DUNDEE PRECIOUS METALS ANNOUNCES 2021 SECOND QUARTER RESULTS; DELIVERED RECORD QUARTERLY GOLD PRODUCTION AND GENERATED RECORD FINANCIAL RESULTS (All monetary figures are expressed in U.S. dollars
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DUNDEE PRECIOUS METALS ANNOUNCES 2021 SECOND QUARTER RESULTS;
DELIVERED RECORD QUARTERLY GOLD PRODUCTION AND GENERATED RECORD FINANCIAL RESULTS
(All monetary figures are expressed in U.S. dollars unless otherwise stated)
Toronto, Ontario, July 29, 2021 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the “Company”)
today announced its operating and financial results for the second quarter of 2021. All operational and
financial information contained in this news release are related to continuing operations, unless otherwise
stated.
SECOND QUARTER FINANCIAL AND OPERATING HIGHLIGHTS:
Record gold production – Achieved record quarterly gold production of 85,128 ounces. Copper
production was 10.0 million pounds;
Solid smelter performance – Throughput of 59,627 tonnes of complex concentrate;
Strong cost performance at all operations – Reported an all-in sustaining cost per ounce of gold(1) of
$605 and a cash cost per tonne of complex concentrate smelted (1) of $400, both below the low-end of
2021 guidance;
Record quarterly free cash flow generation – Generated $75.7 million in cash flow from operating
activities and a record $67.1 million of free cash flow(1);
Record quarterly earnings – Reported record net earnings attributable to common shareholders from
continuing operations of $67.5 million and adjusted net earnings(1) of $67.1 million or $0.37 per share;
Dividends – Declared third quarter dividend of $0.03 per common share payable on October 15, 2021 to
shareholders of record on September 30, 2021;
Sale of MineRP – Closed sale of MineRP Holdings Inc. (“MineRP”) bringing in cash proceeds of $45.8
million;
Acquisition of INV – Announced acquisition of INV Metals Inc. (“INV”) adding the Loma Larga gold
project, an attractive development project in Ecuador, to the Company;
Growing financial strength – Ended the quarter with $260.5 million in cash and an undrawn $150 million
long-term revolving credit facility (“RCF”), as well as an investment portfolio of $76.9 million and no debt;
and
2021 guidance – On track to meet previously issued 2021 guidance at all operations.
“We delivered exceptional performance at our mines in the second quarter, achieving record gold production
and impressive all-in sustaining cost performance. Our strong operating results generated record net earnings
and free cash flow,” said David Rae, President and Chief Executive Officer. “Earlier this week, we completed
the acquisition of the Loma Larga gold project, adding a high -quality, advanced stage gold asset to our
development pipeline with the potential to generate meaningful production growth and significant value.”
“Our strong gold production profile and significant free cash flow generation, combined with our operating
track record and unique skills in innovation and building partnerships with local communities, positions DPM
very well to continue delivering value for all stakeholders.”
