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Detour Gold Reports 2Q Profit, Financial-Risk Positions

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(Kitco News) - Detour Gold Corp. (TSX: DGC) late Tuesday reported a profit for the second quarter and also announced a program to manage the company’s financial risk.

Net earnings for the second quarter were $16 million, or 9 cents, per share, up from $8.8 million, or 5 cents, in the same quarter of 2018. However, adjusted earnings of $11.3 million, or 6 cents, were down from $24.1 million, or 14 cents, a year ago. The company said the biggest part of the difference between net and adjusted earnings was the reversal of foreign-exchange gains on tax balances.

Detour reported second-quarter gold production of 150,079 ounces, down from 154,385 in the same period a year ago. All-in sustaining costs rose to $1,143 from $1,075.

Detour reported a debt repayment of $50 million.

“The second quarter was a good operational quarter for the company where we continued to deliver on guidance and look for improvements within the business,” said Mick McMullen, president and chief executive officer. “The full impact of the recent rise in the gold price had a limited impact on the company’s financials for the second quarter and yet we delivered solid cash flows for our shareholders.

“The continuing strongly positive block model reconciliation trend has provided additional flexibility, which is to slow down mining rates as more waste tonnes are converted to mill feed while still able to maintain the mill at current maximum capacity. We are currently working towards assessing the long-term potential benefit of this positive trend seen over the last 18 months.”

The guidance for 2019 remains unchanged, with the company projecting full-year output of 570,000 to 605,000 ounces.

Detour Gold said it established financial-risk management programs for its gold sales, Canadian dollar expenditures and diesel fuel requirements for 2019 and 2020. Officials said these are to help protect the margin on a portion of gold production and sales.

As of June 30, the company said it had 405,000 ounces of zero-cost Asian gold collars, of which 111,000 ounces are denominated in Canadian dollars, on 45% to 50% of the company's remaining 2019 and 2020 gold sales. The U.S. dollar-denominated Asian gold collars protect an average floor price of $1,269 per ounce with participation up to an average ceiling price of $1,452 per ounce. The Canadian dollar-denominated Asian gold collars protect an average floor price of C$1,743 per ounce with participation up to an average ceiling price of C$2,009 per ounce.

In July, Detour said, the company added 15,000 ounces of Canadian dollar-denominated zero-cost Asian gold collars which protect an average floor price of C$1,825 per ounce with participation up to an average ceiling price of C$2,016 per ounce for the fourth quarter of 2020.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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