TORONTO, Oct.25, 2017(GLOBE NEWSWIRE) -- Detour Gold Corporation (TSX:DGC) ("Detour Gold" or the "Company") reports its operational and financial results for the third quarter of 2017. This release should be read in conjunction with the Company's third quarter 2017 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 earnings (loss), and adjusted earnings (loss) per basic 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.
Highlights
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"Detour Lake operation continued to improve with record mining and milling rates, although gold production was at the lower end of our projections for the quarter. We expect a strong fourth quarter gold production to meet the mid-range of our annual guidance," said Paul Martin, President and CEO. "With a strong balance sheet and having generated approximately $60 million of free cash flow before financing activities in the first nine months of the year, the Company now has the flexibility of further reducing debt in the fourth quarter."
Q3 2017 Summary Operational Results
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Detour Lake Mine Statistics | |||||||||||
YTD 2017 | Q3 2017 | Q2 2017 | Q1 2017 | Q4 2016 | Q3 2016 | ||||||
Ore mined (Mt) | 15.1 | 5.4 | 4.9 | 4.8 | 5.8 | 5.0 | |||||
Waste mined (Mt) | 58.0 | 20.6 | 20.4 | 17.0 | 15.0 | 18.5 | |||||
Total mined (Mt) | 73.1 | 26.1 | 25.2 | 21.8 | 20.9 | 23.5 | |||||
Strip ratio (waste:ore) | 3.9 | 3.8 | 4.2 | 3.6 | 2.6 | 3.7 | |||||
Mining rate (k tpd) | 268 | 283 | 277 | 242 | 227 | 256 | |||||
Ore milled (Mt) | 16.4 | 5.7 | 5.5 | 5.2 | 5.5 | 5.2 | |||||
Head grade (g/t Au) | 0.90 | 0.86 | 0.95 | 0.88 | 0.90 | 0.88 | |||||
Recovery (%) | 89 | 90 | 90 | 89 | 90 | 87 | |||||
Mill throughput (tpd) | 59,992 | 61,548 | 60,259 | 58,114 | 60,052 | 56,453 | |||||
Mill operating time (%) | 87 | 88 | 87 | 85 | 86 | 84 | |||||
Ounces produced (oz) | 421,417 | 139,861 | 150,138 | 131,418 | 143,512 | 127,758 | |||||
Ounces sold (oz) | 405,681 | 128,498 | 142,970 | 134,213 | 144,668 | 113,845 | |||||
Average realized price ($/oz) | $1,248 | $1,273 | $1,257 | $1,216 | $1,210 | $1,281 | |||||
Total cash costs ($/oz sold) | $721 | $668 | $706 | $788 | $855 | $802 | |||||
AISC ($/oz sold) | $1,092 | $1,032 | $1,123 | $1,118 | $1,132 | $1,042 | |||||
Mining (Cdn$/t mined) | $2.86 | $2.84 | $2.83 | $2.92 | $3.25 | $2.66 | |||||
Milling (Cdn$/t milled) | $9.37 | $8.29 | $9.63 | $10.26 | $8.74 | $11.74 | |||||
G&A (Cdn$/t milled) | $3.36 | $3.26 | $3.35 | $3.46 | $3.46 | $3.46 |
Note: Totals may not add up due to rounding. G&A includes costs related to agreements with Aboriginal communities.
Q3 2017 Financial Review
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Liquidity and Capital Resources
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Summary Financial Data | |||||||
(in $ millions unless specified) | YTD 2017 | Q3 2017 | Q2 2017 | Q1 2017 | Q4 2016 | Q3 2016 | |
Metal sales | 507.8 | 164.0 | 180.1 | 163.7 | 176.6 | 152.0 | |
Production costs | 295.1 | 86.8 | 101.8 | 106.4 | 123.9 | 91.3 | |
Depreciation | 101.2 | 30.5 | 35.6 | 35.1 | 47.8 | 35.5 | |
Cost of sales | 396.3 | 117.3 | 137.5 | 141.5 | 171.7 | 126.8 | |
Earnings from mine operations | 111.5 | 46.7 | 42.6 | 22.2 | 4.8 | 25.2 | |
Net income (loss) | 71.5 | 41.1 | 24.4 | 6.0 | (13.5) | 9.7 | |
Net income (loss) per basic share | 0.41 | 0.24 | 0.14 | 0.03 | (0.08) | 0.06 | |
Adjusted earnings (loss) | 74.4 | 37.4 | 26.4 | 10.5 | (6.0) | 1.3 | |
Adjusted earnings (loss) per basicshare | 0.43 | 0.21 | 0.15 | 0.06 | (0.03) | 0.01 |
Note: Totals may not add up due to rounding.
