DGC Kick Starts Year with Positive Drill Results

KERRY SMITH, Haywood Securities (01/14/2010)
"Assays from an additional 40 holes (18,052 meters) of infill drilling at the company's 100%-owned Detour Lake project continue to improve confidence within the currently delineated in-pit resource. Up to now, Detour-has reported assays from 203 holes (86,395 meters) from its 2009 program of 241 holes (101,074m). A total of 332,178 meters of drilling has been completed since acquisition of the Detour Lake project in January 2007. Detour plans to include approximately 325,403 meters of drilling in the feasibility study expected in Q2/10, an increase of almost 77,000 meters of new drilling for the new reserve/resource estimate due out in Q1.

In 2010, Detour has committed to a 60,000-meter drilling program that started in January with six drill rigs on site.

Detour currently holds about US$306 million in cash that will be used to pre-order long-lead-time milling equipment, fund detailed engineering, start site civil work, complete the last Impact Benefits Agreements with First Nations, and carry out additional exploration at the project. We are assuming additional equity financing, on the order of US$300 million at C$14.00 per share in 2010, and debt financing of US$400 million in 2011. Our model assumes a capital cost of US$ 1.0 billion and a construction time frame of 30 months.

Valuation: Our $20.25 target price is based on 1.3x our after-tax corporate NAVS% of US$1,375 million, or US$14.25 per share on a fully project-financed basis assuming a long-term gold price of US$825 per ounce. We continue to recommend the shares of Detour Gold Corp. with a SECTOR OUTPERFORM rating."

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