TORONTO, March 8, 2018 /CNW/ - Detour Gold Corporation
(TSX: DGC) ("Detour Gold" or the "Company") reports its
financial results for the fourth quarter and year ended
December 31, 2017. The Company
previously released its fourth quarter and full-year 2017
operational results on January 16,
2018 and its 2017 mineral reserve and resource statement on
February 22, 2018. All amounts are in
U.S. dollars unless otherwise indicated.
This news release should be read in conjunction with Detour
Gold's audited consolidated Financial Statements and related notes
and schedules for the year ended December
31, 2017, and related Management's Discussion and Analysis
("MD&A"), which are available from the Company's website
(www.detourgold.com) under the Investors section and on SEDAR
(www.sedar.com). All references to non-IFRS measures are denoted
with the superscript "1" and are discussed at the end of this news
release.
2017 Highlights
- Annual gold production of 571,463 ounces, within mid-range of
guidance of 550,000 to 600,000 ounces
- Revenues of $707.8 million on
sales of 561,974 ounces of gold at an average realized gold
price1 of $1,256 per
ounce
- Earnings from mine operations of $161.5
million
- All-in sustaining costs ("AISC")1 of $1,064 per ounce sold, at mid-point of guidance
of $1,025 to $1,125 per ounce sold
- Net earnings of $88.2 million
($0.50 per share) and adjusted
earnings1 of $114.5
million ($0.66 per share)
- Year-end cash and cash equivalents of $134.1 million
- Closed $500 million bank debt
facility
- Signed amended Impact Benefit Agreement with Taykwa Tagamou
Nation to include the West Detour project
- Proven and probable reserves of 15.8 million ounces of gold at
year-end
Q4 2017 Highlights
- Quarterly gold production of 150,046 ounces
- Revenues of $200.0 million
- Earnings from mine operations of $50.0
million
- AISC1 of $989 per
ounce sold
- Net earnings of $16.7 million
($0.10 per share) and adjusted
earnings1 of $40.2 million
($0.23 per share)
- Repaid $30 million on the
revolver credit facility
Subsequent Events
- Signed amended Impact Benefit Agreement with Wahgoshig First
Nation to include the West Detour project
Selected Financial Information
|
2017
|
2016
|
2017
|
2016
|
(in $ millions unless
specified)
|
Q4
|
Q4
|
Annual
|
Annual
|
Gold ounces
produced
|
150,046
|
143,512
|
571,463
|
537,765
|
Gold ounces
sold
|
156,293
|
144,668
|
561,974
|
527,727
|
|
|
|
|
|
Average realized
price¹ ($/oz)
|
1,277
|
1,210
|
1,256
|
1,221
|
Total cash costs¹
($/oz sold)
|
705
|
855
|
716
|
746
|
AISC¹ ($/oz
sold)
|
989
|
1,132
|
1,064
|
1,007
|
|
|
|
|
|
Unit costs
|
|
|
|
|
|
Mining (C$/t
mined)
|
2.99
|
3.25
|
2.89
|
2.89
|
|
Milling (C$/t
milled)
|
10.51
|
8.74
|
9.63
|
9.78
|
|
G&A (C$/t
milled)
|
3.43
|
3.46
|
3.37
|
3.36
|
|
|
|
|
|
Metal
sales
|
200.0
|
176.6
|
707.8
|
658.3
|
|
Production
costs
|
110.9
|
123.9
|
405.9
|
398.1
|
|
Depreciation and
depletion
|
39.1
|
47.8
|
140.4
|
165.3
|
Cost of
sales
|
150.0
|
171.7
|
546.3
|
563.4
|
Earnings from mine
operations
|
50.0
|
4.8
|
161.5
|
94.9
|
|
|
|
|
|
Net earnings
(loss)
|
16.7
|
(13.5)
|
88.2
|
(6.9)
|
Net earnings (loss)
per share
|
0.10
|
(0.08)
|
0.50
|
(0.04)
|
Adjusted earnings
(loss)¹
|
40.2
|
(6.0)
|
114.5
|
10.4
|
Adjusted earnings
(loss) per share¹
|
0.23
|
(0.03)
|
0.66
|
0.06
|
Note: Totals may not
add up due to rounding.
|
Q4 2017 Financial Review
- Fourth quarter revenues for 2017 were $200.0 million on the sale of 156,293 ounces of
gold. Revenues in the current period benefitted from a higher
amount of ounces sold and at a higher average realized gold price¹
of $1,277 per ounce, a $67 per ounce increase from the prior year
period.
