TORONTO, April 26, 2018 /CNW/ - Detour Gold Corporation (TSX: DGC) ("Detour Gold" or the "Company") reports its operational and financial results for the first quarter of 2018 and provides an update on its assessment of a revised mine plan with guidance revisions for 2018.

Detour Gold (CNW Group/Detour Gold)

This release should be read in conjunction with the Company's first quarter 2018 Financial Statements and MD&A on the Company's website or on SEDAR. All amounts are in U.S. dollars unless otherwise indicated. All references to non-IFRS measures are denoted with the superscript "o" and are discussed at the end of this news release.

Q1 2018 Highlights
•Gold production of 157,141 ounces
•Mill throughput of 50,860 tpd and mining rate of 249,780 tpd
•Total cash costso of $744 per ounce sold and all-in sustaining costso ("AISC") of $1,072 per ounce sold
•Revenues of $201.4 million on gold sales of 151,060 ounces at an average realized priceo of $1,330 per ounce
•Earnings from mine operations of $51.0 million
•Net earnings of $9.9 million ($0.06 per basic share) and adjusted net earningso of $28.2 million ($0.16 per basic share)
•Cash and cash equivalents increase to $152.5 million at March 31, 2018 after repaying $10 million of debt

2018 Guidance Revisions
•2018 gold production and AISC revised to reflect anticipated mine sequencing changes for the revised life of mine plan (see below) and projected lower mill throughput, and actual and anticipated higher operating costs and additional capital expenditures

2018 Guidance
Revised Previous
Gold production (oz) 595,000-635,000 600,000-650,000
Total cash costso ($/oz sold) $700-$750 $670-$730
AISCo ($/oz sold) $1,200-$1,280 $1,050-$1,150

•2018 free cash flow before financing activitieso estimated at $55 million compared to $115 million in prior guidance

Update on Mine Plan Assessment

As previously disclosed, the Company has been evaluating the opportunity to improve the near-term gold production and cash flow profile of the Detour Lake operation by accelerating access to the higher grades scheduled to be processed in 2021 and 2022 under the life of mine plan issued in March 2017 ("2017 LOM plan").

Based on the Company's assessment, the revised mine plan increases gold production in 2019 and 2020 by approximately 50,000 ounces each year, thereby smoothing the projected gold production over the period 2019-23 to an average of approximately 600,000 ounces per year and substantially reducing the large variation in production under the 2017 LOM plan.

Despite achieving the primary objective of this assessment, the benefits are diminished as a result of two factors:
•During the review of the cost model from the 2017 LOM plan, management determined that some of the operating cost and capital expenditure assumptions needed to be increased and the quantum of anticipated operating and maintenance improvements needed to be slightly reduced. These changes reflect new insights derived from recent operational experience, some ongoing relevant benchmark comparisons and the Company not achieving its unit cost objectives for 2017; and
•As one of the Company's Aboriginal communities has not yet expressed its support of the Environmental Study Report filed in January 2017 for the West Detour project, management has now determined that greater permitting flexibility is appropriate and has therefore rescheduled the North pit development and any impact on Walter Lake to 2026. This delay is resulting in the deferral of approximately 150,000 ounces to beyond the 2019-23 period. The development of the West Detour pit remains in 2025.

The Company is in the process of completing its assessment and expects to release a revised life of mine plan in June 2018 ("2018 LOM plan") to reflect the foregoing factors. The areas which remain to be concluded are some of the future life of mine capital assumptions and the rate at which certain operating cost reductions can be realized although management does not anticipate these to have a significant impact on its overall conclusions to date. The planned mill throughput, life of mine strip ratio and assumed mobile equipment and fixed plant productivities are largely unchanged from the assumptions in the 2017 LOM plan.

Although work is continuing and more detailed reviews are still required, given the expected changes on the period 2019-23 and on the life of mine, the Company is providing the following preliminary information:
Mine Parameters
Period 2019-23 2018 LOM Plan (preliminary) Period 2019-23 2017 LOM Plan

Total mined (Mt) 617 639
Ore mined (Mt) 111 114
Strip ratio (waste:ore) 4.5 4.6
Ore milled (Mt)1 114 114
Average gold grade (g/t) 0.90 0.93
Recovery (%) 92.0 92.4
Total recovered gold (M oz) 3.0 3.15

Average annual gold production (oz) 606,000 630,000

(1) Includes 5.3 Mt of LG Fines and 1.8 Mt of low grade material (0.4-0.5 g/t) processed during that period.

Additional preliminary operational information for the period 2019-2023:
•Annual mining rate to ramp up to 126 Mt in 2023
•Annual plant throughput to increase to 22.5 Mt in 2019 and be maintained at 23.0 Mt starting in 2021
•Strip ratio to vary annually from 3.5:1 to 6.6:1
•ROM stockpiles are depleted and rebuilt at various times through this period


Preliminary financial analysis for the period 2019-2023 and life of mine:
Parameters
2018 LOM Plan 2 ( preliminary ) 2017 LOM Plan 1,2
Period 2019-2023

Gold Production (M oz) ~3.0 3.15
Total Site Costs4 (US$/oz sold) $950-$1,0003 $888


Total Site Cash Flows (pre-tax) (C$ Billions)
At $1,250/oz & FX rate 1.25 ~1.0 1.4
At $1,300/oz & FX rate 1.25 ~1.2 1.65

Life of Mine (2018-2040)
Gold Production (M oz) ~15.0 14.7
Total Site Costs4 (US$/oz sold) $810-$850 $747

Total Site Cash Flows (pre-tax) (C$ Billions)
At $1,250/oz & FX rate 1.25 $7.4-$8.1 $8.9
At $1,300/oz & FX rate 1.25 $8.3-$9.0 $9.85

