DUNDEE PRECIOUS METALS ANNOUNCES 2019 FOURTH QUARTER AND ANNUAL RESULTS, INITIATES THREE-YEAR OUTLOOK AND DECLARES INAUGURAL DIVIDEND (All monetary figures are expressed in U.S. dollars
DUNDEE PRECIOUS METALS ANNOUNCES 2019 FOURTH QUARTER AND ANNUAL RESULTS,
INITIATES THREE-YEAR OUTLOOK AND DECLARES INAUGURAL DIVIDEND
(All monetary figures are expressed in U.S. dollars unless otherwise stated)
Toronto, Ontario, February 13, 2020 – Dundee Precious Metals Inc. (TSX: DPM)
FOURTH QUARTER AND ANNUAL FINANCIAL AND OPERATING HIGHLIGHTS:
• Record annual metals production – Strong fourth quarter performance from Chelopech and Ada Tepe
delivered the highest production quarter of the year and contributed to record annual gold production of
230,592 ounces, above the mid-point of 2019 guidance. Copper production of 37.2 million pounds was
also in line with 2019 guidance;
• Improving performance at Tsumeb – Achieved throughput of 215,289 tonnes in line with its revised
2019 guidance, with a solid ramp-up to full production in the fourth quarter following an unplanned outage
in the third quarter. Finalized new agreement such that smelter is now fully contracted for the next three
years;
• Increasing cash flows – Generated $52.9 million in cash flow from operating activities and $11.8 million
of free cash flow(1) in the fourth quarter; generated annual year cash flow from operating activities of $99.4
million and increased free cash flow by 25% to $67.2 million;
• Solid cost performance at all operations – Fourth quarter all-in sustaining cost per ounce of gold (1)
declined to $679; reported an all-in sustaining cost per ounce of gold for 2019 of $725 and a cash cost
per tonne of complex concentrate smelted(1), of $421, both of which were in line with 2019 guidance and
reflect continued focus on cost containment;
• Initiation of three-year outlook – Longer term outlook provided, highlighting strong production profile of
approximately 275,000 ounces of gold and 35 million pounds of copper per year, declining all-in sustaining
costs, and the potential for significant cash flow generation;
• Inaugural dividend – Introduction of a quarterly dividend of $0.02 per share highlighting commitment to
disciplined capital allocation and confidence in outlook;
• Strong f inancial position and liquidity – Ended 2019 with approximately $ 188 million of cash
resources, comprised of the undrawn portion of the Company’s long-term revolving credit facility (“RCF”),
an increased cash position of $23.4 million and a reduced debt balance of $10.0 million; and
• Growing adjusted net earnings – Reported a net loss attributable to common shareholders in the fourth
quarter and for 2019 of $92.7 million and $70.9 million, respectively, as a result of a $107.0 million non-
cash write-down. Reported adjusted net earnings(1) of $15.9 million in the fourth quarter and for the full
year, reported adjusted net earnings increased by 1 8% to $34.3 million relative to 2 018 with the
declaration of commercial production at Ada Tepe.
“This was a pivotal year for DPM as we transition to a mid-tier producer. In 2019, we commenced production
at our second gold mine, Ada Tepe, which delivered impressive performance following its commissioning in
June. As a result, we generated record gold production and increased our free cash flow by approximately
25% year-over-year,” said Rick Howes, President and CEO. “We are forecasting another strong year for 2020
as we realize a full year of benefits from our two operating mines. In order to provide longer term visibility, we
have initiated a three-year outlook that highlights our strong potential for significant cash flow generation from
our portfolio.”
“Following a multi-year capital investment phase and highly successful optimization of our assets, we are also
pleased to be in a position to reward our shareholders by declaring an inaugural quarterly dividend. This
reflects our commitment to disciplined capital allocation and our confidence that we will continue to deliver
strong results in the coming years. Our intention is to establish a sustainable dividend based on our free cash
flow outlook while maintaining sufficient capital to reinvest in our business.”
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Dundee Precious Metals Inc. (“DPM” or the “Company”) today reported a fourth quarter net loss attributable to
common shareholders of $92.7 million ($0.52 per share) compared to $1.3 million ($0.01 per share) for the
same period in 2018. The net loss attributable to common shareholders in 2019 was $70.9 million ($0.40 per
share) compared to net earnings attributable to common shareholders of $38.1 million ($0.21 per share) for
the same period in 2018.