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KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
$ millions, except where noted
Ended June 30,
Three Months Six Months
2021 2020 2021 2020
Revenue 174.7 154.0 312.7 301.8
Cost of sales 89.9 82.9 175.5 169.8
Earnings before income taxes 74.9 53.0 110.2 104.4
Net earnings attributable to common shareholders from
continuing operations 67.5 48.0 88.2 93.7
Net earnings attributable to common shareholders (1) 88.1 48.9 108.2 92.1
Basic earnings per share from continuing operations 0.37 0.27 0.49 0.52
Basic earnings per share(1) 0.48 0.27 0.60 0.51
Adjusted EBITDA(2) 100.6 77.6 166.8 158.2
Adjusted net earnings(2) 67.1 44.1 98.1 92.7
Adjusted basic earnings per share(2) 0.37 0.25 0.54 0.52
Cash provided from operating activities 75.7 73.6 123.3 84.6
Free cash flow(2) 67.1 59.9 118.1 110.3
Metals contained in concentrate produced:
Gold (ounces)
Chelopech 52,638 49,088 89,517 91,719
Ada Tepe 32,490 32,277 65,869 62,609
Total gold in concentrate produced 85,128 81,365 155,386 154,328
Copper (‘000s pounds) 10,013 9,378 17,187 18,759
Payable metals in concentrate sold:
Gold (ounces)
Chelopech 39,229 36,723 74,763 75,488
Ada Tepe 31,201 34,115 64,234 63,604
Total payable gold in concentrate sold 70,430 70,838 138,997 139,092
Copper (‘000s pounds) 9,468 8,543 16,747 18,063
Cash cost per tonne of ore processed(2):
Chelopech 50.09 37.65 45.83 36.98
Ada Tepe 51.86 44.00 47.45 41.99
All-in sustaining cost per ounce of gold(2) 605 729 583 662
Complex concentrate smelted at Tsumeb (tonnes) 59,627 58,516 82,636 123,526
Cash cost per tonne of complex concentrate smelted, net
of by-product credits(2) 400 345 558 352
1) These measures include discontinued operations.
2) Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA’); adjusted net earnings; adjusted basic earnings per share; free cash
flow; cash cost per tonne of ore processed; all-in sustaining cost per ounce of gold; and cash cost per tonne of complex concentrate smelted, net of by-
product credits are not defined measures under International Financial Reporting Standards (“IFRS”). Refer to the “Non-GAAP Financial Measures”
section of the Management’s Discussion and Analysis for the three and six months ended June 30, 2021 (the “MD&A”) for more details, including
reconciliations to IFRS measures.
Second Quarter Operating Highlights
In the second quarter of 2021, the Company achieved record quarterly gold production, free cash flow and
net earnings reflecting continued strong operating performance at Chelopech and Ada Tepe, combined
with strong gold prices. Production at Chelopech increa sed significantly compared with the prior quarter,
as a result of mining higher grade zones and improved recoveries, while Ada Tepe’s strong gold production
was in line with plan. The Tsumeb smelter delivered solid performance, with complex concentrate sme lted
increasing compared with the prior quarter, following completion of the planned Ausmelt furnace
maintenance in March 2021. With strong performance in the first half of the year, the Company is on track
to meet its previously issued guidance for 2021 at each of its operations.
Net Earnings and Adjusted Net Earnings
Net earnings attributable to common shareholders were $88.1 million ($0.48 per share) and $108.2 million
($0.60 per share) in the second quarter and first six months of 2021, respectively, including a gain of $20.7
million on the disposition of MineRP, compared to $48.9 million ($0.27 per share) and $92.1 million ($0.51
per share) in the corresponding periods in 2020.
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Net earnings attributable to common shareholders from continuing operations in the second quarter and first
six months of 2021 were $67.5 million ($0.37 per share) and $88.2 million ($0.49 per share), respectively,
compared to $48.0 million ($0.27 per share) and $93.7 million ($0.52 per share) in the corresponding periods
in 2020.
Net earnings attributable to common shareholders from continuing operations in the second quarter and first
six months of 2021 and 2020 were impacted by unrealized losses on Sabina Gold and Silver Corp. (“Sabina”)
special warrants and deferred income tax adjustments not related to current period earnings, both of which are
not reflective of the Company’s underlying operating performance and are excluded from adjusted net earnings.
Adjusted net earnings in the second quarter of 2021 were $67.1 million ($0.37 per share) compared to $44.1
million ($0.25 per share) in the corresponding period in 2020. This increase was due primarily to higher realized
gold and copper prices(1) and lower general and administrative expenses related to share-based compensation
as a result of changes in DPM’s share price, partially offset by a weaker U.S. dollar.
Adjusted net earnings in the first six months of 2021 were $98.1 million ($0.54 per share) compared to $92.7
million ($0.52 per share) in the corresponding period in 2020. Th is increase was due primarily to the
maintenance shutdown at Tsumeb, a weaker U.S. dollar and higher income taxes reflecting higher
earnings, partially offset by higher realized gold and copper prices.
