Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or
the “Company”) announced its operating and financial results for
the third quarter and first nine months ended September 30, 2023.
Highlights(Unless otherwise stated, all
monetary figures in this news release are expressed in U.S.
dollars.)
- Strong metals production: Produced 74,102
ounces of gold and 7.2 million pounds of copper.
- All-in sustaining cost: Reported cost of sales
per ounce of gold sold1 of $901 and an all-in sustaining cost per
ounce of gold sold2 of $911.
- On track to achieve 2023 guidance: Both mining
operations are on track to achieve their 2023 production and cost
guidance, while Tsumeb is forecast to be below its 2023 production
guidance range and at the high end of its cash cost per tonne
guidance range.
- Significant free cash flow: Generated $67.4
million of cash provided from operating activities and quarterly
free cash flow2 of $44.6 million, bringing year-to-date cash
provided from operating activities to $197.5 million and
year-to-date free cash flow to $180.1 million.
- Solid adjusted net earnings: Reported net
earnings of $27.1 million ($0.15 per share) and adjusted net
earnings2 of $27.1 million ($0.15 per share2).
- Growing financial position: Ended the quarter
with a strong balance sheet, including $562.7 million of cash, a
$150.0 million undrawn revolving credit facility, and no debt.
- Increasing return of capital to shareholders:
Returned $76.1 million, or 42% of free cash flow, to
shareholders during the first nine months of 2023 through dividends
paid and payments for shares repurchased. Declared fourth quarter
dividend of $0.04 per common share payable on January 15, 2024
to shareholders of record on December 31, 2023.
- Development projects: Completed an investment
protection agreement (“IPA”) for the Loma Larga gold project and
advanced permitting for the 69 kV power line. DPM will continue to
progress the updated feasibility study (“FS”) beyond the previously
stated timeline ending in 2023 to pursue additional optimization
opportunities and potentially incorporate the results of drilling
once these activities are able to resume.
- Strong results from exploration activities:
Results from ongoing drilling activities at the Čoka Rakita
exploration prospect in Serbia locally extended the deposit to the
west and continue to confirm the continuity of the mineralization.
DPM expects to complete a maiden Mineral Resource estimate by the
end of 2023 and is progressing activities to accelerate the
advancement of the project.
_________________________________
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, adjusted net earnings and adjusted basic earnings per share
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 16 of this news release for
more information, including reconciliations to IFRS measures.
CEO Commentary
“With strong gold production, including record
quarterly performance from Ada Tepe, we generated over $180 million
of free cash flow year-to-date, demonstrating the quality of our
assets and strength of our operating teams,” said David Rae,
President and Chief Executive Officer. “Our mining operations are
on track to achieve their 2023 guidance for production and all-in
sustaining cost, and we continue to be well-positioned as one of
the lowest-cost gold producers.
“During the quarter, we continued to return a
significant portion of our free cash flow to our shareholders,
approximately 42% year-to-date, through our enhanced share buyback
program and our sustainable quarterly dividend.
“Our infill and extensional drilling programs at
the Čoka Rakita project are advancing well, and we are on track to
deliver the maiden Mineral Resource estimate for the project before
the end of 2023. We continue to be excited by Čoka Rakita’s
potential and we are progressing activities to accelerate the
development of this high-quality organic growth prospect.”
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 (loss) before interest, 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 16 of this news release.
Key Operating and Financial Highlights
$ millions, except where notedEnded September
30, |
|
Three Months |
|
Nine Months |
|
2023 |
2022 |
|
Change |
|
2023 |
2022 |
Change |
Operating
Highlights |
|
|
|
|
|
|
|
|
Ore Processed |
t |
738,614 |
731,880 |
|
1 |
% |
|
2,217,187 |
2,232,542 |
(1 |
%) |
Metals contained in
concentrate produced: |
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
Chelopech |
oz |
40,280 |
43,051 |
|
(6 |
%) |
|
120,001 |
133,796 |
(10 |
%) |
Ada Tepe |
oz |
33,822 |
20,819 |
|
62 |
% |
|
98,988 |
65,893 |
50 |
% |
Total gold in concentrate
produced |
oz |
74,102 |
63,870 |
|
16 |
% |
|
218,989 |
199,689 |
10 |
% |
Copper |
Klbs |
7,228 |
6,897 |
|
5 |
% |
|
22,318 |
23,399 |
(5 |
%) |
Payable metals in concentrate
sold: |
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
Chelopech |
oz |
34,660 |
36,383 |
|
(5 |
%) |
|
99,586 |
112,377 |
(11 |
%) |
Ada Tepe |
oz |
32,955 |
20,393 |
|
62 |
% |
|
96,593 |
64,489 |
50 |
% |
Total payable gold in
concentrate sold |
oz |
67,615 |
56,776 |
|
19 |
% |
|
196,179 |
176,866 |
11 |
% |
Copper |
Klbs |
6,699 |
6,715 |
|
(0 |
%) |
|
19,642 |
20,498 |
(4 |
%) |
Cost of sales per tonne of ore
processed(1): |
|
|
|
|
|
|
|
|
Chelopech |