Net earnings (loss) attributable to common shareholders in the fourth quarter and twelve months of 2019 and
2018 were impacted by several items not reflective of the Company’s underlying operating performance, most
notably an impairment charge in respect of Tsumeb in 2019 as well as unrealized gains on commodity price
hedges that, prior to the adoption of IFRS 9 in 2018, did not receive hedge accounting treatment and net gains
and losses on Sabina Gold and Silver Corp. (“Sabina”) special warrants, which are excluded from adjusted net
earnings (loss)(1).
Adjusted net earnings in the fourth quarter and twelve months of 2019 were $15.9 million ($0.09 per share)
and $34.3 million ($0.19 per share), respectively, compared to an adjusted net loss of $3.1 million ($0.02 per
share) and adjusted net earnings of $29.0 million ($0.16 per share) for the corresponding periods in 2018.
These increases were due primarily to the start-up of Ada Tepe, which achieved commercial production in
June 2019, higher realized gold prices and a stronger U.S. dollar relative to the Euro and ZAR , partially
offset by lower volumes of complex concentrate smelted at Tsumeb.
Tsumeb Impairment Charge
As at December 31, 2019, the Company assessed the recoverable amount of Tsumeb, triggered by the timing
of the anticipated expansion project being delayed and the ability to optimize the mix of feed being processed
by the smelter.
As a result of this assessment, the Company recognized an impairment charge of $107.0 million. This charge
is primarily attributable to the increased opportunity to process additional volumes of third party complex
concentrate at Tsumeb by capitalizing on, from time to time, market demand to process Chelopech
concentrate, which has more available outlets th an other complex third party concentrate processed by
Tsumeb. While this has the potential to generate additional overall value for the Company, this would be
realized through lower treatment charges and higher margins at Chelopech rather than higher throughput and
higher margins at Tsumeb. The ability to optimize mix, as well as the actual timing and volume of expected
additional third party complex concentrate coming to market, could also result in Tsumeb’s expansion
being further delayed and possibly deferred indefinitely if a long term contract cannot be secured to support the
expansion to 370,000 tonnes. At present, the outlook for additional third party complex concentrate coming to
market remains favourable as is the prospect for entering into a long-term arrangement. In 2019, the Company
contracted additional supply under its tolling agreement with IXM S.A., on terms in line with existing
arrangements, such that the smelter’s existing capacity is now fully contracted for the next three years. In
addition, the Government of Namibia recently issued an Environmental Clearance Certificate to the Company,
which provides the approval required to move forward with the expansion.
Adjusted EBITDA
Adjusted EBITDA(1) in the fourth quarter and twelve months of 2019 was $55.0 million and $138.2 million,
respectively, compared to $12.5 million and $99.5 million in the corresponding period s in 2018, reflecting
the same factors that affected adjusted net earnings (loss), except for depreciation, interest a nd income
taxes, which are excluded from adjusted EBITDA.
Production
In the fourth quarter of 2019, gold contained in concentrate produced increased by 52% to 69,491 ounces,
including 26,528 ounces from Ada Tepe , which achieved full design capacity in the third quarter of 2019,
and copper production increased by 17% to 10.0 million pounds due primarily to higher copper grades and
recoveries at Chelopech, in each case, relative to the corresponding period in 2018.
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In 2019, gold contained in concentrate produced increased by 15% to 230,592 ounces, including 57,193
ounces from Ada Tepe, and copper production increased by 2% to 37.2 million pounds, in each case,
relative to 2018. The increase in gold production was due primarily to the start of commercial production at
Ada Tepe in June 2019, partially offset by lower gold grades and recoveries at Chelopech , in line with its
2019 mine plan.
Complex concentrate smelted at Tsumeb during the fourth quarter of 2019 of 48,614 tonnes was 23% lower
than the corresponding period in 2018 due primarily to the timing of the Ausmelt furnace maintenance
shutdown that occurred in the fourth quarter in 2019 versus the third quarter in 2018.
Complex concentrate smelted at Tsumeb during 2019 of 215,289 tonnes was 7% lower than 2018 due
primarily to the pressurization event in the Ausmelt offgas system that occurred in September 2019 during
a restart after routine maintenance. Repairs to the damaged offgas system components were completed
over a 14-day period and during the restart of the facility, it was determined that the initial pressurization
event had also caused damage to the lining of the furnace. This resulted in advancing the Ausmelt furnace
reline, baghouse and ducting maintenance originally planned for October 2019 to September 2019. This
work was completed over a 38-day period, 10 days longer than planned, due primarily to delays in receiving
materials. The next Ausmelt furnace maintenance shutdown is currently scheduled for 2021, based on an
expected operating cycle of 18 to 24 months.
