TORONTO, ONTARIO--(Marketwired - July 28, 2016) - Detour Gold Corporation (TSX:DGC) ("Detour Gold" or the "Company") reports its operational and financial results for the second quarter of 2016. This release should be read in conjunction with the Company's second quarter 2016 Financial Statements and MD&A on the Company's website or on SEDAR. All amounts are in U.S. dollars unless otherwise indicated.
In this news release, the Company uses the following non-IFRS measures: total cash costs, all- in sustaining costs ("AISC"), realized gold price, average realized margin, adjusted net earnings (loss), and adjusted basic net earnings (loss) per share. Refer to the Company's MD&A and at the end of this news release for an explanation and discussion of these non IFRS measures.
Q2 2016 Highlights
"The Company has accelerated its debt reduction program by buying back $82 million of debt from cash flow in the second quarter. We are now in a position to have surplus cash to meet our debt reduction target of $300 million by year-end, well ahead of our original target of late 2017," stated Paul Martin, President and CEO of Detour Gold. "To better reflect our operational expectations for the second half of 2016, we believed it was appropriate to remove the upper end of our annual production guidance."
Q2 2016 Summary Operational Results
Detour Lake Mine Operation Statistics | |||||
Q2 2016 | Q1 2016 | Q4 2015 | Q3 2015 | Q2 2015 | |
Ore mined (Mt) | 5.5 | 5.8 | 6.3 | 6.5 | 6.4 |
Waste mined (Mt) | 16.4 | 15.2 | 15.7 | 17.0 | 19.1 |
Total mined (Mt) | 21.9 | 21.0 | 22.0 | 23.5 | 25.5 |
Strip ratio (waste:ore) | 3.0 | 2.6 | 2.5 | 2.6 | 3.0 |
Mining rate (tpd) | 241,000 | 231,000 | 239,000 | 255,000 | 280,000 |
Ore milled (Mt) | 5.3 | 4.7 | 5.1 | 5.2 | 5.2 |
Head grade (g/t Au) | 0.92 | 0.91 | 0.98 | 0.86 | 0.82 |
Recovery (%) | 89 | 91 | 91 | 90 | 91 |
Mill throughput (tpd) | 58,466 | 52,165 | 55,522 | 56,015 | 57,015 |
Mill availability (%) | 87 | 88 | 86 | 85 | 88 |
Ounces produced (oz) | 139,359 | 127,136 | 146,417 | 128,222 | 125,348 |
Ounces sold (oz) | 131,606 | 137,608 | 132,209 | 126,241 | 123,296 |
Average realized price ($/oz) | $1,230 | $1,172 | $1,102 | $1,164 | $1,215 |
Total cash cost per oz sold ($/oz) | 691 | $637 | $694 | $766 | $734 |
AISC per oz sold ($/oz) | 1,030 | $824 | $858 | $1,071 | $1,030 |
Mining (Cdn$/t mined) | $2.75 | $2.94 | $2.63 | $2.69 | $2.42 |
Milling (Cdn$/t milled) | $9.55 | $9.08 | $9.24 | $8.64 | $8.81 |
G&A (Cdn$/t milled) | $3.03 | $3.51 | $3.15 | $3.19 | $2.72 |
Note: Mill availability is defined as mill operating time. Totals may not add up due to rounding.
Q2 2016 Selected Financial Information
Summary Financial Data | ||||||||||
(in $ millions unless specified) | Q2 2016 | Q1 2016 | Q4 2015 | Q3 2015 | Q2 2015 | |||||
Metal sales | 166.7 | 163.0 | 145.7 | 142.4 | 147.5 | |||||
Production costs | 93.4 | 89.4 | 92.5 | 98.0 | 100.2 | |||||
Depreciation | 39.2 | 42.8 | 44.1 | 41.1 | 39.8 | |||||
Cost of sales | 132.6 | 132.2 | 136.6 | 139.1 | 140.0 | |||||
Earnings from mine operations | 34.0 | 30.8 | 9.1 | 3.4 | 7.5 | |||||
Net income (loss) | (30.7 | ) | 27.6 | (40.8 | ) | (44.3 | ) | (15.4 | ) | |
Net income (loss) per share | (0.18 | ) | 0.16 | (0.24 | ) | (0.26 | ) | (0.09 | ) | |
Adjusted net earnings (loss) | 3.9 | 11.3 | (4.4 | ) | (13.3 | ) | 0.5 | |||
Adjusted net earnings (loss) per share | 0.02 | 0.07 | (0.03 | ) | (0.08 | ) | 0.00 | |||
Net cash generated from operations before changes in working capital | 61.5 | 61.1 | 51.5 | 38.6 | 44.4 |
Note: Totals may not add up due to rounding.
