New Detour West gold mine

Adding years to operation’s life

By Gregory Reynolds

The life of the Detour Lake Gold Mine, already having the biggest gold reserves in Canada, is being extended by the creation of a new mine beside it. Detour Gold Corporation chief executive officer Paul Martin says the permitting process is underway for Detour West, a second open pit operation on the company’s site located 185 km by road northeast of the Town of Cochrane.

The new mine is expected to add 1.5 million ounces to the company’s 16.4 million ounce reserve. Cost of developing Detour West is estimated at $80 million with gold production commencing in the first quarter of 2019. Gold production at the mine in 2016 is expected to be more than 500,000 ounces. Aim of the company is eventually to produce 650,000 ounces annually.

The present mine is an important economic contributor to the economy of Northeastern Ontario.

The company has 800 employees, with contractors bringing the total to over 1,000. Over the next two to three years, the company could add 130 to 150 new jobs to its workforce. Eleven per cent of the present workforce reside in the City of Timmins but through the purchase of supplies and services from local firms, the company plays a major role in the city’s economy. “There are 126 companies that provide goods and services to us. Over the past 18 months, we have purchased $60.5 million worth of supplies or contracting services from them,” Martin said in a recent presentation to city council. Martin sees the new mine adding several years to the estimated life (23 years) of the Detour operation.

At present, the company produces gold at less than $900 an ounce, well below the world price. Production guidance was revised in the second quarter from 540,000 to 590,000 ounces to 540,000 to 570,000 ounces of gold and sustaining capital increased by $10 million. Q2 gold production was 139,359 ounces at total cash costs of $691 per ounce sold and all-in sustaining costs (AISC) of $1,030 per ounce sold. “The company has accelerated its debt reduction program by buying back $82 million of debt from cash flow in the second quarter. We are now in a position to have surplus cash to meet our debt reduction target of $300 million by year-end, well ahead of our original target of late 2017,” stated Martin. “To better reflect our operational expectations for the second half of 2016, we believed it was appropriate to remove the upper end of our annual production guidance.”

Detour Lake is one of the largest gold producing mines in Canada.

Detour Lake contains an open pit mineral reserve of 16.4 million ounces of gold (514 Mt grading 0.99 g/t) using a cut-off grade of 0.5 g/t. Detour Gold says it is in a position to deliver superior returns with its growing cash flow profile, organic growth initiatives, and significant potential for further exploration discoveries on its large land package.

The company says it is dedicated to responsible mining and to the highest safety and environment standards while having a strong commitment to the communities it operates and lives in. The company said June 7 that it had successfully installed and commissioned a new 410-conveyor system in the first half of April.

In May, the plant recorded an impressive 2.0 Mt of ore processed, and while it is too early to confirm these rates for the long term, it is nevertheless a positive indication that we are on the right path to reach our target of processing 23 Mt of ore annually prior to 2019.”

Mine Plan Focus for 2016

  • Targeting mining rates of 250,000 - 270,000 tpd for H2 2016
    1. Phase 1 – mining rate on track
    2. Phase 2 – pioneering to accelerate with additional shovel in June
  • Improving open bit blast fragmentation