Metals Sold
Payable gold in concentrate sold in the fourth quarter of 2019 increased by 136% to 79,109 ounces relative
to the corresponding period in 2018 due primarily to gold production from Ada Tepe, the timing of
concentrate deliveries and a drawdown of concentrate inventories at Chelopech and Ada Tepe . Payable
copper in concentrate sold in the fourth quarter of 2019 of 11.0 million pounds was 56% higher than the
corresponding period in 2018 due primarily to higher deliveries of gold -copper concentrate as a result of
the timing of concentrate deliveries and a drawdown of concentrate inventories at Chelopech.
In 2019, payable gold in concentrate sold increased by 21% to 198,664 ounces relative to 2018 due
primarily to the start of commercial production at Ada Tepe in June 2019, partially offset by lower gold
grades at Chelopech. In 2019, payable copper in concentrate sold of 34.1 million pounds was comparable
to 2018.
Cost Measures
Cost of sales in the fourth quarter and twelve months of 2019 of $9 8.2 million and $306.4 million,
respectively, was $ 32.5 million and $3 3.5 million higher than the corresponding periods in 2018 due
primarily to higher depreciation and gold concentrate deliveries at Ada Tepe following the commencement
of production in June 2019, partially offset by the favourable impact of a stronger U.S. dollar relative to the
ZAR and Euro.
All-in sustaining cost per ounce of gold in the fourth quarter of 2019 of $6 79 was $185 lower than th e
corresponding period in 2018 due primarily to deliveries of low -cost gold produced at Ada Tepe, following
the achievement of full design capacity in the third quarter of 2019.
All-in sustaining cost per ounce of gold in 2019 of $7 25 was $65 higher than 2018 due primarily to lower
gold grades in gold -copper concentrate produced at Chelopech and higher cash outlays for sustaining
capital expenditures, in line with 2019 guidance, partially offset by deliveries of low -cost gold produced at
Ada Tepe in 2019.
Cash cost per tonne of complex concentrate smelted at Tsumeb during the fourth quarter of 2019 of $46 5
was $5 2 higher than the corresponding period in 2018 due primarily to lower volumes of complex
concentrate smelted stemming from the timing of the Ausme lt furnace maintenance shutdown, partially
offset by the favourable impact of a weaker ZAR relative to the U.S. dollar.
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Cash cost per tonne of complex concentrate smelted at Tsumeb during 2019 of $42 1 was $24 lower than
2018 due primarily to the favourabl e impact of a weaker ZAR relative to the U.S. dollar, partially offset by
lower volumes of complex concentrate smelted.
Cash provided from operating activities
Cash provided from operating activities in the fourth quarter and twelve months of 2019 was $52.9 million
and $99.4 million, respectively, compared to $32.7 million and $98.1 million in the corresponding periods
in 2018 reflecting the same underlying factors affecting net earnings (loss), except for depreciation , any
impairment charges or reversa ls thereof , and changes in working capital. In addition, d uring the fourth
quarter and twelve months of 2019, Ada Tepe delivered 12,123 ounces of gold pursuant to the prepaid
forward gold sales arrangement resulting in $16.5 million of deferred revenue being recognized in revenue
with no corresponding impact on cash as these deliveries were in partial satisfaction of the $50.0 million of
upfront proceeds received in 2016 in respect of the prepaid forward gold sales arrangement.
Free Cash Flow
Free cash flow in the fourth quarter and twelve months of 2019 was $ 11.8 million and $ 67.2 million,
respectively, compared to negative cash flow of $4.3 million and free cash flow of $53.9 million in the
corresponding periods in 2018. Free cash flow was im pacted by the same factors affecting cash provided
from operating activities , with the exception of changes in working capital, which are excluded from free
cash flow, and outlays for sustaining capital, lease obligations and interest, which are included in free cash
flow.
Capital Expenditures
Capital expenditures incurred during the fourth quarter and twelve months of 2019 were $20.1 million and
$73.8 million, respectively, compared to $23.6 million and $107.4 million in the corresponding periods in 2018.