Q2 2016 Financial Performance
Q2 2016 Liquidity and Capital Resources
Financial Risk Management
2016 Guidance Revisions
Prior Guidance | Revised Guidance | |
Gold production (oz) | 540,000-590,000 | 540,000-570,000 |
Total cash costs ($/oz sold)1 | $675-$750 | $640-7001 |
All-in sustaining costs ($/oz sold) | $840-$940 | $920-980 |
Sustaining capital ($ M) | Prior Guidance | Revised Guidance | |
TMA | $30 | $30 | |
Mine | $15 | $20 | |
Processing | $10 | $15 | |
Infrastructure & other | $10 | $10 | |
Sub total (range) | $60-70 | $70-80 | |
Reclassification of costs from opex1 | $0 | $301 | |
Total sustaining capital (range) | $60-70 | $100-110 |
1 Based on a review of the estimated useful life of components in the mine fleet, the Company has reclassified $30 million of costs from operating to sustaining capital. This re-classification had no impact on the change in guidance range for all-in sustaining costs and conforms with the financial statements.
West Detour Project
Exploration
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, July 28, 2016 at 9:00 AM E.T. where senior management will discuss the second quarter operational and financial results. Access the conference call as follows:
A playback will be available until August 31, 2016 by dialing 604-674-8052 or 1-855-669-9658 within Canada and the United States, using pass code 00568. The webcast and presentation slides will be archived on the Company's website.
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.
Detour Gold Corporation, Commerce Court West, 199 Bay Street, Suite 4100, P.O. Box 121, Toronto, Ontario M5L 1E2
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 First Quarter 2016 MD&A for full details. For other periods, refer to the corresponding MD&A for 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. Production costs include the costs associated with providing the royalty in kind ounces.
All-in sustaining costs
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 Differences may also arise to a different definition of sustaining versus non-sustaining in underlying principles and policies applied. capital.
Three months ended | Six months ended | ||||||||||||
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In thousands of dollars, except where noted | 2016 | 2015 | 2016 | 2015 | |||||||||
Gold ounces sold | 131,606 | 123,296 | 269,214 | 227,793 | |||||||||
Total Cash Costs Reconciliation | |||||||||||||
Production costs | $ | 93,419 | $ | 100,162 | $ | 182,803 | $ | 197,883 | |||||
Less: Electricity adjustment1 | - | (9,198 | ) | - | (7,732 | ) | |||||||
Less: Share-based compensation | (2,010 | ) | (240 | ) | (3,368 | ) | (998 | ) | |||||
Less: Silver sales | (405 | ) | (230 | ) | (805 | ) | (493 | ) | |||||
Total cash costs | $ | 91,004 | $ | 90,494 | $ | 178,630 | $ | 188,660 | |||||
Total cash costs per ounce sold | $ | 691 | $ | 734 | $ | 664 | $ | 828 | |||||
All-in Sustaining Costs Reconciliation | |||||||||||||
Total cash costs | $ | 91,004 | $ | 90,494 | $ | 178,630 | $ | 188,660 | |||||
Property, plant and equipment2 | 28,678 | 25,825 | 43,514 | 55,586 | |||||||||
Accretion on decommissioning and restoration provision | 42 | 16 | 93 | 80 | |||||||||
Site share-based compensation | 2,010 | 240 | 3,368 | 998 | |||||||||
Realized losses on operating hedges3 | 272 | $ | 795 | 1,656 | 2,151 | ||||||||
Corporate administration expense4 | 13,124 | 8,686 | 20,454 | 15,883 | |||||||||
Exploration and evaluation expense5 | 485 | 910 | 1,328 | 1,605 | |||||||||
Total all-in sustaining costs | $ | 135,615 | $ | 126,966 | $ | 249,043 | $ | 264,963 | |||||
All-in sustaining costs per ounce sold | $ | 1,030 | $ | 1,030 | $ | 925 | $ | 1,163 | |||||
1 | Reflects adjustment related to electricity consumption in prior years (refer to December 31, 2015 MD&A for additional details). |
2 | Based on property, plant and equipment additions per the cash flow statement, which includes deferred stripping. Non-sustaining capital expenditures included in the cash flow statement have been excluded. Non-sustaining capital expenditures in 2016 relate to West Detour. |
3 | Includes realized gains and losses on derivative instruments related to operating hedges (foreign exchange and diesel hedges only) as disclosed in the "Derivative instruments" section of the MD&A. These balances are included in the statement of comprehensive income (loss), within caption "net finance income and costs". |
4 | Includes the sum of corporate administration expense, which includes share-based compensation, per the statement of comprehensive income (loss), excluding depreciation within those figures. |
