Detour Gold Reports Third Quarter 2019 Results

2019-11-14 / @businesswire

Detour Gold Corporation (TSX: DGC) (“Detour Gold” or the “Company”) reports its operational and financial results for the third quarter of 2019. All amounts are in U.S. dollars unless otherwise indicated.

This release should be read in conjunction with the Company’s third quarter 2019 Financial Statements and MD&A on the Company’s website or on SEDAR. All references to non-IFRS measures are denoted with the superscript “0” and are discussed at the end of this news release.

Q3 2019 Highlights

Safety metrics improving with a decline in the TRIFR for both employees and contractors with a 48% reduction from 2.27 in Q3 2018 to 1.17 in Q3 2019, a record low
Increasing the lower end of 2019 gold production guidance range to 590,000-605,000 ounces and expecting to be towards the upper end of that range
Gold production of 137,670 ounces in Q3 2019 in line with the forecast grade profile, compared to 151,402 ounces in Q3 2018
AISC⁽⁰⁾ of $1,198 per ounce sold and total cash costs⁽⁰⁾ of $730 per ounce sold in Q3 2019, representing a 13% and 9% improvement, respectively, compared to Q3 2018 results of $1,377 and $798 per ounce sold, respectively
Reducing 2019 AISC guidance range by $75 per ounce to $1,100-$1,175 per ounce and expecting to be towards the bottom end of that range and reducing 2019 total cash cost guidance from $790-$840 to $750-$790
Free cash flow⁽⁰⁾of $37.5 million in Q3 2019 compared to $7.3 million in Q3 2018
Net cash balance at the end of Q3 2019 of $44.2 million
Operating cash flow per share of $0.50 in Q3 2019 compared to $0.47 in Q3 2018
Strong positive block model reconciliation continues with ounces mined up 21.6% relative to mineral reserves
Improving mill throughput with the mill regularly achieving the daily permit limit of 75 ktpd, leading the Company to elect to apply to increase the daily limit to 90 ktpd
Adjusted net earnings⁽⁰⁾of $35.3 million ($0.20 per basic share) in Q3 2019 compared to adjusted net loss⁽⁰⁾ of $1.5 million ($0.01 per basic share) in Q3 2018
Net loss of $12.6 million ($0.07 per basic share) in Q3 2019 compared to net earnings of $12.7 million ($0.07 per basic share) in Q3 2018, including the pre-tax impact of $20.3 million ($0.11 per basic share) of impairment of long-term deposits (representing irrecoverability of estimated down payments on significant components of mobile equipment) resulting in a deferred tax recovery of $6.4 million, and the deferred tax impact associated with the amendment of the closure plan of $16 million ($0.09 per basic share)
Cash and cash equivalents of $144.2 million at September 30, 2019 compared to $131.9 million at December 31, 2018 after repaying $150.0 million of principal payments against the credit facility, reducing the outstanding principal balance to $100.0 million
The West Detour project final Environmental Study Report was filed in Q3 and the Company is in the process of consultation with all of the relevant stakeholders
Closure Plan amendment for Detour Lake mine was accepted by the Ontario government in November 2019 following posting of increased financial assurance

Mick McMullen, President and Chief Executive Officer, stated: “Q3 was a good operational quarter for the Company where we continued to deliver on guidance and look for improvements within the business. As we noted on our Q2 conference call, we expected the grade to be lower in Q3 and much stronger in Q4 and this is what we have seen.

Given the strength of the operating performance and improvements realized in the business year-to-date, we are lowering our cash cost and all-in sustaining cost guidance for the year and increasing the lower end of our production guidance.

During Q3, we continued to work on optimizing the mine plan, with the result that we have been able to reduce planned total expit tonnes relative to the 2018 LOM by 18 Mt in 2020 and 31 Mt in each of 2021 and 2022 while still filling the mill. This is a result of the continued strongly positive reserve reconciliation (21.6% more ounces year to date) and using discounted cash flows to plan the pit staging.

Despite the lower ounces produced quarter over quarter, we have made very good progress on reducing absolute costs and this quarter represents our highest ever cash cost margin per ounce.