Growth capital expenditures (1) incurred during the fourth quarter and twelve months of 2019 were $1.5
million and $36.5 million, respectively, compared to $14.1 million and $80.0 million in the corresponding
periods in 2018. The period over period decline in growth capital expenditures was related principally to the
construction of the Ada Tepe gold mine. Sustaining capital expenditures(1) incurred during the fourth quarter
and twelve months of 2019 were $18.6 million and $37.3 million, respectively, compared to $9.5 million and
$27.4 million in the corresponding period s in 2018 and were in line with 2019 guidance. Fourth quarter
changes were due primarily to the timing of executing planned projects and the timing of the Ausmelt
maintenance shutdown. The increase in 2019 sustaining capital expenditures was in line with 2019
guidance and reflected higher spending, as planned, for the work being done at Chelopech to extend the
life of its tailings management facility.
Timok Gold Project, Serbia
The Company filed a National Instrument 43-101 (“NI 43 -101’”) Technical Report on August 29, 2019
supporting the preliminary economic assessment (“PEA”) of the Timok gold project. The PEA is based on the
updated Mineral Resource estimate completed in September 2018 and provides a base case which, primarily
considers the oxide and transitional material types. Following optimization work completed in 2019 to
incorporate the sulphide portion of the resource, geotechnical work is currently underway prior to initiating
a potential prefeasibility study. If approved, the prefeasibility study would be initiated in the first half of 2020.
For additional details, refer to the press releases entitled “Dundee Precious Metals Files NI 43-101 Technical
Report Supporting the Preliminary Economic Assessment of the Timok Gold Project in Serbia” dated August
29, 2019 and “NI 43-101 Technical Report – Mineral Resource Estimate Update for the Timok Gold Project
Serbia” dated November 7, 2018, both found on DPM’s website and filed on SEDAR at www.sedar.com.
Exploration
At Chelopech, diamond drilling continued in the fourth quarter of 2019 from underground positions along the
Southeast Breccia Pipe Zone and from surface at the Wedge South target and at the Krasta prospect. Results
from the first two holes at the Wedge South target are encouraging and further drilling is in progress. At Ada
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Tepe, drilling continued during the fourth quarter of 2019 on the concession and exploration licenses near the
mine. In Serbia, drilling in the fourth quarter of 2019 focused on shallow oxide targets at the Timok gold project
as well as extensions of higher grade copper gold porphyry mineralization at depth at the Tulare project. In
Quebec, mapping and prospecting in the second half of 2019 have defined new drill targets on the Malartic
project.
Financial Position
As at December 31, 2019, DPM had $23.4 million of cash, $59.4 million of investments, comprised primarily
of its 10.4% interest in Sabina and 19.5% equity interest in INV Metals Inc. (“ INV”), and $165.0 million of
undrawn capacity under its RCF. With the start-up of Ada Tepe and the corresponding expected increase
in operating cash flow, the Company amended the terms and size of its RCF, resulting in, among other
things, the cancellation of tranches A and C in April 2019 and the increase of tranche B from $150 million
to $175 million in June 2019.
Inaugural Dividend
DPM announced that its Board of Directors has approved the introduction of a regular dividend and declared an
inaugural quarterly dividend of $0.02 per common share. This dividend is payable on April 15, 2020 to
shareholders of record as at 5:00 p.m. Toronto local time on March 31, 2020 and qualifies as an "eligible dividend"
for Canadian income tax purposes. Dividends paid to shareholders outside of Canada (non-resident investors)
will be subject to Canadian non-resident withholding taxes. For Canadian shareholders, the U.S. dollar dividend
will be converted to Canadian dollars using the spot exchange rate on April 14, 2020, the date prior to the payment
date.
The level of this dividend was set with the intention of establishing a sustainable dividend based on the Company’s
free cash flow outlook and is expected to allow the Company to build additional balance sheet strength to support
further growth, a key element of DPM’s strategy. With strong free cash flow expected from the business in the
coming years based on the current market environment, the Company will consider increasing its regular dividend
and/or, from time to time, declaring a supplemental dividend.
The declaration, amount and timing of any future dividend is at the sole discretion of the Board of Directors and
will be assessed based on the Company’s capital allocation framework, having regard for the Company’s financial
position, overall market conditions, its outlook for sustainable free cash flow and capital, and other factors
considered relevant by the Board of Directors. Based on the Company's current financial position and outlook,
the Board of Directors expects to declare future quarterly dividends in the amount of $0.02 per common share.