Financial Risk Management
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Exploration Update
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2017 Outlook
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Gold production (oz) | 550,000-600,000 |
Total cash costs ($/oz sold) | $690-$750 |
All-in sustaining costs ($/oz sold) | $1,025-$1,125 |
Technical Information
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The scientific and technical content of this news release was reviewed, verified and approved by Drew Anwyll, P.Eng., Senior Vice President, Technical Services and Guy MacGillivray, P.Geo., Exploration Manager, Qualified Persons as defined by Canadian Securities Administrators National Instrument 43-101 "Standards of Disclosure for Mineral Projects."
Conference Call
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The Company will host a conference call on Thursday, October 26, 2017 at 10:00 AM E.T. where senior management will discuss the third quarter operational and financial results. Access the conference call as follows:
A playback will be available until November 26, 2017 by dialing 604-674-8052 or 1-855-669-9658 within Canada and the United States, using pass code 1729. The webcast and presentation slides will be archived on the Company's website.
About Detour Gold
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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.
For further information, please contact:
Paul Martin, President and CEO | Laurie Gaborit, Vice President Investor Relations |
Tel: (416) 304.0800 | Tel: (416) 304.0581 |
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 Third Quarter 2017 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, 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 these measures 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 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
Gold ounces sold | 128 498 | 113 845 | 405 681 | 383 059 | ||||||||||||||
Total Cash Costs Reconciliation | ||||||||||||||||||
Production costs | $ | 86 799 | $ | 91 348 | 295 049 | $ | 274 151 | |||||||||||
Less: Share-based compensation | (558 | ) | 172 | (1 303 | ) | (3 196 | ) | |||||||||||
Less: Silver sales | (378 | ) | (248 | ) | (1 239 | ) | (1 053 | ) | ||||||||||
Total cash costs | $ | 85 863 | $ | 91 272 | $ | 292 507 | $ | 269 902 | ||||||||||
Total cash costs per ounce sold | $ | 668 | $ | 802 | $ | 721 | $ | 705 | ||||||||||
All-in Sustaining Costs Reconciliation | ||||||||||||||||||
Total cash costs | $ | 85 863 | $ | 91 272 | $ | 292 507 | $ | 269 902 | ||||||||||
Sustaining capital expenditures1 | 45 568 | 21 385 | 134 235 | 64 899 | ||||||||||||||
Accretion on decommissioning and restoration provision | 51 | 31 | 150 | 124 | ||||||||||||||
Share-based compensation | 558 | (172 | ) | 1 303 | 3 196 | |||||||||||||
Realized (gain) loss on operating hedges2 | (5 145 | ) | 69 | (4 437 | ) | 1 725 | ||||||||||||
Corporate administration expense3 | 5 288 | 5 146 | 17 755 | 25 600 | ||||||||||||||
Sustaining exploration expenditures4 | 461 | 931 | 1 646 | 2 259 | ||||||||||||||
Total all-in sustaining costs | $ | 132 644 | $ | 118 662 | $ | 443 159 | $ | 367 705 | ||||||||||
All-in sustaining costs per ounce sold | $ | 1 032 | $ | 1 042 | $ | 1 092 | $ | 960 |
1 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. Sustaining capital expenditures includes the value of fully commissioned assets with deferred payment terms.Non-sustaining capital expenditures primarily relate to West Detour.
2Includes 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 this document. These balances are included in the statement of comprehensive earnings (loss), within caption "net finance cost".
3Includes the sum of corporate administration expense, which includes share-based compensation, per the statement of comprehensive earnings (loss), excluding depreciation within those figures.
4Includes the sum of sustaining exploration and evaluation expense, which includes share-based compensation, per the statement of comprehensive earnings (loss), excluding depreciation within those figures. Non-sustaining exploration and evaluation expense, primarily relates to costs associated with Zone 58N, regional exploration, and Burntbush property.
