Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or
the “Company”) announced its operating and financial results for
the first quarter ended March 31, 2023.
Highlights
(Unless otherwise stated, all monetary figures
in this news release are expressed in U.S. dollars, and all
operational and financial information contained in this news
release is related to continuing operations.)
-
Strong metals production: Produced 68,581 ounces
of gold and 7.2 million pounds of copper.
-
All-in sustaining cost: Reported cost of sales per
ounce of gold sold1 of $974 and an all-in sustaining cost per ounce
of gold sold2 of $872, slightly above the 2023 guidance range due
primarily to an unfavourable mark-to-market adjustment to
share-based compensation expenses as a result of DPM’s strong share
price performance, which impacted all-in sustaining cost by
approximately $100 per ounce of gold sold.
-
On track to achieve 2023 guidance: Strong
performance at each operation is expected for the balance of the
year and DPM remains on track to achieve its 2023 production and
cost guidance.
-
Significant free cash flow: Generated $70.9
million of cash provided from operating activities and $65.0
million of free cash flow2.
-
Solid adjusted net earnings: Reported net earnings
of $46.6 million ($0.25 per share) and adjusted net earnings2 of
$46.1 million ($0.24 per share).
-
Growing financial position: Ended the quarter with
a strong balance sheet, including $473.0 million of cash, a $150.0
million undrawn revolving credit facility, and no debt.
-
Increasing return of capital to shareholders:
Returned $15.9 million, or 24% of free cash flow during the first
quarter, to shareholders through dividends and share repurchases.
Declared second quarter dividend of $0.04 per common share payable
on July 17, 2023 to shareholders of record on June 30, 2023.
-
Chelopech mine life extension: Updated Mineral
Reserve and Mineral Resource estimate and life of mine plan for
Chelopech supports a mine life that now extends to 2031.
-
Development projects: Continued to progress the
updated feasibility study (“FS”) for Loma Larga in Ecuador, which
is expected to be completed in the second half of 2023.
-
Strong results from exploration activities: Assay
results from the ongoing drill program at the Čoka Rakita
exploration prospect in Serbia reported in April 2023 extended the
deposit to the east and confirmed and extended the high-grade zone.
Also reported encouraging results at Tierras Coloradas in Loja,
Ecuador, which confirmed the presence of a well-mineralized vein
system.
CEO Commentary
“Our first quarter was an excellent start to the
year, as we delivered strong production and financial results,
including a near-record $65 million of free cash flow generation.
With quarterly production at each of our operations expected to
increase for the balance of the year, we are in a strong position
to deliver on our 2023 guidance,” said David Rae, President and
Chief Executive Officer.
“We returned 24% of our free cash flow to
shareholders during the quarter through our enhanced share buyback
program and our sustainable quarterly dividend. We also continued
to invest in our future, as we progressed the optimized feasibility
study at Loma Larga, and announced strong results from our
exploration activities at Čoka Rakita in Serbia and Tierras
Coloradas in Ecuador.”
“We continue to believe that DPM represents a
compelling value opportunity for investors, given our strong
three-year outlook for gold production, attractive all-in
sustaining costs, significant free cash flow generation and
exciting exploration prospects.”
Use of non-GAAP Financial
Measures
Certain financial measures referred to in this
news release are not measures recognized under IFRS and are
referred to as non-GAAP financial measures or ratios. These
measures have no standardized meanings under IFRS and may not be
comparable to similar measures presented by other companies. The
definitions established and calculations performed by DPM are based
on management’s reasonable judgment and are consistently applied.
These measures are intended to provide additional information and
should not be considered in isolation or as a substitute for
measures prepared in accordance with IFRS. Non-GAAP financial
measures and ratios, together with other financial measures
calculated in accordance with IFRS, are considered to be important
factors that assist investors in assessing the Company’s
performance.
The Company uses the following non-GAAP
financial measures and ratios in this news release:
- mine cash cost
- cash cost per tonne of ore
processed
- mine cash cost of sales
- cash cost per ounce of gold
sold
- all-in sustaining cost
- all-in sustaining cost per ounce of
gold sold
- smelter cash cost
- cash cost per tonne of complex
concentrate smelted
- adjusted earnings before interest,
income taxes, depreciation and amortization (“EBITDA”)
- adjusted net earnings
- adjusted basic earnings per
share
- cash provided from operating
activities, before changes in working capital
- free cash flow
- average realized metal prices
For a detailed description of each of the
non-GAAP financial measures and ratios used in this news release
and a detailed reconciliation to the most directly comparable
measure under IFRS, please refer to the “Non-GAAP Financial
Measures” section commencing on page 12 of this news release.