$/t |
63 |
63 |
|
0 |
% |
|
63 |
60 |
5 |
% |
Ada Tepe |
$/t |
138 |
122 |
|
13 |
% |
|
138 |
119 |
16 |
% |
Cash cost per tonne of ore
processed(2): |
|
|
|
|
|
|
|
|
Chelopech |
$/t |
50 |
51 |
|
(2 |
%) |
|
50 |
49 |
2 |
% |
Ada Tepe |
$/t |
65 |
55 |
|
18 |
% |
|
66 |
54 |
22 |
% |
Cost of sales per ounce of
gold sold(3) |
$/oz |
901 |
1,039 |
|
(13 |
%) |
|
934 |
970 |
(4 |
%) |
All-in sustaining cost per
ounce of gold sold(2) |
$/oz |
911 |
991 |
|
(8 |
%) |
|
840 |
839 |
0 |
% |
Complex concentrate
smelted |
t |
21,782 |
63,990 |
|
(66 |
%) |
|
120,912 |
132,287 |
(9 |
%) |
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
1,061 |
481 |
|
121 |
% |
|
589 |
717 |
(18 |
%) |
Cash
cost per tonne of complex concentrate smelted(2) |
$/t |
921 |
297 |
|
210 |
% |
|
467 |
470 |
(1 |
%) |
Financial Highlights |
|
|
|
|
|
|
|
|
Revenue |
|
135.0 |
128.6 |
|
5 |
% |
|
458.4 |
416.9 |
10 |
% |
Cost of sales |
|
84.0 |
89.8 |
|
(6 |
%) |
|
254.4 |
266.3 |
(4 |
%) |
Earnings before income taxes |
|
34.5 |
(53.7 |
) |
164 |
% |
|
152.8 |
21.1 |
624 |
% |
Net earnings |
|
27.1 |
(57.7 |
) |
147 |
% |
|
135.5 |
2.6 |
5,104 |
% |
Per share |
|
0.15 |
(0.30 |
) |
150 |
% |
|
0.72 |
0.01 |
7,100 |
% |
Adjusted EBITDA(2) |
|
52.5 |
56.4 |
|
(7 |
%) |
|
207.5 |
194.5 |
7 |
% |
Adjusted net earnings(2) |
|
27.1 |
25.3 |
|
7 |
% |
|
135.5 |
95.6 |
42 |
% |
Per share(2) |
|
0.15 |
0.13 |
|
15 |
% |
|
0.72 |
0.50 |
44 |
% |
Cash provided from operating
activities |
|
67.4 |
31.5 |
|
114 |
% |
|
197.5 |
182.8 |
8 |
% |
Free cash flow(2) |
|
44.6 |
43.2 |
|
3 |
% |
|
180.1 |
133.2 |
35 |
% |
Capital expenditures incurred(5): |
|
|
|
|
|
|
|
|
Sustaining(6) |
|
16.8 |
11.6 |
|
45 |
% |
|
33.4 |
41.5 |
(20 |
%) |
Growth(7) |
|
6.4 |
7.5 |
|
(14 |
%) |
|
19.7 |
21.2 |
(7 |
%) |
Total capital expenditures |
|
23.2 |
19.1 |
|
22 |
% |
|
53.1 |
62.8 |
(15 |
%) |
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 16 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 third
quarter and nine months ended September 30, 2023 against 2023
guidance is located on page 12 of this news release.
In the third quarter of 2023, the Company’s
mining operations continued to perform well and delivered another
quarter of strong production. Ada Tepe achieved record quarterly
gold production, reflecting higher grades in-line with the mine
plan, and production from Chelopech was in-line with expectations.
At Tsumeb, the planned Ausmelt furnace maintenance was completed
during the quarter and the smelter resumed operations and ramped up
to full production towards the end of September. Both mining
operations are on track to achieve their 2023 production and cost
guidance, while Tsumeb is forecast to be below its 2023 production
guidance range and towards the high end of its cash cost per tonne
guidance range.
Highlights include the following:
Chelopech, Bulgaria: Gold
contained in concentrate produced in the third quarter and first
nine months of 2023 of 40,280 ounces and 120,001 ounces,
respectively, was 6% and 10% lower than the corresponding periods
in 2022 due primarily to lower gold grades, partially offset by
higher volumes of ore processed, in-line with the mine plan. Copper
production in the third quarter of 2023 of 7.2 million pounds was
5% higher than the corresponding period in 2022 due primarily to
higher volumes of ore processed. Copper production in the first
nine months of 2023 of 22.3 million pounds was 5% lower than the
corresponding period in 2022 due primarily to lower copper grades,
partially offset by higher volumes of ore processed.
All-in sustaining cost per ounce of gold sold in
the third quarter of 2023 of $1,120 increased compared to $1,046 in
the corresponding period in 2022 due primarily to lower volumes of
gold sold and a stronger Euro relative to the U.S. dollar.
All-in sustaining cost per ounce of gold sold in
the first nine months of 2023 of $944 increased compared to $765 in
the corresponding period in 2022 due primarily to lower by-product
credits, lower volumes of gold sold, higher costs for labour and
direct materials, and higher cash outlays for sustaining capital
expenditures, partially offset by lower treatment and freight
charges.
Ada Tepe, Bulgaria: Gold
contained in concentrate produced in the third quarter and first
nine months of 2023 of 33,822 ounces and 98,988 ounces,
respectively, was 62% and 50% higher than the corresponding periods
in 2022 due primarily to mining higher grade zones, partially
offset by lower volumes of ore processed, in-line with the mine
plan. The Ada Tepe mine achieved record production for both the
quarter and the first nine months of the year.
All-in sustaining cost per ounce of gold sold in
the third quarter and first nine months of 2023 of $509 and $508,
respectively, was 32% and 30% lower than the corresponding periods
in 2022 due primarily to higher volumes of gold sold.
Consolidated Operating Highlights
Production:
Gold contained in concentrate produced in the third quarter and
first nine months of 2023 of 74,102 ounces and 218,989 ounces,
respectively, was 16% and 10% higher than the corresponding periods
in 2022 due primarily to mining in higher grade zones at Ada Tepe,
partially offset by lower gold grades at Chelopech, in-line with
the mine plans for both operations.
