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DETOUR GOLD CORPORATION Management’s Discussion and Analysis SECOND QUARTER 2015

DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Page 1: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

DETOUR GOLD

CORPORATION

Management’s Discussion and Analysis

SECOND

QUARTER 2015

Page 2: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

1

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”)

provides information that management believes is relevant to an assessment and understanding of the consolidated

financial condition and results of operations of the Company. This MD&A should be read in conjunction with Detour

Gold’s unaudited condensed consolidated interim financial statements and related notes for the three and six months

ended June 30, 2015 and 2014 which are prepared in accordance with International Accounting Standard Interim

Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). This MD&A

contains certain forward-looking statements. Refer to the cautionary language at the end of this MD&A. All dollar

figures stated herein are expressed in United States dollars, except for: (i) tabular amounts which are in thousands of

United States dollars; (ii) per share or per ounce amounts; or (iii) unless otherwise specified. This MD&A is dated July

29, 2015. The Company’s public filings, can be viewed on the SEDAR website (www.sedar.com) and on the

Company’s website (www.detourgold.com).

Certain non-IFRS measures are included in this MD&A. Detour Gold believes that these measures, in addition to

conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the

underlying performance of the Company. The non-IFRS measures are intended to provide additional information and

should not be considered in isolation or as a substitute for measures of performance prepared in accordance with

IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be

comparable to other issuers. The non-IFRS measures included in this document are: total cash costs; all-in

sustaining costs; average realized price; average realized margin; adjusted net earnings (loss); and adjusted basic

net earnings (loss) per share.

The Company adjusted the historical calculation of total cash costs, all-in sustaining costs, average realized margin,

adjusted net earnings (loss) and adjusted net earnings (loss) per share to reflect an electricity adjustment related to

prior periods. For further information on the adjustment refer to “Second Quarter 2015 Financial Results – Costs of

Sales” and section “Non-IFRS Financial Performance Measures – Revised Non-IFRS Measures: Electricity

Adjustment”. In addition, included in this MD&A is the measure “Earnings (loss) from mine operations”; refer to

section “Additional IFRS Financial Performance Measures” for additional information on this measure.

The following abbreviations are used throughout this document: USD or U.S. dollar (United States dollar), Cdn

(Canadian dollar), Au (gold), oz (ounces), g/t (grams per tonne), Mt (million tonnes), km (kilometre), and tpd (tonnes

per day),

BUSINESS OVERVIEW

Detour Gold is an intermediate Canadian gold producer in Canada that holds a 100% interest in the Detour Lake

mine, a long-life large-scale open pit operation. Detour Gold’s common shares are listed on the Toronto Stock

Exchange (TSX:DGC).

Page 3: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

2

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

TABLE OF CONTENTS

SECOND QUARTER 2015 HIGHLIGHTS ..................................................................................................................... 3

OUTLOOK ..................................................................................................................................................................... 3

KEY PERFORMANCE DRIVERS .................................................................................................................................. 4

KEY OPERATING AND FINANCIAL STATISTICS ........................................................................................................ 6

OPERATING RESULTS ................................................................................................................................................ 7

2015 EXPLORATION PROGRAM UPDATE .................................................................................................................. 8

SECOND QUARTER 2015 FINANCIAL RESULTS ....................................................................................................... 9

FIRST HALF 2015 FINANCIAL RESULTS .................................................................................................................. 13

FINANCIAL CONDITION REVIEW .............................................................................................................................. 17

LIQUIDITY AND CAPITAL RESOURCES ................................................................................................................... 18

COMMITMENTS .......................................................................................................................................................... 22

CONTINGENCIES ....................................................................................................................................................... 23

IT RISK MANAGEMENT .............................................................................................................................................. 23

OFF-BALANCE SHEET ARRANGEMENTS ................................................................................................................ 23

SUMMARY OF QUARTERLY FINANCIAL RESULTS ................................................................................................. 24

NON-IFRS FINANCIAL PERFORMANCE MEASURES .............................................................................................. 25

ADDITIONAL IFRS FINANCIAL PERFORMANCE MEASURES ................................................................................. 29

CRITICAL ACCOUNTING ESTIMATES ...................................................................................................................... 30

ACCOUNTING POLICIES ........................................................................................................................................... 30

INTERNAL CONTROLS OVER FINANCIAL REPORTING ......................................................................................... 31

OUTSTANDING SHARES ........................................................................................................................................... 31

RISKS AND UNCERTAINTIES .................................................................................................................................... 32

FORWARD LOOKING STATEMENTS ........................................................................................................................ 41

INFORMATION CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES.......... 42

TECHNICAL INFORMATION ....................................................................................................................................... 42

Page 4: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

3

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

SECOND QUARTER 2015 HIGHLIGHTS

Gold production of 125,348 ounces; Total cash costs of $734 per ounce sold and all-in sustaining costs of $1,030

per ounce sold

Mining rates averaged 280,000 tpd and mill throughput rates averaged 57,015 tpd

Metal sales of $147.5 million on gold sales of 123,296 ounces at an average realized price of $1,215 per ounce

Net loss of $15.4 million ($0.09 per share) and adjusted net earnings of $0.5 million ($nil per share)

Cash and short-term investments balance of $133.2 million at June 30, 2015

Amended Cdn$135 million Credit Facility, eliminating Completion Test and allowing more flexible financial

covenants and extending the maturity date

Drilling program of 30,000 metres at Lower Detour started at the end of June 2015

OUTLOOK

2015 Guidance

Detour Gold re-affirms its 2015 guidance for gold production of 475,000 to 525,000 ounces at total cash costs of $780

to $850 per ounce sold. All-in sustaining costs (“AISC”) are expected to be between $1,050 and $1,150 per ounce

sold.

Expected sustaining capital expenditures and capitalized stripping costs for 2015 remain as previously stated at

approximately $90 to $100 million and $20 to $25 million, respectively.

Exploration expenditures for 2015 are expected to increase to approximately $8 million as the Company has added a

30,000 metre drilling program at Lower Detour.

Life of mine plan update

The objective of the life of mine (LOM) plan update is to maximize returns for the next 5 to 10 years and optimize the

net asset value of the Detour Lake mine by efficient capital allocation and decisions on the mining and mill throughput

rates. The Company is currently evaluating five mine plan scenarios ranging from 115 to 140 Mt annually (equivalent

to mining rates of approximately 300,000 to 385,000 tpd). In the new LOM plan, Block A pit development is planned

to commence no earlier than in 2018.

The LOM plan update is expected to be completed at the end of 2015 and be released along with the 2016 guidance.

Processing of fines update

A second test of processing the fines from the enriched portion of the low-grade stockpile (referred to as mineralized

waste grading an average of 0.44 g/t gold in the February 2014 LOM plan) started on July 1, 2015 at a rate of up to

4,000 tpd and is scheduled to continue throughout the third quarter.

Page 5: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

KEY PERFORMANCE DRIVERS

The Company’s key internal performance drivers are production volumes and costs which are disclosed in the

sections, “Operational Results” and “Second Quarter 2015 and First Half 2015 Financial Results”. The key external

performance drivers are the price of gold and foreign exchange rates.

Gold price

The price of gold is the most significant external financial factor affecting the Company’s profitability and cash flow

from operations. Therefore, the financial performance of the Company is expected to be closely linked to the price of

gold. The price of gold is subject to volatile price movements over short periods of time and is affected by numerous

industry and macroeconomic factors.

Significant influences on the gold price include currency exchange rate fluctuations, the relative strength of the U.S.

dollar, the supply of and the demand for gold, and macroeconomic factors such as the level of interest rates and

inflation expectations.

The gold price (London PM fix) fluctuated during the second quarter of 2015 opening at $1,187 per ounce, reaching a

high of $1,225 per ounce in mid-May, and closing at $1,171 per ounce at the end of the quarter. The average price

for the second quarter based on the London Bullion Market Association PM Fix was $1,192 per ounce, a $97 per

ounce decrease over the second quarter of 2014 average of $1,289 per ounce.

The Company has entered into gold forward contracts to mitigate the variability associated with changing market

prices of gold. As at June 30, 2015, the Company had a total of 35,000 ounces of outstanding gold contracts at an

average price of $1,276 per ounce. The impact to net income before tax of a 10% movement in the market price of

gold would be approximately $4.1 million, holding all other variables constant.

In the second quarter of 2015, the Company realized a gain of $2.5 million, recorded in net finance income and costs,

related to its gold sales risk management program.

Refer to section “Liquidity and Capital Resources – Derivative Instruments” for details on the gold forward sales

settled and outstanding at June 30, 2015.

Foreign exchange rates

The Company’s functional and reporting currency is the U.S. dollar. A significant portion of the operating and capital

costs at the Detour Lake mine, as well as the corporate administration and exploration and evaluation costs, are

denominated in Canadian dollars. Consequently, the Company’s operating results and cash flows are influenced by

changes in the Canadian dollar against the U.S. dollar exchange rate.

1100

1200

1300

1400

Jun-13 Dec-13 Jun-14 Dec-14 Jun-15

Average Monthly Gold Price $ per gold ounce

Page 6: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

5

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

The average U.S. dollar exchange rate strengthened by 13% during the second quarter of 2015 compared to the

second quarter of 2014, and decreased slightly from the average rate during the first quarter of 2015. A weaker

Canadian dollar reduces costs in U.S. dollar terms as the Company estimates that approximately 80% of its

expenditures are denominated in Canadian dollars.

Through our currency hedging program, the Company has put in place protection to limit the impact of fluctuations in

the Canadian dollar. As at June 30, 2015, the Company had $40 million of zero-cost collars, guaranteeing it will

purchase Canadian dollars at a rate of no worse than 1.11 and can participate at rates up to 1.21. In addition, the

Company has $40 million of forward contracts at an average exchange rate of 1.26. The impact to net income before

tax of a +/-10% movement in the market price of gold would be approximately +$7.2 million/-$5.9 million, holding all

other variables constant.

In the second quarter of 2015, the Company realized an exchange rate of 1.23 on its Canadian denominated

expenditures, and a $1.0 million realized loss related to its foreign exchange risk management program.

Refer to section “Liquidity and Capital Resources – Derivative Instruments” for details on the foreign exchange

derivatives settled and outstanding at June 30, 2015.

1.00

1.10

1.20

1.30

Jun-13 Dec-13 Jun-14 Dec-14 Jun-15

Average Monthly Exchange Rate USD to CDN

Page 7: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

6

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

KEY OPERATING AND FINANCIAL STATISTICS

The operating and financial data for the periods are as follows:

In thousands of U.S. dollars, except where noted

Three-months ended

June 30

Six-months ended June 30

2015 2014 2015 2014

Operating data

Ore mined Mt 6.37 2.89 10.19 7.77

Waste mined Mt 19.08 16.11 35.05 30.40

Total mined Mt 25.45 19.00 45.24 38.17

Strip ratio waste:ore 3.0 5.6 3.4 3.9

Mining rate ‘000s tpd 280 209 250 211

Ore milled Mt 5.19 4.42 9.49 8.50

Head grade g/t Au 0.82 0.91 0.83 0.91

Recovery % 91 91 91 91

Mill throughput tpd 57,015 48,569 52,431 46,935

Gold ounces produced oz 125,348 117,366 230,920 224,520

Gold ounces sold1 oz 123,296 107,206 227,793 191,766

Financial data

Metal sales1 $ 147,526 139,009 274,901 249,024

Earnings (loss) from mine operations

$ 7,527 2,595 286 (1,125)

Net loss $ (15,401) (35,037) (78,462) (89,980)

Per share – basic and diluted

$/share (0.09) (0.22) (0.47) (0.60)

Adjusted net earnings (loss)

2

$ 544 (18,851) (24,373) (48,501)

Per share – basic2 $/share 0.00 (0.12) (0.15) (0.32)

Total assets $ 2,488,725 2,555,252 2,488,725 2,555,252

Long-term debt $ 426,819 547,329 426,819 547,329

Average realized price $/oz 1,215 1,294 1,223 1,268

Total cash costs2 $/oz 734 954 828 972

Average realized margin

2

$/oz 481 340 395 296

All-in sustaining costs2,3

$/oz 1,030 - 1,163 -

1Gold ounces sold are net of 2% royalty ounces payable in kind.

2The calculation of these non-IFRS measures, including prior periods, was adjusted to allocate the electricity adjustment into the

appropriate historical period to which the cost applied. Refer to section “Second Quarter 2015 Financial Results – Cost of Sales”

and “Non-IFRS Financial Performance Measures – Revised IFRS Measures: Electricity Adjustment” for details on the adjustment.

3The Company adopted this non-IFRS Financial Performance Measure effective January 1, 2015.

Page 8: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

7

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

OPERATING RESULTS

The Detour Lake gold mine is a large open pit operation located in northeastern Ontario, approximately 300 km

northeast of Timmins and 185 km by road northeast of Cochrane. The Detour Lake property consists of a contiguous

block of mining claims and leases totaling approximately 630 km2 in the District of Cochrane.

