Detour studies expansion with eye on the gold price


Detour studies expansion with eye on the gold price 
TORONTO (miningweekly.com) – Detour Gold will have a feasibility study later this year on an expansion project that could make its flagship mine the biggest gold producer in Canada, but will need gold prices to stay in the four-figure range for the expansion to go ahead, CEO Gerald Panneton said in an interview on Wednesday.

It could cost about $300-million, based on 'back of the envelope' numbers, he told Mining Weekly Online.

"And because we don't want to issue shares, we want to do it with cash flow, we are going to need at least $1 000/oz gold price" to go ahead with the expansion, he said.

The company also continues to get positive results from drilling, and expects to add another one- to three-million ounces to reserves later this year or early 2012 "relatively easily", he said in a presentation earlier at the Prospectors and Developers Association of Canada convention.

Reserves at Detour Lake currently stand at 14,9-million ounces, after an increase announced in January.

“We feel that this project could achieve a target of 25-million ounces at a 0,3 g cut-off within the next couple of years,” Panneton said.

Construction began this year at the Detour Lake mine, and the company is on schedule to pour the first gold in two years' time. The operation will be the second-largest openpit mine in Canada, according to the company.

He was also adamant that the project's exposure to cost overruns is limited, because much of the procurement and major contracts have already been locked in.

About $700-million of the $1,2-billion capital expenditure estimate has been committed.

The 10% contingency allowance on the capex number will likely be used, but the company won't need to go out and raise any more money to fund construction, Panneton said.

Beyond that, the expansion, which would potentially increase throughput to as much as 100 000 t/d, will depend on the gold price staying above $1 000/oz, he said.

The company could increase production from the mine to as much as 800 000 oz/y, which would make it the biggest gold producer in Canada.

If all goes to plan, Detour could start the project in 2013, complete it at the end of 2015 and ramp up to the increased capacity in 2016, Panneton said.

Edited by: Liezel Hill 

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