For investors who are interested in large, long-life projects in stable jurisdictions, Detour Gold has something to offer. Said Laurie Gaborit, Detour Gold's Director of Investor Relations, “Right now we are building Canada's largest gold mine and the construction is basically 48% done.”
[October 2011 (above) and February 2012 (below): Detour Lake processing plant facilities]
The construction on this massive project is nearly halfway done and is moving along nicely. Said Gaborit, “We have another year, but we are on schedule and on budget for the first gold pour in the first quarter of 2013.”
[December 2011: Transport of the primary crusher to Detour Lake project site]
Detour Gold has put all its resources into the Detour Lake project due to the sheer size of the deposit. Said Gaborit, “We have the largest open pit gold reserves in Canada with 15.6 million ounces.” This updated mineral reserve was announced at the end of January 2012. Said Gaborit, “The year-end 2011 reserve update includes a significant portion of our 2011 drilling which targeted the western extension of the deposit.” Currently, Detour Gold is working on further expanding its reserve/resource base with a drilling program on the Block A near-surface resource located just northwest of Detour Lake. Gaborit said, “We have a 50,000 meter drilling program planned for this year to define an open pit reserve on the Block A deposit. The plan is to start a pre-feasibility study this year and evaluate the potential for increasing the throughput capacity of our plant facilities with this ore.”
[February 2012: Removal of overburden at the Detour Lake mine]
Detour Gold's Detour Lake project will be an open pit operation stretching along an east-west corridor for about three kilometers by one kilometer wide to a depth of 650 meters. The company has started the pre-stripping activities with its own equipment. Said Gaborit, “We'll start with eight trucks and then add twelve more. The haul trucks are CAT795F with loads of 320 metric tonnes.” The ore will be trucked to the close-by mill facility. Said Gaborit, “The mill is a conventional gravity and CIP plant. Overall recovery is expected to be just over 91%.”
When developing a project of this magnitude, cost is always an issue that needs to be managed. Since the project has infrastructure in place (i.e. road and hydro power access), the overall investment for the development of the Detour Lake project is quite reasonable. Said Gaborit, “Our capex for the project is C$1.45 billion dollars. As at December 31, 2011, we had committed C$1.1 billion dollars of which C$682 million have been spent. At the end of December we had about C$800 million dollars in cash. The Company also estimates that operating cash costs will be within the average bracket of the intermediate producers. Said Gaborit, “The operating cash costs are estimated to be around C$543 per ounce. We will be revising those costs with our new mine plan and schedule that will be released in the third quarter of this year.” The Company is now fully financed with the recently announced bought deal of C$241 million. Despite this additional dilution bringing their shares outstanding to about 110 million shares, this is still exceptional since they are building a large mining operation. Said Gaborit, “Since day one, we believe in keeping a tight share structure and not diluting our shareholders.” Part of their effort is to make sure that shareholders get great value. Gaborit said, “With only 110 million shares outstanding, this mine will generate very good cash flow per share.” In fact, Gaborit and the management team are estimating that the mine will generate $6 to $7 cash flow per share using a gold price of US$1,700 per ounce.
Over the last few months, Detour Gold shares have been performing relatively well compared to its peers and gold producers. Gaborit said, “Our shares trade between C$28 to C$29 per share right now. We are undervalued at this stage.” Regardless of the market, Detour Gold is pressing on. Gaborit said, “We are going to move on and build this project. At the end of the day, we want to be in production in the first quarter of 2013.”
Part of Gaborit's optimism is due to the high quality experience that they have in their management team and Board of Directors. Said Gaborit, “We have an excellent team with lots of operational experience. All of the people have been in the mining industry for such a long time. Thus far, our team has done such an incredible job.” The President, CEO and Director, Gerald Panneton, founder of Detour Gold, is a geologist with nearly 30 years in the business.
The sheer size of the project as well as the quality of management is reasons that Gaborit believes that shareholders will want to invest in Detour Gold. She said, “This is going to be Canada's largest gold mine and there is still excellent potential on the property to find more ounces.” Part of the upside is the large size of the property. Said Gaborit, “The size of the property is 540 square kilometers. There is over 80 kilometers of favorable geology along major structures. There is a lot of organic growth potential.
We have incredible people and thus far we have been able to deliver on our objectives. The Board is supportive of the team. Now is the time to invest in Detour Gold. There is also great leverage to the gold price and at today’s gold price we expect to generate a significant profit margin.”
Overall, Detour Gold is expecting the Detour Lake project to have a minimum mine life of 20 years. Said Gaborit, “An operation with such a long mine life is positive for the economy of northern Ontario.” Gaborit herself is very optimistic about the future. She said, “It's been exciting for all of us at Detour Gold and also for all the people in the local communities near the project.”
With 15.6 million ounces of gold in the ground, Detour Gold is in a position to create a name for itself in the near future as the largest gold mining operation in Canada.
Detour Gold Corporation
Royal Bank Plaza - South Tower
200 Bay Street, Suite 2200, Box#23
Toronto, ON M5J 2J1, Canada