Copper production in the third quarter of 2023
of 7.2 million pounds was 5% higher than the corresponding period
in 2022 due primarily to higher volumes of ore processed. Copper
production in the first nine months of 2023 of 22.3 million pounds
was 5% lower than the corresponding period in 2022 due primarily to
lower copper grades, partially offset by higher volumes of ore
processed.
Deliveries: Payable gold in
concentrate sold in the third quarter and first nine months of 2023
of 67,615 ounces and 196,179 ounces, respectively, was 19% and 11%
higher than the corresponding periods in 2022 primarily reflecting
higher gold production.
Payable copper in concentrate sold in the third
quarter of 2023 was comparable to the corresponding period in 2022.
Payable copper in the first nine months of 2023 of 19.6 million
pounds was 4% lower than the corresponding period in 2022
primarily reflecting lower copper production.
Complex concentrate: Complex
concentrate smelted in the third quarter of 2023 of 21,782 tonnes
was 42,208 tonnes lower than the corresponding period in 2022 due
primarily to the timing of the Ausmelt furnace maintenance
shutdown, which was completed during the third quarter of 2023
compared to the second quarter of 2022. Complex concentrate smelted
in the first nine months of 2023 of 120,912 tonnes was 11,375
tonnes lower than the corresponding period in 2022 due primarily to
unplanned downtime earlier in 2023, which was related to water
leaks in the off-gas system. Following the completion of the
maintenance work in the third quarter of 2023, Tsumeb resumed
operations and ramped up to full production towards the end of
September. While complex concentrate smelted is expected to
increase in the fourth quarter, reflecting improved operating
performance as a result of the maintenance work, it is forecast to
be below the guidance range for the year.
Cost measures: Cost of sales in
the third quarter of 2023 of $84.0 million decreased compared to
$89.8 million in the corresponding period in 2022 due primarily to
lower depreciation expense as a result of the impairment charge in
respect of Tsumeb taken in the third quarter of 2022 and lower
operating costs at the smelter as a result of the maintenance
shutdown in the third quarter of 2023. Cost of sales in first nine
months of 2023 of $254.4 million decreased compared to $266.3
million in the corresponding period in 2022 due primarily to lower
depreciation expense and lower operating costs at the smelter as a
result of unplanned downtime at Tsumeb, partially offset by higher
local currency mine operating costs reflecting higher costs for
labour and direct materials.
All-in sustaining cost per ounce of gold sold in
the third quarter of 2023 of $911 was 8% lower than the
corresponding period in 2022 due primarily to higher volumes of
gold sold, partially offset by a stronger Euro relative to the U.S.
dollar.
All-in sustaining cost per ounce of gold sold in
the third quarter of 2023 was $178 higher compared to the second
quarter of 2023 due primarily to higher treatment charges as all of
the gold-copper concentrate was delivered to Tsumeb this quarter,
while all deliveries were to third-party smelters in the second
quarter. Going forward, DPM expects all gold-copper concentrate to
be delivered to third-party smelters.
All-in sustaining cost per ounce of gold sold in
the first nine months of 2023 of $840 was comparable to the
corresponding period of 2022 due primarily to higher local currency
mine operating costs reflecting higher costs for labour and direct
materials, lower by-product credits as a result of lower volumes
and realized prices of copper sold, and higher share-based
compensation reflecting DPM’s strong share price performance,
largely offset by higher volumes of gold sold and lower treatment
and freight charges at Chelopech.
Cash cost per tonne of complex concentrate
smelted in the third quarter of 2023 of $921 was $624 higher than
the corresponding period in 2022 due primarily to lower volumes of
complex concentrate smelted as a result of the timing of the
Ausmelt furnace maintenance shutdown. Cash cost per tonne of
complex concentrate smelted in the first nine months of 2023 of
$467 was comparable to the corresponding period in 2022 due
primarily to lower volumes of complex concentrate smelted, largely
offset by a weaker South African Rand (“ZAR”) relative to the U.S.
dollar. Tsumeb is tracking towards the high end of its 2023 cash
cost guidance range.
Capital expenditures: Capital
expenditures incurred in the third quarter and first nine months of
2023 of $23.2 million and $53.1 million, respectively, were 22%
higher and 15% lower than the corresponding periods in 2022 of
$19.1 million and $62.8 million.
Sustaining capital expenditures incurred in the
third quarter of 2023 of $16.8 million were 45% higher than the
corresponding period in 2022 of $11.6 million due primarily to the
timing of the Ausmelt furnace maintenance shutdown. Sustaining
capital expenditures in the first nine months of 2023 of $33.4
million were 20% lower than the corresponding period in 2022 of
$41.5 million benefited primarily from the cost optimizations of
the Ausmelt furnace maintenance shutdown in 2023. Sustaining
capital expenditures incurred in the first nine months of 2022 also
included the capitalized lease and leasehold improvements related
to the new head office lease.
Growth capital expenditures incurred during the
third quarter and first nine months of 2023, primarily related to
the Loma Larga gold project, were $6.4 million and $19.7 million,
respectively, compared to $7.5 million and $21.2 million in the
corresponding periods in 2022.
Consolidated Financial Highlights
Financial results from operations in the third
quarter of 2023 reflected higher volumes of gold sold and higher
realized gold and copper prices, partially offset by lower volumes
of complex concentrate smelted and higher planned exploration and
evaluation expenses.