5 | Includes the sum of sustaining exploration and evaluation expense, which includes share-based compensation, per the statement of comprehensive income (loss), excluding depreciation within those figures. Non-sustaining exploration and evaluation expense, primarily relate to costs associated with Lower Detour. |
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 | Six months ended | ||||||||||||
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In thousands of dollars, except where noted | 2016 | 2015 | 2016 | 2015 | |||||||||
Metal sales | $ | 166,656 | $ | 147,526 | $ | 329,670 | $ | 274,901 | |||||
Realized gain (loss) on gold forwards | (4,372 | ) | 2,508 | (5,663 | ) | 4,183 | |||||||
Silver sales | (405 | ) | (230 | ) | (805 | ) | (493 | ) | |||||
Revenues from gold sales | $ | 161,879 | $ | 149,804 | $ | 323,202 | $ | 278,591 | |||||
Gold ounces sold | 131,606 | 123,296 | 269,214 | 227,793 | |||||||||
Average realized price | $ | 1,230 | $ | 1,215 | $ | 1,201 | $ | 1,223 | |||||
Less: Total cash costs per gold ounce sold | (691 | ) | (734 | ) | (664 | ) | (828 | ) | |||||
Average realized margin per gold ounce sold | $ | 539 | $ | 481 | $ | 537 | $ | 395 |
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. 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.
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In thousands of dollars, except where noted | 2016 | 2015 | 2016 | 2015 | ||||||||||
Basic weighted average shares outstanding | 173,186,380 | 170,585,329 | 172,519,591 | 167,772,151 | ||||||||||
Adjusted net earnings (loss) and Adjusted basic net earnings (loss) per share Reconciliation | ||||||||||||||
Net income (loss) | $ | (30,719 | ) | $ | (15,401 | ) | $ | (3,099 | ) | $ | (78,462 | ) | ||
Adjusted for: | ||||||||||||||
Fair value (gain) loss of the convertible notes1 | 25,743 | 6,581 | 34,344 | 10,684 | ||||||||||
Accretion on convertible notes1 | 8,301 | 7,181 | 16,336 | 14,095 | ||||||||||
Accretion on decommissioning and restoration provision1 | 42 | 16 | 93 | 80 | ||||||||||
Non-cash unrealized (gain) loss on derivative instruments2 | 3,304 | (2,951 | ) | 9,030 | (2,923 | ) | ||||||||
Foreign exchange (gain) loss1 | 29 | (1,544 | ) | (744 | ) | (343 | ) | |||||||
Foreign exchange on deferred income taxes | (2,834 | ) | (2,536 | ) | (40,808 | ) | 24,764 | |||||||
Electricity adjustment3 | - | 9,198 | - | 7,732 | ||||||||||
Adjusted net earnings (loss) | $ | 3,866 | $ | 544 | $ | 15,152 | $ | (24,373 | ) | |||||
Adjusted basic net earnings (loss) per share | $ | 0.02 | $ | 0.00 | $ | 0.09 | $ | (0.15 | ) | |||||
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 December 31, 2015 MD&A for additional details). |
The Company has included the additional IFRS measures:
Earnings (loss) from mine operations
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.
Net cash generated from operations before changes in working capital
Working capital can be volatile due to numerous factors including, among other items, a build-up or reduction of inventories or harmonized sales tax receivables. Management believes that excluding these items, "net cash generated from operations before changes in working capital", provides investors with the ability to better evaluate the cash flow performance of the Company.
Forward-Looking Information
This news 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 being in a position to have surplus cash to meet our debt reduction target of $300 million by year-end; the mining rates averaging between 250,000 and 270,000 tpd for the second half of 2016; gold production of between 540,000 and 570,000 ounces in 2016 at total cash costs of $640 to $700 per ounce sold and all-in sustaining costs of $920 to $980 per ounce sold (based on a US dollar to Canadian dollar exchange rate of $1.28); the Company not anticipating to access higher grade ore in the area of the Campbell pit in the second half of the year, which will negatively impact gold production by 15,000 to 20,000 ounces; the Company's plans to start the processing of the medium grade fines in the second half of the year; the Company's plans to file a draft environmental assessment for West Detour prior to year-end 2016; the design, timeline and cost estimate for an exploration program at Zone 58N to be completed in the fourth quarter; and confidence in the potential of finding high grade mineralization along the Lower Detour trend.
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 2015 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.
Paul Martin
President and CEO
Tel: (416) 304.0800
Laurie Gaborit
Director Investor Relations
Tel: (416) 304.0581