Mr. Gerald Panneton reports
DETOUR GOLD ANNOUNCES UPDATED OPEN PIT MINE PRODUCTION PLAN FOR ITS DETOUR LAKE GOLD PROJECT IN ONTARIO
Detour Gold Corp. has provided an updated open pit mine production plan for its 100-per-cent-owned Detour Lake gold mine in Northeastern Ontario. The updated mine production plan supports a 21.5-year operating life with the current mineral reserve of 15.6 million ounces of gold (470 million tonnes grading 1.03 grams per tonne Au). Project construction is progressing very well, having reached the 87-per-cent completion mark at the end of August, 2012. Detour Lake remains on budget and on schedule for gold production to start in the first quarter of 2013. All figures are in Canadian dollars except where noted.
A National Instrument 43-101 technical report for the updated mine plan will be filed within 45 days on SEDAR and on the company's website.
Highlights
-
Proven and probable open pit reserves of 15.6 million ounces contained
gold;
-
Reduced strip ratio (waste to ore) to 3.7:1;
-
21.5-year life of mine (LOM) at mill throughput ranging from 55,000 to
61,000 tonnes per day;
-
Average annual gold production of approximately 657,000 ounces;
-
Average LOM cash operating costs of $710 per ounce and total cash costs of
$749 per ounce;
-
2013 gold production forecast between 350,000 and 400,000 ounces;
-
On schedule to start gold production in first quarter 2013.
"We are very pleased with this updated life-of-mine production plan and the detailed work we have done. Based on a production start-up of January, 2013, and assuming commercial production is achieved in July, the mine is expected to produce up to 400,000 ounces of gold in 2013," commented Gerald Panneton, president and chief executive officer of Detour Gold. "I would like to take this occasion to thank the entire Detour Gold team for their dedication and hard work. Our team is ready to start commissioning in the fourth quarter, which will be followed by the commencement of operations. We have succeeded in recruiting a very talented group of individuals who are playing an integral role in achieving our near-term objective of becoming a leading mid-tier gold producer and a premier investment opportunity. Over the first three years of operation including 2013, we estimate the project to generate over a $1-billion of operational cash flow. With average annual gold production projected at 657,000 ounces, the Detour Lake mine will be among the largest gold operations in North America."
PROJECT ASSUMPTIONS AND PARAMETERS
Prior (2) Update
Assumptions (01/2011) (09/2012)
Gold price (U.S.$/oz) $850 $1,200(1)
Foreign exchange rate (Cdn$/U.S.$) 1.10 1.00
Fuel price WTI ($/barrel) 80 100
Income/mining tax rate (%) 25/10 25/10
Net smelter royalty (%) 2.0 2.0
Mine parameters
Ore milled (Mt) 449.6 470.0
Waste mined (Mt) 1,654 1,734
Strip ratio (waste:ore) 3.9:1 3.7:1
Average gold grade (g/t) 1.03 1.03
Total contained gold (M oz) 14.9 15.6
Estimated gold recovery (%) 91.0 91.0
Total recovered gold (M oz) 13.5 14.1
Mine life (years) 21 21.5
Average annual gold production (oz) 657,000 657,000
Costs (3)
Preproduction capital ($ B) 1.18 1.45
Sustaining capital and mine closure ($ M) 998 1,200
Average cash operating costs ($/oz) 524 710
Average total cash costs ($/oz) 542 749
(1) $1,600 (U.S.) per ounce for 2013, $1,500 (U.S.) per ounce for 2014 and
$1,400 (U.S.) per ounce for 2015
(2) Press release dated Jan. 31, 2011, with technical report dated March
15, 2011
(3) For an overview of the projected cash flows, refer to pages four to five
-- capital costs update
Detour Lake mineral reserves
Detour Gold used the 2011 year-end mineral reserves (refer to press release Jan. 25, 2012) to develop the new life-of-mine (LOM) production plan. The 2011 year-end mineral reserves were estimated in MineSight with the kriged block grades that included an estimated dilution of 11.7 per cent. The proven and probable reserves totalled 15.6 million ounces, after using a 95-per-cent mining recovery rate and an additional mining dilution of 3.8 per cent.
