Global measured and indicated mineral resources of 20.5 million ounces (inclusive of mineral reserves)
Advancing North America's 4th Largest Gold Reserves Towards Development
Message: ...crushed analyst expectations!
Canaccord Genuity, Morning Coffee (02/02/11)
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"Detour Gold went on a tear after releasing an updated year-end reserves and resources at the Detour Lake project (Ontario) that crushed analyst expectations. Detour Lake reserves increased by 31% (compared to the June 2010 update) and now stand at 14.9 Moz. (total global resource of ~26 Moz.). Reserve grade went up by 1% grades compared to expectations of a 13% decline, explained by lower modeled dilution, extension of the pit at depth and an unchanged cutoff grade. A Bay Street analyst notes that as an offset, strip ratio increased to 3.9 from 3.3 compared to his expectation of a decline to 2, so overall impact on NAV is neutral. However, he also points out that had he not assumed a 2 Moz. reserve increase, his NAV estimate would have jumped 23%. Further, the analyst believes that large reserve/resource and the potential to add over 800 Koz. in annual production should enhance the prospect that the company is an acquisition target, given the relative multiple differential with the senior producers. Note, Detour trades at approximately 0.65x P/NAV compared the senior/intermediate average of 1.11x. Given the decline in Detour share price (as of Monday's close, shares were down 21% over the last three months versus the S&P/TSX Gold Index down only 6%) and valuation, an acquisition of Detour could be accretive to most seniors trading at relatively higher multiples. So to summarize, the analyst believes that what you get here is a fully financed project, superior leverage to higher gold prices and lots of room for improvement in project economics versus feasibility study parameters. In addition there is good rerating potential on advancing to production (or a takeout scenario)." |
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