Detour Gold’s (CN:DGC) revised mine plan for its namesake operation in Ontario released last week is unlikely to inspire near-term investment, placing the company in limbo until it is able to execute on expansion plans – previously pegged for early next year – in more than three years’ time.
Detour in late January said it had moved development of the West Detour zone of the Detour Lake mine back from early 2018 to 2021 in a new “base case” scenario forced by a local aboriginal group, which wants a federal environmental assessment of West Detour by the Canadian Environmental Assessment Agency. That is typically a two-to-three-year process, whereas the provincial review generally takes a year.
This prompted a rethink on the mine plan, which will mean some uglier numbers than previously anticipated. Though the annual mining rate will increase to 125 million tonnes by adding more mining equipment and the mine life has been extended slightly, life-of-mine costs “site costs” are up 8% to US$758 per ounce.
In the immediate term, both the tonnes milled and the grade expected out to 2021 will be higher and production lower, in large part because of a 55% increase in the strip ratio over the 2019-2020 period compared to 2017-2018.
Average annual production out to 2021 is expected to be around 580,000oz compared to life-of-mine average annual production of 656,000oz.
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