Canada’s Detour Gold expects lower cash costs in 2014

Canada’s Detour Gold Corp said it expects cash costs to fall to $800-$900 per ounce sold and production to double to 450,000-500,000 ounces this year.

Miners, stung by a near 25 percent drop in gold prices over the last year, have been cutting costs and slowing down work on growth projects.

Detour reported in November cash costs of $1,214 per gold ounce for the third quarter, when it started commercial production at its low-grade Detour Lake mine in northeastern Ontario.

“Minesite sustaining cash costs came in lower than anticipated. The lower sustaining cash costs appear to be driven by lower-than-expected operating costs,” RBC Capital Markets analyst Dan Rollins said in a note.

Detour estimated to save C$20 million ($18 million) in power costs this year after it secured a six-year power contract at 5 Canadian cents per kWh with the Ontario Power Authority.

Spot gold was down 0.7 percent at $1,260.30 an ounce by 1503 GMT on Monday, having hit its highest since mid-November overnight at $1,278.01. U.S. gold futures for February delivery were down $4 an ounce at $1,260.30.

Detour Gold shares, which have fallen about 73 percent in the last year, were up about 2 percent at C$6.29 on the Toronto Stock Exchange on Monday.