Momentum building at Detour Gold

POSTED ON January 15, 2015 BY James Fraser
CATEGORY Detour Gold,

A mining shovel at the Detour Lake mine (Image: Detour Gold)

Detour Gold (DGC.T), the owner of one of Canada's largest producing mines, released 2014 year end results and guidance for 2015 this morning. Detour is still in the process of trying to increase the milling rate and therefore output at the mine.

The stock is up 8% at press time but I believe the majority of that is from the bump in gold this morning rather than the yearly results. Detour is highly leveraged to the price of gold as it is a large producer with higher costs mostly due to the average grade being mined of ~0.80 grams per tonne.

2014 saw the company take a big step in the right directing with production of 456,634 ounces which was a 97% year over year increase from 2013 production of 232,287 ounces.

2015 guidance is between 475,000 and 525,000 ounces at an all in sustaining cost of $1050-$1150 per ounce.

Highlights for 2014 include

Gold production of 456,634 ounces, achieving lower end of guidance
Preliminary total cash cost of $930 per ounce sold, at midpoint of guidance; with fourth quarter estimated total cash costs of $875 per ounce sold
Exited 2014 at an average mill throughput rate of 54,310 tonnes per day (tpd) and mining rate of 234,000 tpd for December

Paul Martin, president and chief executive officer, commented: "We are pleased to announce that we achieved our production and cost guidance for 2014 and ended the year with $135-million in cash and short-term investments. By year-end, the mill was performing within 1 per cent of design capacity and mining rates were improving with an average of 234,000 tpd in December. Building upon this momentum is our key priority for 2015. We are optimistic that the initiatives we have under way, including improvements in the mining rate and the potential of processing of fines from our stockpiles, can further enhance our 2015 performance and enable us to achieve the higher end of our production guidance and lower end of our total cash cost guidance."

Detour share price responded in 2014 by doubling year over year as production increased.

I listened in on the companies conference call this morning to get the latest for CEO.ca readers.

Two interesting things I learned from the call involve costs savings from the weak $CAN dollar and the lower diesel price.

Every 1 cent drop in the dollar adds approximately $4 million to the Detour bottom line in year.
Detour uses 45-50 million litres of diesel per year so a 10% decline in the diesel price would also add approximately $4 million to the bottom line annually.

I still believe Detour is a legitimate takeover in the gold space as I mentioned in this post. Any company in the market for a large asset with a long mine life must have Detour near the top of the list.

With a market cap of ~$2 billion Detour is still trading at nearly half of the $3.9 billion dollar valuation Osisko received last year.

Symbol: DGC.T

Share price: $12.47
Shares outstanding: 157. 87 M
Market cap: $2B

Read: Detour Gold Reports Fourth Quarter and Full Year 2014 Operating Results and Provides 2015 Guidance or Goldcorp's next takeout

Discuss here in CEO.ca chat here

I have no position in any of the stocks mentioned. This is not investment advice. All facts are to be verified by reader.As always please do your own due diligence

James Fraser

Mr. Fraser joined CEO.ca in October 2014. He is passionate about the mining industry. His passion led to co-authoring the e-book "Mining Stocks Investor Guide: A Guide to Investing in Mining Companies." He has a finance background and has completed his Canadian Securities Course (CSC) and Conduct and Practices Handbook (CPH). When Fraser is not "digging" up the latest mining stock, he can be found enjoying a wide variety of sports or travelling the world. More →

Twitter: @miningstocks

james@miningstocksguide.com

James Fraser

Twitter: @miningstocks

james@miningstocksguide.com

Disclaimer:

Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any significant positions will be disclosed explicitly. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. Thomas Humphreys, Pacific Website Company Inc., and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. We reserve the right to buy and sell such securities or commodities without notice to readers. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Thomas Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in these publications or web site.

Forward-Looking Statements: This article may include certain "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking statements include predictions, projections and forecasts and are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "forecast", "expect", "potential", "project", "target", "schedule", budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions and includes the negatives thereof. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the potential of the Company's properties are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are based on a number of material factors and assumptions. Important factors that could cause actual results to differ materially from Company's expectations include actual exploration results, changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to receive required approvals, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ from those described in forward-looking statements, there may be other factors that cause such actions, events or results to differ materially from those anticipated. There can be no assurance that forward-looking statements will prove to be accurate and accordingly readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date of this article. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Always do your own due diligence. We seek safe harbor.

We hate spam too and promise 100% privacy.

Global opportunities and leadership. Created by Tommy Humphreys.

We hate spam too and promise 100% privacy.

One thought on “Momentum building at Detour Gold”

Matthew says:

January 16, 2015 at 7:09 am

Large asset, long mine life, room for growth/grade, strong fundamentals (costs culd be lower), good jurisdiction, good management, leveraged to commodity price, etc… makes DGC a strong takeover candidate; however, the share price already has some of this ‘takeover’ speculation baked into its price, so I don’t think the premium will be as rich as most ppl expect
– Always PTHYD

Comments are closed.

Momentum building at Detour Gold

One thought on “Momentum building at Detour Gold”

Real-time knowledge sharing for global investors: CHAT.CEO.CA