The story of Detour Gold is nothing short of golden. In just over three years, the company has gone from one man and an acquisition to a listing on the S&P/TSX Global Mining Index and the Global Gold Index. “This is probably the best time in 25 years to build a gold project,” says president and CEO Gerald Panneton as, fittingly, the sun beams down on him through the gold-cov- ered windows of his company’s rapidly expanding 20th floor office in Toronto’s Royal Bank Plaza. Back in 2006, the former corporate development executive for Barrick Gold, looking to strike out on his own, scouted around and came across an opportunity to acquire an explora- tion company’s primary asset – the abandoned Detour Lake mine property near Cochrane, Ont.

Detour Lake began operation in 1983, but was shut down by Placer Dome in 1999 when depressed gold prices – to the tune of $250 per ounce – prevented any major infrastructure upgrades.
Panneton knew that it was easier to find gold where there is gold, or, in this case, an existing gold mine. And Detour Lake’s gold endowment – the actual value of the project – was immediately apparent to his trained geologist’s eye. In fact, this undeveloped gold reserve has the potential to be the largest in Canada.

“When I looked at the potential of this gold mineralized corridor, it was very easy to see, ‘Wow, you’re sitting on something. There’s a lot of gold here’ ” says Panneton. His thoughts were confirmed when a subsequent evaluation indicated a resource of 3.4 million ounces.

“We knew we were not starting from scratch,” says Panneton.

Detour Gold Corporation purchased the mine from Pelangio Mines Ltd. for $75 million, and went public in January 2007. Over the next three years, more than 350,000 metres of drilling was done to test the deposit, and the site where 1.8 million ounces of gold was produced is now estimated to contain another 8.8 million ounces (mineral reserves), with current acquisition-discovery costs at $15 per ounce.

All told, the measured and indicated resources stand at 17.3 million ounces of gold (inclusive of mineral reserves) and the company continues to drill to the west, where there’s an excellent chance of finding more resources. (Half of the 2010 drilling program of approximately 60,000 metres has been completed, although Detour Gold has not yet released the results.)

Detour Gold’s September 2009 pre-feasibility study reported that the large open pit project could potentially process upwards of 45,000 tonnes per day, producing approximately 560,000 ounces of gold per year. As a result, Detour Gold’s market capitalization has gone from $140-million to $1.3- billion in just three years, with a share price of over $18. “For the shareholders, we’ve realized a lot of value,” says Panneton. “It’s not a small feat in three years.”

Now it’s on to the next stage – finalizing the feasibility study for the second quarter of 2010. Subject to permitting, site work could begin later this year, followed by construction in 2011-2012 and gold production by the end of 2012.

Pierre Beaudoin, one of Panneton’s colleagues when he was working on Barrick Gold’s Buzwagi project in Tanzania, was recently hired to oversee construction of the large open pit mine. With over 20 years experience in operations, “Beaudoin knows how to take the ore, crush it, grind it and get all the gold from it,” explains Panneton. “He’s the guy that’s signing off on a mill that will cost approximately $400 million dollars.”

Another of Panneton’s former Barrick Gold colleagues, Louis Dionne, has been a director with Detour Gold since September 2006. Panneton considers him one of the top five mining engineers in the country. “He brings a lot of depth on the mining side,” he says.

According to Panneton, the key to the gold in this mine lies in both time and place. Besides having had the good fortune – and sense – to scoop up the Detour Lake property when he did, 30 years of local mining history makes getting the mine up and running much easier than starting from scratch.

Government regulations already consider Detour Lake a disturbed site (known as a brownfield), which minimizes the impact of development and lessens permit hurdles. There’s also an existing tailing facility for collecting residue from crushing and grinding that will be re-used at the beginning of the operation.

“People always raise concerns about the environment,” notes Panneton. “But if you have 30 years of baseline studies where you’ve been collecting water and soil samples, and the site has been environmentally protected since the beginning, there’s less concern since you can mitigate all the impacts, present and future, to protect the environment.”

And while the current global scramble for gold is leading mining companies to more remote places with less developed infrastructure, Detour Lake’s value is considerably enhanced by its direct road and rail access and proximity to hyrdo-electric power.

As a new venture in a region desperate for employment opportunities, Detour Gold will work with local communi- ties, including Aboriginal peoples, to provide training, job and business opportunities. There will be an office in Cochrane, and most of the workforce – an estimated 400 direct jobs and an additional 2,700 indirect jobs – is expected to come from Cochrane, Timmins, and other nearby communities. “This project will impact quite significantly the economy and devel- opment of northern Ontario,” says Panneton.

Unlike underground mines, Detour Lake’s open pit poses fewer fatality risks and requires truck drivers and heavy equipment operators who can be easily trained. Employees will be bussed 180 kilometres from Cochrane to the Detour Lake site on an existing MTO-maintained road. Employees will work in seven-day rotations, and stay in a permanent camp.

With a projected 15-year lifespan, the Detour Lake project is likely the largest private investment planned in Ontario. But Panneton sees it going on longer if more ore is found to the west. “In my mind this project has a much longer operating life than 15 years. The potential is excellent to increase the mine’s life and the longevity of job employment in the area.”

In terms of timing, with the economy and manufacturing down, it’s a buyer’s market. “You think it’s a good time to buy a car? It’s a good time to buy mining equipment, too,” says Panneton. Lead times to order equipment for the $400-million mill, for example, have decreased from 150 weeks in 2008, to 90 weeks in the pre-feasibility study, to about 50 weeks currently. “That’s why I’m saying this is the best time to build a mining project,” says Panneton. “There are no queues and no backlog. It’s a buyer’s market to decide and negotiate the price and conditions.”

Finally, there’s the gold environment itself. With a US$600 per ounce break-even point, and gold currently hovering at US$1,100, “you cannot be in a better environment than this,” says Panneton, cradling his 1.6 ounce gold bar. Moreover, many investors believe the price of gold will continue to go up since gold deposits are getting harder to find.

For shareholders, Detour Lake is a robust project expected to deliver strong earnings per share due to the strength of the price of gold, the quality of the project, and Detour Gold’s low share count. And as the project advances towards production, valuation will continue to increase.

In fact, the imminent release of Detour Gold’s feasibility study will put the mine at an even higher throughput than anticipated (up to 55,000 tonnes per day) producing over 600,000 ounces of gold annually, and making Detour Gold one of the largest gold producers in Canada. “We’re the premiere North American developer,” Panneton boasts.

Clearly, there’s gold to be had.