourth quarter, the total for 2015
stands at $10 million versus plan of $20 to 25 million.
-- Exploration expenditures for 2015 increased to approximately $8 million
with the 30,000 metre drilling program at Lower Detour.
-- The LOM plan update remains on track for completion in January 2016 and
will be released along with the 2016 guidance.
Lower Detour Drilling Program
On October 20, 2015, the Company reported initial results from its 30,000 metre infill drilling program at Lower Detour. Results from the first 34 holes totaling 14,800 metres demonstrated continuity of the mineralization within Zone 58N, with visible gold in all but five holes (view news release).
Once the Company receives the results from the eastern and deeper holes and completes the interpretation of Zone 58N, it will be in a position to consider the option of proceeding with underground definition drilling and/or surface infill drilling of the upper portion of the deposit at a closer spacing.
Corporate Update
The Company appointed Ruben Wallin as Vice President Environment and Sustainability, effective October 1, 2015. Prior to the appointment, Mr. Wallin served as Director Safety, Health, Environment and Community for Yamana Gold Inc. and Vice President Environment and Sustainable Development for Osisko Mining Corp. Concurrent with the appointment of Mr. Wallin, Jim Robertson has retired as Vice President Environment and Sustainability. Mr. Robertson had for some time been planning his retirement after a successful 40 year career in the mining industry and serving Detour Gold since 2010. Mr. Robertson will remain a consultant to Detour Gold during the period necessary to ensure the orderly transition of responsibilities to Mr. Wallin.
Technical Information
The scientific and technical content of this news release 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 43-101 "Standards of Disclosure for Mineral Projects."
Conference Call
The Company will host a conference call on Thursday, October 29, 2015 at 10:00 AM E.T. where senior management will discuss the third quarter operational and financial results. Access the conference call as follows:
-- Via webcast, go to www.detourgold.com and click on the "Q3 2015 Results Conference Call and Webcast" link on home page -- By phone toll free in Canada and the United States 1-800-319-4610 -- By phone internationally 416-915-3239
The conference call will be recorded and playback of the call will be available after the event by dialing toll free in Canada and the United States 1-800-319-6413, or internationally 604-638-9010, pass code 1532 (available up to November 30, 2015).
About Detour Gold
Detour Gold is an intermediate gold producer in Canada that holds a 100% interest in the Detour Lake mine, a long life large-scale open pit operation.
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS measures in this news release. 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.
The non-IFRS measures are defined below and are reconciled with the reported IFRS measures. Refer to the Company's Third Quarter 2015 MD&A for full details. The tables below are in thousands of dollars, except where noted.
Total cash costs
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 and depletion. Production costs include the costs associated with providing the royalty in kind ounces.
All-in sustaining costs
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 (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.
Other companies may calculate this measure differently as a result of differences in underlying principles and policies applied. Differences may also arise to a different definition of sustaining versus non-sustaining capital.
Three months ended Nine months ended
September 30 September 30
--------------------------------------------
In thousands of dollars, except
where noted 2015 2014 2015 2014
----------------------------------------------------------------------------
Gold ounces sold 126,241 106,334 354,034 298,100
Total Cash Costs Reconciliation
Production costs $ 97,981 $ 100,582 $ 295,864 $ 281,855
Less: Electricity adjustment(1) - 1,402 (7,732) 8,371
Less: Share-based compensation (755) (208) (1,753) (1,653)
Less: Silver sales (551) (271) (1,044) (647)
--------------------------------------------
Total cash costs $ 96,675 $ 101,505 $ 285,335 $ 287,926
Total cash costs per ounce sold $ 766 $ 955 $ 806 $ 966
============================================
All-in Sustaining Costs
Reconciliation
Total cash costs $ 96,675 $ - $ 285,335 $ -
Property, plant and equipment(2) 27,386 - 82,972 -
Unwinding of discount on
decommissioning and restoration
provisions 63 - 143 -
Site share-based compensation 755 - 1,753 -
Realized losses on operating
hedges(3) 4,545 - 6,696 -
Corporate administration
expense(4) 6,440 - 22,324 -
Exploration and evaluation
expense(5) (695) - 909 -
--------------------------------------------
Total all-in sustaining costs $ 135,169 $ - $ 400,132 $ -
All-in sustaining costs per
ounce sold $ 1,071 $ - $ 1,130 $ -
--------------------------------------------
(1) Reflects adjustment related to electricity consumption in prior years;
refer to MD&A for Q2 2015 "Revised non-IFRS measures: Electricity
adjustment" for additional details.
(2) Represents property, plant and equipment additions per the cash flow
statement, which include deferred stripping. All property, plant and
equipment additions are considered sustaining capital.
(3) Includes realized gains and losses on derivative instruments related to
operating hedges (foreign exchange and diesel hedges only) as disclosed
in the MD&A for Q3 2015 "Derivative instruments" section. These
balances are included in the statement of comprehensive income (loss),
within caption "net finance income and costs".
(4) Includes sum of corporate administration expense, which includes share-
based compensation, per the statement of comprehensive income (loss),
excluding non-cash depreciation within those figures.
(5) Includes sum of sustaining exploration and evaluation expense, which
includes share-based compensation, per the statement of comprehensive
income (loss), excluding non-cash depreciation within those figures.
Certain amounts have been re-classified on a year-to-date basis to
conform to the Company's definition of sustaining exploration and
evaluation expense.