Adjusted EBITDA
Adjusted EBITDA in the second quarter of 202 1 was $ 100.6 million compared to $ 77.6 million in the
corresponding period in 2020 due primarily to higher realized gold and copper prices and lower general and
administrative expenses related to share-based compensation as a result of changes in DPM’s share price,
partially offset by a weaker U.S. dollar.
Adjusted EBITDA in the first six months of 2021 was $166.8 million c ompared to $158.2 mi llion in the
corresponding period in 20 20 due primarily to the maintenance shutdown at Tsumeb and a weaker U.S.
dollar, partially offset by higher realized gold and copper prices.
Production, Delivery and Cost Measures
Gold contained in concentrate produced in the second quarter of 2021 increased by 5% to 85,128 ounces
due primarily to higher gold grades as a result of mining higher grade zones and improved recoveries at
Chelopech, and copper production increased by 7% to 10.0 million pounds due prim arily to higher copper
grades and recoveries, partially offset by lower ore processed, in each case, relative to the corresponding
period in 2020.
Gold contained in concentrate produced in the first six months of 2021 of 155,386 ounces was comparable
to the corresponding period in 2020 reflecting higher gold grades offset by lower ore processed, and copper
production decreased by 8% to 17.2 million pounds due primarily to lower copper grades, relative to the
corresponding period in 2020.
Payable gold in concentrate sold in the second quarter of 2021 of 70,430 ounces was comparable to the
corresponding period in 2020. Payable copper in concentrate sold in the second quarter of 2021 of 9.5
million pounds was 11% higher than the corresponding period in 2020 consistent with the increase in copper
production as a result of higher copper grades and recoveries.
Payable gold in concentrate sold in the first six months of 2021 of 138,997 ounces was comparable to the
corresponding period in 2020. Payable copper in concentrate sold in the first six months of 2021 of 16.8
million pounds was 7% lower than the corresponding period in 2020 consistent with the decrease in copper
production as a result of lower copper grades.
Complex concentrate smelted at Tsumeb in the second quarter of 2021 of 59,627 tonnes was comparable
to the corresponding period in 2020. Complex concentrate smelted at Tsumeb in the first six months of
2021 of 82,636 tonnes was 33% lower than the corresponding period in 2020 due primarily to the planned
Ausmelt furnace maintenance shutdown, which was completed during the first quarter of 2021.
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Cost of sales in the second quarter and first six months of 2021 of $ 89.9 million and $175.5 million,
respectively, was $7.0 million and $5.7 million higher than the corresponding periods in 2020 due primarily
to a weaker U.S. dollar relative to the ZAR and Euro and higher royalties at Ada Tepe reflecting a higher
profit-based royalty rate.
All-in sustaining cost per ounce of gold in the second quarter and first six months of 2021 of $605 and $583,
respectively, was 17% and 12% lower than the corresponding period s in 2020 due primarily to higher by -
product credits reflecting higher copper prices and lower allocated general and administrative expenses,
partially offset by a stronger Euro relative to the U.S. dollar and higher cash outlays for sustaining capital
expenditures.
Cash cost per tonne of complex concentrate smelted in the second quarter of 2021 of $400 was $55 higher
than the corresponding period in 2020 due primarily to a stronger ZAR relative to the U.S. dollar and lower
acid by-product credits as a result of the timing of deliveries. Cash cost per tonne of complex concentrate
smelted in the first six months o f 2021 of $ 558 was $206 higher than the corresponding period in 2020
reflecting the fixed cost nature of the facility and the impact of lower volumes of complex concentrate
smelted resulting from the longer-than anticipated maintenance shutdown, which was completed in the first
quarter of 2021, combined with a stronger ZAR relative to the U.S. dollar.
A table comparing production, delivery and cash cost measures for the second quarter and first six months
of 2021 against 2021 guidance can be found on page 8 of this news release.
