DUNDEE PRECIOUS METALS ANNOUNCES 2022 SECOND QUARTER RESULTS; DELIVERS ANOTHER STRONG QUARTER OF FREE CASH FLOW (All monetary figures are expressed in U.S. dollars
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DUNDEE PRECIOUS METALS ANNOUNCES 2022 SECOND QUARTER RESULTS;
DELIVERS ANOTHER STRONG QUARTER OF FREE CASH FLOW
(All monetary figures are expressed in U.S. dollars unless otherwise stated)
Toronto, Ontario, July 28, 2022 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the “Company”)
today announced its operating and financial results for the second quarter of 2022. All operational and
financial information contained in this news release are related to continuing operations, unless otherwise
stated.
HIGHLIGHTS:
• Strong metals production – Produced 72,904 ounces of gold and 8.8 million pounds of copper, in line
with 2022 guidance;
• Excellent all-in sustaining cost performance – Reported cost of sales per ounce of gold sold(1) of $906,
and an all-in sustaining cost per ounce of gold sold(2) of $792, supporting a year-to-date cost that is below
the low end of the 2022 guidance range;
• Attractive free cash flow generation – Delivered $71.8 million in cash provided from operating activities
and $41.2 million of free cash flow(2);
• Strong adjusted net earnings – Generated net earnings attributable to common shareholders from
continuing operations of $33.5 million or $0.18 per share, and adjusted net earnings(2) of $33.3 million or
$0.17 per share;
• Growing financial strength – Ended the quarter with $423.3 million in cash, an investment portfolio of
$35.8 million, an undrawn $150.0 million long-term revolving credit facility (“RCF”) and no debt;
• Returning capital to shareholders – Declared 2022 third quarter dividend of $0.04 per common share
payable on October 17 , 2022 to shareholders of record on September 30, 202 2 and repurchased
1,598,800 common shares for a total value of $9.5 million in the first six months of 2022; and
• Continued progress at Loma Larga – Continued to advance permitting for the project, receiving the
technical viability certificate for the filtered tailing storage facility in June, and received a positive decision
in the Constitutional Protection Action (the “Action”) which upheld the valid ity of the Company’s
environmental permits for exploration activity.
“During the second quarter, w e delivered strong gold production and excellent cost performance at our
mines. On a year-to-date basis we have achieved an all-in sustaining cost below our 2022 guidance range,”
said David Rae, President and Chief Executive Officer. “Based on our strong operating performance and
our outlook for the balance of the year, our mining operations are on track to achieve their 2022 guidance.”
“We continue to advance permitting activities for the Loma Larga project in Ecuador, and at the end of June,
achieved a milestone with the approval for the tailing storage facility. As we progress towards receipt of the
project’s environmental licence, we are fully committed to working collaboratively and transparently with all
stakeholders involved with the project.”
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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. This measure
is before by-product credits, while all-in sustaining cost per ounce of gold sold is net of by-product credits.
2) All-in sustaining cost per ounce of gold sold ; free cash flow; and adjusted net earnings are non-GAAP financial measures or ratios. These measures have n o
standardized meanings under International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures presented by other
companies. Refer to the “Non-GAAP Financial Measures” section commencing on page 13 of this news release for more information, including reconciliations
to IFRS measures.
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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 prep ared in accordance with IFRS. Non -GAAP
financial measures and ratios, together with other financial measures calculated in accordance with IFRS,
are considered to be important factors that assist investors in assessing the Company’s performance.
The Company uses the following non-GAAP financial measures and ratios in this news release:
• mine cash cost
• cash cost per tonne of ore processed
• mine cash cost of sales
• cash cost per ounce of gold sold
• all-in sustaining cost
• all-in sustaining cost per ounce of gold sold
• smelter cash cost
• cash cost per tonne of complex concentrate smelted
• adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”)
• adjusted net earnings
• adjusted basic earnings per share
• cash provided from operating activities, before changes in working capital
• free cash flow
• average realized metal prices
For a detailed description of each of the non-GAAP financial measures and ratios used in this news release
and a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the “Non-
GAAP Financial Measures” section commencing on page 13 of this news release.
