Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or
the “Company”) announced its operating and financial results for
the second quarter and six months ended June 30, 2023.
Highlights(Unless otherwise stated, all
monetary figures in this news release are expressed in U.S.
dollars.)
-
Strong metals production: Produced 76,306 ounces
of gold and 7.9 million pounds of copper.
-
All-in sustaining cost: Reported cost of sales per
ounce of gold sold1 of $929 and an all-in sustaining cost per ounce
of gold sold2 of $733.
-
On track to achieve 2023 guidance: Both mining
operations are on track to achieve their 2023 production and cost
guidance, while Tsumeb is tracking toward the low end of its 2023
production guidance and the higher end of its cash cost per tonne
guidance.
-
Significant free cash flow: Generated $59.2
million of cash provided from operating activities and achieved
record quarterly free cash flow of $70.5 million.2
-
Solid adjusted net earnings: Reported net earnings
of $61.7 million ($0.33 per share) and adjusted net earnings2 of
$62.2 million ($0.33 per share).
-
Growing financial position: Ended the quarter with
a strong balance sheet, including $542.0 million of cash, a $150.0
million undrawn revolving credit facility and no debt.
-
Increasing return of capital to shareholders:
Returned $48.9 million, or 36% of free cash flow, to shareholders
during the first half of 2023 through dividends and share
repurchases. Declared second quarter dividend of $0.04 per common
share payable on October 16, 2023 to shareholders of record on
September 30, 2023.
-
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. Received
technical approval for the environmental impact assessment (“EIA”)
for a 69 kV power line and initiated the associated public
consultation process.
-
Strong results from exploration activities:
Results from ongoing drilling activities at the Čoka Rakita
exploration prospect in Serbia reported in July 2023 extended the
deposit to the south and also confirmed and further extended the
high-grade zone. With nine drill rigs currently active on-site and
an additional 30,000 metres of drilling planned, DPM continues to
target a maiden Mineral Resource estimate by year-end 2023.
_____________________________________
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 13 of this news release for more information,
including reconciliations to IFRS measures.
CEO Commentary
“We continued to deliver strong performance in
the second quarter, including solid gold production, excellent
all-in sustaining costs, and a record $70.5 million of free cash
flow generation. Year-to-date, we returned 36% of our free cash
flow to shareholders through our enhanced share buyback program and
our sustainable quarterly dividend,” said David Rae, President and
Chief Executive Officer.
“The most recent results from our ongoing
drilling program at the high-quality Čoka Rakita deposit in Serbia
extended the deposit to the south and also confirmed and further
extended the high-grade zone. We continue to view Čoka Rakita as a
promising prospect within our organic portfolio and we are
aggressively drilling to grow the deposit and test other nearby
targets that share the same geological environment.
“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 13 of this news release.
Key Operating and Financial Highlights
$ millions, except where notedEnded June 30, |
|
Three Months |
|
|
Six Months |
|
|
2023 |
2022 |
Change |
|
2023 |
2022 |
Change |
Operating Highlights |
|
|
|
|
|
|
|
|
Ore Processed |
t |
740,936 |
746,027 |
(1 |
%) |
|
1,478,573 |
1,500,662 |
(1 |
%) |
Metals contained in
concentrate produced: |
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
Chelopech |
oz |
44,463 |
49,245 |
(10 |
%) |
|
79,721 |
90,745 |
(12 |
%) |
Ada Tepe |
oz |
31,843 |
23,659 |
35 |
% |
|
65,166 |
45,074 |
45 |
% |
Total gold in concentrate
produced |
oz |
76,306 |
72,904 |
5 |
% |
|
144,887 |
135,819 |
7 |
% |
Copper |
Klbs |
7,913 |
8,809 |
(10 |
%) |
|
15,090 |
16,502 |
(9 |
%) |
Payable metals in concentrate
sold: |
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
Chelopech |
oz |
33,853 |
39,681 |
(15 |
%) |
|
64,926 |
75,994 |
(15 |
%) |
Ada Tepe |
oz |
31,212 |
23,028 |
36 |
% |
|
63,638 |
44,096 |
44 |
% |
Total payable gold in
concentrate sold |
oz |
65,065 |
62,709 |
4 |
% |
|
128,564 |
120,090 |
7 |
% |
Copper |
Klbs |
6,585 |
7,242 |
(9 |
%) |
|
12,943 |
13,783 |
(6 |
%) |
Cost of sales per tonne of ore
processed(1): |
|
|
|
|
|
|
|
|
Chelopech |
$/t |
62 |
52 |
18 |
% |
|
63 |
58 |
9 |
% |
Ada Tepe |
$/t |
138 |
118 |
17 |
% |
|
138 |
117 |
18 |
% |
Cash cost per tonne of ore