Key Operating and Financial Highlights
$ thousands, except where otherwise indicatedEnded March
31, |
|
Three Months |
|
2023 |
2022 |
Change |
Operating Highlights |
|
|
|
|
Ore processed |
t |
737,637 |
754,635 |
(2 |
%) |
Metals contained in
concentrate produced: |
|
|
|
|
Gold |
|
|
|
|
Chelopech |
oz |
35,258 |
41,500 |
(15 |
%) |
Ada Tepe |
oz |
33,323 |
21,415 |
56 |
% |
Total gold in concentrate
produced |
oz |
68,581 |
62,915 |
9 |
% |
Copper |
Klbs |
7,177 |
7,693 |
(7 |
%) |
Payable metals in concentrate
sold: |
|
|
|
|
Gold |
|
|
|
|
Chelopech |
oz |
31,073 |
36,313 |
(14 |
%) |
Ada Tepe |
oz |
32,426 |
21,068 |
54 |
% |
Total payable gold in
concentrate sold |
oz |
63,499 |
57,381 |
11 |
% |
Copper |
Klbs |
6,358 |
6,541 |
(3 |
%) |
Cost of sales per tonne of ore
processed(1): |
|
|
|
|
Chelopech |
$/t |
65 |
63 |
3 |
% |
Ada Tepe |
$/t |
139 |
117 |
19 |
% |
Cash cost per tonne of ore
processed(2): |
|
|
|
|
Chelopech |
$/t |
51 |
48 |
6 |
% |
Ada Tepe |
$/t |
66 |
53 |
25 |
% |
Cost of sales per ounce of
gold sold(3) |
$/oz |
974 |
1,030 |
(5 |
%) |
All-in sustaining cost per
ounce of gold sold(2) |
$/oz |
872 |
684 |
27 |
% |
Complex concentrate
smelted |
t |
49,647 |
47,243 |
5 |
% |
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
515 |
720 |
(28 |
%) |
Cash
cost per tonne of complex concentrate smelted(2) |
$/t |
392 |
480 |
(18 |
%) |
Financial Highlights |
|
|
|
|
Revenue |
|
155.8 |
153.8 |
1 |
% |
Cost of sales |
|
87.5 |
93.1 |
(6 |
%) |
Earnings before income
taxes |
|
49.0 |
33.9 |
45 |
% |
Net earnings |
|
46.6 |
26.8 |
74 |
% |
Per share |
$/sh |
0.25 |
0.14 |
79 |
% |
Adjusted EBITDA(2) |
|
68.4 |
69.5 |
(2 |
%) |
Adjusted net earnings(2) |
|
46.1 |
37.0 |
25 |
% |
Per share(2) |
$/sh |
0.24 |
0.19 |
26 |
% |
Cash provided from operating
activities |
|
70.9 |
78.8 |
(10 |
%) |
Free cash flow(2) |
|
65.0 |
52.4 |
24 |
% |
Capital expenditures
incurred: |
|
|
|
|
Sustaining(5) |
|
7.7 |
8.8 |
(12 |
%) |
Growth(6) |
|
6.5 |
6.2 |
5 |
% |
Total capital expenditures |
|
14.2 |
15.0 |
(5 |
%) |
1) |
Cost of sales per tonne of ore processed represents cost of sales
for Chelopech and Ada Tepe, respectively, divided by tonnes of ore
processed. |
2) |
Cash cost per tonne of ore
processed, all-in sustaining cost per ounce of gold sold, cash cost
per tonne of complex concentrate smelted, adjusted EBITDA, adjusted
net earnings, adjusted basic earnings per share and free cash flow
are non-GAAP financial measures or ratios. Refer to the “Non-GAAP
Financial Measures” section commencing on page 12 of this news
release for more information, including reconciliations to IFRS
measures. |
3) |
Cost of sales per ounce of gold
sold represents total cost of sales for Chelopech and Ada Tepe,
divided by total payable gold in concentrate sold. |
4) |
Cost of sales per tonne of
complex concentrate smelted represents cost of sales for Tsumeb,
divided by tonnes of complex concentrate smelted. |
5) |
Sustaining capital expenditures
are generally defined as expenditures that support the ongoing
operation of the asset or business without any associated increase
in capacity, life of assets or future earnings. This measure is
used by management and investors to assess the extent of
non-discretionary capital spending being incurred by the Company
each period. |
6) |
Growth capital expenditures are
generally defined as capital expenditures that expand existing
capacity, increase life of assets and/or increase future earnings.
This measure is used by management and investors to assess the
extent of discretionary capital spending being undertaken by the
Company each period. |
|
|
Performance Highlights
A table comparing first quarter 2023 production,
sales and cash cost measures by asset against 2023 guidance is
located on page nine of this news release.
The Company’s mining operations continued to
deliver strong operating results, including a near record-level of
gold production at Ada Tepe and continued consistent performance at
Chelopech. All-in sustaining cost per ounce of gold sold for the
first quarter was slightly above the high end of guidance range for
the year, due primarily to an unfavourable mark-to-market
adjustment to share-based compensation expenses as a result of
DPM’s strong share price performance, which impacted all-in
sustaining cost by approximately $100 per ounce of gold sold. Both
mines remain on track to achieve their 2023 production and cost
guidance.
Highlights include the following:
Chelopech, Bulgaria: Chelopech
continued its track record of strong performance, producing 35,258
ounces of gold and 7.2 million pounds of copper in first quarter
2023. Gold production was in-line with expectations while copper
production was slightly lower than planned to due to lower copper
grades. Grades and recoveries are expected to be higher for the
balance of the year.
All-in sustaining cost per ounce of gold sold in
first quarter 2023 was $932 compared to $428 in the corresponding
period in 2022 due primarily to higher treatment and freight
charges, lower by-product credits as a result of lower volumes and
prices of copper sold, higher cash outlays for sustaining capital
expenditures related to the upgrade of Chelopech’s tailings
management facility, which is expected to be completed in the
second quarter, as well as lower volumes of gold sold, higher
labour costs and higher prices for direct materials, partially
offset by a stronger U.S. dollar.
Ada Tepe, Bulgaria: Ada Tepe
delivered a near-record level of performance during the first
quarter, producing 33,323 ounces of gold.
All-in sustaining cost per ounce of gold sold in
first quarter 2023 was $486 compared to $783 in the corresponding
period in 2022 due primarily to higher volumes of gold sold, lower
cash outlays for sustaining capital expenditures and a stronger
U.S. dollar.
Consolidated Operating
Highlights
Production: Gold contained in
concentrate produced in first quarter 2023 of 68,581 ounces was 9%
higher than the corresponding period in 2022, due primarily to
higher gold grades at Ada Tepe, partially offset by lower
recoveries at Chelopech, in line with the mine plans for both
operations.
Copper production in first quarter 2023 of 7.2
million pounds was 7% lower than the corresponding period in 2022
due primarily to lower copper recoveries.
Deliveries: Payable gold in
concentrate sold in first quarter 2023 of 63,499 ounces was 11%
higher than the corresponding period in 2022, reflecting higher
gold production and timing of shipments. Payable copper in
concentrate sold in first quarter 2023 of 6.4 million pounds was 3%
lower than the corresponding period in 2022 due primarily to lower
copper production, partially offset by the timing of shipments.
Complex concentrate: Complex
concentrate smelted in first quarter 2023 of 49,647 tonnes was
comparable to the corresponding period in 2022, but below
expectations due to unplanned maintenance to the off-gas system.