Subject to authorization by the Board of Directors and compliance with all applicable laws, the record date for
future dividends is expected to be the last business day of March, June, September and December in each year
and the payment date is expected to be approximately two weeks thereafter. The exact record date and other
details of future dividends, if any, will be announced by the Company separately at such time a dividend is
declared and authorized by the Board of Directors.
Normal Course Issuer Bid (“NCIB”)
The Company intends to ini tiate an NCIB to purchase up to 9,000,000 common shares of the Company
(“Shares”) on the Toronto Stock Exchange (“TSX”). The NCIB has been approved by the Company’s Board
of Directors, however, it is subject to acceptance by the TSX and, if accepted, will be made in accordance
with the applicable rules and policies of the TSX and applicable Canadian securities laws.
Pursuant to the NCIB, it is expected that the Company will be able to purchase up to 9,000,000 Shares,
representing 5% of the total outstanding Shares as of February 13, 2020, over a period of twelve months
commencing after TSX approval. In accordance with TSX rules, any daily purchases, other than pursuant
to a block purchase exception, on the TSX under the NCIB will be limited to a maximum 25% of the average
daily trading volume on the TSX for the six months ended January 31, 2020. The price that the Comp any
will pay for Shares in open market transactions will be the market price at the time of purchase and any
Shares that are purchased under the NCIB will be cancelled. The actual timing and number of Shares that
may be purchased pursuant to the NCIB will be subject to DPM’s ongoing capital requirements and
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management’s view that, from time to time, DPM’s Shares trade at prices well below the underlying value
of the Company and during these periods the repurchase of Shares represents an excellent opportunit y to
enhance shareholder value.
The Company commenced an NCIB on May 16, 2018 (the “Previous Bid”), which expired on May 15, 2019.
Under the Previous Bid, the Company sought and obtained approval to purchase up to 8,900,000 Shares
but did not purchase any Shares under the Previous Bid as it continued to fund the development of its Ada
Tepe mine in Bulgaria.
(1) Adjusted net earnings (loss), adjusted basic earnings (loss) per share, adjusted earnings before interest, taxes, depreciation and
amortization (“EBITDA”), all-in sustaining cost per ounce of gold, cash cost per tonne of complex concentrate smelted at Tsumeb, net
of by -product credits, free cash flow, and growth and sustaining capital expenditures have no standardized meaning under
International Financial Reporting Standards ("IFRS"). Presenting these measures from period to period helps management and
investors evaluate earnings and cash flow trends more readily in comparison with results from prior periods. Refer to the “Non-GAAP
Financial Measures” section of the Management’s Discussion and Analysis for the three and twelve months ended December 31,
2019 (the “MD&A”) for further discussion of these items, including reconciliations to IFRS measures.
KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
$ millions, except where noted
Ended December 31,
Three Months Twelve Months
2019 2018 2019 2018
Revenue 139.7 83.0 419.1 377.1
Cost of sales 98.2 65.7 306.4 272.9
Earnings (loss) before income taxes (85.3) (1.6) (57.0) 44.4
Net earnings (loss) attributable to common shareholders (92.7) (1.3) (70.9) 38.1
Basic earnings (loss) per share (0.52) (0.01) (0.40) 0.21
Adjusted EBITDA(1) 55.0 12.5 138.2 99.5
Adjusted net earnings (loss)(1) 15.9 (3.1) 34.3 29.0
Adjusted basic earnings (loss) per share(1) 0.09 (0.02) 0.19 0.16
Cash provided from operating activities 52.9 32.7 99.4 98.1
Free cash flow(1) 11.8 (4.3) 67.2 53.9
Metals contained in concentrate produced:
Gold (ounces) 69,491 45,848 230,592 201,095
Copper (‘000s pounds) 10,031 8,559 37,250 36,673
Silver (ounces) 57,783 35,127 180,370 183,283
Payable metals in concentrate sold:
Gold (ounces)(2) 79,109 33,455 198,664 163,595
Copper (‘000s pounds) 11,060 7,070 34,131 33,651
Silver (ounces) 64,212 29,218 156,159 165,035
All-in sustaining cost per ounce of gold(1) 679 864 725 660
Complex concentrate smelted at Tsumeb (tonnes) 48,614 63,061 215,289 232,043
Cash cost per tonne of complex concentrate smelted at
Tsumeb(1) 465 413 421 445
1) Adjusted EBITDA; adjusted net earnings (loss); adjusted basic earnings (loss) per share; free cash flow; all-in sustaining cost per ounce of gold; and cash
cost per tonne of complex concentrate smelted at Tsumeb, net of by-product credits, are not defined measures under IFRS. Refer to the “Non-GAAP
Financial Measures” section of the MD&A for reconciliations to IFRS measures.