processed(2): |
|
|
|
|
|
|
|
|
Chelopech |
$/t |
50 |
48 |
4 |
% |
|
51 |
48 |
6 |
% |
Ada Tepe |
$/t |
66 |
54 |
22 |
% |
|
66 |
53 |
25 |
% |
Cost of sales per ounce of
gold sold(3) |
$/oz |
929 |
852 |
9 |
% |
|
951 |
937 |
1 |
% |
All-in sustaining cost per
ounce of gold sold(2) |
$/oz |
733 |
792 |
(7 |
%) |
|
802 |
741 |
8 |
% |
Complex concentrate
smelted |
t |
49,483 |
21,054 |
135 |
% |
|
99,130 |
68,297 |
45 |
% |
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
454 |
1,426 |
(68 |
%) |
|
485 |
938 |
(48 |
%) |
Cash
cost per tonne of complex concentrate smelted(2) |
$/t |
343 |
973 |
(65 |
%) |
|
368 |
632 |
(42 |
%) |
Financial Highlights |
|
|
|
|
|
|
|
|
Revenue |
|
167.5 |
134.5 |
25 |
% |
|
323.4 |
288.3 |
12 |
% |
Cost of sales |
|
82.9 |
83.4 |
(1 |
%) |
|
170.4 |
176.6 |
(4 |
%) |
Earnings before income taxes |
|
69.2 |
40.9 |
69 |
% |
|
118.2 |
74.8 |
58 |
% |
Net earnings |
|
61.7 |
33.5 |
84 |
% |
|
108.3 |
60.3 |
80 |
% |
Per share |
|
0.33 |
0.18 |
83 |
% |
|
0.57 |
0.32 |
78 |
% |
Adjusted EBITDA(2) |
|
86.7 |
68.7 |
26 |
% |
|
155.1 |
138.1 |
12 |
% |
Adjusted net earnings(2) |
|
62.2 |
33.3 |
87 |
% |
|
108.3 |
70.3 |
54 |
% |
Per share(2) |
|
0.33 |
0.17 |
94 |
% |
|
0.57 |
0.37 |
54 |
% |
Cash provided from operating
activities |
|
59.2 |
72.5 |
(18 |
%) |
|
130.1 |
151.3 |
(14 |
%) |
Free cash flow(2) |
|
70.5 |
41.2 |
71 |
% |
|
135.5 |
89.9 |
51 |
% |
Capital expenditures incurred(5): |
|
|
|
|
|
|
|
|
Sustaining(6) |
|
8.9 |
21.1 |
(58 |
%) |
|
16.6 |
30.0 |
(45 |
%) |
Growth(7) |
|
6.8 |
7.6 |
(10 |
%) |
|
13.3 |
13.7 |
3 |
% |
Total capital expenditures |
|
15.7 |
28.7 |
(45 |
%) |
|
29.9 |
43.7 |
(31 |
%) |
|
|
|
|
|
|
|
|
|
|
|
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 ounce of gold sold, 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 13 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) Capital expenditures incurred were reported on an
accrual basis and do not represent the cash outlays for the capital
expenditures.6) 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.7) 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 HighlightsA table comparing
production, sales and cash cost measures by asset for the second
quarter and six months ended June 30, 2023 against 2023 guidance is
located on page 10 of this news release.
The Company’s mining operations continued to
perform well and delivered another quarter of strong production.
Gold production at Chelopech increased compared to Q1 2023 as a
result of higher grades, as expected per the mine plan. Ada Tepe
continued to deliver strong performance, with gold production
in-line with expectations. All-in sustaining cost per ounce of gold
sold for the second quarter was at the low-end of the Company’s
2023 guidance range. Both mining operations are on track to achieve
their 2023 production and cost guidance, while Tsumeb is tracking
toward the low end of its 2023 production guidance and the higher
end of its cash cost per tonne guidance.
Highlights include the following:
Chelopech, Bulgaria: Gold
contained in concentrate produced in the second quarter and first
half of 2023 of 44,463 ounces and 79,721 ounces, respectively, was
10% and 12% lower than the corresponding periods in 2022 due
primarily to lower gold grades and recoveries, in-line with the
mine plan. Copper production in the second quarter and first half
of 2023 of 7.9 million pounds and 15.1 million pounds,
respectively, was 10% and 9% lower than the corresponding periods
in 2022 due primarily to lower copper grades.
All-in sustaining cost per ounce of gold sold in
the second quarter and first half of 2023 of $776 and $851,
respectively, increased compared to $754 and $598 in the
corresponding periods in 2022 due primarily to lower by-product
credits, lower volumes of gold sold, higher labour cost and higher
prices for direct materials, as well the timing of cash outlays for
sustaining capital expenditures related to the upgrade of the
tailings management facility, which was
completed during the second quarter, partially offset by
lower treatment and freight charges.
Ada Tepe, Bulgaria: Gold
contained in concentrate produced in the second quarter and first
half of 2023 of 31,843 ounces and 65,166 ounces, respectively, was
35% and 45% higher than the corresponding periods in 2022 due
primarily to mining higher grade zones, in-line with the mine
plan.
All-in sustaining cost per ounce of gold sold in
the second quarter and first half of 2023 of $530 and $508,
respectively, was 15% and 27% lower compared to the corresponding
periods in 2022 due primarily to higher volumes of gold sold.