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KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
$ millions, except where noted
Ended June 30,
Three Months Six Months
2022 2021 2022 2021
Revenue 134.5 174.7 288.3 312.7
Cost of sales 86.8 89.9 184.1 175.5
Earnings before income taxes 40.9 74.9 74.8 110.2
Net earnings attributable to common shareholders from
continuing operations 33.5 67.5 60.3
88.2
Net earnings attributable to common shareholders (1) 33.5 88.1 60.3 108.2
Basic earnings per share from continuing operations 0.18 0.37 0.32 0.49
Basic earnings per share(1) 0.18 0.48 0.32 0.60
Adjusted EBITDA(2) 68.6 100.6 138.1 166.8
Adjusted net earnings(2) 33.3 67.1 70.3 98.1
Adjusted basic earnings per share(2) 0.17 0.37 0.37 0.54
Cash provided from operating activities 71.8 75.7 150.3 123.3
Free cash flow(2) 41.2 67.1 89.9 118.1
Capital expenditures incurred:
Growth(3) 7.6 3.9 13.7 5.5
Sustaining(4) 21.2 11.9 30.0 29.3
Total capital expenditures 28.8 15.8 43.7 34.8
Metals contained in concentrate produced:
Gold (ounces)
Chelopech 49,245 52,638 90,745 89,517
Ada Tepe 23,659 32,490 45,074 65,869
Total gold in concentrate produced 72,904 85,128 135,819 155,386
Copper (‘000s pounds) 8,809 10,013 16,502 17,187
Payable metals in concentrate sold:
Gold (ounces)
Chelopech 39,681 39,229 75,994 74,763
Ada Tepe 23,028 31,201 44,096 64,234
Total payable gold in concentrate sold 62,709 70,430 120,090 138,997
Copper (‘000s pounds) 7,242 9,468 13,783 16,747
Cost of sales per tonne of ore processed(5):
Chelopech 57.22 60.33 63.15 60.40
Ada Tepe 122.29 115.16 121.92 111.62
Cash cost per tonne of ore processed(2):
Chelopech 48.39 50.09 48.23 45.83
Ada Tepe 53.57 51.86 53.41 47.45
Cost of sales per ounce of gold sold(6) 906 797 1,000 811
All-in sustaining cost per ounce of gold sold(2) 792 605 741 583
Complex concentrate smelted (tonnes) 21,054 59,627 68,297 82,636
Cost of sales per tonne of complex concentrate smelted (7) 1,426 567 938 761
Cash cost per tonne of complex concentrate smelted(2) 973 400 632 558
1) These measures include discontinued operations for the second quarter and first six months of 2021.
2) Adjusted 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 are non-GAAP financial measures or ratios. Refer to the “Non-GAAP Financial Measures”
section commencing on page 13 of this news release for more information, including reconciliations to IFRS measures.
3) Growth capital expenditures are generally defined as capital expenditures that expand existing capacity, increase life of ass ets 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 ea ch period.
4) 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.
5) Cost of sales per tonne of ore processed represents cost of sales for Chelopech and Ada Tepe, respectively, divided by tonnes of ore processed.
6) 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.
7) Cost of sales per tonne of complex concentrate smelted represents cost of sales for Tsumeb, divided by tonnes of complex concentrate smelted.
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Second Quarter Operating Highlights
In the second quarter of 2022, the Company delivered strong operating performance at Chelopech and Ada
Tepe, benefitting from higher than expected gold grades and recoveries. Gold grades at Ada Tepe are
expected to increase further in the fourth quarter in line with the mine plan. At Tsumeb, the Company completed
the planned Ausmelt furnace maintenance shutdown and resumed full operations at the beginning of July. This
45-day maintenance shutdown included additional maintenance to the off-gas and baghouse systems, which
is expected to improve operating performance of the smelter moving forward.
Net Earnings and Adjusted Net Earnings
Net earnings attributable to common shareholders from continuing operations in the second quarter and first
six months of 2022 were $33.5 million ($0.18 per share) and $60.3 million ($0.32 per share), respectively,
compared to $67.5 million ($0.37 per share) and $88.2 million ($0.49 per share) in the corresponding periods
in 2021.
Net earnings attributable to common shareholders from continuing operations in the second quarter and first
six months of 2022 and 2021 were impacted by Tsumeb restructuring costs related to a comprehensive
initiative directed at optimizing the cost structure of the smelter, unrealized gains or losses on Sabina Gold and
Silver Corp. (“Sabina”) special warrants and deferred income tax adjustments not related to current period
earnings, all 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 2022 were $33.3 million ($0.17 per share) compared to $67.1
million ($0.37 per share) in the corresponding period in 2021 due primarily to the planned Ausmelt furnace
maintenance shutdown at Tsumeb completed in the second quarter of 2022, lower volumes of metals sold and
higher freight charges at Chelopech, partially offset by higher estimated metal recoveries at Tsumeb, a stronger
U.S. dollar and higher realized gold and copper prices.