2) Payable gold in concentrate sold in the fourth quarter of 2019 is approximately 3,000 ounces lower than the payable gold in concentrate sold reported in
the Company’s January 9, 2020 news release due to a finalization adjustment.
DPM’s audited consolidated financial statements for the years ended December 31, 2019 and 2018 and
MD&A for the three and twelve months ended December 31, 2019 are posted on the Company’s website
at www.dundeeprecious.com and have been filed on SEDAR at www.sedar.com.
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THREE-YEAR OUTLOOK
DPM continues to focus on increasing the profitability of its business by optimizing existing assets, including
Ada Tepe, which achieved full design tonnage at the mine and mill in September 2019. This is expected to
generate further growth in gold product ion and declining all-in sustaining costs as highlighted in the 2020
to 2022 outlook and supplemental detailed 2020 guidance below, as well as a significant increase in cash
flow.
2020 to 2022 Outlook
DPM is initiating a three -year outlook for gold and copper production, complex concentrate smelted, all-in
sustaining cost, cash cost per tonne of complex concentrate smelted, and sustaining capital expenditures
for 2020 to 2022, supplemented with detailed guidance for 2020.
DPM’s three-year outlook reflects the production schedules outlined in the Chelopech Technical Report
entitled “Mineral Resource & Reserve Update, Chelopech Project, Chelopech, Bulgaria” dated March 28,
2018 and the Technical Report fo r Ada Tepe entitled “Revised NI 43 -101 Technical Report, Ada Tepe
Deposit, Krumovgrad Project, Bulgaria”, dated November 7, 2017, adjusted where applicable to incorporate
the current mine plan for each operation and inflationary impacts since the filing of the relevant Technical
Report. For 2021 and 2022, all production and cost estimates do not yet incorporate any cost savings
initiatives, operating performance improvements in respect of mine and smelter throughput, potential
improvements to mine grades an d recoveries, or variations in third party processing mix at Tsumeb to
capitalize on the potential to process Chelopech concentrate at higher margins through other facilities.
These Technical Reports have been filed on SEDAR (www.sedar.com) and are available on the Company’s
website (www.dundeeprecious.com).
Highlights include:
• Strong gold production profile : Gold production is forecast to grow by approximately 20% in 2020,
based on the mid -point of 2020 guidance, as a result of a full -year contribution from Ada Tepe and
continued strong performance at Chelopech. Gold production is expected to be maintained at this
increased level through 2022.
• Stable copper production: Copper production for 2020 is expected to be in line with 2019, and stable
through 2022.
• All-in sustaining cost to trend lower: For 2020, all-in sustaining cost is expected to be slightly higher
compared to 2019, based on the mid-point of 2020 guidance. This increase is largely a result of normal
course cost inflation, as well as higher sustaining capital expenditures (see 2020 Guidance). For 2021
and 2022, all-in sustaining cost is expected to decline.
• Improving smelter performance: The smelter is expected to deliver a record level of throughput in
2020. Annual estimates for complex concentrate smelted vary due to the timing of scheduled
maintenance shutdowns, the next of which is planned for 2021, resul ting in an expected decrease in
complex concentrate smelted for that year, with 2022 expected to be in -line with the record level
expected for 2020. Cash cost per tonne of complex concentrate smelted is expected to remain stable
for each of 2020 and 2022, with an increase expected for 2021, as a result of a planned maintenance
shutdown.
• Sustaining capital expenditures expected to decline: Sustaining capital expenditures for 2020 are
expected to increase compared with 2019, reflecting the addition of Ada Tepe as a producing mine and
increased costs related to the ongoing cell construction and operation of the integrated mine waste
facility (“IMWF”), as well as investments to extend the life of Chelopech’s tailing s management facility.
For 2021 and 2022, susta ining capital expenditures are expected to be below 2020 levels, with 2022
being representative of the longer-term range.
