Detour Gold* (DGC : TSX : $11.31), Net Change: -1.10, % Change: -8.86%, Volume: 1,121,442
Ramp-up progress report. Canaccord Genuity Precious Metals Analyst Steven Butler recently visited DGC's Detour Lake Mine which is progressing reasonably well on the ramp-up to commercial production by Q3/13. Mill throughput and availability factors are improving from Q1 levels. Mill ramp-up continues after resolving minor debottlenecking issues from Q1 that limited mill availability to 66%. Fixes include mill drive programming and chute sizes on the secondary crushers. Mill throughput was approximately 40,000 tpd on April 24 (design capacity 55,000 tpd). Butler highlights that the mining area is performing largely in line with expectations. Management expects production to be in the range of 18,000-20,000 oz in April (budget of 80,000 oz of pre-commercial production in Q2/13). At $1,400 gold, 20,000 oz/month should be able to cover pre-commercial operating costs at site (in range of $23 mm in April, based on monthly ramp-up from $17 mm in January to $35 mm in December). The company ended Q1/13 with $170 mm in cash. Depending upon gold price and production volumes being able to cover operating expenses during the pre-commercial period, the level of cash that may be “reserved” due to the outstanding $67 mm legal claim, and assuming the likely drawdown of $20 mm in available credit, Butler believes there remains a modest risk that the company could seek additional financing to cover the final stages of the mine?s ramp-up.