Gold production

In the second quarter of 2015, the Detour Lake mine increased gold production by 7% to 125,348 ounces of gold,

compared to 117,366 ounces of gold in the prior year period. The increase is primarily related to a 17% improvement

in the mill throughput rate (57,015 tpd compared to 48,569 tpd), partially offset by a decrease of 10% in the head

grade (0.82 g/t compared to 0.91 g/t), while recoveries remained consistent at 91%.

Production in the first half of 2015 was 230,920 ounces of gold, in line with the operating plan and consistent with the

Company’s guidance that production is expected to be higher in the second half of the year primarily due to the

transition in the open pit into higher grade ore. Production guidance for 2015 of 475,000 to 525,000 ounces remains

unchanged.

Mining

A total of 25.5 Mt of ore and waste was mined in the second quarter of 2015, an increase of 34% compared to the

second quarter of 2014 (19.0 Mt mined). This reflected an increase in the average mining rates from 209,000 tpd in

the second quarter of 2014 to 280,000 tpd in the second quarter of 2015.

The significant increase over the last year in the mining rate was primarily achieved as a result of the extensive

overburden removal program during 2014 combined with a significant increase in the production drilling rates which

has enabled the pit to develop resulting in higher shovel productivity and increased mining rates in 2015.

Mining rates achieved during the second quarter of 2015, were approximately 18% higher than the annual budgeted

rate of 238,000 and above the fourth quarter 2015 target of 268,000 tpd. The improvement in the mining rate has

allowed the Company to rebuild its run-of-mine stockpiles to 1.7 Mt grading 0.71 g/t Au at June 30, 2015.

For the remainder of 2015, the Company is targeting mining rates ranging between 250,000 and 290,000 tpd. Mine

development will be focusing on opening the eastern part of the pit to access higher grade ore, accelerating waste

rock delivery to the tailings area using the mine haulage fleet, and maximizing feed grade. Access to the higher grade

ore is now anticipated to start in the third quarter versus the fourth quarter and as a result approximately 10,000 to

15,000 ounces from the fourth quarter production are targeted to be processed in the third quarter.

125

106

117 115 117

107

75

85

95

105

115

125

135

Q22015

Q12015

Q42014

Q32014

Q22014

Q12014

Gold Production Thousands of ounces

280

220 214 206 209 213

100

150

200

250

300

Q22015

Q12015

Q42014

Q32014

Q22014

Q12014

Mining Rate Thousands of tonnes per day

57

48

51

49 49

45

45

50

55

60

Q22015

Q12015

Q42014

Q32014

Q22014

Q12014

Mill Throughput Rate Thousands of tonnes per day

Page 9: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

8

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Milling

A record of 5.2 Mt of ore, or 57,015 tpd, was processed in the second quarter of 2015, an increase of 17% compared

to the second quarter of 2014 (4.4 Mt of ore processed, or 48,569 tpd). This significant improvement was primarily

due to enhancements completed to material movement processes, including modifications and reinforcements to the

410 conveyor and chute modifications to the secondary crushers. These modifications, along with efficiencies and

experience gained since start-up, have enabled the mill to reach and exceed nameplate capacity of 55,000 tpd.

Head grade was 0.82 g/t Au for the second quarter, lower than the comparative period of 0.91 g/t Au, but slightly

higher than projections for the quarter. The head grade is expected to increase in the second half of 2015 as a result

of accessing higher grade ore.

2015 EXPLORATION PROGRAM UPDATE

The Company started its 30,000 metre drilling program at the end of June. To date, 7,200 metres in 20 holes have

been completed on the Lower Detour target, located approximately 6 to 7 kilometres south of the Detour Lake

processing plant. The majority of the holes have encountered visible gold in the targeted mineralized zones. Assay

results are pending.

Page 10: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

9

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

SECOND QUARTER 2015 FINANCIAL RESULTS

Factors Affecting Second Quarter Net Loss

Millions of US dollars

Metal sales

Metal sales for the second quarter of 2015 were $147.5 million, compared to $139.0 million in the prior year period.

Although gold sales volume increased, metal sales were negatively affected by lower average realized prices

compared to the prior year period.

Due to higher production, gold sales volumes during the second quarter of 2015 amounted to 123,296 ounces,

compared to 107,206 ounces in the prior year period.

The average realized gold price for the second quarter of 2015 was $1,215 per ounce, compared to $1,294 per ounce

in the prior year period. The decrease reflects the lower market price for gold (London PM fix) which averaged $1,192

per ounce compared to $1,289 per ounce in the prior year period. Detour Gold achieved an average realized price

above the London PM fix primarily as a result of the Company’s gold sales program, which contributed $2.5 million

and is recorded in net finance income and costs.

Cost of sales

Cost of sales for the second quarter of 2015 was $140.0 million compared to $136.4 million in the second quarter of

2014. This balance is comprised of production costs and depreciation and depletion.

Production costs include costs associated with mining, processing, refining, site administration, and agreements with

Aboriginal communities. Production costs during the second quarter of 2015 were $100.2 million compared to $98.1

million in the second quarter of 2014.

Production costs in the second quarter of 2015 include an unfavourable adjustment to the Company’s electricity

rebate related to electricity usage from January 2013 to April 2015. The adjustment resulted in an additional cost of

$12.5 million, of which $9.7 million was recorded in current period production costs for electricity consumption in the

post commercial production period (September 2013 to April 2015), and $2.8 million related to pre-commercial

production period and charged to property, plant and equipment. The portion of the adjustment relating to 2015

usage amounted to $2.0 million. The $12.5 million balance is payable in 20 equal monthly instalments commencing in

the third quarter of 2015.

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Page 11: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

10

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

The Company’s long-term electricity contract with the Independent Electricity System Operator (previously Ontario

Power Authority), is applicable until December 2019. The contract will continue to enable the Detour Lake mine to

receive a reduction in electricity costs in the form of a rebate. The current period electricity adjustment affected all

participants under the IESO’s Stream 2 long-term electricity program. It is not anticipated that the Company will be

subject to additional adjustments to electricity rebates previously received.

Total cash costs for the second quarter of 2015 were $734 per ounce sold, an improvement of $220 per ounce from

the second quarter 2014 of $954 per ounce. Unit costs improved in the second quarter of 2015, reflecting the higher

volumes of tonnes mined and milled during the quarter, operating efficiencies and experience gained since start-up,

and a positive impact from the depreciation of the Canadian dollar, relative to the prior year period. Plant

consumables (i.e. grinding media, cyanide, and SO2) declined to their lowest levels since production commenced.

Total cash costs, including prior periods, was adjusted to allocate the electricity adjustment into the appropriate

historical period to which the cost applied. Refer to the section ‘Non-IFRS Financial Performance Measures” for a

reconciliation of this calculation.

Depreciation and depletion during the period was $39.8 million, or $323 per gold ounce sold, compared to $38.3

million, or $357 per gold ounce sold in the second quarter of 2014. The decrease in the depreciation per ounce is

mainly due to the fixed component of depreciation expense divided by higher production.

In 2015, the Company adopted all-in sustaining costs. AISC for the second quarter of 2015 was $1,030 per ounce

sold, which is in-line with the Company’s full year 2015 guidance.

As the operations stabilize and become more efficient, total cash costs are expected to continue to trend lower

relative to 2014.

Corporate administration expense

Corporate administration expense was $8.8 million in the second quarter of 2015 compared to $7.9 million for the

prior year period. The increase is primarily related to the issuance of share based compensation in 2015. Total share-

based compensation expense (share options and units) for the second quarter of 2015 was $3.8 million compared to

$2.7 million in the prior year period.

Exploration and evaluation expense

Exploration and evaluation expense was $0.9 million in the second quarter of 2015, compared to $1.4 million for the

prior year period. The expense includes $0.1 million of share based compensation (2014 - $0.1 million).

Exploration and evaluation expense, in both 2015 and 2014, primarily relate to the drilling program in the Lower

Detour Lake area, located approximately 6 to 7 kilometers south of the Detour Lake processing plant. The decrease

in expenditures primarily relates to fewer metres drilled during the first half of 2015 compared to 2014.

Net finance income and costs

Fair value change of the Convertible notes

The share price of the Company is a significant input in the fair value calculation of the convertible notes. As the

Company’s share price increases or decreases, a related loss or gain on the mark-to-market of the convertible notes

is reflected in net finance income and costs, respectively.

During the second quarter of 2015, the share price of the Company appreciated from $8.49 to $11.52, resulting in a

$6.6 million revaluation loss on the convertible notes. In the second quarter of 2014, the share price appreciated from

$8.66 to $13.79 resulting in a $15.1 million revaluation loss on the convertible notes.

Page 12: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

11

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Interest expense and bank charges

During the second quarter of 2015, the Company recorded interest expense and bank charges of $7.2 million

compared to $8.6 million during the second quarter of 2014. The decrease is related to lower levels of debt

outstanding in 2015.

Unrealized and realized gain/loss on derivative instruments

During the second quarter of 2015, the Company realized a net gain of $1.7 million on its gold sales, diesel and

foreign exchange risk management program derivative instruments and recorded an unrealized gain of $3.0 million

on derivative positions at June 30, 2015. Details on the company’s derivative positions at June 30, 2015 are included

in the “Liquidity and Capital Resources – Derivative Instruments” section.

Income and mining tax

During the second quarter of 2015, income and mining tax recovery of $2.5 million was recognized (2014 - $nil)

primarily due to the strengthening of the Canadian dollar against the U.S. dollar and the resulting impact on the

translation of non-monetary assets, mainly property, plant and equipment. The Company’s functional currency for

financial reporting purposes differs from its tax filing currency. As a result, tax bases of non-monetary assets and

liabilities that are denominated in a foreign currency, other than the U.S. dollar, are subject to re-measurement for

changes in currency exchange rates at each reporting period. This can have a significant impact on the Company’s

net loss in a period. All else being equal, if the Canadian dollar devalues against the U.S. dollar, the Company would

recognize additional deferred tax expense. In the event the Canadian dollar appreciates against the U.S. dollar, a

deferred tax recovery would be expected.

Net loss

Net loss for the second quarter of 2015 was $15.4 million, or $0.09 per share, compared to a net loss of $35.0 million,

or $0.22 per share in the second quarter of 2014. The decrease in net loss was primarily due to higher gold sales

volumes and a significant decrease in the finance costs as described above.

Adjusted net earnings

Adjusted net earnings for the second quarter of 2015 amounted to $0.5 million or $nil per share, an improvement

from adjusted net loss of $18.9 million, or $0.12 per share in the prior year period.

Reconciliation of Second Quarter 2015 Adjusted Net Earnings

Millions of US dollars

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Page 13: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

12

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Net loss was adjusted to exclude specific items that are significant, but not reflective of the underlying operations of

the Company, including: fair value change of the convertible notes, the impact of foreign exchange gains and losses,

including the foreign exchange impact on deferred income and mining taxes, non-cash unrealized gains and losses

on derivative instruments, accretion on convertible notes and unwinding of discount on decommissioning and

restoration provisions. In addition, adjusted net earnings excludes the impact of the electricity rebate related to prior

periods electricity usage as described in the section “Cost of Sales” above. Adjusting for these items provides an

additional measure to evaluate the underlying operating performance of the Company as a whole for the reporting

periods presented.

Refer to “Non-IFRS Financial Performance Measures” for a reconciliation of the net loss to adjusted net loss.

Page 14: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

FIRST HALF 2015 FINANCIAL RESULTS

Factors Affecting First Half Net Loss

Millions of US dollars

Metal sales

Gold sales volume in the first half of 2015 amounted to 227,793 ounces, compared to 191,766 ounces in the prior

year period. Gold sales in the current period are similar to production as inventory levels have stabilized, whereas

they were lower in the comparative period due to a re-building of the gold-in-circuit inventory following a drawdown at

year-end 2013.

Metal sales for the first half of 2015 were $274.9 million, an increase of $25.9 million, or 9%, compared to the prior

year period. Although gold sales volumes increased, metal sales were negatively affected by lower average realized

prices compared to the prior year period.

The average realized gold price for the first half of 2015 was $1,223 per ounce, compared to $1,268 per ounce in the

prior year period. The decrease reflects the lower market price for gold (London PM fix) which averaged $1,206 per

ounce compared to $1,291 per ounce in the prior year period. Detour Gold achieved an average realized price above

the London PM fix primarily as a result of the Company’s gold sales program, which contributed $4.2 million and is

recorded in net finance income and costs.

Cost of sales

Cost of sales for the first half of 2015 was $274.6 million compared to $250.1 million in the first half of 2014. This

balance is comprised of production costs and depreciation and depletion.

Production costs include costs associated with mining, processing, refining, site administration, and agreements with

Aboriginal communities. Production costs during the first half of 2015 were $197.9 million compared to $181.3 million

in the first half of 2014.