Adjusted net earnings in the first six months of 2022 were $70.3 million ($0.37 per share) compared to $98.1
million ($0.54 per share) in the corresponding period in 2021. This decrease was due primarily to lower volumes
of metals sold, higher freight charges at Chelopech, lower volumes of complex concentrate smelted at Tsumeb
and higher share-based compensation, partially offset by higher realized metal and sulphuric acid prices, higher
estimated metal recoveries at Tsumeb, a stronger U.S. dollar and lower treatment charges at Chelopech.
Earnings before Income Taxes and Adjusted EBITDA
Earnings before income taxes in the second quarter and first six months of 2022 was $40.9 million and
$74.8 million, respectively, compared to $ 74.9 million and $ 110.2 million in the corresponding periods in
2021, reflecting the same factors that affected net earnings attributable to common shareholders from
continuing operations, except for income taxes, which is excluded from earnings before income taxes.
Adjusted EBITDA in the second quarter and first six months of 2022 was $68.6 million and $138.1 million,
respectively, compared to $100.6 million and $166.8 million in the corresponding periods in 2021, reflecting
the same factors that affected adjusted net earnings, except for interest, income tax, depreciation and
amortization, which are excluded from adjusted EBITDA.
Production, Delivery and Cost Measures
Gold contained in concentrate produced in the second quarter and first six months of 2022 of 72,904 ounces
and 135,819 ounces, respectively, was 14% and 13% lower than the corresponding period s in 2021 due
primarily to lower expected gold grades at Ada Tepe as a result of mining in lower gold grade zones, partially
offset by improved gold recoveries at Chelopech. Copper production in the second quarter of 2022
decreased by 12% to 8.8 million pounds due primarily to lower copper grades and recoveries, and cop per
production in the first six months of 2022 decreased by 4% to 16.5 million pounds due primarily to lower
copper grades, partially offset by higher copper recoveries, relative to the corresponding periods in 2021.
Payable gold in concentrate sold in the second quarter and first six months of 2022 of 62,709 ounces and
120,090 ounces, respectively, was 11% and 14% lower than the corresponding periods in 2021, consistent
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with lower gold production. Payable copper in concentrate sold in the second quarter and first six months
of 2022 of 7.2 million pounds and 13.7 million pounds, respectively, was 24% and 18% lower than the
corresponding periods in 2021 due primarily to lower copper production and timing of deliveries.
Complex concentrate smelted at Tsumeb during the second quarter of 2022 of 21,054 tonnes was 65%
lower than the corresponding period in 2021 due primarily to the planned Ausmelt furnace maintenance
shutdown, which was completed during the second quarter of 2022 . Originally planned for 30 day s, the
maintenance shutdown was extended to 45 days for additional maintenance to the off -gas and baghouse
systems, which is expected to improve operational performance moving forward. Complex concentrate
smelted at Tsumeb during the first six months of 20 22 of 68,297 tonnes was 17% lower than the
corresponding period in 2021 due primarily to unplanned downtime as a result of maintenance to the off -
gas and baghouse systems during the first six months of 2022.
Revenue in the second quarter of 2022 of $ 134.5 million was $40.2 million lower than the corresponding
period in 2021 due primarily to the planned Ausmelt furnace maintenance shutdown at Tsumeb and lower
volumes of metals sold , partially offset by higher estimated metal recoveries at Tsumeb as a r esult of
extensive clean-up and measurement activities during the shutdown resulting in higher estimated levels of
material-in-circuit. Revenue in the first six months of 2022 of $ 288.3 million was $ 24.4 million lower than
the corresponding period in 2021 due primarily to lower volumes of metal sold and lower volumes of
complex concentrate smelted, partially offset by higher realized metal and sulphuric acid prices, higher
estimated metal recoveries at Tsumeb and lower treatment charges at Chelopech as a result of increased
deliveries to third-party smelters.
