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Franco-Nevada

Detour Lake (Au)

Detour

LOCATION: Ontario / Quebec, 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. KLG has stated that it plans to optimize the mine plan, improve productivity, manage costs and expand production.

Production at Detour Lake was 601,566 ounces of gold in 2019 versus 621,128 ounces in 2018. KLG is targeting greater than 700,000 ounces per year by 2021. This exceeds the average annual production of 659,000 ounces of gold over an approximate 22 year mine life in Detour Gold’s most recent life of mine plan released in June 2018. The life of mine plan includes the development of the West Detour project which is in the process of being permitted.

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 (60.9 million tonnes grading 0.94 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. The studies contemplate 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 8.5km south of Detour Lake with underground potential. The 2018 maiden Mineral Resource for Zone 58N included an Indicated Resource of 534,000 ounces (2.9 million tonnes grading 5.8 g/t) and an Inferred Resource of 136,000 ounces (1 million tonnes grading 4.4 g/t). Although not on royalty ground, Zone 58N represents the exploration potential of the region. KLG believes there is considerable potential for new discoveries to support future Mineral Resource growth near-mine and regionally.

ASSET HIGHLIGHTS

  • New operator targeting greater than 700,000 ounces per year by 2021
  • West Detour pit permitting ongoing
  • Renewed focus on exploration both near-mine and regionally

2019 2018 2017
Revenue to Franco-Nevada ($ million) $ 16.8 $ 15.8 $ 14.3
Detour Lake