Production costs in the first half of 2015 include an unfavourable adjustment to the Company’s electricity rebate

related to electricity usage from January 2013 to April 2015. The adjustment resulted in an additional cost of $12.5

million, of which $9.7 million was recorded to production costs in the current period for electricity consumption in the

post commercial production period (September 2013 to April 2015), and $2.8 million, related to pre-commercial

production period and charged to property, plant and equipment. The portion of the adjustment relating to 2015

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Page 15: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

14

Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

usage amounted to $2.0 million. The $12.5 million balance is payable in 20 equal monthly instalments commencing in

the third quarter of 2015.

The Company’s long-term electricity contract with the Independent Electricity System Operator (previously Ontario

Power Authority), is applicable until December 2019. The contract will continue to enable the Detour Lake mine to

receive a reduction in electricity costs in the form of a rebate. The current period electricity adjustment affected all

participants under the IESO’s Stream 2 long-term electricity program. It is not anticipated that the Company will be

subject to additional adjustments to electricity rebates previously received.

Total cash costs for the first half of 2015 were $828 per ounce sold, an improvement of $144 per ounce from the first

half of 2014 of $972 per ounce. Unit costs improved in the first half of 2015, reflecting the higher volumes of tonnes

mined and milled during the period, operating efficiencies and experience gained since start up, and a positive impact

from the depreciation of the Canadian dollar, relative to the prior year period. Total cash costs, including prior periods,

was adjusted to allocate the electricity adjustment into the appropriate historical period to which the cost applied.

Refer to the section ‘Non-IFRS Financial Performance Measures” for a reconciliation of this calculation.

Depreciation and depletion for the first half of 2015 was $76.7 million, or $337 per gold ounce sold, compared to

$68.9 million, or $359 per gold ounce sold in the first half of 2014. The decrease in the depreciation per ounce is

mainly due to the fixed component of depreciation expense divided by higher production.

In 2015, the Company adopted AISC. AISC for the first half of 2015 was $1,163 per ounce sold, slightly above the

higher end of the full year 2015 guidance.

Corporate administration expense

Corporate administration expense was $16.2 million in the first half of 2015 compared to $15.4 million for the prior

year period. The increase is primarily related to the issuance of share based compensation in 2015. Total share-

based compensation expense (share options and units) for the first half of 2015 was $6.1 million compared to $5.4

million in the prior year period.

Exploration and evaluation expense

Exploration and evaluation expense was $1.7 million in the first half of 2015 compared to $2.8 million for the prior

year period. The expense includes $0.1 million of share based compensation (2014 - $0.2 million).

Exploration and evaluation expense, in both 2015 and 2014, primarily relate to the drilling program in the Lower

Detour Lake area, located approximately seven kilometers south of the Detour Lake gold mine. The decrease in

expenditures primarily relates to fewer metres drilled during the first half of 2015 compared to 2014.

For the full year, the Company expects to record exploration and evaluation expense of approximately $8.0 million

due to an expanded drilling program at Lower Detour.

Net finance income and costs

Fair value change of the convertible notes

The share price of the Company is a significant input in the fair value calculation of the convertible notes. As the

Company’s share price increases or decreases, a related loss or gain on the mark-to-market of the convertible notes

is reflected in net finance income and costs.

During the first half of 2015, the share price of the Company appreciated from $8.18 to $11.52, resulting in a $10.7

million revaluation loss on the convertible notes.

Interest expense and bank charges

Page 16: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

During the first half of 2015, the Company recorded interest expense and bank charges of $15.6 million compared to

$17.6 million during the first half of 2014. The decrease is related to lower levels of debt outstanding in 2015,

including the repayment of the finance lease obligations and Revolving Credit Facility during the first quarter of 2015.

Unrealized and realized gain/loss on derivative instruments

During the first half of 2015, the Company realized a net gain of $2.0 million on its gold sales, diesel and foreign

exchange risk management program derivative instruments and recorded an unrealized gain of $2.9 million on

derivative positions at June 30, 2015. Details on the company’s derivative positions at June 30, 2015 are included in

the “Liquidity and Capital Resources – Derivative Instruments” section.

Income and mining tax

During the first half of 2015, income and mining tax expense of $24.8 million was recognized (2014 - $nil) primarily

due to the weakening of the Canadian dollar since 2014 and the resulting impact on the translation of non-monetary

assets, mainly property, plant and equipment. The Company’s functional currency for financial reporting purposes

differs from its tax filing currency. As a result, tax bases of non-monetary assets and liabilities that are denominated

in a foreign currency, other than the U.S. dollar, are subject to re-measurement for changes in currency exchange

rates at each reporting period. This can have a significant impact on the Company’s net loss in a period. All else

being equal, if the Canadian dollar continues to devalue against the U.S. dollar, the Company would recognize

additional deferred tax expense. In the event the Canadian dollar appreciates against the U.S. dollar, a deferred tax

recovery would be expected.

Net loss

Net loss for the first half of 2015 was $78.5 million, or $0.47 per share, compared to a net loss of $90.0 million, or

$0.60 per share in the first half of 2014. The net loss in 2015 was impacted by the recording of deferred taxes of

$24.8 million during the first half of 2015 (2014 - $nil) as well as the additional electricity costs related to prior periods

totaling $7.7 million (2014 – credit of $3.9 million).

Adjusted net loss

Adjusted net loss for the first half of 2015 amounted to $24.4 million or $0.15 per share, an improvement from

adjusted net loss of $48.5 million, or $0.32 per share in the prior year period.

Reconciliation of First Half 2015 Adjusted Net Loss

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Page 17: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Net loss was adjusted to exclude specific items that are significant, but not reflective of the underlying operations of

the Company, including: fair value change of the convertible notes, the impact of foreign exchange gains and losses,

including the foreign exchange impact on deferred income and mining taxes, non-cash unrealized gains and losses

on derivative instruments, accretion on convertible notes and unwinding of discount on decommissioning and

restoration provisions. In addition, adjusted net loss excludes the impact of the electricity rebate related to prior

periods electricity usage as described in the section “Cost of Sales” above. Adjusting for these items provides an

additional measure to evaluate the underlying operating performance of the Company as a whole for the reporting

periods presented.

Refer to “Non-IFRS Financial Performance Measures” for a reconciliation of the net loss to adjusted net loss.

Page 18: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

FINANCIAL CONDITION REVIEW

In thousands of dollars June 30

2015 December 31

2014

Cash and cash equivalents $ 131,537 $ 133,465

Short-term investments 1,702 1,808

Other receivables 13,627 12,241

Other assets 18,119 22,377

Inventories 102,434 92,089

Property, plant and equipment 2,221,306 2,254,577

Total assets $ 2,488,725 $ 2,516,557

Current and long-term trade and other payables $ 74,295 $ 77,028

Current and long-term debt 426,819 526,295

Other liabilities 46,522 46,472

Deferred tax liability 43,517 19,119

Total liabilities $ 591,153 $ 668,914

Total equity $ 1,897,572 $ 1,847,643

Total assets were $2.5 billion at June 30, 2015, a decrease of $27.8 million compared to December 31, 2014. The

Company’s asset base is primarily comprised of non-current assets, property, plant and equipment, reflecting the

capital intensive nature of mining. Other significant assets include cash and cash equivalents and inventories. The

decrease in total assets primarily reflects an increase in inventories and other assets, which were more than offset by

the net decrease in property, plant and equipment.

At June 30, 2015, inventories included $17.3 million of stockpiled ore (December 31, 2014 - $6.9 million), $27.2

million of gold-in-circuit (December 31, 2014 - $22.8 million), $9.8 million of finished metal inventory (December 31,

2014 - $19.1 million), and $48.1 million of materials and supplies (December 31, 2014 - $43.2 million). The improved

mining rate, specifically in the second quarter of 2015, allowed for the rebuilding of the run-of-mine stockpiles to 1.7

Mt grading 0.71 g/t Au (December 31, 2014 – 0.8 Mt grading 0.76 g/t Au). Finished metal inventory decreased as a

result of selling gold held at refineries.

Other receivables primarily relate to Harmonized Sales Tax (HST) refunds of $11.8 million. The Company expects to

collect these receivables during the third quarter of 2015. The Company does not carry any trade receivables.

Property, plant and equipment decreased by net $33.3 million during the first half of 2015, as depreciation expense

was greater than additions to property, plant and equipment. Capital additions for 2015, including deferred stripping,

remain within the full year guidance of $110 to $125 million.

The Company’s primary contractual obligations consist of long-term debt and trade and other payables. The

decrease in the long-term debt primarily relates to the repayment of the finance leases and Revolving Credit Facility

during the first quarter of 2015.

At June 30, 2015, long-term debt consisted of the convertible notes of $426.8 million (face value $500 million). Trade

and other payables (current and long-term) were $74.3 million at June 30, 2015 compared to $77.1 million at

December 31, 2014. The reduction is primarily as a result of the continued weakening of the Canadian dollar since

the beginning of the year, offset by an electricity adjustment of $12.5 million as described in “Second Quarter 2015

Financial Results - Cost of Sales” section.

Page 19: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

The Company’s decommissioning and restoration provisions are included within Other liabilities in the table above.

Significant restoration and rehabilitation activities include land rehabilitation, demolition of buildings and mine

facilities, ongoing care and maintenance and other costs. At June 30, 2015, the provision was $41.7 million compared

to $41.6 million at December 31, 2014. The variance is primarily due to a slight decrease in the long-term discount

rate used to record the long-term provision at its net present value. There have been no changes to the underlying

mine site closure activities since the third quarter of 2014.

The Company recognized deferred tax liabilities of $43.5 million in respect of income and mining taxes, an increase

of $24.4 million since December 31, 2014. Deferred tax liabilities were recognized primarily due to the further

weakening of the Canadian dollar since year-end 2014 and the resulting impact on the translation of non-monetary

assets, mainly property, plant and equipment.

Derivative assets and derivative liabilities have increased since year-end. These balances are included in the caption

Other assets and Other liabilities, respectively, in the table above. The increase in derivative assets primarily relates

to the favorable gold and diesel hedge positions while the increase in derivative liabilities primarily relates to the

unrealized market-to-market loss on the foreign exchange risk management program. Refer to the section “Liquidity

and Capital Resources – Derivative Instruments” for details on the derivative instruments outstanding at June 30,

2015.

Total equity was $1.9 billion at June 30, 2015, an increase of $50.0 million compared to December 31, 2014. The

increase resulted primarily from a public offering of common shares completed on February 10, 2015, which

generated net proceeds of $123.1 million, partially offset by the net loss of $78.5 million for the first half of 2015.

LIQUIDITY AND CAPITAL RESOURCES

The Company manages liquidity risk by monitoring actual and projected cash flows and matching the maturity profile

of financial assets and liabilities. Cash flow forecasting is performed regularly. The Company monitors rolling

forecasts of the Company’s liquidity in the form of additional cash and cash equivalents and requirements to ensure it

has sufficient cash to meet operational needs while maintaining additional liquidity on its undrawn Credit Facility.

Forecasting takes into consideration the Company’s debt financing commitments, covenant compliance and internal

liquidity targets. In addition, factors that can impact the Company’s liquidity are monitored regularly and include

assumptions of gold market prices, foreign exchange rates, production levels, operating costs and capital costs.

Contractual obligations and other commitments that could impact the Company’s liquidity are detailed in the

“Commitments” section below.

Liquidity and capital resources

The Company uses a mixture of cash, long-term debt and shareholders’ equity to maintain an efficient capital

structure and ensure adequate liquidity exists to meet the needs of the operations and the Company.

On February 10, 2015, the Company closed a public offering on a bought deal basis of 11,000,000 common shares

with an over-allotment option of 1,650,000 common shares at a price of $10.18 (Cdn$12.80) per common share. The

gross proceeds to the Company were $128.8 million (Cdn$161.9 million). In connection with the offering, the

underwriters were paid a 4% commission totaling approximately $5.2 million (Cdn$6.5 million). Share issuance costs

of $0.5 million (Cdn$0.6 million) were incurred in relation to the offering.

The Company used the net proceeds, along with cash on hand, to repay all outstanding indebtedness under its

Revolving Credit Facility and finance leases, reducing long-term debt by $124.2 million.

As a result of these debt repayments, the only debt outstanding is the convertible notes (face value $500 million),

maturing in 2017. If conversion of the convertible notes to equity does not occur, the Company will review the capital

resources available, including future operating cash flows, and the likelihood of refinancing a portion of the

convertible notes to determine the optimal principal repayment method.

Page 20: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

The long-term debt repayment profile at June 30, 2015 is as follows:

In thousands of dollars 2015 2016 2017 2018 Thereafter Total

Repayment of convertible notes $ - $ - $ 500,000 $ - $ - $ 500,000

Interest on convertible notes 13,750 27,500 27,500 - - 68,750

Total $ 13,750 $ 27,500 $ 527,500 $ - $ - $ 568,750

During the second quarter of 2015, the Company amended its Cdn$135 million senior secured credit facility (the

“Facility”). The Facility is now comprised of a Cdn$85 million revolving credit facility (previously Cdn$90 million) and a

Cdn$50 million letter of credit facility (previously Cdn$45 million). The term of the Facility has been extended from

March 8, 2016 to August 31, 2017 and is available for financial assurance and general corporate purposes.