Cost of sales in the second quarter of 2022 of $86. 8 million was $3.1 million lower than the corresponding
period in 2021 due primarily to lower volumes of complex concentrate smelted at Tsumeb and a stronger
U.S. dollar, partially offset by higher prices for electricity and direct materials in Bulgaria. Cost of sales in
the first six months of 2022 of $184.1 million was $8.6 million higher than the corresponding period in 2021
due primarily to higher prices for electricity and direct materials in Bulgaria, partially offset by a stronger
U.S. dollar and lower royalties at Ada Tepe.
All-in sustaining cost per ounce of gold sold in the second quarter of 2022 of $ 792 was 31% higher than
the corresponding p eriod in 2021 due primarily to higher freight charges at Chelopech, lower by -product
credits reflecting lower copper production , lower volumes of gold sold and higher allocated general and
administrative expenses as a result of changes in DPM’s share price , partially offset by a stronger U.S.
dollar. All-in sustaining cost per ounce of gold sold in the first six months of 2022 of $ 741 was 27% higher
than the corresponding period in 2021 due primarily to higher freight charges at Chelopech, lower volumes
of gold sold , higher allocated general and administrative expenses and higher prices for electricity and
direct materials in Bulgaria, partially offset by a stronger U.S. dollar and lower treatment charges at
Chelopech.
Cash cost per tonne of complex concentrate smelted in the second quarter of 2022 of $ 973 was $573
higher than the corresponding period in 2021 reflecting the fixed cost nature of the facility and the impact
of lower volumes of complex concentrat e smelted resulting from the maintenance shutdown, which was
completed during the second quarter of 2022. Cash cost per tonne of complex concentrate smelted in the
first six months of 2022 of $ 632 was $74 higher than the corresponding period in 2021 due pr imarily to
lower volumes of complex concentrate smelted, partially offset by higher by-product credits reflecting higher
sulphuric acid prices.
A table comparing production, delivery and cash cost measures for the second quarter and first six months
of 2022 against 2022 guidance is located on page 10 of this news release.
Cash Provided from Operating Activities
Cash provided from operating activities in the second quarter and first six months of 2022 of $71.8 million
and $150.3 million was $3.9 million lower and $27.0 million higher than the corresponding periods in 2021,
respectively, due primarily to the same factors impacting earnings before income taxes, as well as timing
of deliveries and subsequent receipt of cash.
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For a detailed dis cussion on the factors affecting cash provided from operating activities, refer to the
“Liquidity and Capital Resources” section contained in th e Management’s Discussion and Analysis for the
three and six months ended June 30, 2022 (the “MD&A”).
Free Cash Flow
Free cash flow in the second quarter and first six months of 2022 of $41.2 million and $89.9 million,
respectively, was $25. 9 million and $28. 2 million lower than the corresponding periods in 2021, due
primarily to the same factors impacting earnings before income taxes, partially offset by lower cash outlays
for sustaining capital expenditures.
Capital expenditures
Capital expenditures incurred during the second quarter and first six months of 2022 were $28.8 million and
$43.7 million, respectively, compared to $15.8 million and $34.8 million in the corresponding periods in
2021.
Sustaining capital expenditures incurred during the second quarter and first six months of 2022 were $21.2
million and $ 30.0 million, respectively, compared to $11.9 million and $29.3 million in the corresponding
periods in 2021, due primarily to the timing of the Ausmelt furnace maintenance shutdown at Tsumeb which
occurred in the second quarter of 2022 and in the first quarter of 2021. Growth capital expenditures incurred
during the second quarter and first six months of 2022 were $ 7.6 million and $ 13.7 million, respectively,
compared to $3.9 million and $5.5 million in the corresponding periods in 2021, due primarily to capitalized
costs related to the development of the Loma Larga and Timok gold projects.
Loma Larga gold project, Ecuador
The Company continued to pro gress permitting activities, receiving the certificate of technical viability for
the filtered tailings storage facility at the end of June, a key milestone for the project’s development. As
previously reported, in April 2022, the Company received the tech nical approval of the Environmental
Impact Assessment (“EIA”) study, which was submitted to the Ministry of Environment, Water and
Ecological Transition (“MAATE” ) by the previous owner prior to its acquisition by DPM . The MAATE has
appointed facilitators t o carry out the Citizen Participation Process, which was temporarily postponed
following national protests that occurred in June. Once these activities resume, DPM and its EIA consultant
will support the Citizen Participation Process, assess all comments r eceived and make the necessary
updates to the EIA in order to assist the MAATE in providing its final approval of the EIA and issuing the
environmental licence.
