Gold specks can be seen in a core sample from the Detour Lake property north of Cochrane, Ont. Gold's remarkable upswing over the past decade has sparked a new wave of exploration, prompting prospectors to take a second look at deposits once considered too remote or uneconomical to develop.Moe Doiron/The Globe and Mail
Things were looking grim for Detour Gold's stock late last week. Heading into the long weekend, the miner's shares had nosedived about 14 per cent over the course of seven days.
But then everything changed. First thing Tuesday morning, the company released an updated production plan for its Detour lake project in northern Ontario, and investors appeared to like what they saw. Since its low on Friday, the company's stock is now up about 14 per cent.
In its update, Detour's management noted that project construction is 87 per cent complete, as of August, allowing for a production start of January 2013. Should that hold, commercial production is expected in July next year, and the company expects to produce up to 400,000 ounces of gold in 2013, with cash costs pegged between $800 and $900 per ounce.
Over the first three years of production, Detour expects to generate operating cash flows totalling $1-billion.
"Management's message is clear that the focus will be on mining sufficient tonnes to feed the mill," noted CIBC World Markets analyst Barry Cooper, who expects production to hit about 575,000 ounces by 2014.
Although the company's grade profile wasn't spectacular, the report seems to have assured the market that production plans haven't gone awry. Yet even though the update is good news, keep in mind that Detour's stock is still down 30 per cent over the past year.
Tim Kiladze