Consolidated Operating
Highlights
Production: Gold contained in
concentrate produced in the second quarter and first half of 2023
of 76,306 ounces and 144,887 ounces, respectively, was 5% and 7%
higher than the corresponding periods in 2022 due primarily to
higher gold grades at Ada Tepe, partially offset by lower gold
grades and recoveries at Chelopech, in line with mine plans for
both operations.
Copper production in second quarter and first
half of 2023 of 7.9 million pounds and 15.1 million pounds,
respectively, was 10% and 9% lower than the corresponding periods
in 2022 due primarily to lower copper grades.
Deliveries: Payable gold in
concentrate sold in the second quarter and first half of 2023 of
65,065 ounces and 128,564 ounces, respectively, was 4% and 7%
higher than the corresponding periods in 2022 primarily reflecting
higher gold production.
Payable copper in concentrate sold in the second
quarter and first half of 2023 of 6.6 million pounds and 12.9
million pounds, respectively, was 9% and 6% lower than the
corresponding periods in 2022 primarily reflecting lower copper
production.
Complex concentrate: Complex
concentrate smelted in the second quarter and first half of 2023 of
49,483 tonnes and 99,130 tonnes, respectively, was 28,429 tonnes
and 30,833 tonnes higher than the corresponding periods in 2022 due
primarily to the timing of the Ausmelt furnace maintenance
shutdown, which was completed during the second quarter of 2022.
Complex concentrate smelted in the first half of 2023 was below
expectations due to unplanned maintenance in the off-gas system.
The Company is undertaking additional maintenance in the off-gas
system to resolve this issue during the Ausmelt furnace
maintenance, which is currently underway.
Cost measures: Cost of sales in
the second quarter and first half of 2023 of $82.9 million and
$170.4 million, respectively, decreased compared to $83.4 million
and $176.6 million in the corresponding periods in 2022, due
primarily to a stronger U.S. dollar relative to the South African
Rand (“ZAR”) and lower depreciation expense as a result of the
impairment charge in respect of Tsumeb taken in the third quarter
of 2022, partially offset by higher local currency mine operating
costs.
All-in sustaining cost per ounce of gold sold in
the second quarter of 2023 of $733 was 7% lower than the
corresponding period in 2022 due primarily to lower treatment and
freight charges at Chelopech as a result of increased deliveries to
third-party smelters and higher volumes of gold sold, partially
offset by higher local currency operating expenses reflecting
higher labour costs and higher prices for direct materials, and
lower by-product credits as a result of lower volumes and realized
prices of copper sold. All-in sustaining cost per ounce of gold
sold in first half of 2023 of $802 was 8% higher than the
corresponding period in 2022 due primarily to lower by-product
credits as a result of lower volumes and realized prices of copper
sold, higher local currency operating expenses and higher
share-based compensation reflecting DPM’s strong share price
performance, partially offset by lower treatment and freight
charges at Chelopech and higher volumes of gold sold.
Cash cost per tonne of complex concentrate
smelted in the second quarter and first half of 2023 of $343 and
$368, respectively, was 65% and 42% lower than the corresponding
periods in 2022 due primarily to higher volumes of complex
concentrate smelted and a stronger U.S. dollar relative to the
ZAR.
Capital expenditures: Capital
expenditures incurred in the second quarter and first half of 2023
of $15.7 million and $29.9 million, respectively, were 45% and 31%
lower than the corresponding periods in 2022 of $28.7 million and
$43.7 million.
Sustaining capital expenditures incurred in the
second quarter and first half of 2023 of $8.9 million and $16.6
million, respectively, were 58% and 45% lower than the
corresponding periods in 2022 of $21.1 million and $30.0 million.
While overall this was in-line with expectations, these decreases
also reflected the timing of the Ausmelt furnace maintenance
shutdown at Tsumeb.
Growth capital expenditures incurred in the
second quarter and first half of 2023, primarily related to the
Loma Larga gold project, were $6.8 million and $13.3 million,
respectively, compared to $7.6 million and $13.7 million in the
corresponding periods in 2022.
Consolidated Financial
Highlights
Financial results from operations in the second
quarter of 2023 reflected higher volume and prices of gold sold,
lower treatment charges at Chelopech and a strong U.S. dollar
relative to the ZAR, which contributed to the Company’s record
quarterly free cash flow generation.
Revenue: Revenue in the second
quarter and first half of 2023 of $167.5 million and $323.4
million, respectively, was 25% and 12% higher than the
corresponding periods in 2022 due primarily to lower treatment and
freight charges at Chelopech as a result of increased deliveries to
third-party smelters, higher volumes and realized prices of gold
sold, and higher volumes of complex concentrate smelted as a result
of the timing of the Ausmelt furnace maintenance shutdown. This was
partially offset by lower volumes and realized prices of copper
sold at Chelopech.