Contractor management has improved significantly and based on the work to date we expect to save approximately C$15-$20 million per annum from 2020 onwards on contractor spend. This represents over C$300 million in value life-of-mine.

The work to reduce the maintenance back log in the plant along with the fragmentation project is paying dividends with the mill now regularly reaching its 75 ktpd permit limit and we will soon be applying to increase the mill permit to 90 ktpd. Amendments to the mobile equipment maintenance and repair contract are underway and a definitive agreement is expected in Q4, as a result of this amendment the Company expects to realize cumulative cash savings of over $25 million through 2022.

Subsequent to the end of Q3, we received approval for our updated Closure Plan from the Ontario government and have put in place surety bonds for this, rather than letters of credit, freeing up head room under our Revolving Credit Facility. The Closure Plan approval is a reflection of the hard work of our team who worked closely with the relevant government agencies and all of our Indigenous stakeholders.”

Q3 2019 Operational Results

Safety metrics improving with a decline in the TRIFR to 1.17 for both employees and contractors. This is the lowest quarterly TRIFR in the Company’s history and is testament to the systems being put in place and the Company’s commitment to safety.
Gold production totaled 137,670 ounces in Q3.
Mill throughput was 5.6 Mt. Fragmentation improvements at the mine are making a positive impact at the mill (i.e. better crushing and grinding performance, and higher recovery).
Head grade averaged 0.83 g/t with recoveries improving to 91.2%. The improvement in recovery is the result of completed and ongoing capital projects at the mill combined with better operating practices and a more uniform feed from fragmentation work in the pit. Head grades mined in the quarter were in-line with the mine plan and increased to 0.85 g/t towards the end of the quarter as we accessed higher grade zones resulting in an increase in gold-in-circuit of approximately 5,000 ounces that was subsequently poured in early Q4.
A total of 26.3 Mt (ore and waste) was mined in Q3 (equivalent to mining rates of 286 ktpd). As a result of the positive block model reconciliation, which has resulted in approximately 26% more ore tonnes at slightly lower grade mined than the mineral reserves in the first nine months of 2019, there is no need to move as many waste tonnes to fill the mill.
Run-of-mine stockpiles of 4.8 Mt grading 0.65 g/t (approximately 100,000 ounces) at the end of Q3, well above the planned stockpile balance due to the strong reserve reconciliation.

Detour Lake Operation Statistics

	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018
Ore mined (Mt)	5.2	5.1	5.3	5.3	4.3
Waste mined (Mt)	21.1	21.8	21.3	22.7	23.7
Total mined (Mt)	26.3	26.9	26.6	28.0	28.0
Strip ratio (waste:ore)	4.1	4.3	4.1	4.3	5.6
Mining rate (ktpd)	286	296	296	305	304

Ore milled (Mt)	5.6	5.4	5.2	5.6	5.4
Head grade (g/t Au)	0.83	0.93	1.00	0.98	0.97
Recovery (%)	91.2	92.8	92.2	90.9	89.3
Mill throughput (tpd)	61,348	59,376	57,880	60,300	59,219

Ounces produced (oz)	137,670	150,079	154,709	158,200	151,402
Ounces sold (oz)	137,872	153,748	157,723	172,935	139,821

Average realized price⁰ ($/oz)	$1,436	$1,309	$1,304	$1,228	$1,214
Total cash costs⁰ ($/oz sold)	$730	$793	$739	$712	$798
AISC^0,2 ($/oz sold)	$1,198	$1,143	$1,044	$1,098	$1,377

Mining^0,1 (C$/t mined)	$3.32	$3.38	$3.05	$2.92	$3.01
Milling⁰ (C$/t milled)	$8.23	$9.75	$10.60	$9.65	$9.74
G&A and other^0,2 (C$/t milled) - G&A - Indigenous communities	$4.41 $3.49 $0.93	$4.58 $3.75 $0.83	$4.11 $3.73 $0.38	$3.60 $3.60 $0.00	$3.48 $3.23 $0.24
Total Cost/Ore Tonne (C$/t)	$29.58	$32.24	$30.27	$28.73	$33.08
¹ Includes capitalized stripping in excess of the average strip ratio of 3.4 in current Life of Mine (“LOM”) plan. ² Includes costs related to agreements with Indigenous communities. Note: Totals may not add due to rounding.