Other significant amendments to the Facility include the elimination of the Completion Test and allowing more flexible

financial covenants. The maximum leverage ratio will now be 4.5:1 at June 30, 2015 (versus the prior 3.5:1) and

declining to 3.5:1 after September 30, 2016, and the minimum interest coverage ratio will now be 3.0:1 at June 30,

2015 (versus the prior 3.5:1 ratio) and increasing to 3.5:1 after September 30, 2016.

The Company has no amounts drawn under the revolving credit facility and $34.2 million (Cdn$42.6 million) drawn

under the letter of credit facility.

In addition, the Company has $16.1 million (Cdn$20.1 million) of surety bonds outstanding as at June 30, 2015

issued in support of the closure plan of the Detour Lake mine.

Cash flows

Cash generated from operating activities during the first half of 2015 significantly increased to $68.5 million,

compared to $14.2 million in the prior year period. The Company improved operating cash flow through higher gold

production and sales, a lower cost structure, and improved operating efficiencies, which was partially offset by a

lower realized gold price when compared to the first half of 2014. Cash flows from the prior year period were

negatively impacted by $42.5 million use of working capital. The principal uses of the 2015 operating cash flows were

to fund the Company’s sustaining capital expenditures.

The Company used $52.5 million in investing activities during the first half of 2015. Cash used in investing activities is

primarily for capital expenditures at the Detour Lake mine. Capital expenditures of $55.6 million include $10.0 million

of cash deferred stripping costs primarily in conjunction with waste removal for 2015. The remaining capital

expenditures primarily relate to the acquisition of mining equipment, construction activities related to the tailings

management area, and improvements within the processing plant.

The Company incurred $15.6 million for financing activities during the first half of 2015, primarily as a result of the net

proceeds from the public offering of $123.1 million being more than offset by the full repayment of the Revolving

Credit Facility ($30.0 million) and the finance lease obligations ($94.2 million) and interest payments of $15.6 million.

This compares to net financing cash inflows of $98.9 million in the prior year period, which primarily consists of

$149.1 million of net proceeds in a public offering, partially offset by $40.0 million of debt repayments and $15.8

million of interest payments.

Page 21: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Cash and cash equivalents and short-term investments

At June 30, 2015, the Company held cash and cash equivalents and short-term investments of $133.2 million

compared to $135.3 million at December 31, 2014, as summarized below:

In thousands of dollars June 30 2015

December 31 2014

Cash and cash equivalents $131,537 $133,465

Short-term investments 1,702 1,808

Total $ 133,239 $135,273

The Company maintains its U.S. and Canadian funds in interest bearing accounts at select Canadian chartered

banks.

Liquidity outlook

In the current gold price environment, the Company considers the working capital at June 30, 2015, together with

expected cash flows from operations and undrawn Revolving Credit Facility, to be sufficient to support the Company’s

normal operating requirements for the next 12 months.

Additional information on debt facilities outstanding

Convertible Notes

On December 3, 2010, the Company completed an offering of Senior Unsecured Convertible notes (“Notes”) for total

gross proceeds of $500 million net proceeds of $490.8 million. The Notes bear interest at 5.5% per annum, payable

in arrears in equal semi-annual installments on May 31 and November 30 in each year. The Notes mature on

November 30, 2017.

The Notes are convertible into common shares of the Company at the option of the holder at any time prior to

maturity at a Conversion Price of $38.50 per share (“Conversion Price”). With respect to the Class A Notes, the

Company has the right, in certain circumstances, upon receiving a conversion notice, to elect to satisfy its obligations

by delivering either common shares of the Company at the Conversion Price or the cash equivalent thereof to the

holder. Additionally, in certain circumstance, if the current market price of the Company’s common shares is at least

130% of the Conversion Price, the Company has the right to redeem the Notes.

Credit Facility

In March 2013, the Company entered into a Cdn$135 million senior secured credit facility with a syndicate of

chartered Canadian and Australian banks. In June 2015, the Company amended the terms of the Facility and it is

now comprised of a Cdn$85 million (previously Cdn$90 million) (or the equivalent amount in U.S. dollars) revolving

credit facility (the “Revolving Credit Facility”) and a Cdn$50 million (previously Cdn$45 million) letter of credit facility

(the “LC Facility”). The maturity date of the Facility has been extended from March 2016 to August 2017. As part of

the amendment the Completion test covenant was removed.

The interest margin on drawings under the amended Facility denoted below is over LIBOR, the Prime Rate or the

Base Rate.

Interest Rate Standby Fee

Revolving Credit Facility 1.75 – 2.75% 0.825%

Letter of Credit Facility 1.65% 0.495%

Page 22: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

The Facility contains a financial covenant requiring the Company to maintain at all times a minimum tangible net

worth of $1.1 billion increasing by 50% of positive net income for each fiscal quarter subsequent to September 30,

2012. Positive net income excludes the impact of unrealized gains and losses from mark to market adjustments on

the convertible notes.

In addition, the Company is subject to two financial covenants on a quarterly basis according the ratios in the table

below: a leverage ratio test measuring net debt to earnings before interest, taxes, depreciation and amortization

(“EBITDA”), and an interest coverage ratio test measuring EBITDA to interest expense.

Quarters ending Maximum

Leverage ratio Minimum

Interest coverage ratio

June 2015 – March 2016 4.50 3.00

March – September 2016 4.00 3.25

Thereafter 3.50 3.50

The Company is in compliance with all covenants for the period ending June 30, 2015.

As at June 30, 2015, the Company has not drawn any funds under the Facility (December 31, 2014 - $30.0 million

drawn); however the Letter of Credit Facility has been used to issue letters of credit totaling $34.2 million (Cdn$42.6

million).

Derivative instruments

The Company uses derivatives as part of its risk management program to mitigate the variability associated with

changing market values related to the hedged item. The Company has not applied hedge accounting to derivative

contracts. Changes in the fair value of derivative instruments are recognized through unrealized and realized

derivative instruments gain (loss) included in net finance income and costs. The mark-to-market fair value of all

contracts is based on independently provided inputs and determined using standard valuation techniques.

Summary of derivatives at June 30, 2015

Notional Amount

Note $ thousands Ounces Litres Average rate

Financial

Position

Currency Collars (U.S.$/Cdn$)

U.S. Put - Purchased i 40,000$ - - 1.11 Derivative assets

U.S. Call - Sold i 40,000$ - - 1.21 Derivative liabilities

Currency Forwards (U.S.$/Cdn$)

Buy Cdn$ i 40,000$ - - 1.26 Derivative assets

Commodity Contracts

Gold forw ards ii - 35,000 - 1,276$ Derivative assets

Energy Contracts

Diesel forw ards iii - - 6,000,000 0.46$ Derivative assets

All derivatives mature or expire within one year from the period end date.

i. The Company has entered into “zero-cost” collars to hedge a portion of its Canadian dollar expenditures in the first nine months of 2015. As at June 30, 2015, the Company had used zero-cost collars to hedge a total of $40.0 million, guaranteeing it will purchase Canadian dollars at a rate of no worse than 1.11 and can participate at a rate of up to 1.21. In addition, the Company has $40.0 million of forward contracts at an average exchange rate of 1.26.

ii. As at June 30, 2015, the Company had a total of 35,000 ounces of outstanding gold hedges at an average price of $1,276 per ounce to be settled before the end of the third quarter.

iii. As at June 30, 2015, the Company had a total of 6 million litres of outstanding diesel hedges at an average rate of $0.46/litre, which will settle on a net basis.

Page 23: DETOUR GOLD CORPORATION - Denver Gold Group · This Management’s Discussion and Analysis (“MD&A”) of Detour Gold Corporation (“Detour Gold” or the “Company”) provides

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Fair values of derivative instruments

June 30 December 31

In thousands of dollars 2015 2014

Currency contracts Derivative assets 346$ 303$

Currency contracts Derivative liabilities (1,310)$ (1,190)$

Gold forw ards Derivative assets 3,668$ 890$

Diesel forw ards Derivative assets 222$ -$

Total derivative assets 4,236$ 1,193$

Total derivative liabilities (1,310)$ (1,190)$

Balance sheet

classification

Gains (losses) on derivative instruments

June 30 June 30

In thousands of dollars 2015 2014 2015 2014

Unrealized gain (loss) on derivative insturments

Gold forw ards (2,079)$ (1,372)$ 2,778$ (5,588)$

Currency contracts 4,768 144 (77) 108

Diesel forw ards 262 - 222 -

Total 2,951$ (1,228)$ 2,923$ (5,480)$

Realized gain (loss) on derivative instruments

Gold forw ards 2,508$ 72$ 4,183$ (5,491)$

Currency contracts (1,005) 1,683 (2,361) 630

Diesel forw ards 210 - 210 -

Total 1,713$ 1,755$ 2,032$ (4,861)$

Total unrealized and realized gain (loss)

on derivative instruments 4,664$ 527$ 4,955$ (10,341)$

Three months ended Six months ended

COMMITMENTS

Purchase commitments

As at June 30, 2015, the total purchase commitments for capital expenditures for the Detour Lake mine amounted to

approximately $1.8 million, which are expected to settle over the next 12 months.

Operating leases

The Company has operating lease agreements involving office space and equipment. Future minimum lease

payments required to meet obligations that have initial or remaining non-cancelable lease terms are $0.3 million for

2015, $0.6 million each year from 2016 to 2020, and $0.1 million thereafter.

Detour Lake mine royalty

Production from the Detour Lake mine is subject to a 2% net smelter royalty payable to Franco-Nevada Canada

Holdings Corp. (“FN”). FN has the right to elect, on a yearly basis, to have the royalty paid in cash or in kind. FN has

elected to receive the royalty paid in kind. During the three and six months ended June 30, 2015, the Company

accrued or paid in kind 2,478 and 4,491 ounces of gold (three and six months ended June 30, 2014 – 2,111 and

4,057 ounces of gold).

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Mine site closure obligations

The Company issued $16.1 million (Cdn$20.1 million) surety bonds in favour of the Ministry of Northern Development

and Mines in support of the closure plan of the Detour Lake mine as at June 30, 2015.

CONTINGENCIES

On May 13, 2014, a proposed securities class action claiming, among other things, special and general damages in

the amount of $64.1 million (Cdn$80.0 million), was commenced against the Company and its former President and

Chief Executive Officer, Gerald Panneton, in relation to the Company's secondary market public disclosure

concerning its Detour Lake Mine operations between April 9, 2013 and November 7, 2013 (the “Class Action Claim”).

On July 10, 2014, the Plaintiff issued a Fresh As Amended Statement of Claim incorporating allegations respecting

the Company’s primary market disclosure, specifically in respect of the Company’s final short form prospectus dated

June 3, 2013. On May 25, 2015, the Plaintiff served a Motion to Amend the Fresh As Amended Statement of Claim.

The proposed Second Fresh As Amended Statement of Claim names additional defendants and incorporates new

allegations respecting the Company’s alleged failure to disclose certain debt covenants. No date has been set for the

Plaintiff’s Motion to Amend. The Plaintiff has delivered amended materials in support of an Application for Leave to

proceed with the Class Action Claim and in support of an Application for Certification. No date has been set for the

Applications for Leave and Certification. The Company is investigating the allegations, and intends to vigorously

defend the claims. No provision has been recorded in the Company’s June 30, 2015 financial statements.

