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Enter Symbol
or Name
USA
CA



Detour Gold Corp
Symbol DGC
Shares Issued 156,806,791
Close 2014-03-10 C$ 9.87
Market Cap C$ 1,547,683,027
Recent Sedar Documents

Detour loses $12.29-million (U.S.) in 2013

2014-03-10 17:19 ET - News Release

Mr. Paul Martin reports

DETOUR GOLD REPORTS FOURTH QUARTER AND ANNUAL FINANCIAL RESULTS

Detour Gold Corp. has released its financial results for the fourth quarter and full-year 2013. The company previously released its fourth quarter and full-year 2013 operational results on Jan. 21, 2014. (All amounts are in U.S. dollars unless otherwise indicated. This press release should be read in conjunction with Detour Gold's consolidated financial statements and related notes and schedules for the year ended Dec. 31, 2013, and related management's discussion and analysis, which can be found on the company's website under the investor centre section or on SEDAR.)

Highlights for 2013:

  • Commercial production declared Sept. 1, 2013;
  • Gold production of 232,287 ounces for first year of operation;
  • Revenues from gold sales of $153.6-million during commercial production period (Sept. 1 to Dec. 31, 2013) at an average realized price of $1,283 per gold ounce sold;
  • Total cash costs of $1,182 per gold ounce sold;
  • Net loss of $12.3-million or 10 cents per share;
  • Cash and short-term investment balance of $90-million at year-end.

Fourth quarter 2013 highlights:

  • Gold production of 81,877 ounces;
  • Revenues from gold sales of $120.5-million at an average realized price of $1,269 per gold ounce sold;
  • Total cash costs of $1,174 per gold ounce sold;
  • Net loss of $47.0-million or 34 cents per share.

Recent highlights:

  • Entered into a six-year fixed-rate electricity contract at five Canadian cents per kilowatt hour with the Ontario Power Authority (refer to Jan. 27, 2014, news release);
  • Updated life-of-mine plan for the Detour Lake mine, which supports a 21.7-year operating life (refer to Feb. 4, 2014, news release);
  • Reported measured and indicated in-pit resources for block A (refer to Feb. 4, 2014, news release);
  • Appointed Paul Martin as president and chief executive officer and a director of the company and James Mavor as chief financial officer of the company (refer to Feb. 18, 2014, news release);
  • Closed bought-deal financing for gross proceeds of $172.5-million (Canadian) (refer to March 7, 2014, press release).

Mr. Martin, president and chief executive officer, commented: "Two thousand thirteen was a challenging year for Detour Gold as it commenced the ramp-up of the Detour Lake mine. The ramp-up of a large mining operation is an enormous undertaking and, when combined with a declining gold price, inevitably put additional pressure on our balance sheet. The equity offering we have just completed has alleviated this pressure by strengthening our financial position and allows us to reduce current debt levels. Our focus for 2014 is to complete the ramp-up of the operation to attain profitable production levels through continued production growth and reduced units costs. We also hope to benefit from both an improved gold price and the weakness of the Canadian dollar in 2014. I am pleased with the operating performance of the Detour Lake mine to date in 2014 and am optimistic that we will be successful in achieving our 2014 goals."

            SELECTED OPERATIONAL AND FINANCIAL INFORMATION FOR 2013

                       Q4            Q3             Q2            Q1    Q1-Q4 
               commercial commissioning  commissioning commissioning     2013
               production  & commercial         period        period
                   period    production
                                 period
Operational
results
Ore mined
(000s t)            4,088         4,161          2,708         1,287   12,244
Waste mined
(000s t)
(includes
overburden)        16,799        12,420          9,956         9,123   48,298
Total mined
(000s t)           20,877        16,581         12,664        10,410   60,542
Waste to ore
ratio                 4.1           3.0            3.7           7.1      3.9
Tonnes milled
(000s t)            3,412         3,877          2,868         1,022   11,179
Head grade
(g/t)                0.81          0.72           0.76          0.64     0.75
Recovery (%)           92            85             82            80       86
Gold ounces
produced           81,877        75,672         57,897        16,841  232,287
Gold ounces
sold               95,000        75,600         37,870         4,052  212,522
Selected
financial
results
Metal sales
($000s)          $120,836       $33,088             --            -- $153,924
Production
costs ($000s)      97,965        30,363             --            --  128,328
Net earnings
(loss) ($000s)    (46,960)      (11,846)       $23,097       $23,413  (12,296)
Average
realized
price
($/oz)              1,269         1,340             --            --    1,283
Total cash
costs per
gold oz
($/oz)              1,174         1,214             --            --    1,182
Average
realized
margin
($/oz)                 95           126             --            --      101