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The Company’s three-year outlook is set out in the following table:
$ millions,
unless otherwise indicated
2019
Results
2020
Guidance
2021
Outlook
2022
Outlook
Gold contained in concentrate produced (‘000s
ounces)(1),(2)
Chelopech 174 163 – 184 145 – 165 145 – 165
Ada Tepe 57 94 – 115 105 – 130 105 – 130
Total 231 257 – 299 250 – 295 250 – 295
Copper contained in concentrate produced (million
pounds)
Chelopech 37 35 – 40 30 – 40 30 – 40
All-in sustaining cost per ounce of gold(3),(4),(5),(7) 725 700 – 780 670 – 750 670 – 750
Complex concentrate smelted (‘000s tonnes) 215 230 – 265 220 – 250 240 – 265
Cash cost per tonne of complex concentrate
smelted(3),(4)
421 370 – 450 395 – 475 380 – 455
Sustaining capital expenditures ($ millions)(3),(4),(6)
Chelopech 16 17 – 22 13 – 17 9 – 12
Ada Tepe 4 9 – 11 4 – 5 4 – 5
Tsumeb 16 12 – 15 16 – 20 16 – 20
Consolidated 37 43 – 54 33 – 42 29 – 37
1) Gold produced includes gold in pyrite concentrate produced of 47,000 to 53,000 ounces for 2020, and 39,000 to 44,000 ounces f or each of 2021 and 2022.
2) Metals contained in concentrate produced are prior to deductions associated with smelter terms.
3) All costs and capital expenditures are based on, where applicable, a Euro/US$ exchange rate of 1.15, US$/ZAR exchange rate of 14.50, a copper price of $2.75
per pound, and have not been adjusted for inflation.
4) All-in sustaining cost per ounce of gold, cash cost per tonne of complex concentrate smelted and sustaining capital expenditures have no standardized meaning
under IFRS. Refer to the “Non-GAAP Financial Measures” section of the MD&A for more information.
5) Includes the treatment charges, transportation and other selling costs related to the sale of pyrite concentrate, and payable gold in pyrite concentrate sold.
6) Consolidated sustaining capital expenditures include $5 million related to corporate digital initiatives for 2020.
7) All-in sustaining cost per ounce of gold represents Chelopech and Ada Tepe cost of sales less depreciation, amortization and other non-cash items plus treatment
charges, penalties, transportation and other selling costs , sustaining capital and lease expenditures, rehabilitation related accretion expenses and an allocated
portion of the Company’s general and administrative expenses and corporate social responsibility expenses, less by-product revenues in respect of copper and
silver, divided by the payable gold in concentrate sold.
The Company’s detailed guidance for 2020 is set out in the following table:
$ millions,
unless otherwise indicated Chelopech Ada Tepe Tsumeb
Consolidated
Guidance
Ore processed (‘000s tonnes) 2,090 – 2,200 765 - 892 - 2,855 – 3,092
Cash cost per tonne of ore processed(3),(4) 38 - 40 50 - 60 - -
Metals contained in concentrate produced(1),(2)
Gold (‘000s ounces) 163 - 184 94 - 115 - 257 - 299
Copper (million pounds) 35 - 40 - - 35 - 40
Payable metals in concentrate sold(1)
Gold (‘000s ounces) 135 - 153 94 - 114 - 229 - 267
Copper (million pounds) 33 – 38 - - 33 - 38
All-in sustaining cost per ounce of
gold(3),(4),(5),(8) - - - 700 - 780
Complex concentrate smelted (‘000s tonnes) - - 230 - 265 230 - 265
Cash cost per tonne of complex concentrate
smelted(3),(4) - - 370 - 450 370 - 450
Corporate general and administrative
expenses(3),(6) - - - 18 - 22
Exploration expenses(3) - - - 13 - 15
Evaluation expenses - - - 2 - 8
Sustaining capital expenditures(3),(4),(7) 17 – 22 9 – 11 12 – 15 43 - 54
Growth capital expenditures(3),(4) 4 – 7 0 – 1 1 – 2 5 - 10
1) Gold produced includes gold in pyrite concentrate produced of 47,000 to 53,000 ounces and payable gold sold includes payable gold in pyrite concentrate sold
of 29,000 to 33,000 ounces.
2) Metals contained in concentrate produced are prior to deductions associated with smelter terms.
3) Based on Euro/US$ exchange rate of 1.15, US$/ZAR exchange rate of 14.50 and copper price of $2.75 per pound, where applicable .