Revenue: Revenue in the third
quarter of 2023 of $135.0 million was 5% higher than the
corresponding period in 2022 due primarily to higher volumes of
gold sold, higher realized gold and copper prices, partially offset
by lower volumes of complex concentrate smelted reflecting timing
of the Ausmelt furnace maintenance shutdown.
Revenue in the first nine months of 2023 of
$458.4 million was 10% higher than the corresponding period in 2022
due primarily to higher volumes and realized prices of gold sold,
and lower treatment and freight charges at Chelopech as a result of
increased deliveries to third-party smelters, partially offset by
lower volumes of complex concentrate smelted at Tsumeb and lower
volumes and realized prices of copper sold.
Net earnings (loss): Net
earnings in the third quarter of 2023 of $27.1 million ($0.15
per share) increased compared to a net loss of $57.7 million ($0.30
per share) in the corresponding period in 2022 due primarily to the
Tsumeb impairment charge of $85.0 million taken in the third
quarter of 2022, together with higher volumes of gold sold and
higher realized gold and copper prices, partially offset by lower
volumes of complex concentrate smelted and higher planned
exploration and evaluation expenses. Net earnings in the first nine
months of 2023 of $135.5 million ($0.72 per share) increased
compared to $2.6 million ($0.01 per share) in the corresponding
period in 2022 due primarily to the Tsumeb impairment charge of
$85.0 million, higher volumes and realized prices of gold sold,
lower treatment and freight charges at Chelopech and higher
interest income, partially offset by higher planned exploration and
evaluation expenses, higher local currency mine operating expenses,
lower volumes and realized prices of copper sold, higher
share-based compensation expenses reflecting DPM’s strong share
performance, as well as restructuring costs related to a cost
optimization initiative at Tsumeb taken in 2022.
Adjusted net
earnings: Adjusted net earnings in the
third quarter and first nine months of 2023 of $27.1 million ($0.15
per share) and $135.5 million ($0.72 per share), respectively,
increased compared to $25.3 million ($0.13 per share) and $95.6
million ($0.50 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 impairment charge
and restructuring costs in 2022. Adjusted net earnings in the third
quarter of 2023 was $35.1 million lower compared to the second
quarter of 2023 due primarily to lower volumes of complex
concentrate smelted at Tsumeb reflecting timing of the Ausmelt
furnace maintenance shutdown, combined with higher treatment
charges at Chelopech as all of the gold-copper concentrate was
delivered to Tsumeb this quarter.
Earnings before income
taxes: Earnings before income taxes in the third
quarter and first nine months of 2023 of $34.5 million and $152.8
million, respectively, increased compared to a loss before income
taxes of $53.7 million and earnings before income taxes of $21.1
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 third quarter and first nine months of 2023 was $52.5
million and $207.5 million, respectively, compared to $56.4 million
and $194.5 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
third quarter of 2023 of $67.4 million was 114% higher than the
corresponding period in 2022 due primarily to the timing of
deliveries and subsequent receipt of cash and the timing of
payments to suppliers. Cash provided from operating activities in
the first nine months of 2023 of $197.5 million was 8% higher than
the corresponding period in 2022 due primarily to higher adjusted
EBITDA generated in the period, partially offset by the timing of
deliveries and subsequent receipt of cash.
Free cash flow: Free cash flow
in the third quarter of 2023 of $44.6 million was comparable to the
corresponding period in 2022. Free cash flow in the first nine
months of 2023 of $180.1 million was $46.9 million higher than the
corresponding period in 2022 due primarily to higher adjusted
EBITDA generated and lower 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 $129.5
million to $562.7 million in the first nine months of 2023 due
primarily to earnings 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 payments for shares repurchased,
as well as changes in working capital.
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 first nine months of 2023, the Company
returned a total of $76.1 million to shareholders through
payments for shares repurchased of $53.3 million and dividends paid
of $22.8 million, representing approximately 42% of its free cash
flow generated during this period.
During the nine months ended September 30, 2023,
the Company purchased a total of 8,431,871 shares with a total cost
of $57.5 million at an average price per share of $6.82 (Cdn$9.18).
As at September 30, 2023, the Company had an active automatic share
repurchase plan in place under the NCIB with its designated broker
which terminated on November 2, 2023, pursuant to which the
Company repurchased an additional 1,306,192 shares, all of which
were cancelled as at November 7, 2023.
Enhanced NCIB
The 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 November 7, 2023, the amount of shares
repurchased totalled $65.5 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 Dividend
On November 7, 2023, the Company declared a
dividend of $0.04 per common share payable on January 15, 2024
to shareholders of record on December 31, 2023.
Development Projects
Update
Loma Larga, Ecuador
During the third quarter of 2023, the Company
entered into an IPA with the Government of Ecuador for Loma Larga,
a significant milestone for the project. The IPA provides tax
stability and certain tax incentives, as well as legal protections
including stability of the regulatory framework and resolution of
disputes through international arbitration.
Drilling activities, as well as the public
consultation for the Environmental Impact Assessment (“EIA”),
remain paused following the decision on the appeal of the
Constitutional Protective Action (the “Action”), which was
delivered by the Provincial Court of Azuay in August 2023. Based on
the Company’s preliminary analysis, the decision reaffirmed DPM’s
concessions for the Loma Larga project and clarified that free,
prior and informed consultation of certain local indigenous
populations must be carried out by the state, which the Company had
already planned as part of its development of the project. The
decision also held that environmental consultation with communities
in the project’s area of influence and certain additional reports
on the impact of the project on water resources and the Quimsacocha
National Recreation Area would need to be provided by the Ministry
of Environment, Water and Ecological Transition to the court prior
to advancing the project to the exploitation phase.