The Company plans to undertake additional maintenance in the
off-gas system concurrently with the Ausmelt furnace maintenance,
scheduled for third quarter 2023, which is expected to result in
improved quarterly performance.
Cost measures: Cost of sales in
first quarter 2023 of $87.5 million was 6% lower than the
corresponding period in 2022 due primarily to a stronger U.S.
dollar and lower depreciation expense as a result of the impairment
charge in respect of Tsumeb taken in third quarter 2022, partially
offset by higher local currency mine operating costs and
royalties.
All-in sustaining cost per ounce of gold sold in
first quarter 2023 of $872 was 27% higher than the corresponding
period in 2022 due primarily to higher share-based compensation
expenses reflecting DPM’s strong share price performance, higher
treatment and freight charges, lower by-product credits as a result
of lower volumes and prices of copper sold, higher labour costs and
higher prices for direct materials, partially offset by higher
volumes of gold sold and a stronger U.S. dollar.
Cash cost per tonne of complex concentrate
smelted in first quarter 2023 of $392 was 18% lower than the
corresponding period in 2022 due primarily to a stronger U.S.
dollar and lower labour costs as a result of a cost optimization
initiative undertaken in 2022.
Capital expenditures: Capital
expenditures incurred in first quarter 2023 were $14.2 million
compared to $15.0 million in the corresponding period in 2022.
Sustaining capital expenditures incurred in
first quarter 2023 of $7.7 million were 12% lower than the
corresponding period in 2022 of $8.8 million, in-line with
expectations.
Growth capital incurred in first quarter 2023,
primarily related to the Loma Larga gold project, was $6.5 million
compared to $6.2 million in the corresponding period in 2022.
Consolidated Financial
Highlights
Financial results from operations in the first
quarter reflected higher volumes of gold sold and a strong U.S.
dollar, partially offset by higher share-based compensation expense
reflecting DPM’s strong share price performance and higher planned
exploration expenses.
Revenue: Revenue in first
quarter 2023 of $155.8 million was comparable to the corresponding
period in 2022, due primarily to higher volumes of gold sold at Ada
Tepe, largely offset by lower revenue at Chelopech as a result of
lower volumes of metal sold, higher treatment and freight charges
and lower realized copper prices.
Net earnings: Net earnings in
first quarter 2023 were $46.6 million ($0.25 per share) compared to
$26.8 million ($0.14 per share) in the corresponding period in
2022, due primarily to higher volumes of gold sold and a stronger
U.S. dollar, partially offset by higher share-based compensation,
higher local currency mine operating costs and royalties, and
higher planned exploration expenses. Net earnings in the first
quarter 2022 also included Tsumeb restructuring costs related to
the cost optimization initiative at the smelter.
Adjusted net earnings: Adjusted
net earnings in first quarter 2023 were $46.1 million ($0.24 per
share) compared to $37.0 million ($0.19 per share) in the
corresponding period in 2022, due primarily to the same factors
affecting net earnings, with the exception of adjusting items
primarily related to the Tsumeb restructuring costs in 2022.
Earnings before income taxes: Earnings before
income taxes in first quarter 2023 were $49.0 million compared to
$33.9 million in the corresponding period in 2022. These changes
reflect the same factors that affected net earnings except for
income taxes, which are excluded.
Adjusted EBITDA: Adjusted
EBITDA in first quarter 2023 was $68.4 million compared to $69.5
million in the corresponding period in 2022, reflecting the same
factors that affected adjusted net earnings except for interest,
income taxes, depreciation and amortization, which are excluded
from adjusted EBITDA.
Cash provided from operating
activities: Cash provided from operating activities in
first quarter 2023 of $70.9 million was 10% lower than the
corresponding period in 2022, due primarily to the timing of
payments to suppliers plus the timing of deliveries and subsequent
receipt of cash, partially offset by the same factors impacting
earnings before income taxes.
For a detailed discussion on the factors
affecting cash provided from operating activities, refer to the
“Liquidity and Capital Resources” section contained in the
Management’s Discussion and Analysis for the three months ended
March 31, 2023 (the “MD&A”).
Free cash flow: Free cash flow
in first quarter 2023 of $65.0 million was $12.7 million higher
than the corresponding period in 2022, due primarily to the same
factors impacting earnings before income taxes. Free cash flow is
calculated before changes in working capital.
Balance Sheet Strength and Financial
Flexibility
The Company continues to maintain a strong
financial position, with a growing cash position, no debt and a
$150 million revolving credit facility which remains undrawn.
For the three months ended March 31, 2023, cash
and cash equivalents increased by $39.9 million to $473.0 million
due primarily to earnings generated in the period, partially offset
by cash outlays for capital expenditures, dividends paid and shares
repurchased, as well as changes in working capital primarily
related to timing of payments to suppliers and cash redemptions on
share-based compensation liabilities.
On April 19, 2023, DPM’s 6.5% ownership interest
in Sabina Gold and Silver Corp. (“Sabina”), was exchanged for
B2Gold Corp. (“B2Gold”) common shares as a result of the
acquisition of Sabina by B2Gold. The Company has subsequently
disposed of all B2Gold common shares held for cash proceeds of
$56.5 million.
Return of Capital to
Shareholders
In line with its disciplined capital allocation
framework, DPM continues to return excess capital to shareholders,
which currently includes a sustainable quarterly dividend and
periodic share repurchases under its normal course issuer bid
(“NCIB”).
In first quarter 2023, the Company returned a
total of $15.9 million to shareholders, representing approximately
24% of its free cash flow generated in the quarter. This included
the repurchase of 1,291,207 shares at an average price of $6.45
(Cdn$8.82) per share for a total value of approximately $8.3
million (Cdn$11.3 million), and $7.6 million of dividends paid in
first quarter 2023.