Unit Costs Q3 2019 vs Q3 2018

Unit costs for mining in Q3 mainly reflected higher costs for explosives to obtain better fragmentation, additional costs associated with the RC grade control program and longer cycle time to haul waste material to the tailings management facility (“TMA”). The higher mining costs contributed in part to the 16% improvement in milling costs and are down quarter on quarter.
Unit costs for milling in Q3 reflected lower milling consumables as a result of fragmentation improvements (i.e. better crushing and grinding performance, and higher recovery), lower maintenance costs with better control over scopes of work during shutdowns, and favourable electricity prices.
Unit costs for G&A and other in Q3 reflected higher payments to Indigenous communities than the prior year and increased headcount associated with progressive reclamation activities. Starting in 2019, certain costs relating to the Company’s agreements with Indigenous communities are predominantly gold price linked. Going forward, these costs are expected to show more variability, in line with the U.S. dollar gold price.

2019 Outlook

Based on the results from the first nine months of the year and the strong outlook for Q4 2019, we are expected to meet the higher end of guidance for gold production and are raising the lower end of the range from 570,000 ounces to 590,000 ounces.

As previously indicated, we expected to see lower production in Q3 as a result of lower mined grades and mine sequencing that led to a 5,000 ounce gold-in-circuit inventory build towards the end of September which was unwound in early October. As per the mine plan, we are realizing strong mined grades in Q4 resulting in very strong October production of 60,000 ounces poured, including the largest weekly gold pour in the history of the Company at 17,500 ounces at month end.

Our strong Q4 forecast production and cost performance are giving us the confidence to lower the AISC guidance range by $75 per ounce to $1,100-$1,175 and we expect to have costs towards the lower end of the new guidance range for AISC.

Our cash cost guidance range is also being reduced to $750-$790/oz, a $40 per ounce reduction.

The Company continues to focus on cost control, mining practices, contractor management and optimizing the short-term mine plan in light of the ongoing strong positive reserve reconciliation.

	Previous Guidance	Revised Guidance
Gold production (oz)	575,000 - 605,000	590,000 - 605,000
Total cash costs ($/oz sold)	$790 - $840	$750 - $790
AISC ($/oz sold)	$1,175 - $1,250	$1,100 - $1,175
Total capital expenditures (millions)	$190 - $210	$185 - $195

Unit mining costs expected to remain higher than projected in the 2018 LOM as a result of the lower expit tonnes now planned, higher blasting costs associated with the fragmentation project and higher RC grade control costs. All three of these items have offsetting positive impacts that outweigh their cost.
Processing costs expected to benefit from the finer feed product from the fragmentation project with anticipated lower consumable and electricity costs. We also expect the costs associated with planned shutdowns to decrease as we reduce backlog maintenance hours from 40,000 to a steady state number of 12,000 hours.
Mill recovery expected to be at the higher end to slightly above the guided range of 90.5-91.5% for the year.
The Company has also evaluated capital expenditures and with the deferral and cancellation of fleet replacements to the order of C$10-$15 million and deferral of major component replacements on the 795F truck fleet of C$2.5-$5 million, the Company will revise total capital expenditures guidance downwards from $190-$210 million to $185-$195 million.
The Company also expects to come in towards the bottom end of guidance of $80-$90 million for the TMA capital expenditures.
The Company continues to focus on improving grade control, mining practices, mobile fleet availability, reducing unplanned downtime and optimizing the short-term mine plan.