Net earnings: Net earnings in
the second quarter of 2023 of $61.7 million ($0.33 per share)
increased compared to $33.5 million ($0.18 per share) in the
corresponding period in 2022, due primarily to higher revenue and
higher interest income, partially offset by higher planned
exploration and evaluation expenses. Net earnings in first half of
2023 of $108.3 million ($0.57 per share) increased compared to
$60.3 million ($0.32 per share) in the corresponding period in 2022
due primarily to higher revenue, lower cost of sales and higher
interest income, partially offset by higher planned exploration and
evaluation expenses and higher share-based compensation expenses as
a result of DPM’s strong share price performance. Net earnings in
the second quarter and first half of 2022 also included
restructuring costs related to a cost optimization initiative at
Tsumeb.
Adjusted net earnings: Adjusted
net earnings in the second quarter and first half of 2023 of $62.2
million ($0.33 per share) and $108.3 million ($0.57 per share),
respectively, increased compared to $33.3 million ($0.17 per share)
and $70.3 million ($0.37 per share) in the corresponding periods in
2022 due primarily to the same factors affecting net earnings,
except for adjusting items primarily related to the Tsumeb
restructuring costs in 2022.
Earnings before income taxes:
Earnings before income taxes in the second quarter and first half
of 2023 of $69.2 million and $118.2 million, respectively,
increased compared to $40.9 million and $74.8 million in the
corresponding periods in 2022, reflecting the same factors that
affected net earnings, except for income taxes, which are
excluded.
Adjusted EBITDA: Adjusted
EBITDA in the second quarter and first half of 2023 of $86.7
million and $155.1 million, respectively, increased compared to
$68.6 million and $138.1 million in the corresponding periods 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 the
second quarter and first half of 2023 of $59.2 million and $130.1
million, respectively, was 18% and 14% lower than the corresponding
periods in 2022, due primarily to the timing of deliveries and
subsequent receipt of cash, and the timing of payments to
suppliers, partially offset by higher earnings generated.
Free cash flow: Free cash flow
in the second quarter and first half of 2023 of $70.5 million and
$135.5 million, respectively, was $29.3 million and $45.6 million
higher than the corresponding periods in 2022, due primarily to
higher earnings generated and timing of cash outlays for sustaining
capital expenditures. 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.
Cash and cash equivalents increased by $108.8
million to $542.0 million in the first half of 2023 due primarily
to cash generated in the period, plus the cash proceeds from the
disposition of B2Gold Corp (“B2Gold”) shares following its
acquisition of Sabina Gold and Silver Corp (“Sabina”), partially
offset by cash outlays for capital expenditures, dividends paid and
shares repurchased, as well as changes in working capital.
On April 19, 2023, DPM’s 6.5% ownership interest
in Sabina was exchanged for 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”).
During the first half of the year, the Company
returned a total of $48.9 million to shareholders, representing
approximately 36% of its free cash flow generated during this
period. This included the repurchase of 4,798,095 shares at an
average price of $7.05 (Cdn$9.50) per share for a total value of
approximately $33.7 million, and $15.2 million of dividends
paid.
As at June 30, 2023, the Company had an
automatic share repurchase plan in place under the NCIB with its
designated broker which terminated on July 26, 2023, pursuant to
which the Company repurchased an additional 1,169,923 shares in
July 2023, all of which were cancelled as at August 1, 2023. As at
June 30, 2023, the Company recognized a liability of $8.1 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
through the NCIB. As at August 1, 2023, the shares repurchased
totalled $42.1 million. 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 August 1,
2023, the Company’s Board of Directors declared a dividend of $0.04
per common share payable on October 16, 2023 to shareholders of
record on September 30, 2023.
Development Projects Update
Loma Larga, EcuadorDPM
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.
Drilling activities, as well as the Citizens
Participation Process for the project 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.
During the second quarter, the EIA for the 69 kV
power line received technical approval, and the associated public
consultation process has been initiated.
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 Loma Larga project.
_________________________________________
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.sedarplus.ca.
Exploration
Čoka Rakita, SerbiaIn Serbia,
exploration activities focused on an accelerated drilling program
at the Čoka Rakita deposit, with nine drill rigs currently in
operation. In mid-July, the Company released additional assay
results which extended the deposit to the south and continued to
confirm and further extend the high-grade zone.
The 40,000-metre infill and extensional drill
program is largely complete, including infill drilling at 60-metre
by 60-metre spacing. DPM has commenced an additional 30,000-metre
infill drilling program at a 30-metre by 30-metre spacing.
DPM expects to complete a maiden Mineral
Resource estimate for Čoka Rakita by year-end 2023, and is
progressing activities to accelerate the advancement of the
project, including geotechnical drilling, metallurgical testwork
and evaluation of potential portal locations for an exploration
decline. The Company has also commenced scout drilling to test
other camp-wide targets near Čoka Rakita and is continuing its
10,000-metre scout drill program on the Umka licence.