As at March 31, 2023, the Company had an active
automatic share repurchase plan in place under the NCIB with its
designated broker which terminated on May 1, 2023, pursuant to
which the Company repurchased an additional 1,092,888 shares in
April 2023, all of which were cancelled as at May 3, 2023. As at
March 31, 2023, the Company recognized a liability of $8.3 million
for the amount repurchased under the plan.
Enhanced NCIBThe Company
renewed its NCIB in February 2023 and is able to purchase up to
16,500,000 common shares, representing approximately 10% of the
public float as at February 16, 2023, over a period of twelve
months which commenced on March 1, 2023 and terminates on February
28, 2024.
The Company’s Board of Directors has authorized
management to repurchase up to $100 million of the Company’s shares
over through the NCIB. The actual timing and number of common
shares that may be purchased pursuant to the NCIB will be
undertaken in accordance with DPM’s capital allocation framework,
having regard for such things as DPM’s financial position, business
outlook and ongoing capital requirements, as well as its share
price and overall market conditions.
Quarterly DividendOn May 3,
2023, the Company’s Board of Directors declared a dividend of $0.04
per common share payable on July 17, 2023, to shareholders of
record on June 30, 2023.
Development Projects Update
Loma Larga, EcuadorDrilling
activities, as well as the Citizens Participation Process for the
Environmental Impact Assessment (“EIA”), remain paused pending the
outcome of the appeals process related to the decision on the
Constitutional Protective Action (the “Action”) following the
hearing held in mid-October 2022.3 The decision on the appeal is
expected to provide clarity on the consultation process and whether
an indigenous consultation could be completed in parallel, as
originally planned by the Company, or would need to be completed
prior to resuming the Citizens Participation Process. The expected
timing for receipt of the environmental licence is subject to the
outcome of the appeal process.
DPM continues to advance the updated FS,
including optimization work leveraging the Company’s significant
expertise at Chelopech in Bulgaria, which shares similar geology,
mining method and processing flow sheet to the Loma Larga project.
The updated FS is targeted for completion in the second half of
2023.
The Company continues to progress discussions
with the government of Ecuador in respect of an investor protection
agreement. The agreement is substantially complete and is
progressing through the approvals of the various government
ministries. In line with its disciplined approach to project
development, DPM does not anticipate making any significant capital
commitments to the project prior to the completion of the investor
protection agreement and receipt of the environmental licence.
The Company maintains a constructive
relationship with government institutions and other stakeholders
involved with the development of the project.
Exploration
In Serbia, exploration activities in first
quarter 2023 focused on target delineation at the Čoka
Rakita discovery where DPM has outlined a large,
high-grade footprint that remains open in multiple directions. In
mid-April, the Company released additional assay results which
extended the deposit to the east and confirmed and extended the
high-grade zone. Prospective copper-gold mineralization has also
been identified at depth. DPM continues to advance its 40,000-metre
infill and extensional drilling program to support a maiden Mineral
Resource estimate at Čoka Rakita by the end of the year.
Additionally, approximately 10,000 metres of
drilling is planned at the adjacent Umka
exploration licence, which is located south of Čoka Rakita and
shares a similar geological environment.
During the quarter, DPM reported the results of
a 2,700-metre diamond drilling program completed at the
Tierras Coloradas licence in Ecuador. The drill
results confirmed two well-mineralized high-grade vein systems that
remain open in multiple directions. The Company plans to follow up
on these results with an expanded 10,000-metre drilling program,
which is expected to commence in the second half of 2023. DPM has
increased its 2023 exploration budget at Tierras Coloradas in
support of the expanded drilling program, and now expects to spend
between $4 million and $5 million compared to the original budget
of $1 million to $2 million.
At Chelopech, DPM continued to
advance the brownfield exploration program, with seven drill rigs
focused on the drilling campaign at Sveta Petka, as well as testing
conceptual targets on the Brevene exploration licence and drilling
deeper extensions of the Chelopech deposit. The application for a
Commercial Discovery for Sveta Petka was submitted to the Bulgarian
authorities in mid-February. Pending a positive decision on the
EIA, approval is expected by the end of 2023.
At Ada Tepe, exploration
activities were focused on target delineation for the Surnak and
Kupel prospects, within the mine concession, and the Kara Tepe
prospect located within the Chiirite exploration licence. This
included systematic geological mapping, rock sampling, trenching,
drilling and 3D modelling.
Exploration expenses are expected to be towards
the high end of the Company’s 2023 guidance.
2023 Guidance and Three-year
OutlookWith solid operating performance from the Chelopech
and Ada Tepe mines in the first quarter and higher average
quarterly production expected at all operations over the balance of
the year, DPM is on track to meet its 2023 guidance.
The Company’s three-year outlook issued in
February 2023 remains unchanged.
For additional information regarding the
Company’s detailed guidance for 2023 and three-year outlook, please
refer to the “Three-Year Outlook” section of the MD&A.
Selected Production, Delivery and Cost Performance
versus Guidance
|
|
Q1 2023 |
2023 Consolidated Guidance |
|
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
Ore processed |
Kt |
546 |
192 |
- |
738 |
2,820 – 3,010 |
Metals
contained in concentrate produced |
|
|
|
|
|
|
Gold |
Koz |
35 |
34 |
- |
69 |
270 – 315 |
Copper |
Mlbs |
7 |
- |
- |
7 |
30 – 35 |
Payable
metals in concentrate sold |
|
|
|
|
|
|
Gold |
Koz |
31 |
33 |
- |
64 |
245 – 290 |
Copper |
Mlbs |
6 |
- |
- |
6 |
26 – 31 |
All-in
sustaining cost per ounce of gold sold(1) |
$/oz |
932 |
486 |
- |
872 |
700 – 860 |
Complex
concentrate smelted |
Kt |
- |
- |
50 |
50 |
200 – 230 |
Cash cost per tonne of complex concentrate smelted |
$/t |
- |
- |
392 |
392 |
340 – 410 |
1) All-in sustaining cost per ounce of gold
sold guidance for Chelopech and Ada Tepe is expected to be $700 to
$880 and $530 to $630, respectively.