As it completes its legal assessment of the
decision, DPM is seeking clarification on the requirements for the
additional reports, the indigenous and environmental consultations
and the steps needed for DPM to resume the planned drilling
campaign in support of the updated FS for the project, in order to
assess the associated impact on the project’s development
timeline.3
In parallel, DPM continues to advance the FS
optimization work to leverage the Company’s expertise with similar
deposits, including its Chelopech mine in Bulgaria, and to
incorporate certain scope changes to enhance project execution and
meet DPM’s operating standards. These scope changes, combined with
inflationary pressures consistent with general industry trends, are
expected to result in significant increases to the estimated
initial capital and operating costs for the project. This may
impact the project economics and other parameters, including the
Mineral Resource and Mineral Reserve estimate, which are being
assessed as part of the ongoing optimization phase of the updated
FS.
DPM will continue with the optimization phase of
the updated FS beyond the previously stated timeline ending in
2023, in order to evaluate additional opportunities and to
potentially incorporate the results of drilling, once these
activities are able to recommence. DPM views the Loma Larga gold
project as a high‐quality advanced stage project with the potential
to generate strong economic returns following the results of the
ongoing optimization work. DPM will continue to take a disciplined
approach with respect to future investments in the Loma Larga
project, based on the receipt of key milestones and the overall
operating environment in-country. The Company’s level of spending
in 2024 related to Loma Larga is anticipated to be materially lower
compared to the 2023 guidance range.
The Company maintains a constructive
relationship with government institutions and other stakeholders
involved with the development of the project. The EIA for the 69 kV
power line for the project received technical approval during the
second quarter of 2023, and the associated consultation process is
currently ongoing.
_________________________________
3 For further details on the Action,
please see the news releases issued on February 24, 2022, July 13,
2022, and August 18, 2023, 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, Serbia
In Serbia, exploration activities continued to
focus on an accelerated drilling program at the Čoka Rakita
deposit, with 11 drill rigs currently in operation. In the first
nine months of the year, DPM has drilled 63,500 metres. Infill
drilling at a 30-metre by 30-metre spacing is well advanced,
covering the core of the system, in order to provide additional
confidence in the continuity and high-grade nature of the
mineralization.
DPM expects to complete a maiden Mineral
Resource estimate for Čoka Rakita by the end of the year, and is
progressing activities to accelerate the advancement of the
project, including geotechnical drilling, metallurgical test-work
and evaluation of potential surface locations for the exploration
decline portal, mine infrastructure and processing facilities.
DPM also commenced additional scout drilling to
test other camp-wide targets near Čoka Rakita, and is continuing
its 10,000-metre scout drilling program on the Umka licence. Scout
drilling intercepted favourable geological indicators on the
north-west flank of the system about 600 metres to the north-east
of the current limit of the deposit, as well as 500 metres to the
south of the main Čoka Rakita target, which indicate further
extension potential.
Timok, Serbia
In October 2023, DPM was granted new exploration
licences for the area hosting the Timok gold project, providing
additional exploration potential on prospective targets to be
developed and tested by the Company following the discovery at Čoka
Rakita announced at the beginning of the year.
The Company is currently preparing an aggressive
exploration program and plans to test the favourable stratigraphy
for carbonate replacement and skarns on the new Potja Cuka
exploration licence, located to the north of Čoka Rakita, as well
as on the new Pester Jug exploration licence, which is to the west
of Čoka Rakita. This program is expected to commence in late 2023
or early 2024, pending approval of the work program and permitting
procedures, with approximately 25,000 meters of drilling planed for
the first year of exploration at these targets.
Tierras Coloradas, Ecuador
At the Tierras Coloradas licence in Ecuador, DPM
commenced a 10,000-metre drilling program in August 2023,
completing approximately 2,300 metres during the third quarter.
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. Detailed surface
mapping in conjunction with soil and rock chip-channel sampling is
ongoing in order to determine the surface footprint and identify
additional targets.
Chelopech, Bulgaria
During the third 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
18,500 metres of surface diamond drilling were completed, with 28
holes completed and 20 holes ongoing. At Sharlo Dere, a 50-metre by
50-metre infill drilling program aimed at fully evaluating the
economic potential of the prospect was initiated during the
quarter.
Ada Tepe, Bulgaria
During the third quarter of 2023, exploration
activities at the Ada Tepe camp were on the Krumovitsa exploration
licence, where scout drilling of several epithermal sediment hosted
targets commenced in August. The target delineation and scout
drilling program at Krumovitsa is ongoing, with 15,000 metres
expected to be completed by the end of 2023.
Permitting for drilling at the Kara Tepe
prospect, located on the Chiirite licence, is ongoing and pending
the positive outcome of the EIA process, drilling is expected to
commence in the second quarter of 2024.
2023 Guidance and Three-year
Outlook
With solid operating performance from the
Chelopech and Ada Tepe mines in the third quarter and first nine
months of 2023, DPM is on track to meet its 2023 guidance for both
its mining operations, including expected gold production of
270,000 to 315,000 ounces, copper production of 30 to 35 million
pounds, and an all-in sustaining cost of $700 to $860 per ounce of
gold sold.
While complex concentrate smelted is expected to
increase in the fourth quarter, reflecting improved operating
performance as a result of the maintenance work completed during
the third quarter, it is forecasted to be below the guidance range
for the year.
For additional information regarding the
Company’s detailed guidance for 2023 and current three-year
outlook, please refer to the “Three-Year Outlook” section of the
MD&A.