- Total cash costs¹ for the fourth quarter of 2017 were
$705 per ounce sold, representing an
18% decrease from the prior year period. Lower total cash costs in
the current period resulted from increased gold sales volumes from
the processing of higher grade ore. As well, total cash costs in
2016 were impacted by additional costs associated with testing the
processing of fines.
- Fourth quarter AISC¹ for 2017 decreased to $989 per ounce sold from $1,132 per ounce sold due to lower total cash
costs and the timing of capital expenditures.
- Earnings from mine operations, net earnings and adjusted
earnings all reflect higher revenues and lower total cash costs in
the current period.
Full Year 2017 Financial Review
- Revenues for the full year 2017 totaled $707.8 million on the sale of 561,974 ounces of
gold. The average realized gold price1 in 2017 was
$1,256 per ounce versus $1,221 in 2016, as the Company realized market
prices on its 2017 gold sales.
- Total cash costs¹ decreased to $716 per ounce sold in 2017 from $746 per ounce sold in 2016, driven by higher
gold sales, modestly lower processing costs and there were no fines
tested in 2017.
- AISC¹ increased by 6% to $1,064
per ounce sold in 2017, primarily as a result of higher planned
sustaining capital expenditures. Sustaining capital expenditures in
2017 totaled $174.8 million and
included deferred stripping costs of $34.4
million.
- Earnings from mine operations, net earnings and adjusted
earnings for 2017 increased year-over-year, due to the factors
impacting higher revenues and lower total cash costs described
above.
Liquidity and Capital Resources
- The Company closed a $500 million
credit facility in July 2017. The
facility is comprised of a $300
million Revolving Credit Facility for a tenor of four years
and a $200 million Term Loan for a
tenor of three years.
- The convertible notes matured on November 30, 2017 and $320.5 million was repaid principally by drawing
down on the credit facility plus interest owed.
- Debt was reduced during the year by $88
million, including a discretionary $30 million payment made in December towards its
Revolving Credit Facility.
- As at December 31, 2017, the
Company had $134.1 million of cash
and cash equivalents, approximately $200
million available from its bank debt facility, and net debt
of $166 million.
Financial Risk Management
- During 2017, the Company entered into a number of gold, foreign
exchange and diesel derivative contracts. The total realized gain
on these derivative instruments for 2017 was $6.1 million.
- As at December 31, 2017, the
Company had $156 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 1.32. This represents a hedge
coverage ratio of approximately 25% for projected 2018
expenditures.
- The Company does not have any gold hedges as of March 8, 2018.
Upcoming Events
The Company is evaluating the opportunity of improving its
near-term gold production and cash flow profile by accelerating
access to the higher grades currently being processed in 2021 and
2022. Management anticipates that the results of this assessment on
its current LOM plan will be completed in the second quarter of
2018.
Conference Call
The Company will host a conference call on Friday, March 9, 2018 at 9:00 AM E.T. where senior management will discuss
the 2017 operational and financial results. Access the conference
call as follows:
- Via webcast, go to www.detourgold.com and click on the "2017
Fourth Quarter and Year-End Results Conference Call and Webcast"
link on the home page
- By phone toll free in Canada
and the United States
1-800-319-4610
- By phone internationally 416-915-3239
A playback will be available until April
9, 2018 by dialing 604-674-8052 or 1-855-669-9658 within
Canada and the United States, using pass code 2102. The
webcast and presentation slides will be archived on the Company's
website.
Annual General Meeting of Shareholders
Detour Gold's Annual General Meeting of Shareholders will be
held on May 3, 2018 at 2:00 PM E.T. in the St. Andrew's Lounge
(27th Floor) of Vantage Venues at 150 King Street West
in Toronto.
