VANCOUVER — Ontario-focused miner Detour Gold (TSX: DGC; US-OTC: DRGDF) pleasantly surprised markets in August when it reached commercial production ahead of schedule at its wholly owned Detour Lake gold mine, which lies 185 km northeast of the town of Cochrane.
And the good news kept rolling into September, with the release of drill results that identified a gold-bearing structure on the company’s 630 sq. km property.
Over the first six months of 2013 the company completed 25,100 metres of drilling at Detour Lake, with its focus being the Lower Detour Deformation Zone (LDDZ), which lies 6 km south of mining operations. The LDDZ has been traced over a strike length of 40 km and remains largely underexplored. On Sept. 10 the company released assays from 12 widely spaced holes collared along the trend.
Located in the northwestern part of the Abitibi greenstone belt, most current reserves at Detour Lake are spatially related to the Sunday Lake Deformation Zone (SLDZ), which is defined as a regional-scale thrust zone occurring between a thick sequence of mafic-to-ultramafic volcanic rocks and younger sediments. According to Detour, the LDDZ is a major east–west structure similar to the SLDZ.
Detour targeted a number of induced-polarization (IP) chargeability anomalies, resulting in the discovery of three sub-parallel, east–west trending mineralized zones — 75, 58 and 58 North — within a wide corridor that runs 5 km long.
The company discovered Zone 75 by drilling a well-defined IP anomaly traced over a 900-metre strike length, with mineralization hosted in quartz veins in a well-defined sheared zone that remains open in all directions. Hole 13-075 cut 4.4 metres of 17.3 grams gold per tonne from 222 metres depth, while 30 metres up dip, hole 13-029 intersected 2.1 metres averaging 6.19 grams gold.
Almost 2 km due west from Zone 75 sit the company’s Zone 58 and 58 North discoveries, which were tested with 17 drill holes over a strike length of 300 metres.
Detour cut visible gold in 10 holes at the targets, with assays highlighted by 4.5 metres grading 10.25 grams gold from 149 metres depth in hole 13-058, and 5 metres of 3.85 grams gold from 322 metres depth in hole 13-068.
BMO Capital Markets analyst John Hayes — who maintains an “outperform” rating on Detour and a $16 per share price target — notes that the “twelve intercepts from wide-spaced drilling returned a weighted-average intercept of 3 metres at a weighted-average grade of 5.87 grams gold. In BMO Research’s view, the company has a large land package that is relatively unexplored, offering organic growth options.”
Detour has spent around US$4.8 million in exploration and evaluation costs over the first half of 2013, for a 17% year-on-year decrease.
The company indicates it will bring drills back to Zone 75 — which it describes as a high-priority target — in early 2014.
The company reported US$112 million in working capital in June.
Detour shares have rebounded since June, when it sat near a three-year low at $7.38 per share. Shares have jumped 39%, or $2.90 over the past 10 weeks, en route to a $10.29-per-share close at press time.
Detour maintains 138 million shares outstanding for a $1.4-billion market capitalization.
[Editor’s note: a previous version of this story incorrectly cited BMO Capital Markets analyst Brian Quast, when it was in fact John Hayes who penned the research note.]