INFORMATION TECHNOLOGY RISK MANAGEMENT

The Company has been the subject of information technology (“IT”) security incidents, including in the first half of

2015, when the Company was the subject of illegal breaches of its information technology systems which resulted in

confidential information, including personal information, being accessed and released. Investigations of the source of

this breach, the process of assessing the financial and other impacts of such breach and the remediation steps being

taken in response to this breach are ongoing. It is possible that additional confidential information, beyond what has

been released to date, was accessed and/or that other unforeseen developments related to this breach could occur,

which could have a further adverse impact on the Company’s operations, financial results and reputation.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

SUMMARY OF QUARTERLY FINANCIAL RESULTS

In thousands of dollars, expect per share and ounce amounts

2015 2014 2013

Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3

Gold ounces produced 125,348 105,572 116,770 115,344 117,366 107,154 81,877 75,672

Gold ounces sold1 123,296 104,497 124,913 106,334 107,206 84,560 95,000 75,600

Metal sales1 $147,52666

$127,375 $150,606 $136,156 $139,009 $110,015 $120,836 $33,088

Cost of sales

Production costs 100,162 97,721 110,265 100,582 98,141 83,132 97,965 30,363

Depreciation and

depletion 39,837 36,895 43,120 37,255 38,273 30,603 33,993 2,939

Mine standby costs - - - - - - 4,191 -

Inventory write-down - - - - - - 14,636 -

Total cost of sales 139,999 134,616 153,385 137,837 136,414 113,735 150,785 33,302

Earnings (loss) from mine

operations 7,527 (7,241) (2,779) (1,681) 2,595 (3,720) (29,949) (214)

Expenses2 (10,725) (8,244) (7,681) (6,166) (9,392) (8,759) (11,615) (7,896)

Net finance income (costs) (14,739) (20,276) (13,909) 7,080 (28,240) (42,464) (5,396) (3,736)

Income tax recovery

(expense) 2,536 (27,300) (34,379) - - - - -

Net Loss $(15,401) $(63,061) $(58,748) $(767) $(35,037) $(54,943) $(46,960) $(11,846)

Loss per share

Basic (0.38)

$(0.09) $(0.38) $(0.37) $(0.00) $(0.22) $(0.38) $(0.34) $(0.09)

Diluted (0.38)

$(0.09) $(0.38) $(0.37) $(0.00) $(0.22) $(0.38) $(0.34) $(0.09)

Adjusted net earnings

(loss)3 $544 $(24,917) $(17,083) $(17,947) $(18,851) $(29,650) $(34,290) $(10,086)

Per share - basic3 (0.00) $(0.15) $(0.11) $(0.11) $(0.12) $(0.21) $(0.25) $(0.07)

1 Gold ounces sold are net of 2% royalty in kind ounces. Refer to section “Commitments – Detour Lake mine royalty”. For 2013, proceeds from 92,822 gold ounces sold in 2013 prior to commercial production (September 1, 2013) were credited against capitalized project costs.

2 Includes corporate administration, exploration and evaluation expenses and other operating expenses.

3 The calculation of these non-IFRS measures, including prior periods, were adjusted to allocate the electricity adjustment into the appropriate historical period to which the cost applied. Refer to section “Second Quarter 2015 Financial Results – Cost of Sales” and “Non-IFRS Financial Performance Measures – Revised IFRS Measures: Electricity Adjustment” for details on the adjustment.

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

NON-IFRS FINANCIAL PERFORMANCE MEASURES

The Company has included certain non-IFRS measures in this document. The Company believes that these

measures, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved

ability to evaluate the underlying performance of the Company. The non-IFRS measures are intended to provide

additional information and should not be considered in isolation or as a substitute for measures of performance

prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS,

and therefore may not be comparable to other issuers.

Commencing with its first quarter 2015 results, the Company adopted non-IFRS “all-in sustaining costs” measure on

a prospective basis. In addition, the Company has adjusted the calculation of the average realized price to include the

effects of realized net gains or losses on gold derivative contracts. Revised 2014 average realized gold price and

margin are included below for all relevant periods presented in this document. The Company did not enter into any

gold derivatives prior to 2014. The Company believes that this adjustment will result in a more meaningful average

realized price measure for investors and analysts to evaluate the Company’s performance.

To improve comparability, total cash costs, all-in sustaining costs, average realized margin, adjusted net earnings

(loss) and adjusted net earnings (loss) per share were revised, based on allocating the electricity adjustment into the

appropriate historical period to which the cost applied. The Company believes this adjustment will result in a more

meaningful trend analysis for investors and analysts to evaluate the Company’s performance. Additional details on

the adjustment are included in section “Second Quarter Financial Results – Cost of Sales”.

Total cash costs

Total cash costs is a common financial performance measure in the gold mining industry but with no standard

meaning under IFRS. Detour Gold reports total cash costs on a sales basis. The Company believes that, in addition

to conventional measures prepared in accordance with IFRS, such as sales, certain investors use this information to

evaluate the Company’s performance and ability to generate operating earnings and cash flow from its mining

operations. Management uses this metric as an important tool to monitor operating cost performance.

Total cash costs include production costs such as mining, processing, refining and site administration, agreements

with Aboriginal communities, less non-cash share-based compensation and net of silver sales divided by gold ounces

sold to arrive at total cash costs per gold ounce sold. The measure also includes other mine related costs incurred

such as mine standby costs and current inventory write downs. Production costs are exclusive of depreciation and

depletion. Production costs include the costs associated with providing the royalty in kind ounces. Other companies

may calculate this measure differently.

All-in sustaining costs

Commencing in 2015, the Company adopted all-in sustaining costs on a prospective basis.

The Company believes this measure more fully defines the total costs associated with producing gold. The Company

calculates AISC as the sum of total cash costs (as described above), share-based compensation, corporate general

and administrative expense, exploration and evaluation expenses that are sustaining in nature, reclamation cost

accretion (also known as unwinding of the discount on decommissioning and restoration provisions), sustaining

capital including deferred stripping, and realized gains and losses on hedges due to operating and capital costs, all

divided by the gold ounces sold to arrive at a per ounce figure.

Other companies may calculate this measure differently as a result of differences in underlying principles and policies

applied. Differences may also arise to a different definition of sustaining versus non-sustaining capital.

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Total cash costs and All-in sustaining costs reconciliation

The following table reconciles these non-IFRS measures to the most directly comparable IFRS measures.

1 Reflects adjustment related to electricity consumption in prior years; refer to section below “Revised non-IFRS measures:

Electricity adjustment” for additional details.

2 Represents property, plant and equipment additions per the cash flow statement, which include deferred stripping. All property,

plant and equipment additions are considered sustaining capital.

3 Includes realized gains and losses on derivative instruments related to operating hedges (foreign exchange and diesel hedges

only) as disclosed in the “Derivative instruments” section of this document. These balances are included in the statement of

comprehensive income (loss), within caption “net finance income and costs”.

4 Includes sum of corporate administration expense, which includes share-based compensation, per the statement of

comprehensive income (loss), excluding non-cash depreciation within those figures.

5 Includes sum of exploration and evaluation expense, which includes share-based compensation, per the statement of

comprehensive income (loss), excluding non-cash depreciation within those figures.

Three-months ended Six-months ended

June 30 June 30

In thousands of dollars, except w here noted 2015 2014 2015 2014

Gold ounces sold 123,296 107,206 227,793 191,766

Total Cash Costs Reconciliation

Production costs 100,162$ 98,141$ 197,883$ 181,273$

Less: Electricity adjustment1 (9,198) 5,411 (7,732) 6,969

Less: Share-based compensation (240) (862) (998) (1,489)

Less: Silver sales (230) (370) (493) (376)

Total cash costs 90,494$ 102,320$ 188,660$ 186,377$

Total cash costs per ounce sold 734$ 954$ 828$ 972$

All-in Sustaining Costs Reconciliation

Total cash costs 90,494$ -$ 188,660$ -$

Property, plant and equipment2 25,825 - 55,586 -

Unw inding of discount on decommissioning

and restoration provisions 16 - 80 -

Site share-based compensation 240 - 998 -

Realized gains and losses on operating hedges3 795 - 2,151 -

Corporate administration expense4 8,686 - 15,883 -

Exploration and evaluation expense5 910 - 1,605 -

Total all-in sustaining costs 126,966$ -$ 264,963$ -$

All-in sustaining costs per ounce sold 1,030$ -$ 1,163$ -$

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Average realized price and Average realized margin

Average realized price and average realized margin per ounce sold are financial measures with no standard meaning

under IFRS. Management and investors use these measures to better understand the gold price and margin realized

throughout a period.

Average realized price is calculated as metal sales per the statement of comprehensive loss and includes realized

gains and losses on gold forwards, less silver sales. Average realized margin represents average realized price per

gold ounce sold less total cash costs per ounce sold.

Adjusted net earnings (loss) and Adjusted basic net earnings (loss) per share

Adjusted net earnings (loss) and adjusted basic net earnings (loss) per share are used by management and investors

to measure the underlying operating performance of the Company. Presenting these measures from period to period

helps management and investors evaluate earnings trends more readily in comparison with results from prior periods.

Adjusted net earnings (loss) is defined as net earnings (loss) adjusted to exclude specific items that are significant,

but not reflective of the underlying operations of the Company, including: fair value change of the convertible notes,

the impact of foreign exchange gains and losses, including the foreign exchange on deferred income and mining

taxes, non-cash unrealized gains and losses on derivative instruments, accretion on convertible notes, unwinding of

discount on decommissioning and restoration provisions, impairment provisions and reversals thereof, and other non-

recurring items. In addition, adjusted net earnings (loss) excludes the impact of the electricity rebate related to prior

periods electricity usage as described in “Second Quarter 2015 Financial Results - Cost of Sales” section in this

document. Adjusted basic net earnings (loss) per share is calculated using the weighted average number of shares

outstanding under the basic method of loss per share as determined under IFRS.

Three-months ended Six-months ended

June 30 June 30

In thousands of dollars, except w here noted 2015 2014 2015 2014

Metal sales 147,526$ 139,009$ 274,901$ 249,024$

Realized gain (loss) on gold forw ards 2,508 72 4,183 (5,491)

Silver sales (230) (370) (493) (376)

Revenues from gold sales 149,804$ 138,711$ 278,591$ 243,157$

Gold ounces sold 123,296 107,206 227,793 191,766

Average realized price 1,215$ 1,294$ 1,223$ 1,268$

Less: Total cash costs per gold ounce sold (734) (954) (828) (972)

Average realized margin per gold ounce sold 481$ 340$ 395$ 296$

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

1 Balance included in the statement of comprehensive income (loss) caption “Net finance income and costs”. The related financial

statements include a detailed breakdown of “Net finance income and costs”.

2 Includes unrealized gains and losses on derivative instruments as disclosed in the “Derivative Instruments” note in the related

financial statements. The balance is grouped with “Net finance income and costs” on the statement of comprehensive income (loss).

3 Reflects adjustment related to electricity consumption in prior years; refer to section “Second Quarter 2015 Financial Results –

Cost of Sales” for additional information.

Three-months ended Six-months ended

June 30 June 30

In thousands of dollars, except w here noted 2015 2014 2015 2014

Basic w eighted average shares outstanding 170,585,329 157,517,434 167,772,151 150,490,783

Adjusted net earnings (loss) and Adjusted basic net earnings (loss) per share Reconciliation

Net loss (15,401)$ (35,037)$ (78,462)$ (89,980)$

Adjusted for:

Fair value (gain) loss of the convertible notes1 6,581 15,103 10,685 31,582

Foreign exchange (gain) loss1 (1,542) (989) (342) (916)

Foreign exchange on deferred income taxes (2,536) - 24,764 -

Non-cash unrealized (gain) loss on derivative

instruments2 (2,951) 1,228 (2,923) 5,480

Accretion on convertible notes1 7,179 6,181 14,093 12,134

Unw inding of discount on decommissioning

and restoration provisions1 16 74 80 168

Electricity adjustment3 9,198 (5,411) 7,732 (6,969)

Adjusted net earnings (loss) 544$ (18,851)$ (24,373)$ (48,501)$

Adjusted basic net earnings (loss) per share 0.00$ (0.12)$ (0.15)$ (0.32)$

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Revised non-IFRS measures: Electricity adjustment

To improve comparability, total cash costs, all-in sustaining costs, average realized margin, adjusted net earnings

(loss) and adjusted basic net earnings (loss) per share were revised, based on allocating the electricity adjustment

into the appropriate historical period to which the cost applied. The Company believes this adjustment will result in a

more meaningful trend analysis for investors and analysts to evaluate the Company’s performance.

Additional details on the electricity adjustment are included in section “Second Quarter Financial Results – Cost of

Sales”.

1 In thousands of U.S. dollars

2 The electricity adjustment had no impact on the Average realized price. The measure was included in the table above for

completeness.

The per ounce measures were calculated as the net electricity cost (benefit) divided by gold ounces sold, then added

to the previously disclosed measure.

Adjusted net earnings (loss) was calculated as the net electricity cost (benefit) plus the previously disclosed adjusted

net loss. Adjusted basic net earnings (loss) per share was calculated as the revised adjusted net earnings (loss)

divided by the weighted average shares outstanding during the period.

ADDITIONAL IFRS FINANCIAL PERFORMANCE MEASURES

The Company has included the additional IFRS measure “Earnings (loss) from mine operations” in the financial

statements. Management noted that “Earnings (loss) from mine operations” provides useful information to investors

as an indication of the Company’s principal business activities before consideration of how those activities are

financed, sustaining capital expenditures, corporate administration expense, exploration and evaluation expenses,

loss on disposal of assets, finance income and costs, and taxation.