DETOUR LAKE MINERAL RESERVES AT $850 (U.S.) PER OUNCE (CUT-OFF GRADE OF 0.5 G/T)
Reserve Tonnes Grade Gold ounces
category (millions) (g/t Au) (000s)
Proven 101,635 1.29 4,222
Probable 368,407 0.96 11,351
Total (P&P) 470,042 1.03 15,573
Mining and production
Total gold production over LOM is estimated to be 14.1 million ounces, averaging 657,000 ounces per year (plus 200,000 ounces of silver). The LOM waste-to-ore ratio is estimated at 3.7 to 1.
The company is planning to stockpile material grading between 0.3 to 0.5 g/t over the life of mine (approximately 240 million tonnes averaging 0.39 g/t Au), which could potentially be processed during the LOM if the company proceeds with an expansion of the processing plant facilities.
Summary of the annual mine production plan is outlined in the table.
Ore mined Ore milled Head grade Production Waste Strip
Years (kt) (kt) (g/t) (oz) (kt) ratio
2012 2,351 - - 0 26,427 11.24
2013 15,000 16,800 0.84 406,715(1) 54,664 3.64
2014 20,000 20,000 0.98 572,566 78,971 3.95
2015 22,265 22,265 0.92 599,143 97,697 4.39
2016 22,265 22,265 0.96 624,167 100,671 4.52
2017 22,265 22,265 1.00 648,401 102,654 4.61
2018 22,265 22,265 1.02 667,363 107,840 4.84
2019 22,265 22,265 1.00 653,635 109,919 4.94
2020 22,265 22,265 0.90 587,851 118,391 5.32
2021 22,265 22,265 0.95 618,607 118,393 5.32
2022 22,265 22,265 0.98 635,924 118,324 5.31
2023 22,265 22,265 0.99 644,558 118,307 5.31
2024 22,265 22,265 0.99 642,796 106,453 4.78
2025 22,265 22,265 1.02 664,032 84,891 3.81
2026 22,265 22,265 1.02 667,432 79,088 3.55
2027 22,265 22,265 0.98 639,283 72,701 3.27
2028 22,265 22,265 1.00 651,543 61,929 2.78
2029 22,265 22,265 1.07 699,560 59,951 2.69
2030 22,265 22,265 1.21 787,913 39,568 1.78
2031 22,265 22,265 1.22 794,326 36,737 1.65
2032 22,265 22,265 1.20 783,348 25,631 1.15
2033 22,265 22,265 1.14 745,060 13,285 0.60
2034 9,656 10,207 1.31 433,014 1,587 0.15
Total 470,042 470,042 1.03 14,167,237 1,734,079 3.68
(1) Two thousand thirteen production of 394,000 ounces of saleable gold plus
12,715 ounces locked in circuit load.
As part of the operation readiness plan, the prestripping operation is well under way in the Calcite zone (western portion) of the Detour Lake deposit. The company has started its mining activities in this wide mineralized zone (50 to 150 metres wide), with a lower grade (0.8 to 0.9 g/t) than the average grade of the mineral reserves, because it is wider and easier to provide ore production in the ramp-up year of the mine to sustain the mine throughput. The plan is to stockpile 2.3 million tonnes of ore at an average grade of 0.85 g/t by year-end 2012. This ore will be available if commissioning proceeds ahead of schedule. At the end of August, 2012, the company had mined over 14 million tonnes of material.
Conventional open pit mining methods will be used to mine the Detour Lake deposit utilizing an initial fleet of 20 haul trucks (CAT 795F -- 320 tonnes), two hydraulic shovels (CAT6060 -- 28/34 cubic metres), two electric rope shovels (CAT7495 -- 48 cubic metres), nine drills and various ancillary equipment to support the mining operation. The fleet will ramp up to 41 at the peak of the mine operation. The open pit design incorporates 12-metre high benches with a 35-metre-wide main haul road at a maximum grade of 10 per cent.
Processing plant -- two independent grinding lines
The processing plant under construction is a conventional gravity, cyanidation and carbon-in-pulp facility initially operating at 55,000 tonnes per day and ramping up to 61,000 tpd in 2015. The assumed availability of the plant is 92 per cent for the first few years and ramping up to 94 per cent in year three. The grinding circuit consists of two parallel lines, each having one twin pinion semi-autogenous (SAG) mill (36 feet by 20 feet) and one twin pinion ball mill (26 feet by 40.5 feet). These four mills are all equipped with a pair of 7,500-kilowatt variable speed drive motors. The crushing capacity is enhanced with inclusion of a larger gyratory crusher (60 inches by 113 inches HD equipped with 1,000 kW) and the addition of a secondary crushing circuit (two 750 kW crushers). This system is complemented with additional crushing capacity in the pebble crushing circuit (two 750 kW crushers).