Average realized price and Average realized margin
Average realized price is calculated as metal sales per the statement of comprehensive loss and includes realized gains and losses on gold forwards, less silver sales. Average realized margin represents average realized price per gold ounce sold less total cash costs per ounce sold.
Three months ended Nine months ended
September 30 September 30
--------------------------------------------
In thousands of dollars, except
where noted 2015 2014 2015 2014
----------------------------------------------------------------------------
Metal sales $ 142,427 $ 136,156 $ 417,328 $ 385,180
Realized gain (loss) on gold
forwards 5,112 (292) 9,295 (5,783)
Silver sales (551) (271) (1,044) (647)
--------------------------------------------
Revenues from gold sales $ 146,988 $ 135,593 $ 425,579 $ 378,750
Gold ounces sold 126,241 106,334 354,034 298,100
--------------------------------------------
Average realized price $ 1,164 $ 1,275 $ 1,202 $ 1,271
Less: Total cash costs per gold
ounce sold (766) (955) (806) (966)
--------------------------------------------
Average realized margin per gold
ounce sold $ 398 $ 320 $ 396 $ 305
--------------------------------------------
Adjusted net earnings (loss) and Adjusted basic net earnings (loss) per share
Adjusted net earnings (loss) and adjusted basic earnings (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 earnings (loss) is defined as net earnings (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. In addition, adjusted net earnings (loss) excludes the impact of the electricity rebate related to prior periods electricity usage as described in MD&A for Q2 2015 "Second Quarter 2015 Financial Results - Cost of Sales" section. Adjusted basic net earnings (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.
Three months ended Nine months ended
September 30 September 30
--------------------------------------------------------
In thousands of
dollars, except
where noted 2015 2014 2015 2014
----------------------------------------------------------------------------
Basic weighted
average shares
outstanding 170,711,206 157,822,617 168,762,602 152,988,220
Adjusted net earnings (loss) and Adjusted basic net earnings (loss) per
share Reconciliation
Net loss $ (44,287) $ (767) $ (122,749) $ (90,747)
Adjusted for:
Fair value (gain)
loss of the
convertible
notes(1) (9,207) (14,625) 1,477 16,957
Foreign exchange
(gain) loss(1) (2,180) 1,301 (2,523) 385
Foreign exchange
on deferred
income taxes 29,332 - 54,096 -
Non-cash
unrealized (gain)
loss on
derivative
instruments(2) 5,484 (8,938) 2,561 (3,458)
Accretion on
convertible
notes(1) 7,454 6,418 21,549 18,552
Unwinding of
discount on
decommissioning
and restoration
provisions(1) 63 66 143 234
Electricity
adjustment(3) - (1,402) 7,732 (8,371)
--------------------------------------------------------
Adjusted net loss $ (13,341) $ (17,947) $ (37,714) $ (66,448)
Adjusted basic net
loss per share $ (0.08) $ (0.11) $ (0.22) $ (0.43)
--------------------------------------------------------
(1) Balance included in the statement of comprehensive income (loss)
caption "Net finance income and costs". The related financial
statements include a detailed breakdown of "Net finance income and
costs".
(2) Includes unrealized gains and losses on derivative instruments as
disclosed in the "Derivative Instruments" note in the related financial
statements. The balance is grouped with "Net finance income and costs"
on the statement of comprehensive income (loss).
(3) Reflects adjustment related to electricity consumption in prior years;
refer to MD&A for Q2 2015 "Second Quarter 2015 Financial Results - Cost
of Sales" section for additional information.
The Company has included the additional IFRS measure "Earnings (loss) from mine operations" in this press release. Management noted that "Earnings (loss) 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, loss on disposal of assets, finance income and costs, and taxation.
Forward-Looking Information
This press release contains certain forward-looking information as defined in applicable securities laws (referred to herein as "forward-looking statements"). Specifically, this news release contains forward-looking statements regarding the Company targeting the mid-point of its 2015 guidance of between 475,000 and 525,000 ounces of gold production at estimated total cash costs of $780 to $850 per ounce sold and all-in sustaining costs of between $1,050 and $1,150 per ounce sold; the processing of higher grades in the last quarter of 2015; the generation of free cash flow in the fourth quarter of 2015; sustaining capital expenditures of between $90 and $100 million; 2015 capitalized stripping costs totaling $10 million with no cash deferred stripping costs in the fourth quarter; mining rates of between 250,000 and 260,000 tpd for the fourth quarter of 2015; extending the scheduled November plant shutdown to replace a damaged ball mill trunnion on one of the grinding lines; the processing plant processing approximately 5 Mt of ore during the fourth quarter; the completion of the LOM plan update in January 2016 and its release along the 2016 guidance; and the Company being in a position to consider the option of proceeding with underground definition drilling and/or surface infill drilling of the upper portion of the deposit at a closer spacing once the Company receives the results from the eastern and deeper holes and completes the interpretation of Zone 58N.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which are beyond Detour Gold's ability to predict or control and may cause Detour Gold's 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, 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 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 capital costs; the Company's ability to attract and retain skilled staff; the mine development schedule; 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 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. 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.
(1) Refer to the section on Non-IFRS Financial Performance Measures at end of the news release. Reconciliation of these measures is described at end of the news release and in the MD&A for the relevant periods.
Contacts:
Detour Gold Corporation
Paul Martin
President and CEO
(416) 304.0800
Detour Gold Corporation
Laurie Gaborit
Director Investor Relations
(416) 304.0581
www.detourgold.com
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