TORONTO, March 7, 2019 /CNW/ - Detour Gold Corporation (TSX: DGC) ("Detour Gold" or the "Company") reports its financial results for the fourth quarter and year ended December 31, 2018. The Company previously released its fourth quarter and full year 2018 operational results on January 15, 2019. All amounts are in U.S. dollars unless otherwise indicated.
Detour Gold (CNW Group/Detour Gold)
This release should be read in conjunction with the Company's Audited Consolidated Financial Statements and corresponding MD&A for the year ended December 31, 2018 filed on SEDAR and posted on the Company's website. All references to non-IFRS measures are denoted with the superscript "0" and are discussed at the end of this news release.
•Annual gold production of 621,128 ounces, above mid-point of the annual guidance of 595,000 to 635,000 ounces
•Revenues of $776.0 million on sales of 610,672 ounces of gold at an average realized gold priceo of $1,268 per ounce
•Earnings from mine operations of $145.7 million
•All-in sustaining costs ("AISC")o of $1,158 per ounce sold, below guidance of $1,200 to $1,280 per ounce sold
•Net loss of $1.0 million ($0.01 per basic share) and adjusted net earningso of $64.2 million ($0.37 per basic share)
•Year-end cash and cash equivalents of $131.9 million
•Repaid $20.0 million on the revolving credit facility
•Extended revolving credit facility by one year from July 2021 to July 2022
•Updated LOM plan in June 2018 with technical report filed in November 2018
•Initial mineral resource estimate for Zone 58N
Q4 2018 Highlights
•Quarterly gold production of 158,200 ounces, representing best ever quarterly production
•Revenues of $212.8 million on sales of 172,935 ounces of gold at an average realized gold priceo of $1,228 per ounce
•Earnings from mine operations of $33.2 million
•AISCo of $1,102 per ounce sold
•Net loss of $32.4 million ($0.19 per basic share) and adjusted net earningso of $17.0 million ($0.10 per basic share)
•Financial risk management programs established for gold sales, Canadian dollar expenditures, and diesel fuel exposures for 2019
•Bill Williams appointed Interim Chief Executive Officer on January 3, 2019 (following the voting results at the Special Meeting of shareholders on December 13, 2018)
•Resignation of James Mavor, Chief Financial Officer, effective April 15, 2019
•Resignation of James Gowans, Director and Board Chair, effective March 6, 2019
•Appointment of Dawn Whittaker as Interim Chair of the Board, to hold office until the Annual General Meeting of Shareholders on June 5, 2019
Q4 2018 Financial Review
•Fourth quarter revenues for 2018 were $212.8 million on the sale of 172,935 ounces of gold at an average realized priceo of $1,228 per ounce.
•Total cash costso for the fourth quarter of 2018 were $712 per ounce sold, representing an increase of 1% from the prior year period.
•Fourth quarter AISCo for 2018 was $1,102 per ounce sold compared to $989 per ounce sold from the prior year period, reflecting higher sustaining capital expenditures, including deferred stripping costs.
•Sustaining capital expenditures totaled $50.1 million for the fourth quarter, including $22.9 million for mining (mainly for major component replacements for the mobile fleet and two excavators), $18.5 million for the ongoing construction of the tailings facility, $6.6 million for the processing plant, and $2.2 million for site infrastructure. Deferred stripping costs totaled $11.0 million.
•Earnings from mine operations for the fourth quarter totaled $33.2 million.
•Net loss for the fourth quarter was $32.4 million ($0.19 per basic share). Adjusted net earningso for the fourth quarter amounted to $17.0 million ($0.10 per basic share).
Full Year 2018 Financial Review
•Revenues for the full year 2018 totaled $776.0 million on the sale of 610,672 ounces of gold. The average realized gold priceo in 2018 was $1,268 per ounce versus $1,256 per ounce in 2017.
•Total cash costso increased to $742 per ounce sold in 2018 from $716 per ounce sold in 2017, mainly due to higher diesel fuel costs and rope shovel repairs during the first half of the year. As well, the Company incurred higher milling costs in the first half of the year due to the maintenance and installation of a new mantle which necessitated contractor ore crushing costs to maintain mill throughput.