Tierras Coloradas, EcuadorAt
the Tierras Coloradas licence in Ecuador, the Company expects to
commence a 10,000-metre drilling program in August 2023. This
program is designed to follow-up results reported during the first
quarter which confirmed two well-mineralized high-grade vein
systems that remain open in multiple directions. The primary focus
will be to further assess the extension and geometry of the
Aparecida and La Tuna vein systems and to test additional recently
discovered high-grade vein and soil anomalies.
Chelopech, BulgariaDuring the
second quarter of 2023, DPM continued to advance the Chelopech
brownfield exploration program, with eight drill rigs currently
drilling along the Brevene exploration licence and Sharlo Dere
target within the mine concession. Approximately 15,600 metres of
surface diamond drilling were completed, with 17 holes completed
and eight holes ongoing.
Ada Tepe, BulgariaDuring the
second quarter of 2023, exploration activities at the Ada Tepe camp
were focused on target delineation campaigns on the Surnak and
Kupel prospects within the Khan Krum mine concession, as well as
the Chiirite and Lada exploration licences. This included
systematic geological mapping, rock sampling, trenching, drilling
and 3D modelling.
At the newly granted Krumovitsa exploration
licence, permitting for 29 drill sites is ongoing, and drilling at
three priority targets is planned to commence in early August 2023.
The Company is planning an aggressive target delineation and scout
drilling program at Krumovitsa, with 15,000 metres expected to be
completed in the second half of 2023.
2023 Guidance and Three-year
Outlook
With solid operating performance from the Chelopech
and Ada Tepe mines in the second quarter and first half of 2023,
DPM is on track to meet its 2023 guidance.
The three-year outlook previously issued in
DPM’s Management’s Discussion and Analysis (“MD&A”) for the
year ended December 31, 2022 remains unchanged, except for the
following updates to the Company’s guidance for 2023:
-
Based on positive results, exploration and evaluation expenses are
now expected to be between $38 million and $46 million, up from the
previous guidance range of $25 million to $30 million. This is due
primarily to increased drilling activities and early stage
technical work at Čoka Rakita in Serbia, as well as increased
drilling activities at Tierras Coloradas in Ecuador, as the
exploration programs for both projects have been expanded following
the initial guidance.
-
Growth capital expenditures related to the Loma Larga gold project
are now expected to be between $18 million and $22 million, up from
the previous guidance range of $10 million to $14 million due
primarily to additional scope of work for the optimization phase of
the project, as well as increased activities related to stakeholder
engagement.
Selected Production, Delivery and Cost Performance
versus Guidance
|
|
Q2 2023 |
YTD June 2023 |
2023ConsolidatedGuidance |
|
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
Ore processed |
Kt |
550.9 |
190.0 |
- |
740.9 |
1,097 |
381.6 |
- |
1,478.6 |
2,820 – 3,010 |
Metals
contained in concentrate produced |
|
|
|
|
|
|
|
|
|
|
Gold |
Koz |
44.5 |
31.8 |
- |
76.3 |
79.7 |
65.2 |
- |
144.9 |
270 – 315 |
Copper |
Mlbs |
7.9 |
- |
- |
7.9 |
15.1 |
- |
- |
15.1 |
30 – 35 |
Payable
metals in concentrate sold |
|
|
|
|
|
|
|
|
|
|
Gold |
Koz |
33.9 |
31.2 |
- |
65.1 |
64.9 |
63.7 |
- |
128.6 |
245 – 290 |
Copper |
Mlbs |
6.6 |
- |
- |
6.6 |
12.9 |
- |
- |
12.9 |
26 – 31 |
All-in
sustaining cost per ounce of gold sold(1) |
$/oz |
776 |
530 |
- |
733 |
851 |
508 |
- |
802 |
700 – 860 |
Complex
concentrate smelted |
Kt |
- |
- |
49.5 |
49.5 |
- |
- |
99.1 |
99.1 |
200 – 230 |
Cash cost per tonne of complex concentrate smelted |
$/t |
- |
- |
343 |
343 |
- |
- |
368 |
368 |
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.
Second Quarter 2023 Results Conference Call and
Webcast
At 9 a.m. EDT on Wednesday, August 2, 2023, DPM
will host a conference call and audio webcast to discuss the
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 |
Wednesday, August 2, 20239 a.m. EDT |
Call registration |
https://register.vevent.com/register/BI2f7e64048f264860a6672fee91c83fd2 |
Webcast link |
https://edge.media-server.com/mmc/p/wu2t5ro7 |
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 and six months ended June 30, 2023 are posted on the
Company’s website at www.dundeeprecious.com and have been filed on
SEDAR+ at www.sedarplus.ca.
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; 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 FS; uncertainties with respect to timing of the
updated Loma Larga FS; 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.sedarplus.ca.
