Detour Gold Corporation (TSX:DGC) has reported an updated reserve and resource estimate for its 100% owned Detour Lake gold project in northeastern Ontario.
This update uses the same assumptions and parameters as the mineral resources and reserves reported in the June 2010 feasibility study.
Highlights (base case using US$850/oz gold)
- A 31% increase in proven and probable open pit reserves from 11.4 to 14.9 million ounces
- A 16% increase in global measured and indicated mineral resources to 20.5 million ounces (inclusive of mineral reserves), and an additional 5.1 million ounces in the inferred category
- Life of mine (LOM) increased to 21 years from 16 years at mill throughput ranging from 55,000 to 61,000tpd
- Initiating economic studies to evaluate an increase in process plant throughput
"This significant reserve increase and the high potential of finding more ounces from additional drilling support our organic growth strategy. The positive impact of the 2010 drilling campaign extended the Detour Lake open pit further to the west. With 14.9 million ounces, the Detour Lake deposit remains Canada's largest pure gold play and ranks fourth among the top ten largest gold reserves in North America. The next step is to proceed with further economic studies to maximize the economics of the project, including a potential expansion of the processing plant if gold price exceeds US$1,000/oz at the start of operations," said Gerald Panneton, President and Chief Executive Officer.
"Detour Gold has started infrastructure construction activities at site and will be in a position to pour concrete for the processing plant by April 2011. During the construction period (2011-12), there will be up to 1,000 people working at site. The Detour Lake mine will make a significant contribution to the economy of northern Ontario, and with gold production expected to commence in early 2013, Detour Lake will be among the largest gold operations in North America."
Detour Lake Mineral Resources
The database for this update incorporated new drilling data from the 2010 drilling campaign (98,934 metres of 107,000 metres) and all the drilling data from the feasibility study for a total of 985,848 metres of drilling in 6,047 holes, of which 435,563 metres is from Detour Gold's drilling campaigns.
The Ordinary Kriging (OK) block model used for the global mineral resources covers the area between sections 17,000E and 20,600E, extending an additional 500 metres to the west from the feasibility study block model. The following improvements were made to the Detour Lake block model: (1) addition of one mineralized domain, (2) barren dykes modeled (forming three new domains), (3) vertical extension of block size dimension increased from 10 to 12 metres (i.e. 10 (E-W) x 5 (N-S) x 12 (vertical) metres, (4) search radius ellipse size reduced by 5 metres in the vertical direction (i.e. from 50x30x10 metres to 50x25x10 metres), and (5) maximum search radius reduced along strike for the inferred category from 200 to 150 metres (i.e. 150x150x60 metres).
Detour Lake Global Mineral Resource Estimate
MineSight software was used to generate an optimum pit shell using the Lerchs-Grossman (LG) pit optimizer algorithm based on the measured and indicated resources only, using the same economic parameters established by the June 2010 feasibility study.
Detour Lake Mineral Reserves
The open pit mineral reserves were estimated within a detailed engineered pit design by using the measured and indicated resources at a cut-off grade of 0.5 g/t. In the pit design, inter-ramp pit slopes vary from 49 to 56 degrees depending on rock type and structure orientation. The block model was prepared in MineSight with the kriged block grades that include an estimated dilution of 11.7%. The estimated proven and probable reserves total 14.9 million ounces, after using a 95% mining recovery rate and an additional mining dilution of 3.8%. The stripping ratio (waste to ore) has increased to 3.9 from 3.3 as a result of a greater quantity of waste (including inferred resources) contained within the new pit design due to insufficient drilling at the west end of the pit. In all drilling programs to date, the Company has had a very high success rate in converting inferred resources to the measured and indicated categories (and reducing strip ratio). It is anticipated that the 2011 drilling program will be as successful in proving the continuity of the gold mineralization, resulting in a conversion to mineral reserves and a lower strip ratio.
The Company's strategy remains, as per the feasibility study, to develop the mining schedule using an elevated cut-off grade through the early years for a higher head grade to be processed at the plant facility.
Capital Costs Status
Pre-production capital costs remain in line with the feasibility study. The Company has entered into commitments for approximately C$540 million for the project and has spent approximately C$80 million as of December 31, 2010. The current cash position of the Company is approximately C$970 million, which is sufficient to advance the development of the project through mid-2012. Construction progress remains on schedule and on budget at this time.
Economic Studies to Start
With a solid reserve base of nearly 15 million ounces, Detour Gold is moving ahead with initiating further economic studies to assess the potential for increasing the annual production profile once the project has reached production in early 2013. The main opportunities to be potentially realized are:
- An increase in mill capacity (processing plant expansion) – initiating a tonnage rationalization study to evaluate throughput options between 75,000 and 100,000 tpd (note that the purchased gyratory crusher is already designed for higher capacity);
- At US$1,000/oz or above and once the plant expansion is completed, the Company could mine economically at a lower gold cut-off grade and generate higher mineral reserves;
- Engineering work optimization (i.e. pit slope improvements, potential in-pit dumping of additional waste and tailings);
- Additional drilling to convert inferred resources into measured and indicated resources in the current pit to reduce strip ratio; and
- Continue drilling campaign to test the western extension of the deposit (i.e. 50,000 metres planned in 2011).
For a potential expansion to proceed, the Company may be required to obtain additional authorizations or permits beyond those currently received or being sought to accommodate for a larger open pit operation.
The mineral resources for Detour Lake have been estimated by Michel Dagbert, Eng., Senior Geostatistician and André Laferrière, P. Geo., Senior Geologist of SGS Canada Inc. The mineral reserves for Detour Lake have been estimated by Patrice Live, Eng., Mining Manager of BBA Inc. All are independent Qualified Person (QP) under National Instrument 43-101 and have reviewed and approved the content of this news release.
A NI 43-101 compliant Technical Report will be filed on the Company's website and on SEDAR within 45 days.
Source: Detour Gold Corporation