During the commercial production period in 2013 (Sept. 1 to Dec. 31), revenues amounted to $153.6-million from gold sales of 119,700 ounces. Prior to reaching commercial production at the Detour Lake mine, the company sold 92,822 ounces of gold for $126.3-million, which amount was credited against capitalized project costs. During the fourth quarter of 2013, revenues amounted to $120.5-million from gold sales of 95,000 ounces. During the fourth quarter of 2013, the company recorded a writedown of $14.7-million on its production inventories as a result of the decline in the gold price and higher mining and processing costs during the ramp-up phase, resulting in the carrying value of inventories exceeding their net realizable value. In addition, the company recorded mine standby charges of $4.2-million associated with fixed costs from the shutdown of the processing plant in December, 2013.

The company recorded a net loss in 2013 of $12.3-million, or 10 cents per share, and a net loss of $47.0-million, or 34 cents per share, in the fourth quarter of 2013. The net loss was primarily the result of recording operating losses, while the mine was ramping up to full production levels; lower realized gold prices; and the impact of the inventory writedown and mine standby charges.

Adjusted net loss in the fourth quarter of 2013 amounted to $35.9-million, or 26 cents per share. During the commercial production period of 2013, total cash costs were $1,182 per gold ounce sold, above the guidance of $1,100 per gold ounce sold, as a result of higher production costs and the loss of production due to the processing plant being shut down from Dec. 17 through the end of the year. The inclusion of the inventory writedown and mine standby charges in total cash costs per gold ounce sold increased the actual amount by $126 per ounce. During 2013, the company paid $171-million of the $190-million incurred in mine development and sustaining capital expenditures.

Liquidity and capital resources

Cash and cash equivalents were $90-million at Dec. 31, 2013. The company has drawn $70-million within its $90-million (Canadian) revolving credit facility. The company has also fully drawn down its $150-million equipment leasing facility and has repaid $39.9-million in principal. On March 7, 2014, the company closed a bought-deal financing for gross proceeds of $172.5-million (Canadian). The company intends to use up to approximately half of the net proceeds of the financing to repay debt and the rest for sustaining capital requirements, debt servicing costs and general corporate purposes and to improve working capital balances.

Financial risk management

In accordance with the company's gold sales risk management policy, management is permitted to enter into transactions to hedge up to 50 per cent of the company's 2014 forecasted gold sales. In January, 2014, the company entered into a series of forward sales contracts pursuant to which the company sold forward its gold sales in certain months of 2014. As at March 10, 2014, the company had a total of 85,000 ounces of gold hedged with 40,000 ounces of gold sold at an average price of $1,241 per ounce and the remaining 45,000 ounces of gold sold at an average price of $1,327 (Canadian) per ounce. This represents fewer than 20 per cent of the company's 2014 remaining forecasted gold sales. The company entered into zero-cost collars to hedge a portion of its Canadian-dollar expenditures in the first half of 2014. As of March 10, 2014, the company had a total of $40-million hedged. Pursuant to the terms of the zero-cost collars, the company has guaranteed it will purchase Canadian dollars at no worse than $1.04 and can participate up to $1.085. The zero-cost collars mature at a rate of $10-million a month (March to June, 2014).

                             GUIDANCE FOR 2014
Total gold production (oz)                                    450,000-500,000
H1 2014                                                       200,000-225,000
H2 2014                                                       250,000-275,000
Total cash costs ($/oz sold)                                 $        800-900
Sustaining capital expenditures ($ millions)                 $            131

Technical information

The scientific and technical content of this news release has been reviewed, verified and approved by Drew Anwyll, PEng, vice-president of operations, a qualified person as defined by Canadian Securities Administrators' National Instrument 43-101 (standards of disclosure for mineral projects).

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