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  Detour Gold Corp.  

TICKER:  TSX:DGC   
DESCRIPTION:  Detour Gold Corporation is a Canadian gold exploration and development company whose primary focus is to advance the Detour Lake property located on the Abitibi Greenstone Belt in northeastern Ontario toward development and production. The positive results of the pre-feasibility study confirmed that the future Detour Lake open-pit operation can be a significant gold producer with the added benefits of a long mine life within a stable political environment. The company continues to advance the project towards completion of a feasibility study for the first half of 2010.

WEBSITE:  http://www.detourgold.com


The information below is based on the most recent information we have received from analysts and the companies participating in The Gold Report. We encourage you to visit the company's web site for updates.
"We reiterated our SPECULATIVE BUY rating and C$22.50 target price on Detour Gold ahead of the final feasibility study on the Detour Lake project (expected in April). Recent discussions with management have highlighted the potential for improvement over the pre-feasibility project economics, including the potential for 10%–20% reserve additions and a 10%–15% throughput increase, advancing the construction timeline, and potential capital cost savings.

While we do model the potential upside for a 20% expected reserve addition and a 12.5% throughput increase, the potential for advancing the construction timeline and capital cost savings could improve project economics. More importantly, the delivery of the feasibility study by as early as April may provide the opportunity to derisk our valuation (i.e., lower discount rate) and raise our target multiple. All else being equal, the potential lift to our target price could be from C$22.50 to C$32.25."

    -   Precious Metals Weekly (02/16/10)

"Detour Gold is continuing to advance the development of the Detour Lake project on several fronts. The project is going ahead with a full feasibility study which should further refine and optimize the elements for a large 'super pit' mining operation. With approximately US$315 million in cash, Detour is in good position to continue additional exploration works, complete the final Impact Benefits Agreements with First Nations, pre-order long-lead time milling equipment, fund detailed engineering studies and begin certain site works by summer 2010.

We have increased our target price to $21.00 (previously $18.50) based on a 6% DCF analysis using a modeled open pit scenario of 264 Mt @ 1.15 g/t Au (9.5 million oz.) and CAPEX of US$ 1,180 million with a proposed production schedule for 2014 (see Action Note dated January 14, 2010). The updating of our model hinges on increased confidence in geological continuity and leverage to milling optimization.

We continue to believe that the company's current share price offers an attractive entry point. Detour Gold management is developing a gold project based on solid and balanced foundations. As the Detour Lake project is set to attain a critical milestone with the feasibility study, we maintain a Buy recommendation and a target price of $21.00."

    -ERIC LEMIEUX,   LAURENTIAN BANK SECURITIES (02/03/10)

"Detour Gold is aggressively exploring and advancing the development of the Detour Lake project in northeastern Ontario. We highlight that Detour Gold completed a pre-feasibility study in September 2009 that displayed positive economics for the project. In early January 2010, Detour Gold disclosed results of its continuing 2009 infill drilling on the Detour Lake deposit. . . .We believe that the short-term declining gold price environment presents opportunities. Our investment thesis remains that there are few quality gold projects in stable jurisdictions and that the Detour Gold Property is emerging as a solid gold project that could potentially attract the interest of senior producers willing to solidify their pipeline of projects. We maintain a Buy rating with a target price of $21.00."
    -ERIC LEMIEUX,   LAURENTIAN BANK SECURITIES (02/01/10)

"In September, Detour released the results of the Pre-Feasibility Study (PFS) for its eponymous project in northern Ontario. The study disclosed the potential for a large-scale open pit mine with average annual gold production of 560,000 oz/year at a cash cost of US$404/oz over a 14.5 year mine life.

We anticipate the company releasing its DFS in early Q2/10 and have revised our project model and valuation to reflect our expectations. These include: increased reserves and a longer mine life, higher levels of gold production, and higher capital and operating costs that result primarily from the stronger Canadian dollar.

As a result, our 12-month target price increases to $22/share (from $20/share) and we reiterate our Speculative BUY recommendation. In our view, Detour offers an attractive valuation which is highlighted by a comparison to what we consider to be its closest peer, Osisko. We note that Osisko trades at 1.5x NAV5%, a premium of 110%, on the basis of a similar project. A valuation at this level would imply a potential target price for Detour of $33/share and is representative, in our view, of what may be achievable if the company were to advance its project through feasibility, permitting, and complete project financing over the next 12 to 18 months."

    -DANIEL EARLE,   NEWCREST, TD SECURITIES (02/02/10)

"The company is on track to deliver the full feasibility study for the 100%-owned Detour Lake gold deposit in northern Ontario during Q2/10. We believe there are several opportunities to improve the positive economics outlined in the 2009 pre-feasibility study, including:

  • Reserve Increases—From in-fill drilling and increased long-term gold price assumption (US$775/oz used in pre-feasibility).
  • Coarser Grind Size—Higher daily throughput leading to higher production rates if coarser grind size is used (assuming gold recovery rates are not significantly negatively impacted). The company expects to announce testwork results later this month.
  • Stockpiling Lower Grade Ore—For processing later in the mine life; could increase ore grades in early years, leading to higher gold output, lower costs, and improved economics.

With a major milestone expected in Q2/10, we believe a positive feasibility study could lead to a re-rating of DGC shares, for the successful delivery of a new Tier II gold producer, once permits are received and financing secured to build the Detour Lake mine. In our view, one metric that clearly shows the re-rating opportunity is AMC/oz of mineable reserve.

We also consider the tabling of the feasibility study as the opening of a 'window of opportunity' for takeover of DGC by other larger producers, which we believe would be interested in a large (+550Koz/yr) gold mine in a low political risk jurisdiction."

    -MICHAEL CURRAN,   RBC CAPITAL MARKETS (02/02/10)




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