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Detour Gold Corporation (TSX:DGC
- News;
"Detour Gold" or the "Company") is pleased to report an
updated reserve and resource estimate for its 100% owned Detour Lake gold
project in northeastern Ontario. This update uses the same assumptions and
parameters as the mineral resources and reserves reported in the June 2010
feasibility study.
Highlights (base case using US$850/oz
gold)
-- A 31% increase in proven and probable open pit reserves from 11.4 to
14.9 million ounces
-- A 16% increase in global measured and indicated mineral resources to
20.5 million ounces (inclusive of mineral reserves), and an additional
5.1 million ounces in the inferred category
-- Life of mine (LOM) increased to 21 years from 16 years at mill
throughput ranging from 55,000 to 61,000 tpd
-- Initiating economic studies to evaluate an increase in process plant
throughput
"This significant reserve increase
and the high potential of finding more ounces from additional drilling
support our organic growth strategy. The positive impact of the 2010 drilling
campaign extended the Detour Lake open pit further to the west. With 14.9
million ounces, the Detour Lake deposit remains Canada's largest pure gold
play and ranks fourth among the top ten largest gold reserves in North
America. The next step is to proceed with further economic studies to
maximize the economics of the project, including a potential expansion of the
processing plant if gold price exceeds US$1,000/oz at the start of
operations," said Gerald Panneton, President
and Chief Executive Officer.
"Detour Gold has started
infrastructure construction activities at site and will be in a position to
pour concrete for the processing plant by April 2011. During the construction
period (2011-12), there will be up to 1,000 people working at site. The
Detour Lake mine will make a significant contribution to the economy of
northern Ontario, and with gold production expected to commence in early
2013, Detour Lake will be among the largest gold operations in North
America."
Detour Lake Mineral Resources
The database for this update
incorporated new drilling data from the 2010 drilling campaign (98,934 metres of 107,000 metres) and
all the drilling data from the feasibility study for a total of 985,848 metres of drilling in 6,047 holes, of which 435,563 metres is from Detour Gold's drilling campaigns.
The Ordinary Kriging
(OK) block model used for the global mineral resources covers the area
between sections 17,000E and 20,600E, extending an additional 500 metres to the west from the feasibility study block
model. The following improvements were made to the Detour Lake block model:
(1) addition of one mineralized domain, (2) barren dykes modeled (forming
three new domains), (3) vertical extension of block size dimension increased
from 10 to 12 metres (i.e. 10 (E-W) x 5 (N-S) x 12
(vertical) metres, (4) search radius ellipse size
reduced by 5 metres in the vertical direction (i.e.
from 50x30x10 metres to 50x25x10 metres), and (5) maximum search radius reduced along
strike for the inferred category from 200 to 150 metres
(i.e. 150x150x60 metres). The table below
summarizes the global mineral resources at various cut-off grades.
Detour Lake Global Mineral Resource Estimate(1)
Resource Cut-off Grade Tonnes Grade Capped(2) Gold Ounces
Category (g/t) (millions) (g/t Au) (000's)
----------------------------------------------------------------------------
Measured (M) 0.3 152.3 1.18 5,784
0.4 137.4 1.27 5,617
0.5 123.6 1.36 5,417
----------------------------------------------------------------------------
Indicated (I) 0.3 741.3 0.78 18,497
0.4 588.0 0.89 16,786
0.5 470.6 1.00 15,098
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total (M&I) 0.3 893.6 0.85 24,282
0.4 725.4 0.96 22,403
0.5 594.2 1.07 20,515
----------------------------------------------------------------------------
Inferred 0.3 375.7 0.62 7,444
0.4 264.9 0.73 6,214
0.5 190.3 0.84 5,144
----------------------------------------------------------------------------
(1) Mineral reserves are included within the mineral resources reported.
(2) Capping grade estimated by domains and varies from 15 g/t to 50 g/t.