First Quarter 2023 Results Conference Call and
Webcast
At 9 AM EDT on Thursday, May 4, 2023, DPM will
host a conference call and audio webcast to discuss first quarter
2023 results, followed by a question-and-answer session. To
participate via conference call, register in advance at the link
provided below to receive the dial-in information as well as a
unique PIN code to access the call.
The call registration and webcast details are as
follows:
Conference call date and time |
Thursday, May 4, 20239AM EDT |
Call registration |
https://register.vevent.com/register/BI8530661972f044949a0799de40889c94 |
Webcast link |
https://edge.media-server.com/mmc/p/wduwwhfd |
Replay |
Archive will be available on www.dundeeprecious.com |
This news release and DPM’s unaudited condensed
interim consolidated financial statements and MD&A for the
three months ended March 31, 2023 are posted on the Company’s
website at www.dundeeprecious.com and have been filed on SEDAR at
www.sedar.com.
Qualified Person
The technical and scientific information in this
news release has been prepared in accordance with Canadian
regulatory requirements set out in National Instrument 43-101
Standards of Disclosure for Mineral Projects (“NI 43-101”) of the
Canadian Securities Administrators and the Canadian Institute of
Mining, Metallurgy and Petroleum Definition Standards for Mineral
Resources and Mineral Reserves, and has been reviewed and approved
by Ross Overall, B.Sc. (Applied Geology), Corporate Mineral
Resource Manager of DPM, who is a Qualified Person as defined under
NI 43-101, and who is not independent of the Company.
About Dundee Precious
Metals
Dundee Precious Metals Inc. is a Canadian-based
international gold mining company with operations and projects
located in Bulgaria, Namibia, Ecuador and Serbia. The Company’s
purpose is to unlock resources and generate value to thrive and
grow together. This overall purpose is supported by a foundation of
core values, which guides how the Company conducts its business and
informs a set of complementary strategic pillars and objectives
related to ESG, innovation, optimizing our existing portfolio, and
growth. The Company’s resources are allocated in-line with its
strategy to ensure that DPM delivers value for all of its
stakeholders. DPM’s shares are traded on the Toronto Stock Exchange
(symbol:
DPM). For
further information, please contact:
David RaePresident and Chief Executive OfficerTel:
(416) 365-5191drae@dundeeprecious.com |
Navin DyalChief Financial OfficerTel: (416)
365-5191navin.dyal@dundeeprecious.com |
Jennifer CameronDirector, Investor RelationsTel:
(416) 219-6177jcameron@dundeeprecious.com |
Cautionary Note Regarding Forward
Looking Statements
This news release contains “forward looking
statements” or “forward looking information” (collectively,
“Forward Looking Statements”) that involve a number of risks and
uncertainties. Forward Looking Statements are statements that are
not historical facts and are generally, but not always, identified
by the use of forward looking terminology such as “plans”,
“expects”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “guidance”, “outlook”, “intends”, “anticipates”,
“believes”, or variations of such words and phrases or that state
that certain actions, events or results “may”, “could”, “would”,
“might” or “will” be taken, occur or be achieved, or the negative
of any of these terms or similar expressions. The Forward Looking
Statements in this news release relate to, among other things:
expected cash flows; the price of gold, copper, silver and
sulphuric acid; toll rates, metals exposure and stockpile interest
deductions at Tsumeb; estimated capital costs, all-in sustaining
costs, operating costs and other financial metrics, including those
set out in the outlook and guidance provided by the Company;
currency fluctuations; the processing of Chelopech concentrate;
results of economic studies, including the Loma Larga feasibility
study; expected milestones; timing and success of exploration
activities, including at the Čoka Rakita target; the timing of the
completion and results of an updated feasibility study for the Loma
Larga project; the timing and possible outcome of pending
litigation or legal proceedings, including the timing of the legal
proceedings related to the Action and resumption of drilling
activities at Loma Larga; development of the Loma Larga gold
project, including expected production, successful negotiations of
an investment protection agreement and exploitation agreement and
granting of environmental and construction permits in a timely
manner; success of permitting activities; permitting timelines;
success of investments, including potential acquisitions;
government regulation of mining and smelting operations; the timing
and amount of dividends; the timing and number of common shares of
the Company that may be purchased pursuant to the NCIB.
Forward Looking Statements are based on certain
key assumptions and the opinions and estimates of management and
Qualified Person (in the case of technical and scientific
information), as of the date such statements are made, and they
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Company to be materially different from any other future
results, performance or achievements expressed or implied by the
Forward Looking Statements. In addition to factors already
discussed in this news release, such factors include, among others:
fluctuations in metal and sulphuric acid prices, toll rates and
foreign exchange rates; risks arising from the current inflationary
environment and the impact on operating costs and other financial
metrics, including risks of recession and risk that the power
subsidy in Bulgaria may be discontinued; continuation or escalation
of the conflict in Ukraine, including the continued exemption from
the Council of Europe’s sanctions in favour of Bulgaria with
respect to the import of Russian oil and economic sanctions against
Russia and Russian persons, or against other countries or persons,
which may impact supply chains; risks relating to the Company’s
business generally and the impact of global pandemics, including
COVID-19, resulting in changes to the Company’s supply chain,
product shortages, delivery and shipping issues; regulatory
changes, including changes impacting the complex concentrate
market; inability of Tsumeb to secure complex copper concentrate on
terms that are economic; possible variations in ore grade and
recovery rates; inherent uncertainties in respect of conclusions of
economic evaluations, economic studies and mine plans, including
the Loma Larga feasibility study; uncertainties with respect to
timing of the updated Loma Larga feasibility study; changes in
project parameters, including schedule and budget, as plans
continue to be refined; uncertainties with respect to realizing the
anticipated benefits from the Loma Larga gold project;
uncertainties with respect to actual results of current exploration
activities; uncertainties and risks inherent to developing and
commissioning new mines into production, which may be subject to
unforeseen delays; uncertainties inherent with conducting business
in foreign jurisdictions where corruption, civil unrest, political
instability and uncertainties with the rule of law may impact the
Company’s activities; limitations on insurance coverage; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; actual results of
current and planned reclamation activities; opposition by social
and non-governmental organizations to mining projects and smelting
operations; unanticipated title disputes; claims or litigation;
failure to achieve certain cost savings or the potential benefits
of any upgrades and/or expansion; increased costs and physical
risks, including extreme weather events and resource shortages,
related to climate change; cyber-attacks and other cybersecurity
risks; there being no assurance that the Company will purchase
additional common shares of the Company under the NCIB; risks
related to the implementation, cost and realization of benefits
from digital initiatives as well as those risk factors discussed or
referred to in the Company’s annual MD&A and annual information
form for the year ended December 31, 2022, the MD&A, and other
documents filed from time to time with the securities regulatory
authorities in all provinces and territories of Canada and
available on SEDAR at www.sedar.com.
