TORONTO, ONTARIO--(Marketwire - Nov. 14, 2011) - Detour Gold Corporation (News - Market indicators) ("Detour Gold" or the "Company") reports on the construction progress at its Detour Lake gold project in northeastern Ontario. All dollar amounts are in Canadian dollars.
Detour Lake Construction Update
Detour Gold initiated infrastructure construction activities at the Detour Lake site in November 2010 following receipt of approvals from the provincial government. The project is now 40% complete and remains on schedule for gold production to start in the first quarter of 2013.
The following milestones and progress have been achieved on the development of the project:
- Procurement for equipment is 100% complete
- Detailed engineering is 91% complete
- Over 90% of major contracts are awarded
- Operations senior management team in place
- Processing plant building to be enclosed by end of November
- Connected to the provincial electrical power grid in October
- Construction of permanent camp started in October
- Construction of haul road underway for pre-stripping
- Delivery and assembly of mining equipment ahead of schedule
- First two mine operating teams in place
As of October 31, 2011, $1.0 billion has been committed towards project expenditures, including $547 million which has been incurred.
In June 2011, Detour Gold released a Project Control Estimate ("PCE") of $1.28 billion for total capital expenditures of the project. From the procurement process to managing construction costs at site, management has worked diligently to manage cost pressures. After completing 91% of the detailed engineering, reaching 100% in equipment procurement and having committed a total of $1.0 billion in project expenditures, the Company anticipates that pre-production capital costs for Detour Lake will reach $1.45 billion (includes approximately $50 million in contingency). The revised guidance is based on cost escalation since the June 2011 PCE driven mainly by higher key consumable input and labour costs, updated infrastructure requirements and increased expenditures to maintain the schedule to deliver first gold production in the first quarter of 2013. The Company has approximately $950 million in cash and will continue to monitor expenditures to ensure sufficient financing is available to complete the construction of the mine.
The process plant building is expected to be enclosed by the end of November. During the winter months, the Company will focus on installing most of the mill equipment, including the SAG and ball mills and gyratory crusher, which are scheduled to start arriving at site prior to year-end. Installation of the 20 leach tanks is nearly complete.
Detour Gold has started the construction of the haul road to access the open pit and is planning to start pre-stripping activities later this month. Six of the initial hauling trucks (CAT 795F) are fully assembled. The first hydraulic shovel (RH340) is assembled and one electric shovel is at site. Training of the first two operating crews is well underway.
In preparation for the grade control program to support mining operations and consistent with industry best practices, the Company is proceeding with a field exercise of approximately 10,000 metres of reverse circulation ("RC") drilling. The RC program will test an area of approximately 230 metres (north-south) by 100 metres (east-west) on a 10 metre by 5 metre spacing in the same area that was drilled on a 20 metre by 20 metre and 10 metre by 10 metre. Holes inclined at 50 degrees are testing the first two benches.
On November 4, 2011, the Canadian Environmental Assessment Agency (CEAA) posted the Detour Lake Comprehensive Study Report for a final public comment period, which ends on December 1, 2011. Following the public comment period, the Minister of the Environment will take into consideration the Comprehensive Study Report along with comments received from the public and Aboriginal groups and issue an environmental assessment decision statement.
Gerald Panneton, President and CEO of Detour Gold said, "The increased pressure on capital costs for projects has been a challenge for all of us building mines. The revised forecast of $1.45 billion is just above the +15% estimation accuracy of the feasibility study estimate, which is very acceptable compared to other large-scale projects being built today. Our team has done an exceptional job in controlling costs in this inflationary environment and, as such, most of the equipment purchases are in line with the feasibility study. With detailed engineering 91% complete and procurement of equipment finished, we have significantly reduced the risks going forward on further increases in capital costs. Detour Lake remains on track to produce gold in early 2013."
About Detour Gold
Detour Gold is a Canadian gold exploration and development company whose primary focus is to advance the development of its flagship Detour Lake gold project located in northeastern Ontario towards production. Detour Gold's shares trade on the Toronto Stock Exchange under the trading symbol DGC.
Forward-Looking Information
This press release contains certain forward-looking information as defined in applicable securities laws (referred to herein as "forward-looking statements"). Specifically, this press release contains forward-looking statements regarding the estimated capital cost and timing of successfully completing construction of the Company's Detour Lake project. Forward-looking statements involve known and unknown risks, uncertainties and other factors which are beyond Detour Gold's ability to predict or control and may cause actual results, performance or achievements to be materially different from any of future results, performance or achievements expressed or implied by forward-looking statements.
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 discussed in the section entitled "Risk Factors" in Detour Gold's July 27, 2011 short form prospectus and in the continuous disclosure documents filed by Detour Gold on and available at www.sedar.com. Such forward-looking statements are also 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; the estimated timeline for and costs related to the development of the Detour Lake gold project; the supply and demand for, and the level and volatility of the price of, gold; the accuracy of reserve and resource estimates and the assumptions on which the reserve and resource estimates are based; the receipt of necessary permits; market competition; ongoing relations with employees and impacted communities; and general business and economic conditions. Accordingly, readers should not place undue reliance on forward-looking statements. Detour Gold undertakes no obligation to update publicly or otherwise revise any forward-looking statements contained herein whether as a result of new information or future events or otherwise, except as may be required by law.
