Franco-Nevada

Detour Lake (Au)

Detour

LOCATION: Ontario, Canada
Operator: Kirkland Lake Gold Ltd.
ROYALTY: NSR: 2%

Franco-Nevada has a 2% NSR royalty that covers an area of 140 km2 of the Abitibi greenstone belt located 185 km northeast of Cochrane, Ontario including the Detour Lake mine. Placer Dome Inc. operated a mine on the property from 1983 through 1999 during which time approximately 1.8 million ounces of gold are estimated to have been produced.

Detour Gold Corporation (“Detour Gold”) constructed the current mine from 2010 to 2013 and, on January 31, 2020, Kirkland Lake Gold Ltd. (“KLG”) completed its acquisition of Detour Gold.

Production at Detour Lake was 516,757 ounces of gold in 2020 versus 601,566 ounces in 2019. Detour Gold’s life of mine plan released in June 2018 anticipated average annual production of 659,000 ounces of gold over an approximate 22-year mine life. On March 31, 2021, KLG announced the 2021 life of mine plan. Production is expected to average 680,000 to 720,000 ounces from 2021 to 2024, before increasing to 800,000 ounces in 2025. Production would then decline for three years during a period of increased stripping before reaching over 900,000 ounces beginning in 2032. KLG plans to present a new mine plan in 2022 which it believes could significantly improve the longer-term outlook for Detour Lake, with the establishment of a “super pit” concept based on the potential existence of a much larger, continuous deposit around the existing pit locations.

The West Detour project (formerly called “Block A”) consists of two pits, the West Detour pit and the North pit, with a Mineral Reserve of 1.8 million ounces of gold (58.5 million tonnes grading 0.95 g/t). Detour Gold filed a Draft Environmental Study Report (“ESR”) with provincial authorities in January 2017 and the final ESR at the end of August 2019. These studies contemplated development starting in 2025 for the West Detour pit and 2026 for the North pit.

KLG has stated it will continue to explore the land package which totals 1,040 km2 in the prolific Abitibi Greenstone Belt including 646 km2 surrounding the Detour Lake property. Exploration targets include the Saddle Zone, between the main and West Detour pits and Zone 58N, a high-grade satellite 8.5 km south of Detour Lake with underground potential (although not on royalty ground). KLG believes there is considerable potential for new discoveries to support future Mineral Resource growth near-mine and regionally. In March 2021, KLG reported new high-grade intersections in the Saddle Zone, which continues to confirm the continuity of mineralization between the main and West Detour pits. A 250,000 m exploration program is being completed to collect information for an updated Mineral Reserve and to support the completion of the production plan to be released in 2022. KLG has reported that an important objective of this plan is to adjust the production profile to mitigate a drop off in production after 2025 while achieving 900,000 ounces of production as soon as possible in the mine life.

ASSET HIGHLIGHTS

  • Plans to grow production to approximately 800,000 ounces in 2025 and 900,000 ounces by 2032
  • Renewed focus on exploration both near-mine and regionally

2020 2019 2018
Revenue to Franco-Nevada ($ million) $ 20.4 $ 16.8 $ 15.8
Detour Lake