Selected Production, Delivery and Cost
Performance versus Guidance
|
|
Q3 2023 |
YTD September 2023 |
2023ConsolidatedGuidance |
|
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
Ore processed |
Kt |
543.3 |
195.4 |
– |
738.6 |
1,640.3 |
576.9 |
– |
2,217.2 |
2,820 – 3,010 |
Metals contained in
concentrate produced |
|
|
|
|
|
|
|
|
|
|
Gold |
Koz |
40.3 |
33.8 |
– |
74.1 |
120.0 |
99.0 |
– |
219.0 |
270 – 315 |
Copper |
Mlbs |
7.2 |
– |
– |
7.2 |
22.3 |
– |
– |
22.3 |
30 – 35 |
Payable metals in concentrate
sold |
|
|
|
|
|
|
|
|
|
|
Gold |
Koz |
34.7 |
33.0 |
– |
67.6 |
99.6 |
96.6 |
– |
196.2 |
245 – 290 |
Copper |
Mlbs |
6.7 |
– |
– |
6.7 |
19.6 |
– |
– |
19.6 |
26 – 31 |
All-in sustaining cost per
ounce of gold sold(1) |
$/oz |
1,120 |
509 |
– |
911 |
944 |
508 |
– |
840 |
700 – 860 |
Complex concentrate
smelted |
Kt |
– |
– |
21.8 |
21.8 |
– |
– |
120.9 |
120.9 |
200 – 230 |
Cash
cost per tonne of complex concentrate smelted |
$/t |
– |
– |
921 |
921 |
– |
– |
467 |
467 |
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.
Third Quarter 2023
Results Conference Call and Webcast
At 9 a.m. EDT on Wednesday, November 8,
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 calldate and time |
Wednesday, November 8, 20239 a.m. EST |
Call registration |
https://register.vevent.com/register/BI1ef3267869cc4929b9a5b18b7d32e17a |
Webcast link |
https://edge.media-server.com/mmc/p/wxpsvu35 |
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 nine months ended September 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 Rae President and Chief Executive
OfficerTel: (416) 365-5191drae@dundeeprecious.com |
Navin DyalChief Financial Officer Tel: (416)
365-5191navin.dyal@dundeeprecious.com |
Jennifer CameronDirector, Investor Relations Tel:
(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 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 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 September 30, 2023 |
|
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
543,264 |
|
195,350 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
21,782 |
|
|
Cost of sales |
|
34,021 |
|
26,900 |
|
23,117 |
|
84,038 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(6,950 |
) |
(14,133 |
) |
(1,645 |
) |
|
Change in concentrate inventory |
|
(31 |
) |
(50 |
) |
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(1,404 |
) |
|
Mine
cash cost / Smelter cash cost(2) |
|
27,040 |
|
12,717 |
|
20,068 |
|
|
Cost of sales per tonne of ore
processed(3) |
$/t |
63 |
|
138 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
50 |
|
65 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
1,061 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
921 |
|
|
$ thousands, unless otherwise indicatedFor the three months ended
September 30, 2022 |
|
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
515,809 |
|
216,071 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
63,990 |
|
|
Cost of sales(5) |
|
32,554 |
|
26,438 |
|
30,772 |
|
89,764 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(6,621 |
) |
(14,317 |
) |
(5,498 |
) |
|
Change in concentrate inventory |
|
354 |
|
(139 |
) |
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(6,273 |
) |
|
Mine
cash cost / Smelter cash cost(2) |
|
26,287 |
|
11,982 |
|
19,001 |
|
|
Cost of sales per tonne of ore
processed(3) |
$/t |
63 |
|
122 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
51 |
|
55 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
481 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
297 |
|
|
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 September 30,
2022, the Bulgarian government subsidy for electricity of $9.7
million was reclassified from other income and expense to cost of
sales to conform with current year presentation.
$ thousands, unless otherwise indicatedFor the nine months
ended September 30, 2023 |
|
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
1,640,282 |
|
576,905 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
120,912 |
|
|
Cost of sales |
|
103,525 |
|
79,701 |
|
71,173 |
|
254,399 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(20,218 |
) |
(41,673 |
) |
(3,344 |
) |
|
Change in concentrate inventory |
|
(747 |
) |
(149 |
) |
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(11,309 |
) |
|
Mine
cash cost / Smelter cash cost(2) |
|
82,560 |
|
37,879 |
|
56,520 |
|
|
Cost of sales per tonne of ore
processed(3) |
|
63 |
|
138 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
50 |
|
66 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
589 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
467 |
|
|
$ thousands, unless otherwise indicatedFor the nine months ended
September 30, 2022 |
|
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
Ore processed |
t |
1,585,704 |
|
646,838 |
|
- |
|
|
Complex concentrate
smelted |
t |
- |
|
- |
|
132,287 |
|
|
Cost of sales(5) |
|
94,491 |
|
77,036 |
|
94,811 |
|
266,338 |
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(18,676 |