Cash Provided from Operating Activities
Cash provided from operating activities in the second quarter of 2021 of $ 75.7 million was $ 2.1 million
higher than the corresponding period in 2020 due primarily to the fulfillment of the prepaid forward gold
sales agreement at Ada Tepe in December 2020 and higher realized gold and copper prices, partially offset
by an unfavourable period over period change related to working capital . Cash provided from operating
activities in the first six months of 2021 of $ 123.3 million was $38.7 million higher than the corresponding
period in 2020 due primarily to a favourable period over period change related to working capital, the
fulfillment of the prepaid forward gold sales agreement at Ada Tepe in December 2020 and higher realized
gold and copper prices, partially offset by lower volumes of complex concentrate smelted as a result of the
planned Ausmelt furnace maintenance shutdown at Tsumeb in 2021.
During the second quarter and first six months of 2020, Ada Tepe delivered 6,992 ounces and 20,102
ounces of gold, respectively, pursuant to the prepaid forward gold sales arrangement which resulted in $9.6
million and $27.5 million of deferred revenue being recognized in revenue during the second quarte r and
first six months of 2020, respectively, 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 December 2020, the
Company completed its final delivery of gold under this arrangement.
For a detailed discussion on the factors affecting cash provided from operating activities, refer to the
“Liquidity and Capital Resources” section contained in the MD&A.
Free Cash Flow
Free cash flow in the second quarter of 2021 was $67.1 million compared to $59.9 million in the
corresponding period in 2020 due primarily to higher realized gold and copper prices including the fulfillment
of the prepaid forward gold sales agreement at Ada Tepe in December 2020, partially offset by higher cash
outlays for sustaining capital expenditures.
Free cash flow in the first six months of 2021 was $118.1 million compared to $110.3 million in the
corresponding period in 2020 due primarily to higher realized gold and copper prices including the fulfillment
of the prepaid forward gold sales agreement at Ada Tepe in December 2020, partially offset by lower
volumes of complex concentrate smelted as a result of the maintenance shutdown at Tsumeb in 2021 and
higher cash outlays for sustaining capital expenditures.
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Capital expenditures
Capital expenditures incurred during the second quarter and first six months of 2021 were $15.8 million and
$34.8 million, respectively, compared to $11.6 million a nd $21.2 million in the corresponding periods in
2020.
Sustaining capital expenditures (1) incurred during the second quarter and first six months of 2021 were
$11.9 million and $ 29.3 million, respectively, compared to $10.3 million and $17.1 million in the
corresponding periods in 2020. These increases were due primarily to the planned maintenance shutdown
at Tsumeb and accelerated grade control drilling at Ada Tepe . Growth capital ex penditures(1) incurred
during the second quarter and first six months of 2021 were $3.9 million and $5.5 million, respectively,
compared to $1.3 million and $4.1 million in the corresponding periods in 2020.
Timok gold project, Serbia
On February 23, 2021, DPM released the positive results of a pre -feasibility study (“PFS”) on the Timok
gold project , and is now proceeding with a feasibility study (“FS”). The project is currently expected to
produce approximately 547,000 gold ounces over an eight-year mine life, with an average annual gold
production of 80,000 ounces for the first six years, at an all-in sustaining cost of $693 per ounce of gold (life
of mine average). Initial capital is currently expected to be $211 million, with several initiatives to reduce
the initial capital estimate and optimize overall economics to be evaluated as part of the FS. The PFS
focused on the oxide and transitional portion of the project’s Mineral Resource, with additional upside
potential from the sulphides to be considered in parallel with the FS following further metallurgical test work.
The FS is expected to be completed in the first quarter of 2022 with the results planned for release in the
second quarter of 2022.
For additional details, including key assumptions, risks and parameters relating to the FS refer to the news
release entitled “Dundee Precious Metals Announces Positive Pre-Feasibility Study and Encouraging New
Exploration Results for the Timok Gold Project in Serbia” dated February 23, 2021 and the Technical Report
entitled “NI 43 -101 Technical Report, Timok Project, Pre -Feasibility Study, Zagubica, Serbi a” effective
March 30, 2021, which have been posted on the Company’s website at www.dundeeprecious.com and
have been filed on SEDAR at www.sedar.com.
