Can Detour Gold Make a Comeback With Its Upcoming Results?

Shares of Detour Gold ( have remained flat so far this year as investors haven’t been enthused by the company’s production and cost forecast for the year. Investors, however, will be expecting a turnaround from Detour when the company releases its first-quarter 2019 results on May 3.

Let’s take a look at what’s expected of the gold miner when it releases its results.

The Headline Numbers

Detour Gold’s top line is expected to decline 4.3% year over year in the first quarter, while earnings per share are expected to go down from $0.16 in the prior-year period to $0.09 this time.

Detour Gold’s top line is expected to decline 4.3% year over year in the first quarter, while earnings per share are expected to go down from $0.16 in the prior-year period to $0.09 this time.

It isn’t surprising to see that the market expects a massive bottom line dip at Detour Gold, along with a slight decline in revenue since their head grade is expected to average between 0.90 grams per ton and 1.00 g/t, which would be lower than the year-ago period’s average grade of 1.04 grams per ton.

As a result of this decline in the head grade, Detour Gold’s production in 2019 will decline 5.4% year over year to a range of 570,000 ounces to 605,000 ounces. Also, because the company will now have to mine more waste tonnage as a result of lower grades, its cost profile will take a turn for the worse.

Detour Gold is looking at cash costs of $790 an ounce to $840 an ounce in 2019, while the company’s all-in sustaining costs will fall in a range of $1,175 and $1,250 per ounce. That’s higher than the company’s cost profile a year ago.

So there’s less chance of a turnaround at Detour Gold, though investors will be anticipating that the recent improvement in gold prices might help it spring a surprise.

Will Gold Prices Be a Saviour?

Detour Gold’s average realized price of the precious metal stood at $1,330 an ounce in the year-ago quarter. The good part is that gold prices have strengthened in recent months, though that might not be enough to help Detour Gold offset the weakness in its production and cost profiles.

Gold prices reportedly averaged $1,300 an ounce during the first quarter of 2019, according to B2Gold. So the only hope for Detour Gold is that it improves its operational performance going forward.

But that might not be the case as operational challenges at the Detour Lake open pit mine could keep the company from making a comeback. However, it looks like Wall Street expects a turnaround at Detour as the year progresses, as the company’s overall revenue is expected to drop around 1% in 2019, while earnings per share are expected to go down from $0.37 last year to $0.34 this time.

So there’s a likelihood of Detour Gold’s performance improving in the second half of the year as analysts suggest. But the company will have to offer solid guidance indicating the same when it releases its results next. As such, Detour Gold’s guidance will play a critical role in determining if it can make a comeback.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan
Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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