Detour sees a straight path to production

Detour Gold (DGC-T) says it’s on track to start producing gold at the Detour Lake mine near Cochrane, Ont., early next year.

Construction of the $1.45-billion project reached its 60% mark at the end of the first quarter and remains on budget and on schedule, Gerald Panneton, Detour’s president and CEO, said in a statement.

The company has committed $1.17 billion of the total $1.45-billion capex, and doesn’t expect any hikes in costs as it has already awarded 98% of its contracts.

Detour intends to fund the remaining project expenditures from its pocket. It has $866 million in cash and short term investments.

As of the end of March, it had spent $736 million of the total capex.

Also during March, it finished building the second 45-km portion of the 230-kV powerline between Pinard and Island Falls, which should boost power to the site.

“While the project site is already connected on 115 kV, this last connection will deliver up to 100 MW of electricity,” Detour explains in a press release.

The powerline should be connected to the grid by late 2012.

While the company continues to install the milling equipment, it’s diligently working through its 2012 pre-stripping activity at the site.

Currently, it has six haul trucks and two hydraulic shovels, and recently reported reaching a production rate of 70, 000 tonnes per day.

The company plans to bring in another 12 haulage trucks and two large cable shovels during the year for its 2013 production plan, where it will be making use of its US$150-million lease facility with CAT Finance.

Detour aims to have 3 million tonnes of ore ready for processing before the mine comes online.

Once up and running, Detour Lake should produce 645,000 oz. gold a year, over its 20-year mine life.

Detour Gold closed April 24 at $22.60 a share.