Q3 2019 Financial Review

Revenues for Q3 were $202.6 million on the sale of 137,872 ounces of gold at an average realized price⁰ of $1,436 per ounce.
Cost of sales for Q3 totaled $142.8 million, including $40.4 million of depreciation.
Total cash costs⁰ were $730 per ounce sold in Q3.
AISC⁰ were $1,198 per ounce sold in Q3.
Sustaining capital expenditures totaled $52.7 million for Q3, including $9.6 million of deferred stripping. The expenditures included $11.6 million for mining (mainly for major component replacements for the mobile fleet and other equipment), $2.5 million for the processing plant, $27.2 million for the ongoing construction of the TMA, and $1.8 million for site infrastructure.
Earnings from mine operations for Q3 totaled $59.8 million.
Net loss for Q3 was $12.6 million ($0.07 per basic share).
Adjusted net earnings⁰ in Q3 amounted to $35.3 million ($0.20 per basic share) with the largest part of the difference attributable to the impact of $20.3 million ($0.11 per basic share) of impairment of long-term deposits (representing irrecoverability of estimated down payments on significant components of mobile equipment) and the deferred tax impact associated with the amendment of the closure plan of $16 million ($0.09 per basic share).

Liquidity and Capital Resources

As at September 30, 2019, the Company had $144.2 million of cash and cash equivalents and a net cash position of $44.2 million.
In Q3, the Company executed a third amendment and restatement of the existing credit agreement, to provide for a new $400 million senior secured revolving credit facility (the “Revolver”), with an accordion option allowing the Company to increase the size of the facility, subject to customary terms and conditions, by another $100 million to a total amount of $500 million.
The reduction in the facility size is a direct result of the Company’s strong cash generation while the accordion maintains optionality to increase the facility if necessary.
In September 2019, the Company repaid $100 million of principal on the Revolver, resulting in a drawn balance of $100 million at period end.

Financial Risk Management

The Company has established financial risk management programs for its gold sales, Canadian dollar expenditures, and diesel fuel requirements for 2019 and 2020. These programs are in place to help protect the margin on a portion of the Company's gold production and sales. As at September 30, 2019, the Company has the following outstanding positions:

345,000 ounces of zero-cost Asian gold collars, of which 126,000 ounces are denominated in Canadian dollars, on 45% of the Company’s remaining 2019 and 2020 gold sales. The Canadian dollar denominated gold collars lock in the correlation between U.S. dollar denominated gold prices and the U.S./Canadian dollar exchange rate. The Asian gold collars mature monthly throughout each quarter over 2019 and 2020. Asian collars are low volatility and are only exercised when the strike price is above or below the average LBMA PM fix for the month of maturity. The impact of daily spikes or declines in prices are therefore muted through averaging. The hedges are settled net in cash.
$150 million of zero-cost European collars whereby the Company can sell U.S. dollars at an average rate of 1.29 and can participate up to an average rate of 1.37. These zero-cost European collars expire throughout the remainder of 2019 and first half of 2020. The Canadian dollar denominated Asian gold collars noted above provide protection against margin fluctuations over the second half of 2020 and therefore the Company did not take out any additional foreign exchange hedges. The coverage ratio is approximately 45% of the Company’s remaining 2019 Canadian dollar exposure and 30% for 2020. The hedges are settled in cash.
27.5 million litres of heating oil SWAP contracts at an implied average dye diesel price of C$0.85 per litre for 2019 and C$0.80 per litre for 2020 to hedge against dye diesel exposure. The SWAP contracts mature monthly and represent approximately 50% and 20% of the Company’s dye diesel consumption for the remainder of 2019 and 2020, respectively. The SWAP contracts settle net in cash.
The Company has not added any hedges since August 2019.

Selected Financial Information

(in $ millions unless specified)	Q3 2019	Q2 2019	Q1 2019	Q4 2018	Q3 2018
Metal sales	202.6	202.0	206.1	212.8	170.0
Production costs	100.1	121.4	117.1	125.9	112.2
Price-linked Indigenous expense	2.3	2.0	-	-	-
Depreciation	40.4	45.0	45.2	53.7	42.8
Cost of sales	142.8	168.4	162.3	179.6	155.0
Earnings from mine operations	59.8	33.6	43.8	33.2	15.0

Net earnings (loss)	(12.6)	16.0	38.9	(32.4)	12.7
Net earnings (loss) per share (basic)	(0.07)	0.09	0.22	(0.19)	0.07
Adjusted net earnings (loss)^0,1	35.3	11.3	18.3	17.6	(1.5)
Adjusted net earnings (loss) per share⁰	0.20	0.06	0.10	0.10	(0.01)
¹ In the second quarter of 2019, the Company incurred costs associated with payments to senior management upon resignation of $3.5 million (C$4.5 million). These costs were deemed to be non-sustaining and removed from adjusted net earnings. The Company has revised adjusted net earnings for the fourth quarter and second quarter of 2018 to reflect similar payments to senior management. Note: Totals may not add up due to rounding.

