Detour Gold targets lifted on improved mine plan

Shares of Detour Gold Corp. have jumped a lot more than 10 % within the last two days as several analysts heaped praise around the company for its new mine plan and hiked their price targets.

Detour, which operates a massive open-pit mine in Northern Ontario, announced the updated plan on Monday. It incorporates a new block of the deposit, which reinforces the general gold reserves to 16.9 million ounces and boosts the mine life by 3 years. In comparison, reserves stood at 14.9 million ounces at the end of 2014.

The new mine plan also improves the overall economics from the project by reducing costs. It assumes a lower mining rate and less waste stripping, and also reduces assumptions for that Canadian dollar and fuel costs.

Desjardins Securities analyst Michael Parkin noted the brand new plan is missing some specifics. But he still hiked his price target to $18.50 a share (from $17.50) as he is confident the new targets is possible.

“With management providing reliable guidance this past year, we have good conviction in our revised estimates,” he said in a note.

BMO Capital Markets analyst Brian Quast noticed that the low mining rate reduces risk by lowering capital requirements and “generally moderating” the work. He boosted his target price 4.3 percent to $16 a share.

At least eight sell-side analysts have raised their targets on Detour because the announcement.