MineSight software was used to generate an
optimum pit shell using the Lerchs-Grossman (LG)
pit optimizer algorithm based on the measured and indicated resources only,
using the same economic parameters established by the June 2010 feasibility
study. The table below shows the in-pit mineral resources at various cut-off
grades.
Detour Lake In-pit Mineral Resource Estimate(1)
Resource Cut-off Grade Tonnes Grade Capped(2) Gold Ounces
Category (g/t) (millions) (g/t Au) (000's)
----------------------------------------------------------------------------
Measured (M) 0.3 135.2 1.18 5,134
0.4 123.1 1.26 4,997
0.5 111.2 1.35 4,825
----------------------------------------------------------------------------
Indicated (I) 0.3 583.1 0.76 14,329
0.4 462.0 0.87 12,977
0.5 367.9 0.98 11,624
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total (M&I) 0.3 718.3 0.84 19,463
0.4 585.1 0.96 17,973
0.5 479.1 1.07 16,449
----------------------------------------------------------------------------
Inferred 0.3 36.7 0.56 658
0.4 21.5 0.71 489
0.5 14.2 0.84 386
----------------------------------------------------------------------------
(1) Mineral reserves are included within the mineral resources reported.
(2) Capping grade estimated by domains and varies from 15 g/t to 50 g/t.
Detour Lake Mineral Reserves
The open pit mineral reserves were
estimated within a detailed engineered pit design by using the measured and
indicated resources at a cut-off grade of 0.5 g/t. In the pit design,
inter-ramp pit slopes vary from 49 to 56 degrees depending on rock type and
structure orientation. The block model was prepared in MineSight
with the kriged block grades that include an
estimated dilution of 11.7%. The estimated proven and probable reserves total
14.9 million ounces, after using a 95% mining recovery rate and an additional
mining dilution of 3.8%. The stripping ratio (waste to ore) has increased to
3.9 from 3.3 as a result of a greater quantity of waste (including inferred
resources) contained within the new pit design due to insufficient drilling
at the west end of the pit. In all drilling programs to date, the Company has
had a very high success rate in converting inferred resources to the measured
and indicated categories (and reducing strip ratio). It is anticipated that
the 2011 drilling program will be as successful in proving the continuity of
the gold mineralization, resulting in a conversion to mineral reserves and a
lower strip ratio.
A summary table of the changes from the
feasibility study is shown below.
Summary of Changes in Mineral Reserves from June 2010 (FS) to January 2011
Feasibility Study New Update % Change
------------------------------------------------------------------------
Total P&P gold reserves (Moz) 11.4 14.9 +31%
------------------------------------------------------------------------
Tonnage (Mt) 347.5 451.4 +30%
------------------------------------------------------------------------
Grade (g/t) 1.02 1.03 +1%
------------------------------------------------------------------------
Strip ratio 3.3 3.9 +18%
------------------------------------------------------------------------
Mine life 16 21 +31%
------------------------------------------------------------------------
Estimated gold recovery (%) 91.2 91.0 -
------------------------------------------------------------------------
Gold price (US$/oz) 850 850 -
------------------------------------------------------------------------
Exchange rate 1.10 1.10 -
------------------------------------------------------------------------
Detour Lake Mineral Reserves at $850/oz (cut-off grade of 0.5 g/t)
Reserve Tonnes Grade Gold Ounces
Category (millions) (g/t Au) (000's)
-----------------------------------------------------------------------
Proven 93,715 1.29 3,886
Probable 355,838 0.96 10,974
-----------------------------------------------------------------------
Total (P&P) 449,553 1.03 14,860
-----------------------------------------------------------------------
The Company's strategy remains, as per
the feasibility study, to develop the mining schedule using an elevated
cut-off grade through the early years for a higher head grade to be processed
at the plant facility.
Capital Costs Status
Pre-production capital costs remain in
line with the feasibility study. The Company has entered into commitments for
approximately C$540 million for the project and has spent approximately C$80
million as of December 31, 2010. The current cash position of the Company is
approximately C$970 million, which is sufficient to advance the development
of the project through mid-2012. Construction progress remains on schedule
and on budget at this time.