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 June 30, 2023 |
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
550,888 |
|
190,048 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
49,483 |
|
|
Cost of sales |
|
34,192 |
|
26,243 |
|
22,465 |
|
82,900 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(6,655 |
) |
(13,648 |
) |
(846 |
) |
|
Change in concentrate inventory |
|
55 |
|
(19 |
) |
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(4,648 |
) |
|
Mine cash cost / Smelter cash cost(2) |
|
27,592 |
|
12,576 |
|
16,971 |
|
|
Cost of sales per tonne of ore processed(3) |
$/t |
62 |
|
138 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
50 |
|
66 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
454 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
343 |
|
|
$ thousands, unless otherwise indicatedFor the three months ended
June 30, 2022 |
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
529,003 |
|
217,024 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
21,054 |
|
|
Cost of sales(5) |
|
27,744 |
|
25,673 |
|
30,027 |
|
83,444 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(6,119 |
) |
(14,139 |
) |
(6,440 |
) |
|
Change in concentrate inventory |
|
3,976 |
|
92 |
|
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(3,097 |
) |
|
Mine cash cost / Smelter cash cost(2) |
|
25,601 |
|
11,626 |
|
20,490 |
|
|
Cost of sales per tonne of ore processed(3) |
$/t |
52 |
|
118 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
48 |
|
54 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
1,426 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
973 |
|
|
|
|
|
|
|
|
|
|
|
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) For the three months ended June 30,
2022, the Bulgarian government subsidy for electricity of $3.4
million was reclassified from other income and expense to cost of
sales to conform with current year presentation.
|
|
|
|
|
|
|
|
$ thousands, unless otherwise indicatedFor the six months
ended June 30, 2023 |
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
1,097,018 |
|
381,555 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
99,130 |
|
|
Cost of sales |
|
69,504 |
|
52,801 |
|
48,056 |
|
170,361 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(13,268 |
) |
(27,540 |
) |
(1,699 |
) |
|
Change in concentrate inventory |
|
(716 |
) |
(99 |
) |
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(9,905 |
) |
|
Mine cash cost / Smelter cash cost(2) |
|
55,520 |
|
25,162 |
|
36,452 |
|
|
Cost of sales per tonne of ore processed(3) |
$/t |
63 |
|
138 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
51 |
|
66 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
|
|
485 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
368 |
|
|
$ thousands, unless otherwise indicatedFor the six months ended
June 30, 2022 |
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
1,069,895 |
|
430,767 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
68,297 |
|
|
Cost of sales(5) |
|
61,937 |
|
50,598 |
|
64,039 |
|
176,574 |
Other non-cash
expenses(6) |
|
(243 |
) |
- |
|
- |
|
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(12,055 |
) |
(27,719 |
) |
(10,725 |
) |
|
Change in concentrate inventory |
|
1,960 |
|
127 |
|
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(10,154 |
) |
|
Mine cash cost / Smelter cash cost(2) |
|
51,599 |
|
23,006 |
|
43,160 |
|
|
Cost of sales per tonne of ore processed(3) |
$/t |
58 |
|
117 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
48 |
|
53 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
938 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
632 |
|
|
|
|
|
|
|
|
|
|
|
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) For the six months ended June 30, 2022,
the Bulgarian government subsidy for electricity of $7.5 million
was reclassified from other income and expense to cost of sales to
conform with current year presentation.6) 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).
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 June 30, 2023 |
|
Chelopech |
|
Ada Tepe |
|
Consolidated |
|
Cost of sales(1) |
|
34,192 |
|
26,243 |
|
60,435 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(6,655 |
) |
(13,648 |
) |
(20,303 |
) |
Treatment charges, transportation and other related selling
costs(2) |
|
19,649 |
|
1,490 |
|
21,139 |
|
By-product credits(3) |
|
(25,754 |
) |
(306 |
) |
(26,060 |
) |
Mine cash cost of sales |
|
21,432 |
|
13,779 |
|
35,211 |
|
Rehabilitation related
accretion and depreciation expenses(4) |
|
315 |
|
293 |
|
608 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
4,890 |
|
Cash outlays for sustaining
capital(6) |
|
4,251 |
|
2,210 |
|
6,461 |
|
Cash
outlays for leases(6) |
|
282 |
|
267 |
|
549 |
|
All-in sustaining cost |
|
26,280 |
|
16,549 |
|
47,719 |
|
Payable gold in concentrate sold(7) |
oz |
