Issue link: http://resourceworld.uberflip.com/i/102869
open pit project total 470 million tonnes grading 1.03 g/t gold, for a total of 15.573 million ounces of gold. The current total measured and indicated resources are pegged at 678.8 million tonnes grading 1.07 g/t gold, for 23.3 million ounces of gold and an inferred resource of 208.5 million tonnes grading 0.86 g/t gold, for 5.785 million ounces of gold. The size of the project and its projected production has some analysts wondering if in a couple years, Detour Gold could become an acquisition or merger target by one of the large gold miners. Kerry Smith*, a research analyst at Haywood Securities, says this is a possibility, but it depends on what happens once the construction is complete. "On the assumption that they can execute the plan and get the mine up and running it's going to be like any other producer. If they'll be big enough to be of interest to a major, then it's just a question of valuation." "I think the majors will look at this company, and I'm sure they've already looked at it, but people are waiting to see them get it up and built," says Smith, who currently has a buy rating on Detour with a $39 share price target. He adds that any future deal would most likely have to be friendly, but this is a little easier said than done: "It always hard to get friendly deals done in any industry and mining is no different." There has also been a certain level of hype around the Detour Mine at different points in its development, but there might be another reason why this company is currently under the microscope and it has to do with another Canadian junior miner: Osisko Gold. "Osisko and Detour have very similar projects," explains Smith. They have similar-sized capital expenditure projects with comparable locations (Osisko is in northwest Québec). But what might have investors on edge is that Osisko has run into some operational issues in the past and the overall startup has been a struggle for this company. Consequently, investors may be looking at Detour with a certain level of caution. "Because of that [history], investors immediately and instinctively look out there and say 'what other big projects are out there are being built that could have the same kinds of issues' and that project is Detour," says Smith. However, he cautions that these companies are not strictly comparable as there are design and operational differences that set Detour apart. Smith says Detour has not cut corners in its mine construction; it has designed a more robust plant and also has a good team in place to run the project. "My bet is that the startup should be a lot smoother," said Smith. n *Kerry Smith has a financial interest in Detour Gold Corp. NOVEMBER 2012 www.resourceworld.com 41