The overall gold recovery is estimated at 91.0 per cent with silver recovery estimated at 48 per cent.
Operating costs
Cash operating costs over the LOM are projected to average $710 per ounce. Total cash costs (after royalty and silver credits) are anticipated to average $749 per ounce.
The updated cash operating costs are based on current market prices for consumables and all other mine benchmarking such as current costs at the project site. The following assumptions have been made: electricity -- 6.5 cents per kilowatt-hour and diesel fuel -- 92 cents per litre.
$/t milled $/t mined $/oz
Average mining costs 11.65 2.49 388
Processing cost 7.83 - 260
General and administration 1.86 - 62
Total cash operating costs (LOM) 21.34 - 710
Royalty (2%) and other 1.26 - 42
Refining charges 0.12 4
Silver credit (0.20) - (7)
Total cash costs (LOM) 22.52 - 749
Commercial production
The company plans to commence gold production in January, 2013, starting with one grinding line (one SAG plus one ball mill). Commercial production is expected to be declared on the first day of the calendar month following the mine having operated for a period of 60 consecutive days at an average of 75 per cent or more of the designed production capacity (55,000 tpd by 75 per cent is equal to 41,250 tpd). Precommercial gold production is estimated at approximately 144,000 ounces and commercial gold production is estimated at approximately 250,000 ounces (excluding the 12,715 ounces locked in the circuit load).
2013 guidance
Management's guidance is as follows:
-
Gold production ranging between 350,000 and 400,000 ounces of gold;
-
Total cash costs of between $800 per ounce and $900 per ounce (to be reported after
commercial production is declared);
-
Estimated 2013 sustaining capital of approximately $180-million, mainly
for construction of the second cell of the tailings facilities and
additional mining fleet costs.
Capital costs update
The estimated preproduction capital costs of $1.45-billion remain unchanged. As of July 31, 2012, the company had spent $1.07-billion and had approximately $462-million in cash and short-term investments, sufficient to fully finance the remaining project expenditures ($380-million). As part of the company's risk management strategy, it is in the process of obtaining a $100-million secured credit facility to provide additional financial flexibility and working capital during the initial mine ramp-up period. As well, the company is putting in place a $50-million credit facility that will allow its letters of credit to be uncollateralized.
Sustaining capital expenditures over the operation's mine life are estimated at $1.2-billion.
The economic cash flow model is based on a gold price of $1,600 (U.S.) per ounce in 2013, $1,500 (U.S.) per ounce in 2014, $1,400 (U.S.) per ounce in 2015 and then decreasing to $1,200 (U.S.) per ounce after 2015, resulting in estimated undiscounted pretax operating LOM cash flow of $4.3-billion (U.S.) and after capital and taxes net cash flow of $3.0-billion (U.S.).
Qualified persons
An NI 43-101-compliant technical report will be filed on the company's website and on SEDAR within 45 days. The report is being prepared by leading independent industry consultants, all qualified persons (QP) under National Instrument 43-101, with the collaboration of the Detour Gold technical group. The QPs have reviewed and approved the content of this news release. The following consultants participated in the study:
-
BBA Inc., under the direction of Andre Allaire, Eng, vice-president,
markets -- mining and metals (overall report preparation, mineral
processing and infrastructures, capital and operating cost estimates and
overall financial analysis) -- and Patrice Live, Eng, mining manager
(mineral reserves, open-pit optimization and engineered pit design, mine
planning, and mining capital and operating cost estimates);
-
SGS Canada Inc., under the direction of Michel Dagbert, Eng, senior
geostatistician (mineral resources), and Maxime Dupere, PGeo, senior
geologist (geology, quality assurance/quality control and data
verification).
Conference call
Detour Gold will hold a conference call today at 10 a.m. EDT where senior management will discuss this press release and respond to questions from analysts and investors. To join the call:
-
By phone toll-free in Canada and the United States, 1-866-226-1792;
-
By phone international, 416-340-2216;
-
To listen on-line, go to the company's website and click on the "Conference call audio webcast, Sept. 4, 2012" link on home page.
The conference call will be recorded and playback of the call will be available after the event by dialling toll-free in Canada and the United States 1-800-408-3053, or internationally 905-694-9451, pass code 6848711 (available up to Sept. 18, 2012).
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.