Exploration Activities

In Q3 of 2019, the Exploration department continued a large 120,000 metres core resampling program of the Detour Lake deposit, as part of the block model work underway.

Conference Call

The Company will host a conference call and webcast at 10:00 AM ET on Friday, November 15, 2019. Access to the conference call is as follows:

Via webcast, go to www.detourgold.com and click on the “Q3 2019 Results Conference Call and Webcast” link on the home page
By phone toll free in North America 1-800-319-4610
By phone Toronto local and internationally 416-915-3239

A playback will be available until December 15, 2019 by dialing 604-674-8052 or 1-855-669-9658 within Canada and the United States, using pass code 3671. The webcast and presentation slides will be archived on the Company’s website.

Technical Information

The scientific and technical content of this news release was reviewed, verified and approved by David Londono, Mine General Manager, a Qualified Person as defined by Canadian Securities Administrators National Instrument 43-101 “Standards of Disclosure for Mineral Projects.”

About Detour Gold

Detour Gold is a mid-tier gold producer in Canada that holds a 100% interest in the Detour Lake mine, a long life large-scale open pit operation. Detour Gold's shares trade on the Toronto Stock Exchange under the trading symbol DGC.

For further information, please contact:

Mick McMullen, President & CEO	Jaco Crouse, CFO
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 1E

Non-IFRS Financial Performance Measures (⁰)
The Company has included certain Non-IFRS measures in this document with no standard meaning under International Financial Reporting Standards (“IFRS”): total cash costs, all-in sustaining costs (AISC), unit costs, average realized gold price and average realized margin, adjusted net earnings, adjusted net earnings per basic share, free cash flow, net cash (debt) and operating cash flow per share. Refer to Non-IFRS Financial Performance Measures in the Company’s Q3 2019 MD&A for further information.

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.

Unit costs

Detour Gold reports the following unit costs:

Mining unit costs: calculated as mining costs divided by total tonnes mined (ore+waste).
Processing unit costs: calculated as processing costs (including bullion delivery and refining) divided by total tonnes milled.
G&A and other unit costs: calculated as site G&A and other costs, which includes costs related to agreements with Indigenous communities divided by total tonnes milled.

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 below), share-based compensation, corporate general and administrative expense net of corporate depreciation and other non-sustaining costs, exploration and evaluation expenses that are sustaining in nature, reclamation cost accretion, sustaining capital including deferred stripping, 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.

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 Indigenous communities, less 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 and total cash costs do not have any standardized meaning whether under IFRS or otherwise and therefore may not be comparable to other issuers. Accordingly, 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. These 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.

	Three months ended		Nine months ended
	September 30		September 30
In millions of dollars, except where noted	2019	2018	2019	2018

Gold ounces sold	137,872	139,821	449,343	437,737

Total Cash Costs Reconciliation
Production costs	$ 100.1	$ 112.2	$ 338.6	$ 331.8
Price-linked Indigenous expense	2.3	-	4.3	-
Less: Share-based compensation	(1.1)	(0.4)	(1.8)	(0.7)
Less: Silver sales	(0.6)	(0.2)	(1.9)	(0.9)
Total cash costs	$ 100.7	$ 111.6	$ 339.2	$ 330.2
Total cash costs per ounce sold	$ 730	$ 798	$ 755	$ 754