The reader has been cautioned that the foregoing
list is not exhaustive of all factors and assumptions which may
have been used. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in Forward
Looking Statements, there may be other factors that cause actions,
events or results not to be anticipated, estimated or intended.
There can be no assurance that Forward Looking Statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements. The
Company’s Forward Looking Statements reflect current expectations
regarding future events and speak only as of the date hereof. Other
than as it may be required by law, the Company undertakes no
obligation to update Forward Looking Statements if circumstances or
management’s estimates or opinions should change. Accordingly,
readers are cautioned not to place undue reliance on Forward
Looking Statements.
Non-GAAP Financial Measures
Certain financial measures referred to in this
news release are not measures recognized under IFRS and are
referred to as non-GAAP financial measures or ratios. These
measures have no standardized meanings under IFRS and may not be
comparable to similar measures presented by other companies. The
definitions established and calculations performed by DPM are based
on management’s reasonable judgment and are consistently applied.
These measures are used by management and investors to assist with
assessing the Company’s performance, including its ability to
generate sufficient cash flow to meet its return objectives and
support its investing activities and debt service obligations. In
addition, the Human Capital and Compensation Committee of the Board
of Directors uses certain of these measures, together with other
measures, to set incentive compensation goals and assess
performance. These measures are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures prepared in accordance with IFRS. Non-GAAP
financial measures and ratios, together with other financial
measures calculated in accordance with IFRS, are considered to be
important factors that assist investors in assessing the Company’s
performance.
Cash Cost and All-in Sustaining Cost
Measures
Mine cash cost; smelter cash cost; mine cash
cost of sales; and all-in sustaining cost are non-GAAP financial
measures. Cash cost per tonne of ore processed; cash cost per ounce
of gold sold; all-in sustaining cost per ounce of gold sold; and
cash cost per tonne of complex concentrate smelted are non-GAAP
ratios. These measures capture the important components of the
Company’s production and related costs. Management and investors
utilize these metrics as an important tool to monitor cost
performance at the Company’s operations. In addition, the Human
Capital and Compensation Committee of the Board of Directors uses
certain of these measures, together with other measures, to set
incentive compensation goals and assess performance.
The following tables provide a reconciliation of
the Company’s cash cost per tonne of ore processed and cash cost
per tonne of complex concentrate smelted to its cost of sales:
$ thousands, unless otherwise indicatedFor the three months
ended March 31, 2023 |
Chelopech |
Ada Tepe |
Tsumeb |
Total |
Ore processed |
t |
546,130 |
|
191,507 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
49,647 |
|
|
Cost of sales |
|
35,312 |
|
26,558 |
|
25,591 |
|
87,461 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(6,613 |
) |
(13,892 |
) |
(853 |
) |
|
Change in concentrate inventory |
|
(771 |
) |
(80 |
) |
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(5,257 |
) |
|
Mine cash cost / Smelter cash cost(2) |
|
27,928 |
|
12,586 |
|
19,481 |
|
|
Cost of sales per tonne of ore processed(3) |
$/t |
65 |
|
139 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
51 |
|
66 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
515 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
392 |
|
|
$ thousands, unless otherwise indicatedFor the three months ended
March 31, 2022 |
Chelopech |
Ada Tepe |
Tsumeb |
Total |
Ore processed |
t |
540,892 |
|
213,743 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
47,243 |
|
|
Cost of sales(6) |
|
34,193 |
|
24,925 |
|
34,012 |
|
93,130 |
Other non-cash
expenses(5) |
|
(243 |
) |
- |
|
- |
|
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(5,936 |
) |
(13,580 |
) |
(4,285 |
) |
|
Change in concentrate inventory |
|
(2,016 |
) |
35 |
|
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(7,057 |
) |
|
Mine cash cost / Smelter cash cost(2) |
|
25,998 |
|
11,380 |
|
22,670 |
|
|
Cost of sales per tonne of ore processed(3) |
$/t |
63 |
|
117 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
48 |
|
53 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
720 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
480 |
|
|
1) |
Represents a
by-product credit for Tsumeb. |
2) |
Cash costs are reported in U.S. dollars, although the majority
of costs incurred are denominated in non-U.S. dollars, and consist
of all production related expenses including mining, processing,
services, royalties and general and administrative. |
3) |
Represents cost of sales and mine cash cost, respectively,
divided by tonnes of ore processed. |
4) |
Represents cost of sales and smelter cash cost, respectively,
divided by tonnes of complex concentrate smelted. |
5) |
Relates to inventory write-down to net realizable value,
reflecting market price movement, included in cost of sales in the
condensed interim consolidated statements of earnings (loss). |
6) |
For the three months ended March 31, 2022, the Bulgarian
government subsidy for electricity of $4.2 million was reclassified
from other income and expense to cost of sales to conform with
current year presentation. |
|
|
The following table provides, for the periods
indicated, a reconciliation of the Company’s cash cost per ounce of