) |
(42,036 |
) |
(16,223 |
) |
|
Change in concentrate inventory |
|
2,314 |
|
(12 |
) |
- |
|
|
Sulphuric acid revenue(1) |
|
- |
|
- |
|
(16,427 |
) |
|
Mine
cash cost / Smelter cash cost(2) |
|
78,129 |
|
34,988 |
|
62,161 |
|
|
Cost of sales per tonne of ore
processed(3) |
$/t |
60 |
|
119 |
|
- |
|
|
Cash cost per tonne of ore
processed(3) |
$/t |
49 |
|
54 |
|
- |
|
|
Cost of sales per tonne of
complex concentrate smelted(4) |
$/t |
- |
|
- |
|
717 |
|
|
Cash
cost per tonne of complex concentrate smelted(4) |
$/t |
- |
|
- |
|
470 |
|
|
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 nine months ended September 30, 2022
the Bulgarian government subsidy for electricity of $17.2 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 September 30, 2023 |
|
Chelopech |
|
Ada Tepe |
|
Total |
|
Cost of sales(1) |
|
34,021 |
|
26,900 |
|
60,921 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(6,950 |
) |
(14,133 |
) |
(21,083 |
) |
Treatment charges, transportation and other related selling
costs(2) |
|
32,479 |
|
1,591 |
|
34,070 |
|
By-product credits(3) |
|
(25,752 |
) |
(304 |
) |
(26,056 |
) |
Mine cash cost of sales |
|
33,798 |
|
14,054 |
|
47,852 |
|
Rehabilitation related
accretion and depreciation expenses(4) |
|
300 |
|
300 |
|
600 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
5,981 |
|
Cash outlays for sustaining
capital(6) |
|
4,469 |
|
2,260 |
|
6,729 |
|
Cash
outlays for leases(6) |
|
257 |
|
173 |
|
430 |
|
All-in
sustaining cost |
|
38,824 |
|
16,787 |
|
61,592 |
|
Payable gold in concentrate
sold(7) |
oz |
34,660 |
|
32,955 |
|
67,615 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
982 |
|
816 |
|
901 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
975 |
|
426 |
|
708 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
1,120 |
|
509 |
|
911 |
|
$ thousands, unless otherwise indicatedFor the three months ended
September 30, 2022 |
|
Chelopech |
|
Ada Tepe |
|
Total |
|
Cost of sales(1)(9) |
|
32,554 |
|
26,438 |
|
58,992 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(6,621 |
) |
(14,317 |
) |
(20,938 |
) |
Treatment charges, transportation and other related selling
costs(2) |
|
31,748 |
|
598 |
|
32,346 |
|
By-product credits(3) |
|
(24,292 |
) |
(148 |
) |
(24,440 |
) |
Mine cash cost of sales |
|
33,389 |
|
12,571 |
|
45,960 |
|
Rehabilitation related
accretion expenses(4) |
|
212 |
|
296 |
|
508 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
2,883 |
|
Cash outlays for sustaining
capital(6) |
|
4,221 |
|
2,207 |
|
6,428 |
|
Cash
outlays for leases(6) |
|
230 |
|
278 |
|
508 |
|
All-in
sustaining cost |
|
38,052 |
|
15,352 |
|
56,287 |
|
Payable gold in concentrate
sold(7) |
oz |
36,383 |
|
20,393 |
|
56,776 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
895 |
|
1,296 |
|
1,039 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
918 |
|
616 |
|
809 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
1,046 |
|
753 |
|
991 |
|
1) Included in cost of sales were share-based
compensation expenses of $0.3 million (2022 - $0.1 million) for the
three months ended September 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
expense of $0.8 million (2022 – reversal of $0.4 million) for the
three months ended September 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 third quarter of 2023 of 11,606 ounces
(2022 – 10,541 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 September 30, 2022, the Bulgarian government
subsidy for electricity of $9.7 million was reclassified from other
income and expense to cost of sales to conform with current year
presentation.
$ thousands, unless otherwise indicatedFor the nine months
ended September 30, 2023 |
|
Chelopech |
|
Ada Tepe |
|
Total |
|
Cost of sales(1) |
|
103,525 |
|
79,701 |
|
183,226 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(20,218 |
) |
(41,673 |
) |
(61,891 |
) |
Treatment charges, transportation and other related selling
costs(2) |
|
73,404 |
|
4,157 |
|
77,561 |
|
By-product credits(3) |
|
(78,102 |
) |
(932 |
) |
(79,034 |
) |
Mine cash cost of sales |
|
78,609 |
|
41,253 |
|
119,862 |
|
Rehabilitation related
accretion and depreciation expenses(4) |
|
920 |
|
897 |
|
1,817 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
21,541 |
|
Cash outlays for sustaining
capital(6) |
|
13,712 |
|
6,226 |
|
19,938 |
|
Cash
outlays for leases(6) |
|
812 |
|
729 |
|
1,541 |
|
All-in
sustaining cost |
|
94,053 |
|
49,105 |
|
164,699 |
|
Payable gold in concentrate
sold(7) |
oz |
99,586 |
|
96,593 |
|
196,179 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
1,040 |
|
825 |
|
934 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
789 |
|
427 |
|
611 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
944 |
|
508 |
|
840 |
|
$ thousands, unless otherwise indicatedFor the nine months ended
September 30, 2022 |
|
Chelopech |
|
Ada Tepe |
|
Total |
|
Cost of sales(1)(9) |
|
94,491 |
|
77,036 |
|
171,527 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(18,676 |