All-in Sustaining Costs Reconciliation
Total cash costs	$ 100.7	$ 111.6	$ 339.2	$ 330.2
Sustaining capital expenditures¹	52.7	74.8	137.8	166.3
Sustaining leases⁵	0.6	-	1.8	-
Accretion on decommissioning and restoration provision	-	-	0.1	0.1
Share-based compensation	1.1	0.4	1.8	0.7
Realized loss on operating hedges²	4.2	-	4.4	0.1
Net corporate administration expense³	5.6	5.5	19.5	18.4
Sustaining exploration expenditures⁴	0.3	0.3	1.1	1.0
Total all-in sustaining costs	$ 165.2	$ 192.6	$ 505.7	$ 516.8
All-in sustaining costs per ounce sold	$ 1,198	$ 1,377	$ 1,125	$ 1,181
¹Based 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 include the value of commissioned assets with deferred payments – major components are included when the replacement of a component occurs. Non-sustaining capital expenditures primarily relate to the West Detour project. 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 contractual severance/retirement payments for changes in senior management and proxy contest costs. 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. ⁵Includes the sum of principal and interest charges on Right-of-Use Assets identified during IFRS 16 adoption. These principal charges were previously treated as production costs and corporate administration expenses before the adoption of IFRS 16 on January 1, 2019.

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 earnings (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 millions of dollars, except where noted	2019	2018	2019	2018

Metal sales	$ 202.6	$ 170.0	$ 610.7	$ 563.2
Realized gain (loss) on gold contracts	(4.0)	-	(4.0)	-
Silver sales	(0.6)	(0.2)	(1.9)	(0.9)
Revenues from gold sales	$ 198.0	$ 169.8	$ 604.8	$ 562.3
Gold ounces sold	137,872	139,821	449,343	437,737
Average realized price per gold ounce sold	$ 1,436	$ 1,214	$ 1,346	$ 1,285
Less: Total cash costs per gold ounce sold	(730)	(798)	(755)	(754)
Average realized margin per gold ounce sold	$ 706	$ 416	$ 591	$ 531

Adjusted net earnings (loss) and Adjusted basic net earnings (loss) per share

Adjusted net earnings (loss) and adjusted basic net 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 is defined as net earnings adjusted to exclude specific items that are significant, but not reflective of the underlying operations of the Company, including: the impact of foreign exchange gains and losses, unrealized and non-cash fair value gains and losses of financial instruments, accretion on long-term debt, impairment provisions and reversals thereof, the impact of foreign exchange translation on non-monetary assets, non-sustaining corporate administration expense such as contractual severance/retirement payments for changes in senior management and proxy contest costs, and other unusual or non-recurring items. The tax effect of adjustments, as well as the deferred tax impact of foreign exchange translation on non-monetary assets and de-recognition of the deferred tax asset in respect of the decommissioning and restoration liabilities for the Detour Lake mine closure plan, are presented in the income and mining tax adjustments line.

Adjusted basic net earnings (loss) per share is calculated using the weighted average number of shares outstanding under the basic method of earnings per share as determined under IFRS.

	Three months ended		Nine months ended
	September 30		September 30
In millions of dollars and shares, except where noted	2019	2018	2019	2018

Basic weighted average shares outstanding	177.0	175.2	176.2	175.1

Adjusted net earnings and Adjusted basic net earnings per share reconciliation

Earnings before taxes	$ 14.5	$ 6.0	$ 65.5	$ 75.0
Adjusted for:
Non-sustaining corporate administrative expense³	-	-	3.5	3.8
Impairment of Long-Term Deposits⁴	20.3	-	20.3	-
Accretion on debt¹	0.4	0.2	1.3	1.2
Non-cash unrealized loss on derivative instruments²	15.1	(1.1)	17.6	1.8
Foreign exchange (gain) loss¹	0.4	(1.3)	(1.7)	2.1
Adjusted earnings before taxes	$ 50.7	$ 3.8	$ 106.5	$ 83.9

Income and mining taxes (expense) recovery	(27.1)	6.7	(23.2)	(43.6)
Income and mining tax adjustments	11.7	(12.0)	(18.2)	11.6
Adjusted income and mining tax expense	$ (15.4)	$ (5.3)	$ (41.4)	$ (32.0)

