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10:51 AM EDT, 09/07/2016 (MT Newswires) -- Detour Gold Corporation (DGC.TO) has lost most of the 3% it gainedon Tuesday after it announced overnight a revision to its 2016 production guidance to between 525,000 to 545,000 ounces of gold.
In a statement, DGC said production at Detour Lake for the second half of the year is being impacted by the unusually heavy rainfalls experienced in mid-August, which flooded the bottom west end of the pit and saturated the surrounding watershed. The west end of the pit hosts the Calcite Zone which is the main source of the higher grade for the plant in the second half of 2016. "With the pumping of the water out of the pit expected to be completed by the end of September, access to the Calcite Zone is now delayed. The resulting mine sequencing changes will not impact the mining rates but will result in a lower head grade than previously planned for the third and fourth quarters."
Consequently, DGC said gold production for the third quarter is projected at approximately 120,000 ounces. Gold production for the fourth quarter is expected to be between 138,000 and 158,000 ounces and is dependent on timely access to the Calcite Zone and on the success of the larger scale test of processing medium grade fines scheduled to commence later this month. Medium grade fines are obtained by screening the ROM stockpile at minus 2" to elevate the grade of the ore processed.
CEO Paul Martin said: "We are disappointed that we are not able to access the higher grade Calcite Zone earlier. We have been monitoring our progress in dewatering the pit and have now concluded that the mine plan adjustments we have made for the remainder of 2016 are necessary. On a positive note, the company remains in a strong financial position and we anticipate significant cash flow in the fourth quarter which will allow us to continue to pursue our debt reduction program."
In addition, the company said it has now completed its last 2016 major scheduled plant shutdown to replace the liners on the SAG and ball mills for both grinding lines. Gold recoveries have been trending back to normalized levels (90%) since August, following operational issues in the recovery circuit in June and July, it added.
All-in sustaining costs are now expected to be between US$970 and US$1,020 per ounce sold as a result of the reduction in gold production and the higher costs associated with the larger scale test of the medium grade fines from the existing ROM stockpile. These tonnes will incur a non-cash book value charge projected at C$10 million, representing near US$15 per ounce sold based on the mid-point of the revised guidance.
Price: 31.65, Change: -0.78, Percent Change: -2.4
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