Technical Information
The scientific and technical content of this news release was
reviewed, verified and approved by Drew
Anwyll, P.Eng., Senior Vice President Technical Services, 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 an intermediate 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:
Paul Martin, President and
CEO
Tel: 416-304-0800
Laurie Gaborit, VP Investor
Relations
Tel: 416-304-0581
Detour Gold Corporation, Commerce Court West, 199 Bay Street,
Suite 4100, P.O. Box 121, Toronto,
Ontario M5L 1E2
Non-IFRS Financial Performance Measures (1)
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,
average realized gold price and adjusted earnings (loss). Refer to
Non-IFRS Financial Performance Measures in the Company's 2017
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.
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, exploration and evaluation expenses that
are sustaining in nature, reclamation cost accretion, sustaining
capital including deferred stripping, and 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 Aboriginal
communities, less non-cash 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
|
|
Year ended
|
|
|
December
31
|
|
December
31
|
In millions of
dollars, except where noted
|
|
2017
|
2016
|
|
2017
|
2016
|
|
|
|
|
|
|
|
Gold ounces
sold
|
|
156,293
|
144,668
|
|
561,974
|
527,727
|
|
|
|
|
|
|
|
Total Cash Costs
Reconciliation
|
|
|
|
|
|
|
Production
costs
|
|
$
|
110.9
|
$
|
123.9
|
|
$
|
405.9
|
$
|
398.1
|
Less: Share-based
compensation
|
|
(0.4)
|
0.2
|
|
(1.7)
|
(3.0)
|
Less: Silver
sales
|
|
(0.4)
|
(0.3)
|
|
(1.6)
|
(1.4)
|
Total cash
costs
|
|
110.1
|
123.8
|
|
402.6
|
393.7
|
Total cash costs per
ounce sold
|
|
705
|
855
|
|
716
|
746
|
|
|
|
|
|
|
|
All-in Sustaining
Costs Reconciliation
|
|
|
|
|
|
|
Total cash
costs
|
|
$
|
110.1
|
$
|
123.8
|
|
$
|
402.6
|
$
|
393.7
|
Sustaining capital
expenditures1
|
|
40.6
|
37.5
|
|
174.8
|
102.4
|
Accretion on
decommissioning and restoration provision
|
|
-
|
-
|
|
0.2
|
0.1
|
Share-based
compensation
|
|
0.4
|
(0.2)
|
|
1.7
|
3.0
|
Realized (gain) loss
on operating hedges2
|
|
(1.8)
|
-
|
|
(6.2)
|
1.8
|
Corporate
administration expense3
|
|
4.8
|
2.1
|
|
22.5
|
27.6
|
Sustaining
exploration expenditures4
|
|
0.5
|
0.5
|
|
2.1
|
2.8
|
Total all-in
sustaining costs
|
|
$
|
154.6
|
$
|
163.7
|
|
$
|
597.7
|
$
|
531.4
|
All-in sustaining
costs per ounce sold
|
|
$
|
989
|
$
|
1,132
|
|
$
|
1,064
|
$
|
1,007
|
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. 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 the MD&A. 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 within
those figures.
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.
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
|
|
Year ended
|
|
December
31
|
|
December
31
|
In millions of
dollars, except where noted
|
2017
|
2016
|
|
2017
|
2016
|
|
|
|
|
|
|
Metal
sales
|
$
|
200.0
|
$
|
176.6
|
|
$
|
707.8
|
$
|
658.3
|
Realized (gain) loss
on gold contracts
|
-
|
(1.1)
|
|
(0.1)
|
(12.8)
|
Silver
sales
|
(0.4)
|
(0.4)
|
|
(1.6)
|
(1.4)
|
Revenues from gold
sales
|
$
|
199.6
|
$
|
175.1
|
|
$
|
706.1
|
$
|
644.1
|
Gold ounces
sold
|
156,293
|
144,668
|
|
561,974
|
527,727
|
Average realized
price
|
$
|
1,277
|
$
|
1,210
|
|
$
|
1,256
|
$
|
1,221
|
Less: Total cash
costs per gold ounce sold
|
(705)
|
(855)
|
|
(716)
|
(746)
|
Average realized
margin per gold ounce sold
|
$
|
572
|
$
|
355
|
|
$
|
540
|
$
|
475
|
Adjusted earnings (loss) and Adjusted basic earnings (loss)
per share
Adjusted earnings (loss) and adjusted basic 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 earnings (loss) is defined as net earnings (loss)
adjusted to exclude specific items that are significant, but not
reflective of the underlying operations of the Company, including:
fair value change of the convertible notes, the impact of foreign
exchange gains and losses, deferred income and mining taxes,
non-cash unrealized gains and losses on derivative instruments,
accretion on long-term debt and decommissioning and restoration
provisions, impairment provisions and reversals thereof, and other
non-recurring items. Adjusted basic earnings (loss) per share is
calculated using the weighted average number of shares outstanding
under the basic method of earnings (loss) per share as determined
under IFRS.
