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Gerald Panneton winces every time he looks at his stock price. But the bottom line is that he is confident his company can thrive in the current gold price environment.
“Leave gold at US$1,250 and it doesn’t bother me,” the chief executive of Detour Gold Corp. said in an interview. “We can get through this no problem. We can adjust to the conditions of the market.”
The company’s Detour Lake mine, expected to be the largest gold mine in Canada, poured first gold in February and is gradually ramping up. This week, Detour reported second-quarter production results that showed good progress. The Ontario-based mine produced nearly 58,000 ounces of gold in Q2, and the mill was operating at more than 80% of planned capacity by the end of the month.
Production ramp-ups are almost always plagued with problems, and while the Q2 results were not as strong as Mr. Panneton hoped, they show the company is on track to reach commercial production in the current quarter. “We would suggest the ramp-up is going well,” TD Securities analyst Daniel Earle wrote in a note.
The news is positive for investors. Detour shares have plunged 65% this year, and it is easy to see why the street was concerned: it is a single-mine company with a relatively low-grade deposit and less financial flexibility than its larger peers. That is a tough mix to have when the gold price is plummeting.
But Detour addressed the financial concerns in May, when it announced a $176-million bought deal financing. Mr. Panneton said he began working on the deal back on April 15th, when the gold price fell 9% in a single day and ended up below US$1,400.
“We had to re-consider everything,” he said.
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