31-Mar-15 31-Dec-14 30-Sep-14 30-Jun-14 31-Mar-14 31-Dec-13 30-Sep-13

Net electricity cost (benefit)1 1,466$ 1,528$ 1,402$ 1,481$ 1,558$ (1,631)$ (536)$

Gold ounces sold 104,497 124,913 106,334 107,206 84,560 95,000 24,700

Weighted average shares

outstanding 164,927,715 157,836,301 157,822,617 157,517,434 143,306,229 138,153,791 138,075,476

Previously disclosed measures:

Per gold ounce sold:

Total cash costs 925$ 874$ 941$ 941$ 976$ 1,174$ 1,214$

All-in sustaining costs 1,307$ -$ -$ -$ -$ -$ -$

Average realized price2 1,232$ 1,240$ 1,275$ 1,294$ 1,235$ 1,269$ 1,340$

Average realized margin 307$ 366$ 334$ 353$ 259$ 95$ 126$

Adjusted net loss1 (23,451)$ (15,555)$ (16,545)$ (17,370)$ (28,092)$ (35,921)$ (10,622)$

Adjusted net loss per share (0.14)$ (0.10)$ (0.10)$ (0.12)$ (0.20)$ (0.26)$ (0.08)$

Revised measures:

Per gold ounce sold:

Total cash costs 939$ 886$ 955$ 954$ 995$ 1,157$ 1,192$

All-in sustaining costs 1,321$ -$ -$ -$ -$ -$ -$

Average realized price2 1,232$ 1,240$ 1,275$ 1,294$ 1,235$ 1,269$ 1,340$

Average realized margin 293$ 354$ 320$ 340$ 240$ 112$ 148$

Adjusted net loss1 (24,917)$ (17,083)$ (17,947)$ (18,851)$ (29,650)$ (34,290)$ (10,086)$

Adjusted net loss per share (0.15)$ (0.11)$ (0.11)$ (0.12)$ (0.21)$ (0.25)$ (0.07)$

Three months ended

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

CRITICAL ACCOUNTING ESTIMATES

The preparation of the financial statements requires management to make judgments, estimates and assumptions

that affect the application of accounting policies and the reported amounts of assets, liabilities and contingent

liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting

period. Estimates and assumptions are continually evaluated and are based on management's experience and other

factors, including expectations of future events that are believed to be reasonable under the circumstances. However,

actual outcomes may differ materially from these estimates.

The critical accounting estimates and judgments applied in the preparation of the Company’s condensed

consolidated interim financial statements for the three and six months ended June 30, 2015 are consistent with those

applied and disclosed in the Company’s audited annual consolidated financial statement for the year ended

December 31, 2014.

ACCOUNTING POLICIES

New accounting policies

Performance-based restricted share units (“PSUs”)

PSUs are granted under the Company’s Restricted Share Unit Plan and are cash-settled. The amount of units to be

issued (or the amount of cash to be paid) on the vesting date will vary from 0% to 200% of the number of PSUs

granted, depending on the Company’s total shareholder return compared to the return of its peer group. Vesting, and

therefore the liability, is based on the achievement of performance goals and the target settlement ranges from 0% to

200% of the original grant of units.

The fair value of a PSU reflects the value of a Detour Gold common share (based on the five day volume weighted

average trading price) and the number of units issued is dependent upon the Company’s relative performance

against group peer companies.

The initial fair value of the liability is calculated as of the grant date and is recognized within salaries and benefits

expense over the vesting period in accordance with the vesting terms and conditions. Subsequently, at each

reporting date and on settlement, the liability is remeasured with any changes in fair value recorded in corporate

administrative expense in the statement of comprehensive loss.

New standards and interpretations not yet adopted

IFRS 9 Financial instruments (“IFRS 9”) replaces the existing guidance in IAS 39 Financial instruments recognition

and measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments,

including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge

accounting requirements. It also carried forward the guidance on recognition and derecognition of financial

instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, with

early adoption permitted. The Company will evaluate the impact of the changes to its financial statements based on

the characteristics of its financial instruments at the time of adoption.

IFRS 15 Revenue from contracts with customers (“IFRS 15”) will replace IAS 18 Revenue, IAS 11 Construction

contracts, and some revenue-related interpretations. The standard contains a single model that applies to contracts

with customers and two approaches to recognizing revenue: at a point in time or over time. The model features a

contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognized.

New estimates and judgmental thresholds have been introduced, which may affect the amount and/or timing of

revenue recognized. The Company intends to adopt IFRS 15 in its financial statements for annual period beginning

on January 1, 2017. The Company does not expect the standard to have a material impact on the financial

statements

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

On May 12, 2014, the IASB issued amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible

Assets. The amendments clarify that the use of revenue-based methods to calculate the depreciation of a tangible

asset is not appropriate because revenue generated by an activity that includes the use of a tangible asset generally

reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB has also

clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the

economic benefits embodied in an intangible asset. The presumption for an intangible asset, however, can be

rebutted in certain limited circumstances. The standard is to be applied prospectively for reporting periods beginning

on or after January 1, 2016 with early application permitted. The Company does not anticipate that there will be any

impact on its method of calculation depreciation and depletion.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Chief Executive Officer and Chief Financial Officer of the Company are responsible for designing internal

controls over financial reporting or causing them to be designed under their supervision in order to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for

external purposes in accordance with IFRS. The control framework that has been used is the COSO (1992)

framework.

There was no change in the Company’s internal controls over financial reporting that occurred during the second

quarter of 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal

controls over financial reporting.

Disclosure controls and procedures

Disclosure controls and procedures have been designed to provide reasonable assurance that all relevant

information required to be disclosed by the Company is accumulated and communicated to senior management as

appropriate to allow timely decisions regarding required disclosure. The Company’s Chief Executive Officer and Chief

Financial Officer have concluded, based on their evaluation of the design of the disclosure controls and procedures

as of June 30, 2015, which disclosure controls and procedures provide reasonable assurance that material

information is made known to them by others within the Company are appropriately designed.

Since the December 31, 2014 evaluation, there have been no material changes to the Company’s disclosure controls

and procedures.

Limitations of controls and procedures

The Company’s management, including the President and Chief Executive Officer and Chief Financial Officer, believe

that any internal controls over financial reporting and disclosure controls and procedures, no matter how well

designed, can have inherent limitations. Therefore, even those systems determined to be effective can provide only

reasonable assurance that the objectives of the control system are met.

OUTSTANDING SHARES

As at July 29, 2015, the date of this MD&A, the Company had the following number of securities outstanding:

Share purchase options 8,901,797

Common Shares 170,703,791

Convertible notes 12,987,013

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

RISKS AND UNCERTAINTIES

The following major risk factors should be given special consideration when evaluating trends, risks and uncertainties

relating to the Company’s business. Any of the following risk factors could cause circumstances to differ materially

from those described in forward-looking statements relating to the Company, and could have a material adverse

effect upon the Company, its business and future prospects. Although the following are major risk factors identified by

management, they do not comprise a definitive list of all risk factors related to the Company. In addition, other risks

and uncertainties not presently known by management could impair the Company and its business in the future.

Fluctuating gold prices

The Company’s future profitability depends upon the world market price of gold, amongst other things. Prices

fluctuate widely and are affected by numerous factors beyond the Company’s control. The price of gold is influenced

by factors including industrial and retail supply and demand, exchange rates, inflation rates, changes in global

economies, confidence in the global monetary system, forward sales of gold and other metals by producers and

speculators as well as other global or regional political, social or economic events. The supply of gold and other

metals consists of a combination of new mine production and existing stocks held by governments, producers,

speculators and consumers. There is no assurance that even as commercial quantities of gold may be produced in

the future, a profitable market will exist for them.

If the market price for gold falls significantly, it could affect the Company’s mining operations, decision to proceed with

further exploration or development and could materially and adversely affect the Company’s ability to obtain

additional financing should the circumstances require. Furthermore, the economic prospects of the properties in

which the Company has an interest could be significantly reduced or rendered uneconomic.

Gold prices have fluctuated widely in recent years. In accordance with the Company’s gold sales risk management

policy, management is permitted to enter into transactions to hedge up to 50% of the Company’s 2015 forecasted

gold sales. Given the gold price volatility seen in 2013, 2014 and to-date in 2015, the Company continues to use its

gold sales risk management program. Refer to section “Liquidity and Capital Resources – Derivative Instruments”.

A decline in the market price of gold may also require the Company to reduce its mineral reserves and resources,

which could have a material adverse effect on the Company’s value. A decline in the long-term price of gold may also

require the Company to record an impairment charge against the carrying value of its net assets.

Share price volatility

In recent years the world securities markets, including those in the United States and Canada, have experienced a

high level of price and volume volatility, and the market price of securities of many companies, including the

Company, has experienced wide fluctuations which has not necessarily been related to operating performance,

underlying asset values or the prospects of such companies. There can be no assurance that continual fluctuations in

share price will not occur.

Life of mine plan

The Company has initiated a comprehensive review of its February 2014 life of mine plan and is evaluating a number

of options to further optimize the Detour Lake mine. The Company anticipates that an updated life of mine plan will be

announced prior to year-end 2015. There is no assurance that such updated life of mine plan will be available in that

timeframe and that such review will result in improvements to the Company’s estimates, including projected future

gold production, total cash costs, sustaining capital expenditures, deferred stripping costs and net cash flows used in

the February 2014 life of mine plan. In addition, there can be no assurance that the estimates in the Company’s life

of mine plan will be consistent with future economic factors or actual results and performance. A decline in net cash

flow may also require the Company to record an impairment charge against the carrying value of its net assets.

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Principal and interest payments on the Notes

The Company’s senior unsecured convertible notes and class A notes (collectively the “Notes”) may be redeemed in

certain circumstances and have a maturity date of November 30, 2017. The Company is also required to offer to

repurchase the Notes upon the occurrence of certain events that constitute a “Change of Control” of the Company (as

defined in each of the respective Note indentures). In addition, interest is payable semi-annually to holders of the

Notes. There is no guarantee that the Company will have sufficient cash available to make interest and principal

payments on the Notes on a timely basis or at all. The likelihood that holders of the Notes will receive the payments

owing to them in connection with the Notes will be dependent upon numerous factors including the financial health

and creditworthiness of the Company and the ability of the Company to generate positive cash flows. Notwithstanding

that the Notes may be subordinated to other indebtedness of the Company, a default under the Notes could have

material adverse effect to the Company and could prevent the Company from operating in accordance with its

business plan, or at all.

Level of debt

The Company’s indebtedness under the Notes could make it difficult for the Company to satisfy its obligations,

increase the Company’s vulnerability to general adverse economic and industry conditions, limit the Company’s

flexibility in planning for, or reacting to or capitalizing on, changes in the Company’s business, the markets in which

the Company operates and in government regulation, place the Company at a competitive disadvantage compared to

the Company’s competitors that have less debt, and limit the Company’s ability to borrow or raise additional funds.

Mining exploration, development and operations

The Company’s business operations are subject to risks and hazards inherent in the mining industry. The exploration

for, and the development of, mineral deposits involves significant risks which even a combination of careful

evaluation, experience and knowledge may not eliminate. While the discovery of mineralization may result in

substantial rewards, few properties that are explored are ultimately developed into producing mines.

The Company’s exploration and future production may be hampered by mining, heritage and environmental

legislation, industrial accidents, industrial disputes, cost overruns, land claims and compensation and other

unforeseen contingencies. The success of the Company also depends on the delineation of economically recoverable

reserves, the availability and cost of required development capital, the price of commodities, securing and

maintaining title to its exploration and mining tenements as well as obtaining all necessary consents and approvals

for the conduct of its exploration and future development and production activities. The failure of the Company to

achieve its production estimates could have a material adverse effect on any or all of its future cash flows,

profitability, results of operations and financial condition.

Risks involved in mining operations include unusual and unexpected geologic formations, seismic activity, pit wall

failures, cave-ins, flooding and other conditions involved in the drilling and removal of any material, any of which

could result in damage to life or property, environmental damage and possible legal liability. Further, weather

conditions over a prolonged period can adversely affect exploration, production, mining and drilling operations and

the timing of realizing revenues.

Whether or not income will result from any of the Company properties will depend upon the successful establishment

of mining operations. While the Detour Lake Mine is in commercial operations, various factors, including costs, actual

mineralization, consistency and reliability of ore grades, processing rates and commodity prices affect future cash

flow and profitability, and there can be no assurance that current or future estimates of these factors will reflect actual

results and performance. The cost and availability of suitable machinery, supplies, mining and mill equipment and

skilled labour, the existence of competent operational management and prudent financial administration, as well as

the availability and reliability of appropriately skilled and experienced consultants can also affect successful project

operations.

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

The recoverability of amounts for mineral properties and related deferred costs is dependent upon the confirmation of

the Company’s interest in the underlying claims, the Company’s ability to obtain necessary financing for ongoing

development, future profitable production or, alternatively, upon disposition of such properties at a profit.

Mineral reserve and resource estimates

The mineral reserve and resource figures referred to herein or in documents filed by the Company from time to time

on SEDAR at www.sedar.com are estimates only and no assurance can be given that any particular level of recovery

of gold or other minerals from mineral reserves or resources will in fact be realized or that an identified mineral

deposit will ever qualify as a commercially mineable (or viable) ore body which can be economically exploited.

Mineral resources which are not mineral reserves do not have demonstrated economic viability. Any material change

in the quantity of mineralization, grade or ore to waste ratio, or the price of gold may affect the economic viability of

any property held by the Company. Until mineral reserves and resources are actually mined and processed, the

quantity of mineral reserve and resource grades must be considered as estimates only.

