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Canada’s newest mega-gold mine poured its first gold bars on Tuesday, as the Detour Lake project in Northern Ontario reached production alongside volatile gold prices holding just above $1,600 an ounce.
Detour Gold Corp., the owner and operator of the huge open-pit mine, poured four gold bars at the Cochrane, Ont., project for a total of 2,000 ounces of the precious metal. The spot value of that gold was some $3.2-million (U.S.) at current gold prices.
The mine was built over 26 months and comes into being about six years after Detour bought the properties. It will vie for top spot with Canada’s largest gold mines, and has the potential to be expanded further under the right conditions.
“We do have the reserves to expand more, no doubt in my mind,” said Gerald Panneton, the president, chief executive and founder of the company he took public six years ago on the Toronto Stock Exchange. “Are we going to do it? It’s a question of economics and market. We will probably take a decision in a couple of years.”
When it went public in 2007, Detour Gold stock was trading at just below $4 a share, a fraction of the $20.75 where it closed on Tuesday. When the company was born, the price of gold was around $650 an ounce, or less than half what it is today.
The mine comes on stream at a time when gold prices have traded slightly lower than many in the industry had expected, backing off of record highs of $1,900 an ounce in September, 2011.
Prices are still quite a bit higher than total cash costs at Detour Lake, seen at about $749 an ounce over the life of the mine.
Detour Lake will produce 657,000 ounces of gold per year, on average, over its 20-plus years of estimated mine life. The figure is on par with Canada’s other major gold mines. At Detour Lake, the gold will be extracted via an open-pit operation that will process high volumes of low-grade ore.
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