gold sold and all-in sustaining cost per ounce of gold sold to its
cost of sales:
$ thousands, unless otherwise indicatedFor the three months
ended March 31, 2023 |
|
Chelopech |
Ada Tepe |
Consolidated |
Cost of sales(9) |
|
35,312 |
|
26,558 |
|
61,870 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(6,613 |
) |
(13,892 |
) |
(20,505 |
) |
Treatment charges, transportation and other related selling
costs(1) |
|
21,276 |
|
1,076 |
|
22,352 |
|
By-product credits(2) |
|
(26,596 |
) |
(322 |
) |
(26,918 |
) |
Mine cash cost of sales |
|
23,379 |
|
13,420 |
|
36,799 |
|
Rehabilitation related
accretion and depreciation expenses(3) |
|
305 |
|
304 |
|
609 |
|
General and administrative
expenses(4) |
|
- |
|
- |
|
10,670 |
|
Cash outlays for sustaining
capital(5) |
|
4,992 |
|
1,756 |
|
6,748 |
|
Cash
outlays for leases(5) |
|
273 |
|
289 |
|
562 |
|
All-in sustaining cost |
|
28,949 |
|
15,769 |
|
55,388 |
|
Payable gold in concentrate
sold(6) |
oz |
31,073 |
|
32,426 |
|
63,499 |
|
Cost of sales per ounce of
gold sold(7) |
$/oz |
1,136 |
|
819 |
|
974 |
|
Cash cost per ounce of gold
sold(7) |
$/oz |
752 |
|
414 |
|
580 |
|
All-in
sustaining cost per ounce of gold sold(7) |
$/oz |
932 |
|
486 |
|
872 |
|
$ thousands, unless otherwise indicatedFor the three months
ended March 31, 2022 |
|
Chelopech |
Ada Tepe |
Consolidated |
Cost of sales(9)(10) |
|
34,193 |
|
24,925 |
|
59,118 |
|
Add/(deduct): |
|
|
|
|
Depreciation and
amortization |
|
(5,936 |
) |
(13,580 |
) |
(19,516 |
) |
Other non-cash expenses(8) |
|
(243 |
) |
- |
|
(243 |
) |
Treatment charges, transportation and other related selling
costs(1) |
|
15,506 |
|
638 |
|
16,144 |
|
By-product credits(2) |
|
(31,008 |
) |
(200 |
) |
(31,208 |
) |
Mine cash cost of sales |
|
12,512 |
|
11,783 |
|
24,295 |
|
Rehabilitation related
accretion expenses(3) |
|
84 |
|
38 |
|
122 |
|
General and administrative
expenses(4)(9) |
|
- |
|
- |
|
7,234 |
|
Cash outlays for sustaining
capital(5) |
|
2,689 |
|
4,346 |
|
7,035 |
|
Cash
outlays for leases(5) |
|
241 |
|
332 |
|
573 |
|
All-in sustaining cost |
|
15,526 |
|
16,499 |
|
39,259 |
|
Payable gold in concentrate
sold(6) |
oz |
36,313 |
|
21,068 |
|
57,381 |
|
Cost of sales per ounce of
gold sold(7) |
$/oz |
942 |
|
1,183 |
|
1,030 |
|
Cash cost per ounce of gold
sold(7) |
$/oz |
345 |
|
559 |
|
423 |
|
All-in
sustaining cost per ounce of gold sold(7) |
$/oz |
428 |
|
783 |
|
684 |
|
1) |
Represents
revenue deductions for treatment charges, refining charges,
penalties, freight and final settlements to adjust for any
differences relative to the provisional invoice. |
2) |
Represents copper and silver revenue. |
3) |
Included in cost of sales and finance cost in the condensed
interim consolidated statements of earnings (loss). |
4) |
Represents an allocated portion of DPM’s general and
administrative expenses and share-based compensation expense, based
on Chelopech’s and Ada Tepe’s proportion of total revenue.
Allocated general and administrative expenses are reflected in
consolidated all-in sustaining cost per ounce of gold sold and are
not reflected in the cost measures for Chelopech and Ada Tepe. |
5) |
Included in cash used in investing activities and financing
activities, respectively, in the condensed interim consolidated
statements of cash flows. |
6) |
Includes payable gold in pyrite concentrate sold in the first
quarter 2023 of 8,972 ounces (2022 – 7,791 ounces). |
7) |
Represents cost of sales, mine cash cost of sales and all-in
sustaining cost, respectively, divided by payable gold in
concentrate sold. |
8) |
Relates to inventory write-down to net realizable value,
reflecting market price movement, included in cost of sales in the
condensed interim consolidated statements of earnings (loss). |
9) |
Included in cost of sales and general and administrative
expenses were share-based compensation expenses of $1.0 million
(2022 – $0.5 million) and $6.6 million (2022 - $1.7 million),
respectively, for the three months ended March 31, 2023. |
10) |
For the three months ended March 31, 2022, the Bulgarian
government subsidy for electricity of $4.2 million was reclassified
from other income and expense to cost of sales to conform with
current year presentation. |
|
|
Adjusted net earnings and adjusted basic
earnings per share
Adjusted net earnings is a non-GAAP financial
measure and adjusted basic earnings per share is a non-GAAP ratio
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 are defined as net
earnings, adjusted to exclude specific items that are significant,
but not reflective of the underlying operations of the Company,
including:
-
impairment charges or reversals thereof;
-
unrealized and realized gains or losses related to investments
carried at fair value;
-
significant tax adjustments not related to current period earnings;
and
-
non-recurring or unusual income or expenses that are either not
related to the Company’s operating segments or unlikely to occur on
a regular basis.
The following table provides a reconciliation of
adjusted net earnings to net earnings:
$ thousands, unless otherwise indicated |
|
|
Three Months |
Ended March 31, |
|
|
2023 |
|
2022 |
Net earnings |
|
|
46,600 |
|
26,825 |
Add/(deduct): |
|
|
|
|
Deferred tax recovery adjustments not related to current period
earnings |
|
|
(464 |
) |
- |
Net loss on Sabina special warrants, net of income taxes of
$nil |
|
|
- |
|
388 |
Tsumeb restructuring costs, net of income taxes of $nil |
|
|
- |
|
9,829 |
Adjusted net earnings |
|
|
46,136 |
|
37,042 |
Basic earnings per share |
$/sh |
|
0.25 |
|
0.14 |
Adjusted basic earnings per share |
$/sh |
|
0.24 |
|
0.19 |
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure
used by management and investors to measure the underlying
operating performance of the Company’s operating segments.