•AISCo increased by 9% to $1,158 per ounce sold in 2018 compared to 2017, primarily attributable to higher sustaining capital expenditures and total cash costs. AISC in 2018 were below the Company's guidance of $1,200 to $1,280 per ounce sold because of the delay in sustaining capital expenditures.
•Sustaining capital expenditures in 2018 amounted to $180.0 million, including $84.5 million for mining (mainly for payments for haul truck and shovel purchases, and major component replacements for the mobile fleet), $65.6 million for the ongoing construction of the tailings facility, $16.1 million for the processing plant, and $13.9 million for site infrastructure, mainly for the new accommodation camp. Deferred stripping costs totaled $47.5 million for the year.
•Sustaining capital expenditures were lower than guidance for the year due to delays in the construction of Cell 2 of the tailings facility, deferral of other discretionary capital, and a weaker Canadian dollar than budgeted.
•Earnings from mine operations for the year totaled $145.7 million.
•Net loss for 2018 was $1.0 million ($0.01 per basic share). Adjusted net earningso for 2018 amounted to $64.2 million ($0.37 per basic share).
Liquidity and Capital Resources
•Revolving credit facility extended by one year, from July 2021 to July 2022.
•A discretionary $20 million payment was made in 2018 towards the revolving credit facility.
•As at December 31, 2018, the Company had $131.9 million of cash and cash equivalents, and approximately $221.3 million available and undrawn from its $500 million Credit Facility.
Financial Risk Management
The Company has established financial risk management programs for its 2019 gold sales, Canadian dollar expenditures, and diesel fuel requirements. These programs are in place to reduce a portion of the Company's exposure to volatile markets and to lock-in known rates for budgeting purposes. As at February 28, 2019, the Company has the following positions:
•222,000 gold ounces of collars on approximately 45% of the Company's remaining 2019 gold sales at an average floor price of $1,250 per ounce and participation up to an average ceiling price of $1,423 per ounce. These collars mature relatively evenly over 2019.
•$300 million of collars that allow the Company to sell U.S. dollars at no worse than 1.27 and have upside to 1.35. These collars mature relatively evenly over 2019. These contracts along with other spot transactions completed in January and February have secured prices for approximately 60% of the Company's estimated 2019 Canadian dollar requirements.
•28.3 million litres of diesel fuel contracts at an average rate of C$0.85 per litre, which settle on a net basis. These contracts are predominantly weighted in the first nine months of 2019 and represent approximately 45% of the Company's diesel fuel requirements for the remainder of 2019.
Proxy Contest Costs and Deemed Change of Control
On July 26, 2018, Paulson & Co. Inc. ("Paulson") requisitioned a Special Meeting of shareholders and nominated eight Directors. The Special Meeting was held on December 13, 2018.
At the Special Meeting, five of Paulson's nominees were elected to the nine member Board. These nominees had not been nominated by Management. As the Paulson nominees represented a majority of the Directors on the Board, this resulted in a deemed change of control under the Company's Share Option Plan, Restricted Share Unit Plan (covering both RSUs and PSUs) and certain employment contracts. All previously granted share options held by employees and former employees immediately vested and all previously granted RSUs and PSUs under the Restricted Share Unit Plan immediately vested, resulting in a compensation expense in the period totaling $8.8 million. These awards were settled in cash resulting in payments totaling $12.3 million to certain employees and former employees of the Company in December 2018.
In addition, the Company incurred $4.9 million of costs associated with the proxy contest in relation to the engagement of third party advisors.
On February 11, 2019, the Company and Paulson announced that both parties had agreed to a dismissal of the court action that Detour Gold had commenced on July 24, 2018. As part of the agreement, both parties agreed to provide releases of certain claims in respect of the proxy contest, complaints made by the Company to Staff of the Ontario Securities Commission, the court action and reimbursement of certain costs claimed by Paulson of $2.6 million.
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Detour Gold Corp. TSX:DGC 10:43 12.52 CAD +0.14 +1.13% vol.357423 12.65 12.38