1
Balance included in the statement of comprehensive earnings caption
"Net finance cost". The related financial statements include a
detailed breakdown of "Net finance cost".
|
Three months
ended
|
|
Year ended
|
|
December
31
|
|
December
31
|
In millions of
dollars, except where noted
|
2017
|
2016
|
|
2017
|
2016
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
174,838,628
|
174,574,001
|
|
174,699,112
|
173,530,610
|
|
|
|
|
|
|
Adjusted earnings
and Adjusted basic earnings per share reconciliation
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
|
16.7
|
$
|
(13.5)
|
|
$
|
88.2
|
$
|
(6.9)
|
Adjusted
for:
|
|
|
|
|
|
|
Fair value (gain)
loss of the convertible notes1
|
-
|
(13.0)
|
|
(0.9)
|
4.6
|
|
Accretion on
debt1
|
5.4
|
7.6
|
|
28.5
|
31.8
|
|
Accretion on
decommissioning and restoration provision1
|
-
|
-
|
|
0.2
|
0.1
|
|
Non-cash unrealized
(gain) loss on derivative instruments2
|
1.0
|
(4.5)
|
|
(0.5)
|
(1.7)
|
|
Foreign exchange
(gain) loss1
|
1.3
|
0.6
|
|
(4.6)
|
-
|
|
Deferred income and
mining taxes
|
15.8
|
16.8
|
|
3.6
|
(17.5)
|
Adjusted earnings
(loss)
|
$
|
40.2
|
$
|
(6.0)
|
|
$
|
114.5
|
$
|
10.4
|
Adjusted basic
earnings (loss) per share
|
$
|
0.23
|
$
|
(0.03)
|
|
$
|
0.66
|
$
|
0.06
|
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).
Additional IFRS Financial Performance Measures
The
Company has included the additional IFRS measure "Earnings (loss)
from mine operations" in the news release. Management noted that
"Earnings (loss) from mine operations" 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.
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"). These 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" 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.
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 the Company completing an assessment to
improve near-term gold production and cash flow profile by
accelerating access to the higher grades currently being processed
in 2021 and 2022 in the second quarter of 2018.
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, 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, interest rate
and exchange rate fluctuations, general economic conditions and
other risks involved in the gold exploration and development
industry, as well as those risk factors listed in the section
entitled "Description of Business - Risk Factors" in Detour Gold's
2017 Annual Information Form ("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 are
likely to differ, and may differ materially, 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; 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 Aboriginal
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.
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 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 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.
Information Containing Estimates of Mineral Reserves and
Resources
The mineral reserve and resource estimates were
prepared in accordance with Canadian National Instrument 43-101 -
Standards of Disclosure for Mineral Projects ("NI 43-101"), as
required by Canadian securities regulatory authorities. Readers are
advised to refer to the latest AIF of the Company and other
continuous disclosure documents filed by the Company available at
www.sedar.com, for detailed information regarding the mineral
reserve and resource estimates. For United States reporting purposes, the United
States Securities and Exchange Commission ("SEC") applies different
standards in order to classify mineralization as a reserve. In
particular, while the terms "measured", "indicated" and "inferred"
mineral resources are required pursuant to NI 43-101, the SEC does
not recognize such terms. Canadian standards differ significantly
from the requirements of the SEC. Investors are cautioned not to
assume that any part or all of the mineral deposits in these
categories constitute or will ever be converted into reserves. In
addition, "inferred" mineral resources have a great amount of
uncertainty as to their existence and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a
higher category. Under Canadian securities laws, issuers must not
make any disclosure of results of an economic analysis that
includes inferred mineral resources, except in rare cases.
SOURCE Detour Gold