33,853 |
|
31,212 |
|
65,065 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
1,010 |
|
841 |
|
929 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
633 |
|
441 |
|
541 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
776 |
|
530 |
|
733 |
|
$ thousands, unless otherwise indicatedFor the three months ended
June 30, 2022 |
|
Chelopech |
Ada Tepe |
Consolidated |
Cost of sales(1)(9) |
|
27,744 |
|
25,673 |
|
53,417 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(6,119 |
) |
(14,139 |
) |
(20,258 |
) |
Treatment charges, transportation and other |
|
|
|
|
|
|
|
related selling costs(2) |
|
37,233 |
|
843 |
|
38,076 |
|
By-product credits(3) |
|
(32,752 |
) |
(185 |
) |
(32,937 |
) |
Mine cash cost of sales |
|
26,106 |
|
12,192 |
|
38,298 |
|
Rehabilitation related
accretion expenses(4) |
|
95 |
|
48 |
|
143 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
5,411 |
|
Cash outlays for sustaining
capital(6) |
|
3,496 |
|
1,800 |
|
5,296 |
|
Cash
outlays for leases(6) |
|
237 |
|
295 |
|
532 |
|
All-in sustaining cost |
|
29,934 |
|
14,335 |
|
49,680 |
|
Payable gold in concentrate sold(7) |
oz |
39,681 |
|
23,028 |
|
62,709 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
699 |
|
1,115 |
|
852 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
658 |
|
529 |
|
611 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
754 |
|
623 |
|
792 |
|
|
|
|
|
|
|
|
|
1) Included in cost of sales
were share-based compensation expenses of $0.1 million (2022 - $0.1
million) for the three months ended June 30,
2023.2) Represents revenue deductions for
treatment charges, refining charges, penalties, freight and final
settlements to adjust for any differences relative to the
provisional invoice.3) Represents copper and
silver revenue.4) Included in cost of sales and
finance cost in the condensed interim consolidated statements of
earnings (loss).5) Represents an allocated portion
of DPM’s general and administrative expenses, including a
share-based compensation reversal of $0.3 million (2022 – expense
of $0.01 million) for the three months ended June 30, 2023, 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.6) Included in cash used in investing
activities and financing activities, respectively, in the condensed
interim consolidated statements of cash
flows.7) Includes payable gold in pyrite
concentrate sold in the second quarter of 2023 of 8,454 ounces
(2022 – 12,088 ounces).8) Represents cost of
sales, mine cash cost of sales and all-in sustaining cost,
respectively, divided by payable gold in concentrate
sold.9) For the three months ended June 30, 2022,
the Bulgarian government subsidy for electricity of $3.4 million
was reclassified from other income and expense to cost of sales to
conform with current year presentation.
|
|
|
|
|
|
|
|
$ thousands, unless otherwise indicatedFor the six months
ended June 30, 2023 |
|
Chelopech |
|
Ada Tepe |
|
Consolidated |
|
Cost of sales(1) |
|
69,504 |
|
52,801 |
|
122,305 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(13,268 |
) |
(27,540 |
) |
(40,808 |
) |
Treatment charges, transportation and other related selling
costs(2) |
|
40,925 |
|
2,566 |
|
43,491 |
|
By-product credits(3) |
|
(52,350 |
) |
(628 |
) |
(52,978 |
) |
Mine cash cost of sales |
|
44,811 |
|
27,199 |
|
72,010 |
|
Rehabilitation related
accretion and depreciation expenses(4) |
|
620 |
|
597 |
|
1,217 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
15,560 |
|
Cash outlays for sustaining
capital(6) |
|
9,243 |
|
3,966 |
|
13,209 |
|
Cash
outlays for leases(6) |
|
555 |
|
556 |
|
1,111 |
|
All-in sustaining cost |
|
55,229 |
|
32,318 |
|
103,107 |
|
Payable gold in concentrate sold(7) |
oz |
64,926 |
|
63,638 |
|
128,564 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
1,071 |
|
830 |
|
951 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
690 |
|
427 |
|
560 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
851 |
|
508 |
|
802 |
|
$ thousands, unless otherwise indicatedFor the six months ended
June 30, 2022 |
|
Chelopech |
|
Ada Tepe |
|
Consolidated |
|
Cost of sales(1)(10) |
|
61,937 |
|
50,598 |
|
112,535 |
|
Add/(deduct): |
|
|
|
|
Depreciation and
amortization |
|
(12,055 |
) |
(27,719 |
) |
(39,774 |
) |
Other non-cash expenses(9) |
|
(243 |
) |
- |
|
(243 |
) |
Treatment charges, transportation and other |
|
|
|
|
|
|
|
related selling costs(1) |
|
52,739 |
|
1,481 |
|
54,220 |
|
By-product credits(2) |
|
(63,760 |
) |
(385 |
) |
(64,145 |
) |
Mine cash cost of sales |
|
38,618 |
|
23,975 |
|
62,593 |
|
Rehabilitation related
accretion expenses(4) |
|
179 |
|
86 |
|
265 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
12,645 |
|
Cash outlays for sustaining
capital(6) |
|
6,185 |
|
6,146 |
|
12,331 |
|
Cash
outlays for leases(6) |
|
478 |
|
627 |
|
1,105 |
|
All-in sustaining cost |
|
45,460 |
|
30,834 |
|
88,939 |
|