Replacement of depleted reserves

The Company’s mineral reserves must be replaced to maintain production levels over the long term. Reserves can be

replaced by expanding known orebodies, locating new deposits or making acquisitions. Exploration is highly

speculative in nature. Exploration projects involve many risks and are frequently unsuccessful. Once a site with

mineralization is discovered, it may take several years from the initial phases of drilling until production is possible,

during which time the economic feasibility of production may change. Substantial expenditures are required to

establish proven and probable reserves and to construct mining and processing facilities. As a result, there is no

assurance that current or future exploration programs will be successful. Depletion of reserves may not be offset by

discoveries or acquisitions and divestitures of assets could lead to a lower reserve base. Reserves calculated in

accordance with National Instrument 43-101 may also decrease due to economic factors such as the use of a lower

metal price assumption.

Limited operating history

The Company has only realized limited precious metal revenues from its operations to date. The Company officially

started its operations with the first gold pour in February 2013 and declared commercial production on September 1,

2013 after having operated for a period of 60 consecutive days at an average of 75% or more of the designed

production capacity. The Company produced 232,287 ounces of gold in 2013, 456,634 ounces of gold in 2014, and

230,920 during the first half of 2015 from the Detour Lake mine. The Company expects to continue to incur losses

unless and until such time as the Detour Lake mine generates sufficient revenues to fund its continuing operations,

investing and financing activities. The generation of such revenues will depend upon a number of factors, including,

among others, the worldwide market price of gold and the quantity of gold produced by the Detour Lake mine. There

can be no assurance that the Company will generate sufficient revenues or achieve profitability or that the Detour

Lake mine or any of the properties it may hereafter acquire or obtain an interest in will generate earnings, operate

profitably or provide a return on investment in the future. There can be no assurance that the underlying assumed

levels of expenses will prove to be accurate. There can be no assurance that significant additional losses will not

occur in the near future or that the Company will be profitable in the future. The Company’s operating expenses and

capital expenditures may increase in subsequent years as consultants, personnel and equipment associated with

advancing exploration, development and commercial production of its properties are added. The amount and timing

of expenditures will depend on the progress of ongoing exploration and development, the rate at which operating

losses are incurred, the execution of any joint venture agreements with strategic partners, the Company’s acquisition

of additional properties and other factors, many of which are beyond the Company’s control.

Litigation

The Company is subject to litigation risks. All industries, including the mining industry, are subject to legal claims,

with and without merit. Defence and settlement costs can be substantial, even with respect to claims that have no

merit. Due to the inherent uncertainty of the litigation process, there can be no assurance that the resolution of any

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

particular legal proceeding will not have a material adverse effect on the Company’s financial position or results of

operations.

On May 13, 2014, a proposed securities class action claiming, among other things, special and general damages in

the amount of $64.1 million (Cdn$80.0 million), was commenced against the Company and its former President and

Chief Executive Officer, Gerald Panneton, in relation to the Company's secondary market public disclosure

concerning its Detour Lake Mine operations between April 9, 2013 and November 7, 2013 (the “Class Action Claim”).

On July 10, 2014, the Plaintiff issued a Fresh As Amended Statement of Claim incorporating allegations respecting

the Company’s primary market disclosure, specifically in respect of the Company’s final short form prospectus dated

June 3, 2013. On May 25, 2015, the Plaintiff served a Motion to Amend the Fresh As Amended Statement of Claim.

The proposed Second Fresh As Amended Statement of Claim names additional defendants and incorporates new

allegations respecting the Company’s alleged failure to disclose certain debt covenants. No date has been set for the

Plaintiff’s Motion to Amend. The Plaintiff has delivered amended materials in support of an Application for Leave to

proceed with the Class Action Claim and in support of an Application for Certification. No date has been set for the

Applications for Leave and Certification. The Company is investigating the allegations, and intends to vigorously

defend the claims. No provision has been recorded in these financial statements.

Global economic conditions

In recent years financial conditions have been characterized by volatility and several financial institutions have either

gone into bankruptcy or have had to be assisted by governmental authorities. Global economic conditions may cause

decreases in asset values that are deemed to be other than temporary, which may result in impairment losses.

Additionally, access to financing has been negatively impacted by many factors as a result of the global financial

crisis. This may impact the Company’s ability to, if required, obtain equity or debt financing in the future on terms

favourable to the Company. If such volatility and market turmoil continue, the Company’s business and financial

condition could be adversely impacted.

Currency risk

The Company is subject to fluctuation in the rates of currency exchange between the United States dollar and the

Canadian dollar, and these fluctuations could materially affect the Company’s financial position, its borrowing

capacity under its Credit Facility, and results of operations. The Company has entered into transactions to hedge a

portion of its Canadian dollar expenditures in 2015.

Additional financing

Unforeseen events or circumstances may require the Company to seek additional financing. However, the Company

has only limited revenues to date, has significant operational expenses and there is no assurance that additional

funding will be available to the Company. The ability of the Company to arrange additional financing in the future will

depend, in part, on the prevailing debt and equity market conditions, the price of gold, the performance of the Detour

Lake mine and other factors outlined herein and in the documents incorporated by reference. Failure to obtain

additional financing may result in delaying or the indefinite postponement of any further operations or development of

the Detour Lake mine. There can be no assurance that additional capital or other types of financing will be available if

needed or that, if available, the terms of such financing will be favourable to the Company.

If the Company raises additional funds through the sale of equity securities or securities convertible into equity

securities, shareholders may have their equity interest in the Company diluted.

In addition, failure to comply with covenants under the Company’s current or future debt agreements or to make

scheduled payments of the principal of, or to pay interest on, its indebtedness or to make scheduled payments under

hedging arrangements would likely result in an event of default under the debt agreements and would allow the

lenders to accelerate the debt under these agreements, which would affect the Company’s financial condition.

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Possible dilutive effects on holders of common shares

The Company may issue additional Common Shares pursuant to the Notes, outstanding options and a number of

existing agreements, as well as in order to give effect to the Company’s business plan, all of which may dilute the

ownership interests of existing holders of Common Shares. Any sales in the public market, or the availability for sale,

of any of such Common Shares could adversely affect prevailing market prices of the Common Shares. In addition,

any conversion of the Notes into Common Shares could depress the price of the Common Shares. A decline in the

market price of Common Shares could impair the Company’s ability to raise additional capital through the sale of

Common Shares or securities convertible into Common Shares should the Company desire to do so.

Limitations under credit facility

The Credit Facility, comprised of the Revolving Credit Facility and the LC Facility, limits, among other things, the

Company’s ability to permit the creation of certain liens, make investments, dispose of the Company’s material assets

or, in certain circumstances, pay dividends. In addition, the Credit Facility limits the Company’s ability to incur

additional indebtedness and requires the Company to meet specified financial covenants. Events beyond the

Company’s control, including changes in general economic and business conditions, may affect the Company’s ability

to satisfy these covenants, which could result in a default under the Credit Facility. As of the date of this MD&A, the

Company has repaid all amounts outstanding under the Revolving Credit Facility and has issued letters of credit in

the amount of Cdn$42.6 million under the LC Facility. If an event of default under the Credit Facility occurs, the

lenders could elect to declare all principal amounts outstanding thereunder at such time, together with accrued

interest, to be immediately due. An event of default under the Credit Facility may also give rise to an event of default

under existing and future debt agreements and, in such event, the Company may not have sufficient funds to repay

amounts owing under such agreements.

Permits

Although the Company has all required permits for its current operations, there is no assurance that delays will not

occur in the renewal of certain permits and there is no assurance the Company will be able to obtain additional

permits for any possible future changes to operations or further development of the Detour Lake mine and other

projects on its property, including, for example, the development of Block A, or additional permits associated with new

legislation. There is also no assurance that the Company can obtain, or that there will not be delays in obtaining, the

environmental approval or permits necessary to develop any future projects.

To the extent such approvals or consents are required and are delayed or not obtained, the Company may be

curtailed or prohibited from continuing its operations or proceeding with any further development.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions

thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed,

and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial

actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be

required to compensate those suffering loss or damage by reason of the mining activities and may have civil or

criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing operations and activities of mining and exploration

companies, or more stringent implementation thereof, could have a material adverse effect on the Company and

cause increases in exploration expenses, capital expenditures or require abandonment or delays in development of

new mining properties.

Limited property portfolio

At present, the Company’s only material mineral properties are those properties comprising the Detour Lake property.

Unless the Company acquires or develops additional mineral properties, the Company will be solely dependent upon

the Detour Lake property. If no additional mineral properties are acquired by the Company, any adverse development

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

affecting the Company’s operations and further development at the Detour Lake property may have a material

adverse effect on the Company’s financial condition and results of operations.

Competitive conditions

The mining industry is intensely competitive in all its phases, and the Company competes with other companies that

have greater financial resources and technical facilities. Competition in the precious metals mining industry is

primarily for mineral rich properties which can be developed and produced economically and businesses compete for

the technical expertise to find, develop, and produce such properties, the skilled labour to operate the properties and

the capital for the purpose of financing development of such properties. Many competitors not only explore for and

mine precious metals, but conduct refining and marketing operations on a world-wide basis and some of these

companies have much greater financial and technical resources than the Company. Such competition may result in

the Company being unable to acquire desired properties, recruit or retain qualified employees or acquire the capital

necessary to fund its operations and develop its properties.

The Company’s inability to compete with other mining companies for these mineral deposits could have a material

adverse effect on the Company’s results of operation and business.

Aboriginal claims

Aboriginal title and rights may be claimed with respect to Crown properties or other types of tenure with respect to

which mining rights have been conferred. The Company is also engaged with the Aboriginal groups whose traditional

territories are or may be impacted by the development of the mine. The Company has signed agreements with the

Moose Cree First Nation, the Taykwa Tagamou Nation, the Wahgoshig First Nation and the Métis Nation of Ontario

(collectively, the “Aboriginal Communities”). The agreements set out benefits the Aboriginal Communities receive

from the development of the Detour Lake mine and outline how the Company and each Aboriginal Community will

work together on community training initiatives as well as employment and business opportunities. Each agreement

recognizes and respects the Aboriginal Communities’ Aboriginal rights and interests as well as the Company’s rights

and interests in the development of the Detour Lake mine. Each agreement also endorses a commitment by the

Company and each of the Aboriginal Communities to consult with and accommodate one another over the life of the

mine. The Company is not aware of any treaty land entitlement claims or Aboriginal land claims having been formally

asserted or any legal actions relating to Aboriginal issues having been instituted with respect to the Detour Lake

property. There can be no assurance that treaty or Aboriginal rights will not be asserted in the future in respect of the

Detour Lake mine, or any of the Company’s other properties, or that any agreements entered into by the Company

will not be disputed. In addition, other parties may dispute the Company’s title to its properties and its properties may

be subject to prior unregistered agreements or transfers or land claims by Aboriginal peoples, and title may be

affected by undetected encumbrances or defects or government actions.

Environmental and safety regulations and risks

Environmental laws and regulations affect the operations of the Company. These laws and regulations set various

standards regulating certain aspects of health and environmental quality. They provide for penalties and other

liabilities for the violation of such standards and establish, in certain circumstances, obligations to rehabilitate current

and former facilities and locations where operations are or were conducted. Furthermore, the permission to operate

could be withdrawn temporarily where there is evidence of serious breaches of health and safety, or even

permanently in the case of extreme breaches. Significant liabilities could be imposed on the Company for damages,

clean-up costs or penalties in the event of certain discharges into the environment, environmental damage caused by

previous owners of acquired properties or non-compliance with environmental laws or regulations. Environmental

legislation is evolving in a manner that may mean stricter standards and enforcement, increased fines and penalties

for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of

responsibility for companies and their officers, directors and employees. Permits from a variety of regulatory

authorities are required for many aspects of mine development, operation and reclamation. Future legislation and

regulations could cause additional expense, capital expenditures, restrictions, liabilities and delays in the

development of the Detour Lake mine, the extent of which cannot be predicted. In the context of environmental

permits, including the approval of reclamation plans, the Company must comply with standards and laws and

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

regulations which may entail costs and delays depending on the nature of the activity to be permitted and how

stringently the regulations are implemented by the permitting authority.

Reclamation estimates and obligations

The Company estimated in its 2010 Mine Closure Plan (as described in the AIF and filed with the Ministry of Northern

Development and Mines ( “MNDM”)) the closure costs at the cessation of mining at Cdn$69.9 million. In 2014, the

Company submitted an amendment to the 2010 Mine Closure Plan to MNDM which estimated an additional

Cdn$15.0 million of closure costs. The Company received approval of this amendment during the first quarter of

2015. Actual costs of completing the reclamation of the mine site may be higher than those estimated. The Company

has agreed to phase in additional security as the mine develops. To date, the Company has issued a letter of credit in

favour of the MNDM in the amount of approximately $22.7 million (Cdn$28.3 million) in support of its obligations. The

letter of credit is secured by the Company’s property and assets. In addition, the Company has provided an

unsecured surety bond in the amount of approximately $16.1 million (Cdn$20.1 million) in support of its obligations.