Exploration
At Chelopech, during the quarter significant effort was dedicated towards testing conceptual targets within
the Brevene exploration license as well as the completion of scout drilling at the Vozdol, Petrovden and
Sharlo Dere near-mine prospects . This phase of work will be continuing over the summer season with
additional geochemical sampling and field mapping campaigns planned in support . Re-logging and re -
interpretation of the results from winter drilling at West Shaft and Wedge are underway to incorporate new
observations and concepts that relate to the occurrence of higher grade mineralization. The review will be
used to support and optimize infill and mineral resource delineation drilling programs planned on the Sveta
Petka Exploration license, subsequent to the granting of an extension of the exploration license, expected
in late 2021.
Drilling activities have been completed at the Surnak, Synap and Kuklitsa prospects, within the Khan Krum
mining concession, as part of sustained efforts to support an extension of the Ada Tepe project life. At
Surnak, a new geological model ha s been completed in order to support internal technical assessments.
Currently the focus has shifted towards a significant camp wide surface data evaluation and compilation
program, that include s additional mapping programs as well as geochemical and geophysical surve ys to
support exploration targeting exercises.
At Timok, drilling programs were completed at the Chocolate, Chocolate South, Frasen and Čoka Rakita
targets, all located south-east of the Bigar Hill deposit. Drilling was focused on infill and delineation drilling
of shallow oxide sediment hosted gold and of higher grade, sulphide-hosted gold mineralization. The results
of the drilling programs returned encouraging results, helping to improve geologic confidence at Chocolate.
Subsequent plans for the next qu arter include scout and target delineation drilling on the adjacent Umka
exploration license, south of Bigar Hill, as well as other regional early stage exploration programs.
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Financial Position and Liquidity
As at June 30, 2021, the Company had no debt, a cash position of $260.5 million, up from $175.7 million
at the end of the first quarter , investments valued at $ 76.9 million primarily related to its 8.9% interest in
Sabina and a 23.5% interest in INV, as well as $150.0 million of available capital under its revolving credit
facility.
Capital Allocation – INV Acquisition and Declaration of Dividend
As part of its strategy, the Company adheres to a disciplined capital allocation framework that is based on
three fundamental considerations – balance sheet strength, reinvestment in the business, and the return of
capital to shareholders.
On July 26, 2021, the Company acquired all of the issued and outstanding shares it did not already own of
INV, the principal assets of which are comprised of the Loma Larga gold project and certain other
exploration licenses. This transaction was accounted for as an asset acquisition and the total consideration
for the acquisition consists of: i) 0.0910 DPM common shares for each INV common share acquired for a
total of 10,664,501 DPM common shares at a market price of $5.72 (Cdn$7.19) per share with an aggregate
value of $61.0 million; ii) 1,119,728 DPM stock options with a fair market value of $2.4 million in exchange
for 12,304,700 outstanding INV stock options which vested immediately as at the date of acquisition ; and
iii) transaction costs of $2.5 million. The total consideration was allocated primarily to the exploration and
evaluation assets related to the Loma Larga gold project. This acquisition leverages DPM’s proven
strengths in developing world-class assets and applying industry-leading Environmental Social Governance
(“ESG”) solutions to unlock the significant potential of the Loma Larga gold project.
On February 11, 2021 and May 5, 2021, the Company declared a quarterly dividend of $0.03 (202 0 –
$0.02) per common share to shareholders of record on March 31, 2021 and June 30, 2021, respectively,
resulting in total dividend distributions of $10.9 million (2020 – $7.2 million) recognized against its retained
earnings in the condensed interim cons olidated statements of changes in shareholders’ equity for the six
months ended June 30, 2021. The Company paid an aggregate of $10.9 million (2020 – $3.6 million) of
dividends which w ere included in cash used in financing activities in the condensed interim consolidated
statements of cash flows for the six months ended June 30, 202 1 and recognized a dividend payable of
$5.5 million (December 31, 2020 – $5.4 million) in accounts payable and accrued liabilities in the condensed
interim consolidated statements of financial position as at June 30, 2021.