Payable gold in concentrate sold(7) |
oz |
75,994 |
|
44,096 |
|
120,090 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
815 |
|
1,147 |
|
937 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
508 |
|
544 |
|
521 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
598 |
|
699 |
|
741 |
|
1) Included in cost of sales
were share-based compensation expenses of $1.1 million (2022 - $0.6
million) for the six months ended June 30,
2023.2) Represents revenue deductions for
treatment charges, refining charges, penalties, freight and final
settlements to adjust for any differences relative to the
provisional invoice.3) Represents copper and
silver revenue.4) Included in cost of sales and
finance cost in the condensed interim consolidated statements of
earnings (loss).5) Represents an allocated portion
of DPM’s general and administrative expenses, including share-based
compensation expenses of $6.3 million (2022 - $1.7 million) for the
six months ended June 30, 2023, 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.6) Included in cash used in
investing activities and financing activities, respectively, in the
condensed interim consolidated statements of cash
flows.7) Includes payable gold in pyrite
concentrate sold in first six months 2023 of 17,426 ounces (2022 –
19,879 ounces).8) Represents cost of sales, mine
cash cost of sales and all-in sustaining cost, respectively,
divided by payable gold in concentrate
sold.9) 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).10) For the six months ended June
30, 2022, the Bulgarian government subsidy for electricity of $7.5
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 |
Three Months |
|
Six Months |
Ended June 30, |
2023 |
2022 |
|
|
2023 |
2022 |
Net earnings |
61,736 |
33,492 |
|
|
108,336 |
60,317 |
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 |
- |
1,797 |
|
|
- |
2,185 |
Tsumeb restructuring costs, net of income taxes of $nil |
- |
(2,023 |
) |
|
- |
7,806 |
Adjusted net earnings |
62,200 |
33,266 |
|
|
108,336 |
70,308 |
Basic earnings per share |
0.33 |
0.18 |
|
|
0.57 |
0.32 |
Adjusted basic earnings per share |
0.33 |
0.17 |
|
|
0.57 |
0.37 |
|
|
|
|
|
|
|
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 |
|
Six Months |
Ended June 30, |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Earnings before income taxes |
69,244 |
|
40,872 |
|
|
118,242 |
|
74,762 |
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
21,716 |
|
27,248 |
|
|
43,611 |
|
51,502 |
|
Tsumeb restructuring costs |
- |
|
(2,023 |
) |
|
- |
|
7,806 |
|
Finance costs |
1,715 |
|
1,475 |
|
|
3,344 |
|
2,838 |
|
Interest income |
(6,021 |
) |
(716 |
) |
|
(10,118 |
) |
(965 |
) |
Net losses on Sabina special warrants |
- |
|
1,797 |
|
|
- |
|
2,185 |
|
Adjusted EBITDA |
86,654 |
|
68,653 |
|
|
155,079 |
|
138,128 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Six Months |
Ended June 30, |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Cash provided from operating activities |
59,177 |
|
72,530 |
|
|
130,077 |
|
151,292 |
|
Add: |
|
|
|
|
|
Changes in working capital |
22,505 |
|
(15,455 |
) |
|
27,031 |
|
(33,377 |
) |
Cash provided from operating activities, before changes in working
capital |
81,682 |
|
57,075 |
|
|
157,708 |
|
117,915 |
|
Cash outlays for sustaining
capital(1) |
(9,437 |
) |
(14,140 |
) |
|
(18,096 |
) |
(24,537 |
) |
Principal repayments related
to leases |
(1,356 |
) |
(1,143 |
) |
|
(2,634 |
) |
(2,274 |
) |
Interest
payments(1) |
(444 |
) |
(586 |
) |
|
(896 |
) |
(1,174 |
) |
Free cash flow |
70,445 |
|
41,206 |
|
|
135,482 |
|
89,930 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Six Months |
Ended June 30, |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Total revenue |
|
167,523 |
|
134,483 |
|
|
323,356 |
|
288,284 |
|
Add/(deduct): |
|
|
|
|
|
|
Tsumeb revenue |
|
(35,005 |
) |
(25,966 |
) |
|
(64,470 |
) |
(57,059 |
) |
Treatment charges and other deductions(1) |
|
21,139 |
|
38,075 |
|
|
43,491 |
|
54,219 |
|
Silver revenue |
|
(1,249 |
) |
(918 |
) |
|
(2,329 |
) |
(2,152 |
) |
Revenue from gold and copper |
|
152,408 |
|
145,674 |
|
|
300,048 |
|
283,292 |
|
Revenue from gold |
|
127,597 |
|
113,655 |
|
|
249,398 |
|
221,300 |
|
Payable gold in concentrate
sold |
oz |
65,065 |
|
62,709 |
|
|
128,564 |
|
120,090 |
|
Average realized gold
price |
$/oz |
1,961 |
|
1,812 |
|
|
1,940 |
|
1,843 |
|
Revenue from copper |
|
24,811 |
|
32,019 |
|
|
50,650 |
|
61,992 |
|
Payable copper in concentrate
sold |
Klbs |
6,585 |
|
7,242 |
|
|
12,943 |
|
13,783 |
|
Average
realized copper price |
$/lb |
3.77 |
|
4.42 |
|
|
3.91 |
|
4.50 |
|
|
|
|
|
|
|
|
|
|
|
|
1) Represents revenue
deductions for treatment charges, refining charges, penalties,
freight and final settlements to adjust for any differences
relative to the provisional invoice.
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