The Company does not anticipate any additional security will be required in 2015.

Government regulation

The Company’s mining, processing, development and exploration activities are subject to various laws governing

prospecting, mining, development, production, taxes, labour standards and occupational health, mine safety, toxic

substances, land use, water use and other matters. No assurance can be given that new rules and regulations will

not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail

exploration or development.

Many of the mineral rights and interests of the Company are subject to government approvals, licences and permits.

The granting and enforcement of the terms of such approvals, licences and permits are, as a practical matter, subject

to the discretion of the applicable governments or governmental officials. No assurance can be given that the

Company will be successful in maintaining any or all of the various approvals, licences and permits in full force and

effect without modification or revocation. To the extent such approvals are required and not obtained, the Company

may be curtailed or prohibited from continuing or proceeding with planned exploration or development of mineral

properties.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions

thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed,

and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial

actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be

required to compensate those suffering loss or damage by reason of the mining activities and may have civil or

criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws and regulations governing operations or more stringent implementation thereof could

have a material adverse effect on the Company and cause increases in exploration expenses, capital expenditures or

development costs or reduction in levels of production at producing properties, if any, or require abandonment or

delays in development of new mining properties.

Management and technical personnel

The success of the Company is currently largely dependent on the performance of its officers and technical

personnel. Shareholders will be relying on the good faith, experience and judgment of the Company’s management

and advisors in supervising and providing for the effective management of the business of the Company. There is no

assurance the Company can maintain the services of its officers or other qualified technical personnel required to

operate its business. The loss of the services of one or more of these persons could have a material adverse effect

on the Company’s business and prospects.

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

Insurance and uninsurable risks

Exploration, development and production operations on mineral properties involve numerous risks, including

unexpected or unusual geological operating conditions, rock bursts, cave-ins, ground or slope failures, fires, floods,

earthquakes, cyclones and other environmental occurrences, as well as political and social instability that could result

in damage to or destruction of mineral properties or producing facilities, personal injury or death, environmental

damage, delays in mining caused by industrial accidents or labour disputes or changes in regulatory environment,

monetary losses and possible legal liability. It is not always possible to obtain insurance against all such risks and the

Company may decide not to insure against certain risks because of high premiums or other reasons. Moreover,

insurance against risks such as environmental pollution or other hazards as a result of exploration and production is

not generally available to the Company or to other companies in the mining industry on acceptable terms. Although

the Company maintains insurance to protect against certain risks in such amounts as it considers reasonable, its

insurance will not cover all potential risks associated with its operations, and insurance coverage may not continue to

be available or may not be adequate to cover any resulting liability. Should such liabilities arise, they could reduce or

eliminate any further profitability and result in increasing costs and a decline in the value of the securities of the

Company.

Information systems security threats

The Company is dependent upon information technology systems in the conduct of its operations.

The Company’s information technology systems are subject to disruption, damage or failure from a variety of

sources, including, without limitation, cable cuts, damage to physical plants, fire, power loss, vandalism, theft,

computer viruses, security breaches, cyber-attacks, natural disasters and defects in design. Cybersecurity incidents,

in particular, are evolving and include, but are not limited to, malicious attempts to gain unauthorized access to data

and/or automated network systems and the manipulation or improper use of information technology systems.

Given the unpredictability of the timing, nature and scope of information technology disruptions, the Company could

potentially be subject to information system failures; production downtimes; operational delays; significant costs,

including increased capital expenses; the unauthorized release of confidential information; the destruction or

corruption of data; lawsuits; damage to the Company’s reputation; and/or financial losses resulting from remedial

actions, all of which could have a material adverse effect on the Company’s cash flows, competitive position, financial

condition or results of operations. The Company could also be adversely affected by system or network disruptions if

new or upgraded information technology systems are defective, not installed properly or not properly integrated into

the Company’s operations.

The Company has been the subject of IT security incidents, including in the first half of 2015, when the Company

was the subject of illegal breaches of its information technology systems which resulted in confidential information,

including personal information, being accessed and released. Investigations of the source of this breach, the process

of assessing the financial and other impacts of such breach and the remediation steps being taken in response to this

breach are ongoing. It is possible that additional confidential information, beyond that which has been released to

date, was accessed and/or that other unforeseen developments related to this breach could occur, which could have

a further adverse impact on the Company’s operations, financial results and reputation.

The Company continuously monitors security threats to its information systems and implements measures to

manage these threats. Although the Company has not experienced any material losses relating to cyber-attacks or

other information security breaches to date, there can be no assurance that the Company will not incur such losses in

the future. The Company’s risk and exposure to these matters cannot be fully mitigated because of, among other

things, the evolving nature of these threats, the difficulty in anticipating such threats and the difficulty in immediately

detecting all such threats. As a result, cyber security and the continued development and enhancement of controls,

processes and practices designed to protect systems, computers, software, data and networks from attack, disruption

or damage remain a priority. As cyber threats continue to evolve, the Company may be required to expend additional

resources to continue to modify or enhance protective measures or to investigate and remediate any security

vulnerabilities.

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

No history of earnings or dividends

The Company has no history of earnings and as such the Company has not paid dividends on its Common Shares

since incorporation and does not anticipate doing so in the foreseeable future. Payment of any future dividends will

be at the discretion of the board of directors after taking into account many factors, including operating results,

financial condition and anticipated cash needs.

Price fluctuations of consumed commodities

The price and availability of commodities consumed or used in connection with exploration and development and

mining, such as natural gas, diesel, oil, electricity and reagents, also fluctuate, and these fluctuations affect the costs

of production at various operations. These fluctuations can be unpredictable, can occur over short periods of time and

may have a material adverse effect on the Company’s operating costs or the timing and costs of various projects. The

Company is a significant consumer of electricity. The Company has a contract with the Independent Electricity

System Operator (formerly Ontario Power Authority) which provides the Company with an electricity rebate to

December 31, 2019. In the event this fixed price contract were to be terminated, the Company would be subject to

fluctuating, and potentially significantly increased, electricity costs which could materially impact the Company’s

operating costs. The Company has also hedged its diesel price exposure as disclosed in section “Liquidity and

Capital Resources - Derivative Instruments”.

Infrastructure

Mining, processing, development and exploration activities depend on adequate infrastructure. Reliable roads,

bridges, power sources and water supply are important determinants, which affect capital and operating costs. The

Detour Lake mine has sufficient infrastructure for its current mining operation on the Detour Lake property. Unusual

or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of

such infrastructure could also adversely affect the Company’s operations, financial condition and results of

operations.

Accounting policies and internal controls

The Company prepares its financial reports in accordance with IFRS. In preparation of financial reports, management

may need to rely upon assumptions, make estimates or use their best judgment in determining the financial condition

of the Company. Significant accounting policies are described in more detail in the Company’s audited financial

statements. In order to have a reasonable level of assurance that financial transactions are properly authorized,

assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported.

The Company has implemented and continues to analyze its internal control systems for financial reporting. Although

the Company believes its financial reporting and financial statements are prepared with reasonable safeguards to

ensure reliability, the Company cannot provide absolute assurance.

Community relations and license to operate

The Company’s relationship with the communities in which it operates are critical to ensure the future success of the

Detour Lake mine and any potential future development including, for example, the development of Block A. There is

an increasing level of public concern relating to the perceived effects of mining activities on the environment and on

communities impacted by such activities. Adverse publicity could have a material adverse effect on the Company’s

reputation or financial condition and may impact its relationship with the communities in which it operates, including

Aboriginal communities. While Detour Gold is committed to operating in a socially responsible manner, there is no

guarantee that the Company’s efforts in this respect will mitigate this potential risk.

Third party claims

Title to, and the area of, resource claims may be disputed and additional amounts may be paid to surface rights

owners in connection with any development of mining activity. Although the Company is satisfied, based on due

diligence conducted by the Company, that its surface and mineral rights to the Detour Lake property are valid, there

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

may be challenges, including Aboriginal land claims, on the Detour Lake property or other properties which the

Company may wish to develop including, for example, Block A, which, if successful, could impair exploration,

development and/or mining operations.

Conflict of interest

All but two of the directors of the Company also serve as directors and/or officers of other companies involved in

natural resource exploration, development and production. Consequently, there exists the possibility that such

directors will be in a position of conflict of interest. Any decision made by such directors involving these other

companies will be made in accordance with the duties and obligations to deal fairly and in good faith with the

Company and these other companies. In addition, such directors must declare, and refrain from voting on, any matter

in which such directors may have a material conflict of interest.

FORWARD LOOKING STATEMENTS

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable

securities laws (collectively referred to herein as “forward-looking statements”). These statements relate to future

events or the Company’s future performance. All statements other than statements of historical fact are forward-

looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as

“plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”,

“intends”, “anticipates” or “believes”, or variations of, or the negatives of, such words and phrases or state that certain

actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-

looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results

to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this

MD&A speak only as of the date of this MD&A or as of the date or dates specified in such statements.

Specifically, this MD&A contains forward-looking statements regarding the Company’s production of between

475,000 and 525,000 ounces of gold in 2015 at an estimated total cash cost of $780 to $850 per ounce of gold sold

and all-in sustaining costs of between $1,050 and $1,150 per ounce sold; sustaining capital expenditures in 2015 to

range from $90 to $100 million; capitalized stripping costs in 2015 to range from $20 to $25 million; exploration

expenditures for 2015 increasing to approximately $8 million; settlement of the total purchase commitments for capital

expenditures for the Detour Lake mine over the next 12 months; the sufficiency of available funds and the

requirement for additional funding; prices and price volatility for gold; and general business and economic conditions.

Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company’s ability to

predict or control. These risks, uncertainties and other factors include, but are not limited to, gold price volatility,

changes in debt and equity markets, the uncertainties involved in interpreting geological data, increases in costs,

environmental compliance and changes in environmental legislation and regulation, interest rate and exchange rate

fluctuations, general economic conditions and other risks involved in the gold exploration and development industry

as well as those risk factors discussed in the section entitled “Description of Business – Risk Factors” in the

Company’s 2014 Annual Information Form filed by the Company on and available on SEDAR at www.sedar.com.

Readers are cautioned that the foregoing list of factors is not exhaustive of the factors that may affect the forward-

looking statements. Actual results and developments are likely to differ, and may differ materially, from those

expressed or implied by the forward-looking statements contained in this MD&A. Such statements are based on a

number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about the

following:

operating and capital costs;

the estimated timeline for the Detour Lake mine to reach a steady state of commercially viable operations;

the supply and demand for, and the level and volatility of the price of, gold;

the availability of financing for the Company’s exploration and development activities;

the Company’s ability to attract and retain skilled staff;

timing of the receipt of regulatory and governmental approvals for development projects and other operations;

the supply and availability of consumables and services;

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Detour Gold Second Quarter 2015 Management’s Discussion and Analysis

the exchange rates of the Canadian dollar to the U.S. dollar;

energy and fuel costs;

the accuracy of the Company’s mineral reserve and resource estimates and the geological and metallurgical

assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources) and

operational and price assumptions on which the mineral reserve and resource estimates are based;

market competition;

the Company’s ongoing relations with its employees and impacted communities;

the Company’s ability to re-finance debt and other obligations as they come due; and

general business and economic conditions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the

Company’s actual results, performance or achievements to be materially different from any of its future results,

performance or achievements expressed or implied by forward-looking statements. All forward-looking statements

herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-

looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-

looking statements whether as a result of new information or future events or otherwise, except as may be required

by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will

make additional updates with respect to those or other forward-looking statements.

INFORMATION CONCERNING ESTIMATES OF MEASURED, INDICATED AND

INFERRED RESOURCES

The mineral reserve and resource estimates were prepared in accordance with Canadian National Instrument 43-101

Standards of Disclosure for Mineral Projects (“NI 43-101”), as required by Canadian securities regulatory authorities.

For United States reporting purposes, the United States Securities and Exchange Commission (“SEC”) applies

different standards in order to classify mineralization as a reserve. In particular, while the terms “measured,”

“indicated” and “inferred” mineral resources are required pursuant to NI 43-101, the SEC does not recognize such

terms. Canadian standards differ significantly from the requirements of the SEC. Investors are cautioned not to

assume that any part or all of the mineral deposits in these categories constitute or will ever be converted into

reserves. In addition, “inferred” mineral resources have a great amount of uncertainty as to their existence and great

uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral

resource will ever be upgraded to a higher category. Under Canadian securities laws, issuers must not make any

disclosure of results of an economic analysis that includes inferred mineral resources, except in rare cases.

TECHNICAL INFORMATION

The scientific and technical content of this MD&A has been reviewed, verified and approved by Drew Anwyll, P.Eng.,

Senior Vice President Technical Services, a Qualified Person as defined by Canadian Securities Administrators

National Instrument 43-101 "Standards of Disclosure for Mineral Projects".