Average realized price and Average realized margin
Average realized price and average realized margin per ounce sold are used by management and investors use these measures to better understand the gold price and margin realized throughout a period.Average realized price is calculated as metal sales per the statement of comprehensive loss and includes realized gains and losses on gold derivatives, 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 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Metal sales | $ | 163 987 | $ | 152 046 | $ | 507 766 | $ | 481 716 | |||||||||||
Realized loss on gold contracts | (76 | ) | (5 988 | ) | (70 | ) | (11 651 | ) | |||||||||||
Silver sales | (378 | ) | (248 | ) | (1 239 | ) | (1 053 | ) | |||||||||||
Revenues from gold sales | $ | 163 533 | $ | 145 810 | $ | 506 457 | $ | 469 012 | |||||||||||
Gold ounces sold | 128 498 | 113 845 | 405 681 | 383 059 | |||||||||||||||
Average realized price | $ | 1 273 | $ | 1 281 | $ | 1 248 | $ | 1 224 | |||||||||||
Less: Total cash costs per gold ounce sold | (668 | ) | (802 | ) | (721 | ) | (705 | ) | |||||||||||
Average realized margin per gold ounce sold | $ | 605 | $ | 479 | $ | 527 | $ | 519 |
Adjusted earnings and Adjusted basic earnings per share
Adjusted earnings and adjusted basic earnings 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 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: fair value change of the convertible notes, the impact of foreign exchange gains and losses, deferred income and mining taxes, non-cash unrealized gains and losses on derivative instruments, accretion on convertible notes, and decommissioning and restoration provisions, impairment provisions and reversals thereof, and other non-recurring items. Adjusted basic earnings 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 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
Basic weighted average shares outstanding | 174 735 263 | 174 487 277 | 174 652 096 | 173 180 274 | ||||||||||||||
Adjusted earnings and Adjusted basicearnings per share reconciliation | ||||||||||||||||||
Net earnings | $ | 41 105 | $ | 9 679 | $ | 71 531 | $ | 6 580 | ||||||||||
Adjusted for: | ||||||||||||||||||
Fair value (gain) loss of the convertible notes1 | (10 | ) | (16 787 | ) | (862 | ) | 17 577 | |||||||||||
Accretion on long-term debt1 | 7 731 | 7 913 | 23 081 | 24 249 | ||||||||||||||
Accretion on decommissioning and restoration provision1 | 51 | 31 | 150 | 124 | ||||||||||||||
Non-cash unrealized (gain) loss on derivative instruments2 | 330 | (6 220 | ) | (1 505 | ) | 2 810 | ||||||||||||
Foreign exchange (gain) loss1 | (3 194 | ) | 214 | (5 872 | ) | (551 | ) | |||||||||||
Deferred income and mining taxes | (8 586 | ) | 6 491 | (12 150 | ) | (34 317 | ) | |||||||||||
Adjusted earnings | $ | 37 427 | $ | 1 321 | $ | 74 373 | $ | 16 472 | ||||||||||
Adjusted basic earnings per share | $ | 0,21 | $ | 0,01 | $ | 0,43 | $ | 0,10 |
1 Balance included in the statement of comprehensive earnings (loss) caption "Net finance cost". The related financial statements include a detailed breakdown of "Net finance cost".
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 cost" on the statement of comprehensive earnings (loss).
The Company has included the additional IFRS measure:
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 cost, and taxation.
Free cash flow before financing activities
Free cash flow before financing activities is calculated as cash flow from operations less cash flow from investing activities. It provides useful information to management and investors as an indicator of the cash generated from the Company's operations before consideration of how those activities are financed.
Forward-Looking Information
This press release contains certain forward-looking information as defined in applicable securities laws (referred to herein as "forward-looking statements"). Forward-looking statements relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of mineral resources and mineral reserves and exploration targets; (ii) the amount of future production over any period; (iii) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the technical reports, studies and disclosure of the Company; (iv) assumptions relating to revenues, operating cash flow and other revenue metrics set out in the Company's disclosure materials (v) mine expansion potential and expected mine life; (vi) expected time frames for completion of permitting and regulatory approvals; (vii) future capital and operating expenditures; (viii) future exploration plans; (ix) future gold prices; and (x) sources of and anticipated financing requirements. 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.
Specifically, this press release contains forward-looking statements regarding the Company's expectation of a strong fourth quarter gold production to meet the mid-range of annual guidance; having flexibility of further reducing debt in the fourth quarter; circuit to return to normal levels in the fourth quarter at approximately 25,000 ounces of gold; holders of the convertible notes being paid on November 30, 2017; attaining the mid-range of its annual guidance for production, total cash costs, and AISC; achieving 100 Mt mined from the Detour Lake pit in 2017; Company's seventh shovel and two haul trucks arriving at site at year-end; capital expenditures of approximately $160 to $180 million; and provincial approval for the West Detour project targeted for mid-2018.
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, a reduction in the Company's available cash resources, the uncertainties involved in interpreting geological data, risks relating to variations in recovered grades and mining dilution, variations in rates of recovery, changes or delays in mining development and exploration plans, the success of mining, development and exploration plans, changes in project parameters, risks related to the receipt of regulatory approvals,increases in costs, environmental compliance and changes in environmental legislation and regulation, delays in the consultation and permitting process for West Detour, 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 2016 AIF and in the continuous disclosure documents filed by Detour Gold on and available on SEDAR at www.sedar.com.
Forward-looking statements in this press release are also based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about the following: a constant gold price of $1,200/oz in 2017, a constant diesel fuel price of C$0.70 per litre in 2017, a constant US/CAD exchange rate of 1.30 in 2017 and a constant power cost of C$0.03 per kilowatt hour in 2017;the availability of financing for exploration and development activities; operating and capital costs; the Company's available cash resources in 2017; 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 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 reserve and 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.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.