NPV 5% (after-tax) (C$ Billions)
At $1,250/oz & FX rate 1.25 $3.0 -$3.2 $3.7
At $1,300/oz & FX rate 1.25 $3.4-$3.6 $4.1
(1)

2017 LOM Plan assumed a gold price of $1,250/oz for all years and FX rate of 1.27 for 2018 and 1.25 for all other years. Year 2017 has been removed from mine plan.
(2)

The following assumptions from the 2017 LOM plan are unchanged in the 2018 LOM plan: electricity costs at $0.035/kWh to end of 2024 (except $0.03/kWh for 2018) and $0.08/kWh for 2025+; diesel costs at $0.80/L for 2018+.
(3)

For 2019-20, preliminary total site costs average $1,050-$1,125/oz sold and are expected to gradually decline to below $900/oz sold in 2023.
(4)

Total site costs are presented on an average annual basis. This non-IFRS measure is discussed at the end of the news release.
(5)

Number not provided in March 2017 Technical Report.


Q1 2018 Results
Operational results
•Gold production totaled 157,141 ounces in the first quarter, reflecting higher head grades offset by lower mill throughput tonnage.
•Record head grade of 1.17 grams per tonne (g/t) was above projections for the quarter due to higher grades returned from mining the Campbell pit crown pillar. Mill recoveries were 91.1%, in line with plan.
•Mill throughput in the first quarter was 4.6 million tonnes (Mt), impacted by additional repairs predominantly to the primary crusher and related conveyor belt damage. The installation of a new redesigned mantle for the primary crusher is scheduled for June 2018.
•A total of 22.5 Mt (ore and waste) was mined in the first quarter (equivalent to mining rates of 249,780 tpd), well below plan due predominately to low shovel availability caused primarily by the premature failure of one of the rope shovel frames and, to a lesser extent, other shovel component failures, combined with the delay in commissioning the Company's seventh shovel (operational since mid-April). Mining rates are back on track with an average of approximately 300,000 tpd for April.
•At the end of the first quarter, run-of-mine stockpiles totaled 7.1 Mt grading 0.69 g/t (approximately 158,000 ounces).


Detour Lake Operation Statistics
Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
Ore mined (Mt) 5.8 4.7 5.4 4.9 4.8
Waste mined (Mt) 16.7 22.4 20.6 20.4 17.0
Total mined (Mt) 22.5 27.0 26.1 25.2 21.8
Strip ratio (waste:ore) 2.9 4.8 3.8 4.2 3.6
Mining rate (k tpd) 250 294 283 277 242

Ore milled (Mt) 4.6 5.0 5.7 5.5 5.2
Head grade (g/t Au) 1.17 1.04 0.86 0.95 0.88
Recovery (%) 91.1 90.3 89.6 89.8 88.6
Mill throughput (tpd) 50,860 54,144 61,548 60,259 58,114

Ounces produced (oz) 157,141 150,046 139,861 150,138 131,418
Ounces sold (oz) 151,060 156,293 128,498 142,970 134,213

Average realized priceo ($/oz) $1,330 $1,277 $1,273 $1,257 $1,216
Total cash costso ($/oz sold) $744 $705 $668 $706 $788

AISCo ($/oz sold) $1,072 $989 $1,032 $1,123 $1,118
Mining (Cdn$/t mined) $3.75 $2.99 $2.84 $2.83 $2.92
Milling (Cdn$/t milled) $11.60 $10.51 $8.29 $9.63 $10.26
G&A (Cdn$/t milled) $4.61 $3.43 $3.26 $3.35 $3.46

Note: Totals may not add due to rounding.

Financial Review
•Revenues for the first quarter were $201.4 million on the sale of 151,060 ounces of gold at an average realized priceo of $1,330 per ounce.
•Cost of sales for the first quarter totaled $150.4 million, including $37.5 million of depreciation (or $248 per ounce sold).
•Total cash costso of $744 per ounce sold in the first quarter, reflecting higher mining and milling costs, mainly attributable to unplanned repairs and contractor crushing costs (during repairs to primary crusher).
•AISCo of $1,072 per ounce sold in the first quarter, reflecting sustaining capital expenditures of $43.7 million and deferred stripping costs of $1.3 million.
•Sustaining capital expenditures included $29.3 million for mining (mainly for the haul truck and shovel purchases and major component replacements for some of the mobile fleet), $8.0 million for the ongoing construction of the tailings facility, $1.3 million for processing, and $5.1 million for site infrastructure (mainly for the new accommodation camp).
•Earnings from mine operations for the first quarter totaled $51.0 million.
•Net earnings for the first quarter were $9.9 million ($0.06 per basic share). Adjusted net earningso in the first quarter amounted to $28.2 million ($0.16 per basic share).


Liquidity and Capital Resources
•Debt was reduced in the quarter with a discretionary $10 million payment made in March towards its Revolving Credit Facility.
•As at March 31, 2018, the Company had $152.5 million of cash and cash equivalents, approximately $210 million available from its bank credit facility, and net debto of $108 million.

Financial Risk Management
•As at March 31, 2018, the Company had $144 million of zero-cost collars to hedge its Canadian dollar costs in 2018 whereby it can sell U.S. dollars at an average rate of 1.25 and can participate up to an average of 1.31. This represents a hedge coverage ratio of approximately 35% for projected expenditures for the remainder of 2018.
•The Company does not have any gold hedges as of March 31, 2018.

see and read more on
https://www.detourgold.com/investors/news/press-release-details/2018/Detour-Gold-Reports-First-Quarter-2018-Results-and-Provides-Update-on-Mine-Plan-Assessment-with-Guidance-Revisions-for-2018/default.aspx