On July 29, 2021, the Company declared a dividend of $0.03 per common share payable on October 15,
2021 to shareholders of record on September 30, 2021.
The Company’s dividend has been set at a level that is considered to be sustainable 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. The declaration, amount and timing of
any future dividend are 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, and its outlook for sustainable free cash flow, capital requirements, and other factors considered
relevant by the Board of Directors.
2021 Guidance
Following strong performance in the first half of the year , DPM is on track to meet its previously issued
guidance for 2021 for all operations , including gold production of 271,000 to 317,000 ounces , copper
production of 34 to 39 million pounds, and complex concentrate smelted of 200,000 to 220,000 tonnes. The
2021 guidance for growth capital expenditures has been revised to include estimated costs of $5 million to
$7 million over the balance of 2021 related to advancing the Loma Larga gold project acquired in July 2021.
For additional information regarding the Company’s detailed guidance for 2021, please refer to the “Three-
Year Outlook” section of the MD&A.
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COVID-19
To date, with the proactive measures taken by each of the Company’s operations, the COVID-19 pandemic
has had minimal impact on DPM’s production. DPM is closely monitoring the COVID -19 situation and has
put measures in place to safeguard the health of its wor kforce and support the continuity of its operations.
Given the highly uncertain and evolving nature of this situation, the Company is not able to reliably estimate
the likelihood, timing, duration, severity and scope of this pandemic and the potential impa ct it could have
on the Company’s future operating and financial results. As a result, the 2021 guidance is predicated on
the COVID-19 pandemic continuing to be effectively managed with minimal impact on DPM’s operations.
For additional details on COVID-19, including the related risks faced by the Company, refer to the “Overview
– Operational and Financial Highlights” and “Risk and Uncertainties” sections contained in th e MD&A.
(1) Adjusted net earnings, adjusted basic earnings per share, adjusted EBITDA, average realized gold and copper prices, all-in
sustaining cost per ounce of gold, cash cost per tonne of complex concentrate smelted, net of by-product credits, free cash flow, and
growth and sustaining capital expenditures are Non-GAAP measures and have no standardized meaning under 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 MD&A for further discussion
of these items, including reconciliations to IFRS measures.
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Selected Production, Delivery and Cost Performance Versus Guidance
Q2 2021 YTD June 2021 2021
Consolidated
Guidance Chelopech Ada Tepe Tsumeb Consolidated Chelopech Ada Tepe Tsumeb Consolidated
Ore processed (‘000s tonnes) 535.6 207.0 - 742.6 1,079.2 425.7 - 1,504.9 2,925 – 3,125
Metals contained in concentrate
produced
Gold (‘000s ounces) 52.6 32.5 - 85.1 89.5 65.9 - 155.4 271 – 317
Copper (million pounds) 10.0 - - 10.0 17.2 - - 17.2 34 – 39
Payable metals in concentrate
sold
Gold (‘000s ounces) 39.2 31.2 - 70.4 74.8 64.2 - 139.0 243 – 285
Copper (million pounds) 9.5 - - 9.5 16.7 - - 16.7 31 – 36
All-in sustaining cost per ounce
of gold(1) 638 563 - 605 649 507 - 583 625 – 695
Complex concentrate smelted
(‘000s tonnes) - - 59.6 59.6 - - 82.6 82.6 200 – 220
Cash cost per tonne of complex
concentrate smelted - - 400 400 - - 558 558 450 – 520
1) Chelopech’s all-in sustaining cost per ounce of gold is expected to range between $685 and $755. Ada Tepe’s all -in sustaining cost per ounce of gold is expected to range between $560 and $630.