) |
(42,036 |
) |
(60,712 |
) |
Treatment charges, transportation and other related selling
costs(2) |
|
84,487 |
|
2,079 |
|
86,566 |
|
By-product credits(3) |
|
(86,242 |
) |
(533 |
) |
(86,775 |
) |
Mine cash cost of sales |
|
74,060 |
|
36,546 |
|
110,606 |
|
Rehabilitation related
accretion expenses(4) |
|
756 |
|
1,058 |
|
1,814 |
|
Allocated general and
administrative expenses(5) |
|
- |
|
- |
|
15,528 |
|
Cash outlays for sustaining
capital(6) |
|
10,406 |
|
8,353 |
|
18,759 |
|
Cash
outlays for leases(6) |
|
708 |
|
905 |
|
1,613 |
|
All-in
sustaining cost |
|
85,930 |
|
46,862 |
|
148,320 |
|
Payable gold in concentrate
sold(7) |
oz |
112,377 |
|
64,489 |
|
176,866 |
|
Cost of sales per ounce of
gold sold(8) |
$/oz |
841 |
|
1,195 |
|
970 |
|
Cash cost per ounce of gold
sold(8) |
$/oz |
659 |
|
567 |
|
625 |
|
All-in
sustaining cost per ounce of gold sold(8) |
$/oz |
765 |
|
727 |
|
839 |
|
1) Included in cost of sales were share-based
compensation expenses of $1.4 million (2022 - $0.8 million) for the
nine months ended September 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 expense
of $7.1 million (2022 - $1.3 million) for the nine months ended
September 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 first
nine months of 2023 of 29,032 ounces (2022 – 30,420
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 nine months ended
September 30, 2022, the Bulgarian government subsidy for
electricity of $17.2 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 (loss) attributable to common shareholders, 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 (loss):
$ thousands unless otherwise indicated |
Three Months |
|
Nine Months |
Ended September 30, |
2023 |
2022 |
|
|
2023 |
2022 |
Net earnings (loss) |
27,127 |
(57,714 |
) |
|
135,463 |
2,603 |
Add/(deduct): |
|
|
|
|
|
Impairment charge |
- |
85,000 |
|
|
- |
85,000 |
Net loss on Sabina special warrants, net of income taxes of
$nil |
- |
40 |
|
|
- |
2,225 |
Tsumeb restructuring costs |
- |
(2,056 |
) |
|
- |
5,750 |
Adjusted net earnings |
27,127 |
25,270 |
|
|
135,463 |
95,578 |
Basic earnings (loss) per
share |
0.15 |
(0.30 |
) |
|
0.72 |
0.01 |
Adjusted basic earnings per share |
0.15 |
0.13 |
|
|
0.72 |
0.50 |
|
|
|
|
|
|
|
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 (loss) before income taxes:
$ thousands unless otherwise indicated |
Three Months |
|
Nine Months |
Ended September 30, |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Earnings (loss) before income
taxes |
34,538 |
|
(53,652 |
) |
|
152,780 |
|
21,110 |
|
Add/(deduct): |
|
|
|
|
|
Impairment charge |
- |
|
85,000 |
|
|
- |
|
85,000 |
|
Depreciation and amortization |
23,364 |
|
27,010 |
|
|
66,975 |
|
78,512 |
|
Tsumeb restructuring costs |
- |
|
(2,056 |
) |
|
- |
|
5,750 |
|
Finance costs |
1,570 |
|
1,932 |
|
|
4,914 |
|
4,770 |
|
Interest income |
(7,022 |
) |
(1,916 |
) |
|
(17,140 |
) |
(2,881 |
) |
Net losses on Sabina special warrants |
- |
|
40 |
|
|
- |
|
2,225 |
|
Adjusted EBITDA |
52,450 |
|
56,358 |
|
|
207,529 |
|
194,486 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Nine Months |
Ended September 30, |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Cash provided from operating
activities |
67,426 |
|
31,471 |
|
|
197,503 |
|
182,763 |
|
Add: |
|
|
|
|
|
Changes in working capital |
(9,463 |
) |
25,456 |
|
|
17,568 |
|
(7,921 |
) |
Cash provided from operating
activities, before changes in working capital |
57,963 |
|
56,927 |
|
|
215,071 |
|
174,842 |
|
Cash outlays for sustaining
capital(1) |
(11,433 |
) |
(12,126 |
) |
|
(29,529 |
) |
(36,663 |
) |
Principal repayments related
to leases |
(1,210 |
) |
(1,139 |
) |
|
(3,844 |
) |
(3,413 |
) |
Interest payments(1) |
(708 |
) |
(418 |
) |
|
(1,608 |
) |
(1,592 |
) |
Free
cash flow |
44,612 |
|
43,244 |
|
|
180,090 |
|
133,174 |
|
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 |
|
Nine Months |
Ended September 30, |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Total revenue |
|
135,000 |
|
128,648 |
|
|
458,356 |
|
416,932 |
|
Add/(deduct): |
|
|
|
|
|
|
Tsumeb revenue |
|
(13,134 |
) |
(39,351 |
) |
|
(77,604 |
) |
(96,410 |
) |
Treatment charges and other deductions(1) |
|
34,070 |
|
32,347 |
|
|
77,561 |
|
86,566 |
|
Silver revenue |
|
(1,110 |
) |
(721 |
) |
|
(3,439 |
) |
(2,873 |
) |
Revenue from gold and
copper |
|
154,826 |
|
120,923 |
|
|
454,874 |
|
404,215 |
|
Revenue from gold |
|
129,881 |
|
97,203 |
|
|
379,279 |
|
320,316 |
|
Payable gold in concentrate
sold |
oz |
67,615 |
|
56,776 |
|
|
196,179 |
|
176,866 |
|
Average realized gold price
per ounce |
$/oz |
1,921 |
|
1,712 |
|
|
1,933 |
|
1,811 |
|
Revenue from copper |
|
24,945 |
|
23,720 |
|
|
75,595 |
|
83,899 |
|
Payable copper in concentrate
sold |
Klbs |
6,699 |
|
6,715 |
|
|
19,642 |
|
20,498 |
|
Average
realized copper price per pound |
$/lb |
3.72 |
|
3.53 |
|
|
3.85 |
|
4.09 |
|
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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