Economic Studies to Start
With a solid reserve base of nearly 15
million ounces, Detour Gold is moving ahead with initiating further economic
studies to assess the potential for increasing the annual production profile
once the project has reached production in early 2013. The main opportunities
to be potentially realized are:
-- An increase in mill capacity (processing plant expansion) - initiating a
tonnage rationalization study to evaluate throughput options between
75,000 and 100,000 tpd (note that the purchased gyratory crusher is
already designed for higher capacity);
-- At US$1,000/oz or above and once the plant expansion is completed, the
Company could mine economically at a lower gold cut-off grade and
generate higher mineral reserves;
-- Engineering work optimization (i.e. pit slope improvements, potential
in-pit dumping of additional waste and tailings);
-- Additional drilling to convert inferred resources into measured and
indicated resources in the current pit to reduce strip ratio; and
-- Continue drilling campaign to test the western extension of the deposit
(i.e. 50,000 metres planned in 2011).
For a potential expansion to proceed, the Company may be required to obtain additional
authorizations or permits beyond those currently received or being sought to
accommodate for a larger open pit operation.
Qualified Persons
The mineral resources for Detour Lake
have been estimated by Michel Dagbert, Eng., Senior
Geostatistician and Andre Laferriere,
P. Geo., Senior Geologist of SGS Canada Inc. The mineral reserves for Detour
Lake have been estimated by Patrice Live, Eng., Mining
Manager of BBA Inc. All are independent Qualified Person (QP) under National
Instrument 43-101 and have reviewed and approved the content of this news
release.
A NI 43-101 compliant Technical Report
will be filed on the Company's website and on SEDAR within 45 days.
Conference Call
Detour Gold will hold a conference call
on Tuesday, February 1, 2011 at 10:00 AM EST where senior management will
discuss the mineral resource and reserve update and respond to questions from
analysts and investors. To join the call:
-- In Canada and the United States dial toll free 1-877-240-9772
-- International 416-340-2216
-- To listen to the audio webcast live online, go to: www.detourgold.com
(home page) and click on "Conference Call Audio Webcast February 1,
2011" under "Events" or go directly to www.gowebcasting.com/2195.
The conference call will be recorded and
playback of the call will be available after the event by dialing toll free
in Canada and the United States 1-800-408-3053, or internationally
416-695-5800, pass code 6848711 (available up to March 1, 2011). To listen to
the recorded webcast online, please go to www.detourgold.com, in the
"Investor Info" section under "Past Events".
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 results and
projections based on the assumptions and parameters contained in the June
2010 feasibility study of the Detour Lake gold project, including the reserve
and resource estimates, ore grade, the expected mine life, anticipated gold
production, gold recovery, the commencement of construction, cash operating
costs and other costs, the projected internal rate of return, capital costs,
sensitivity to metal prices and other sensitivities, the projected payback
period, the availability of capital for development, the financial analysis
and expected drilling activities. 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 Detour Gold's actual
results, performance or achievements to be materially different from any of
its 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 "Description of Business - Risk Factors" in Detour
Gold's 2009 annual information form. 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 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. In addition, the June 2010
feasibility study uses an estimate of gold price based on an approximate
three-year average. The operating and capital costs in the feasibility study
were developed to be reasonable estimates within industry benchmarks. There
is no certainty that the results of the feasibility study will ever be
realized. Should one or more of the risks or uncertainties involved in
forward-looking statements relating to the feasibility study materialize, or
should the assumptions underlying the feasibility study prove incorrect,
actual results of the feasibility study may vary materially from those
anticipated, believed, estimated or expected. 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.
Information Concerning Estimates of
Mineral Reserves and Resources
The mineral reserve and resource
estimates reported in this press release were prepared in accordance with
Canadian National Instrument 43-101Standards of Disclosure for Mineral
Projects ("NI 43-101"), as required by Canadian securities
regulatory authorities. 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.
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