Presenting these measures from period to period helps management
and investors evaluate earnings trends more readily in comparison
with results from prior periods. In addition, the Human Capital and
Compensation Committee of the Board of Directors uses adjusted
EBITDA, together with other measures, to set incentive compensation
goals and assess performance.
Adjusted EBITDA excludes the following from
earnings before income taxes:
-
depreciation and amortization;
- interest
income;
- finance
cost;
-
impairment charges or reversals thereof;
-
unrealized and realized gains or losses related to investments
carried at fair value; and
-
non-recurring or unusual income or expenses that are either not
related to the Company’s operating segments or unlikely to occur on
a regular basis.
The following table provides a reconciliation of
adjusted EBITDA to earnings before income taxes:
$ thousands |
|
Three Months |
Ended March 31, |
|
2023 |
|
2022 |
|
Earnings before income taxes |
|
48,998 |
|
33,890 |
|
Add/(deduct): |
|
|
|
Depreciation and amortization |
|
21,895 |
|
24,254 |
|
Tsumeb restructuring costs |
|
- |
|
9,829 |
|
Finance costs |
|
1,629 |
|
1,363 |
|
Interest income |
|
(4,097 |
) |
(249 |
) |
Net losses on Sabina special warrants |
|
- |
|
388 |
|
Adjusted EBITDA |
|
68,425 |
|
69,475 |
|
Cash provided from operating activities,
before changes in working capital
Cash provided from operating activities, before
changes in working capital, is a non-GAAP financial measure defined
as cash provided from operating activities excluding changes in
working capital as set out in the Company’s consolidated statements
of cash flows. This measure is used by the Company and investors to
measure the cash flow generated by the Company’s operating segments
prior to any changes in working capital, which at times can distort
performance.
Free cash flow
Free cash flow is a non-GAAP financial measure
defined as cash provided from operating activities, before changes
in working capital which includes changes in share-based
compensation liabilities, less cash outlays for sustaining capital,
mandatory principal repayments and interest payments related to
debt and leases. This measure is used by the Company and investors
to measure the cash flow available to fund growth capital
expenditures, dividends and share repurchases.
The following table provides a reconciliation of
cash provided from operating activities, before changes in working
capital, and free cash flow to cash provided from operating
activities:
$ thousands |
|
Three Months |
Ended March 31, |
|
2023 |
|
2022 |
|
Cash provided from operating activities |
|
70,900 |
|
78,762 |
|
Add: |
|
|
|
Changes
in working capital |
|
4,526 |
|
(14,268 |
) |
Cash provided from operating activities, before changes in working
capital |
|
75,426 |
|
64,494 |
|
Cash outlays for sustaining
capital(1) |
|
(8,659 |
) |
(10,397 |
) |
Principal repayments related
to leases |
|
(1,278 |
) |
(1,131 |
) |
Interest payments(1) |
|
(456 |
) |
(588 |
) |
Free cash flow |
|
65,033 |
|
52,378 |
|
1) Included in cash used in investing and
financing activities, respectively, in the condensed interim
consolidated statements of cash flows.Average realized
metal prices
Average realized gold and copper prices are
non-GAAP ratios used by management and investors to highlight the
price actually realized by the Company relative to the average
market price, which can differ due to the timing of sales, hedging
and other factors.
Average realized gold and copper prices
represent the average per unit price recognized in the Company’s
consolidated statements of earnings (loss) prior to any deductions
for treatment charges, refining charges, penalties, freight and
final settlements to adjust for any differences relative to the
provisional invoice.
The following table provides a reconciliation of
the Company’s average realized gold and copper prices to its
revenue:
$ thousands, unless otherwise indicated |
|
Three Months |
Ended March 31, |
|
2023 |
|
2022 |
|
Total revenue |
|
155,833 |
|
153,801 |
|
Add/(deduct): |
|
|
|
Tsumeb revenue |
|
(29,465 |
) |
(31,093 |
) |
Treatment charges and other deductions(1) |
|
22,352 |
|
16,144 |
|
Silver revenue |
|
(1,080 |
) |
(1,234 |
) |
Revenue from gold and copper |
|
147,640 |
|
137,618 |
|
Revenue from gold |
|
121,801 |
|
107,645 |
|
Payable gold in concentrate
sold |
oz |
63,499 |
|
57,381 |
|
Average realized gold
price |
$/oz |
1,918 |
|
1,876 |
|
Revenue from copper |
|
25,839 |
|
29,973 |
|
Payable copper in concentrate
sold |
Klbs |
6,358 |
|
6,541 |
|
Average
realized copper price |
$/lb |
4.06 |
|
4.58 |
|
1) Represents revenue deductions for
treatment charges, refining charges, penalties, freight and final
settlements to adjust for any differences relative to the
provisional invoice.
1 Cost of sales per ounce of gold sold
represents total cost of sales for Chelopech and Ada Tepe, divided
by total payable gold in concentrate sold, while all-in sustaining
cost per ounce of gold sold includes treatment and freight charges,
net of by-product credits, all of which are reflected in
revenue.
2 All-in sustaining cost per ounce of gold
sold, free cash flow, and adjusted net earnings are non-GAAP
financial measures or ratios. These measures have no standardized
meanings under International Financial Reporting Standards (“IFRS”)
and may not be comparable to similar measures presented by other
companies. Refer to the “Non-GAAP Financial Measures” section
commencing on page 12 of this news release for more information,
including reconciliations to IFRS measures.
3 For further details on the Action,
please see the news releases issued on February 24, 2022 and July
13, 2022, which are available on the Company’s website at
www.dundeeprecious.com and have been filed on SEDAR at
www.sedar.com.
Dundee Precious Metals (TSX:DPM)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
Dundee Precious Metals (TSX:DPM)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024