Adjusted net earnings (loss)	$ 35.3	$ (1.5)	$ 65.1	$ 51.9
Adjusted basic net earnings (loss) per share	$ 0.20	$ (0.01)	$ 0.37	$ 0.30
¹Balance included in the statement of comprehensive earnings (loss) caption “Net finance cost”. The related financial statements include a detailed breakdown of “Net finance cost”. ²Includes 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). ³ In the second quarter of 2019, the Company also incurred costs associated with contractual payments to senior management upon resignation of $3.5 million (Cdn $4.5 million). During the second quarter of 2018, the Company incurred in a similar amount related to changes in senior management, including the retirement of the President and CEO. ⁴During September 2019, the Company completed a review of the recoverable value of long-term deposits and recorded an impairment expense of $20.3 million to reduce its carrying value to its recoverable value.

Free Cash Flow

Free cash flow is calculated as cash flow from operations less cash flow from investing activities. It provides useful information to management as an indicator of the cash generated from the Company’s operations before consideration of how those activities are financed.

	Three months ended		Nine months ended
	September 30		September 30
In millions of dollars	2019	2018	2019	2018

Net cash generated by operating activities	$ 88.4	$ 81.8	$ 292.4	$ 215.5
Net cash used in investing activities	(50.9)	(74.5)	(134.4)	(164.9)
Free cash flow	$ 37.5	$ 7.3	$ 158.0	$ 50.6

Net Cash (Debt)

Net cash (debt) is comprised of the face value of the Company’s long-term debt less cash and cash equivalents. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s financial position and its ability to take on new debt in the future, purchase new assets or withstand adverse economic conditions.

In millions of dollars	September 30 2019	December 31 2018

Cash and cash equivalents	$ 144.2	$ 131.9
Less: Long-term debt face value	(100.0)	(250.0)
Net Cash (Debt)	$ 44.2	$ (118.1)

Operating cash flow per share

Operating cash flows generated from operations is intended to provide additional information only and does not have any standardized meaning under IFRS.

	Three months ended		Nine months ended
	September 30		September 30
In millions of dollars	2019	2018	2019	2018

Net cash generated by operating activities	$ 88.4	$ 81.8	$ 292.4	$ 215.5
Weighted average basic number of shares outstanding	177.0	175.2	176.2	175.1

Operating cash flow per basic share	$ 0.50	$ 0.47	$ 1.66	$ 1.23

Additional IFRS Financial Performance Measures
The Company has included the additional IFRS measure “Earnings from mine operations” in the news release. The Company believes that this measure 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.

Cautionary Note regarding Forward-Looking Information
This news release contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking statements”). Forward-looking statements reflect current expectations or beliefs regarding future events or the Company’s future performance. 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.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements, including those herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release speak only as of the date of this news release or as of the date or dates specified in such statements.

Specifically, this news release contains forward-looking statements regarding items including, but not limited to: 2019 gold production; 2019 total cash costs; 2019 AISC; 2019 total capital expenditures; unit costs compared to the 2018 LOM projections; benefits from the finer feed product on processing costs; costs associated with planned shutdowns to decrease; mill recovery, TMA capital expenditure and sustaining capex compared to the guided 2019 range; and savings from contractor management.

Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company’s ability to predict or control. These risks, uncertainties and other factors include, but are not limited to, the results of the life of mine plan (“2018 LOM Plan”), 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, support of the Company’s Indigenous communities, interest rate and exchange rate fluctuations, general economic conditions and other risks involved in the gold exploration, development and production industry, as well as those risk factors listed in the section entitled "Description of Business - Risk Factors" in Detour Gold's Annual Information Form for the year ended December 31, 2018 (“AIF”) and in the continuous disclosure documents filed by Detour Gold on and available on SEDAR at www.sedar.com. Readers are cautioned that the foregoing list of factors is not exhaustive of the factors that may affect forward-looking statements. Actual results and developments and the results of the 2018 LOM Plan are likely to differ, and may differ materially or materially and adversely, from those expressed or implied by forward-looking statements, including those contained in this news release. Such statements are 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; results of operations; the Company’s available cash resources; 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 Indigenous 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 mineral reserve and mineral 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; and general business and economic conditions.

The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements 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.

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