Detour Gold loses $54.94-million (U.S.) in Q1

2014-04-30 19:09 ET - News Release

Mr. Paul Martin reports

DETOUR GOLD REPORTS FIRST QUARTER 2014 RESULTS

Detour Gold Corp. is releasing its financial and operational results for the first quarter of 2014. This release should be read in conjunction with the company's first quarter 2014 financial statements, and management discussion and analysis, on the company's website or on SEDAR. All amounts are in U.S. dollars unless otherwise indicated.

First quarter 2014 highlights:

Capital expenditures totalled $17.4-million for the first quarter of 2014. There was no capitalization of stripping costs during the period.

Liquidity and capital resources

Cash and cash equivalents were $145.2-million at March 31, 2014. The cash position reflects the net proceeds from the bought-deal offering and the repayment of $40-million of the $70-million drawn under the revolving credit facility. During the quarter, the company completed its negotiation with its equipment lease provider to defer the first and second quarter principal lease payments in 2014, which have a total value of $14.7-million.

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. The policy was put in place to reduce gold price risk as the company continues to ramp up its operation to design capacity by the end of 2014. In January, 2014, the company entered into a series of forward sales contracts pursuant to which the company sold forward a portion of its gold sales in 2014. During the quarter, the company realized a loss on settlement of its gold forward positions of $5.6-million as spot prices trended higher through the quarter. As at March 31, 2014, the company had a total of 70,000 ounces of gold hedged, representing approximately 20 per cent of the company's 2014 remaining forecasted gold sales.

At April 30, 2014, the hedge coverage ratio was approximately 30 per cent.

As of March 31, 2014, the company had a total of $70-million of foreign exchange contracts to hedge 2014 Canadian-dollar expenditures.

                              SUMMARY FINANCIAL DATA
            (in thousands of U.S. dollars, except per-share amounts)

                               First    Second      Third    Fourth     First
                             quarter	  quarter    quarter   quarter   quarter
                             of 2013   of 2013    of 2013   of 2013   of 2014

Metal sales                        -         -   $ 33,088  $120,836  $110,015
Production costs                   -         -     30,363    97,965    83,132
Depreciation and depletion         -         -      2,939    33,993    30,603
Mine standby costs                 -         -          -     4,191         -
Inventory writedown                -         -          -    14,636         -
Cost of sales                      -         -     33,302   150,785   113,735
Gross profit (loss) from
operations                         -         -       (214)  (29,949)   (3,720)
Net earnings (loss)            23,413    23,097   (11,846)  (46,960)  (54,943)
Net earnings (loss) per
share                        $   0.20  $   0.19  $  (0.09) $  (0.34) $  (0.38)
Adjusted net loss             (12,908)  (11,769)  (10,622)  (35,921)  (28,092)
Adjusted net loss per
share                        $  (0.11) $  (0.10) $  (0.08) $  (0.26) $  (0.20)

2014 exploration program

The company's initial 8,000-metre drilling program in the Lower Detour area, approximately six kilometres south of the Detour Lake processing plant, was extended as a result of encouraging preliminary results and a longer winter drilling season.

The company has now completed the program with 14,874 metres in 40 holes and received assay results for approximately 30 per cent of the program. Results of the entire program are anticipated to be released by the end of the second quarter.

A new mineralized system has been identified to the north of zone 75 after following up on the high-grade intercept of 17.3 g/t over 4.4 metres (DLD-13-075, last hole of the 2013 drilling program). Approximately 11,638 metres in 30 holes tested this new zone (referred to as zone 58N). The mineralized system extends over a strike length of 300 metres and has been tested from surface to a depth of approximately 300 metres. The gold mineralization is found within an altered feldspar porphyry intrusive containing quartz and quartz-tourmaline veins with pyrite and visible gold.

2014 outlook

The company continues to focus on completing the ramp-up of the Detour Lake mine to design capacity by improving operating efficiencies. The main focus for the second quarter is to complete the southwall pushback which, along with the completion of the final south ramp access, will provide improved access to higher-grade ore. As per the mine plan, gold production is expected to be higher in the second half of 2014, as mining activity reaches the higher-grade benches and the mill throughput progresses toward design capacity of 55,000 tonnes per day in the fourth quarter, thereby further reducing unit operating costs.

Capital expenditures are expected to be higher in the second and third quarter as the construction of the tailings facility accelerates.

The company maintains its gold production and cost guidance for 2014.

                      2014 GUIDANCE

Total gold production (ounce)                      450,000 to 500,000
First half of 2014                                 200,000 to 225,000
Second half of 2014                                250,000 to 275,000
Total cash costs (dollar per ounce sold)                 $800 to $900
Sustaining capital expenditures (millions of 
dollars)                                                         $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.

Conference call

The company will host a conference call on Thursday, May 1, 2014, at 9 a.m. ET, during which senior management will discuss the first quarter financial and operational results. The details of the conference call are as follows:

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 U.S. at 1-800-319-6413 or internationally at 604-638-9010, passcode 1532 (available up to May 29, 2014).

Annual general meeting

Detour Gold will host its AGM on Thursday, May 1, 2014, at 2 p.m. ET in confederation rooms 5 and 6, of the Fairmont Royal York, located at 100 Front St. W in Toronto, Ont.