In parallel, the Company continues to advance work to update and optimize the feasibility stu dy (“FS”)
completed by the previous owner. This include s progressing several trade -off studies aimed at further
improving the project based on DPM’s expertise and experience, and the design of a metallurgical test
program. DPM is targeting completion of a revised FS in 2022.
A 15,800 -metre drilling program to support various studies complementary to the Loma Larga FS
optimization, consisting of hydrogeological, geotechnical, metallurgical, condemnation and extension
drilling, was commenced in the first qua rter of 2022. A total of 658 metres of condemnation drilling was
completed prior to DPM temporarily pausing drilling activities at the end of February as a result of the Action
filed against the MAATE by certain non-government organizations and local agenc ies and the suspension
of the environmental permit required for exploration and technical drilling by the court, pending the hearing
of the Action.
On July 12, 2022, an oral decision delivered by the Judicial Labour Unit of Cuenca upheld the validity of
the environmental permits for exploration, confirmed that the MAATE did not violate rights relating to the
protection of water and nature in granting the permits, and reaffirmed the Company’s legal rights in the
mining concessions. The court also found that the Company will be required to include the local indigenous
populations in its consultation process prior to proceeding to the exploitation phase, which DPM had already
planned as part of its development of the project, reflecting the Company’s commitment to the highest
standards of stakeholder engagement and in line with International Finance Corporation practices.
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The written decision was received on July 20, 2022, and DPM will be seeking clarification from the court as
to whether the indigenous consultation may be done in parallel with the Citizen Participation Process and
other activities required for the environmental permit, or whether the consultation must be completed before
advancing those activities, which could delay the timing for the receipt of the environmental licence,
currently expected to be received in the third quarter of 2022. The decision may also be appealed by the
claimants within three days following completion of the clarification process. Drilling activities at Loma Larga
remain paused, pending clarification from the court on the effect of the written decision in this regard and
the impact of any appeals that may be filed.
As the permitting process progresses, DPM’s team is working proactively with stakeholders to obtain the
project’s social licence to operate. Government interaction with the mining industry has improved
significantly since the change in government in Ecuador in May 2021 and DPM maintains a constructive
relationship with all government institutions and other stakeholders involved with the development of the
project. The Company is also progressing discussions that are expected to result in the execution of an
investor protection agreement with the governme nt of Ecuador prior to making any significant capital
commitments.
Timok gold project, Serbia
The Company continues to advance the Timok FS, and as a result of optimization activities focused on
capital expenditures and mining activities , completion is now expected in the third quarter of 2022. The
Company has seen inflationary pressures on capital and operating budgets consistent with general industry
trends. Following completion of the FS, the Company will pursue opportunities through add itional
exploration particularly at the Čoka Rakita target southeast of the Timok deposit, subject to receipt of the
required permits.
Exploration
At Chelopech, the brownfield exploration program ramped -up with an intensive drilling campaign focused
on the Sveta Petka Commercial Discovery, as well as at the Sharlo Dere and Petrovden porphyry prospects
within the mine concession. A total of 20,174 metres of diamond drilling was completed during the second
quarter of 2022 and intensive drilling is expected to continue in the third quarter of 2022.
At the Sharlo Dere prospect, located approximately 500 metres northeast of the most eastern ore bodies
of the Chelopech mine, a total of 5,088 metre s of drilling was completed on six holes, which continue to
return significant copper -gold mineralization, and confirm and extend the results formerly defined by the
state exploration drilling in the late 1970s and more systematic drilling is underway to fully test the footprint
of the system.
The geological activities at the Krumovgrad exploration camp were focused on extensive target delineation
campaigns that encompassed the Ada Tepe mine concessi on and the Chiirite and Dalbokata Reka
exploration licences during the quarter. This included detailed mapping, rock sampling, trenching and 3D
modelling, and is currently being followed up with diamond drilling.
During the second quarter of 2022, the exploration team in Serbia progressed a gravity survey at Umka, as
well as some trenching. Target delineation work, which includes mapping, stream, soil and rock sampling
and ground magnetics surveys, is also underway at Zdrelo and Kopaonik exploration licence s, in
preparation for a scout drilling campaign expected to commence later in the year.
In Ecuador, a 2,650-metre drilling program has been planned for the Tierras Coloradas concessions which
is expected to be completed in the third quarter of 2022. The change in status of that project from an early
to advanced stage exploration is in progress and all regulations and authorizations required from the
different Ecuadorian authorities are expected to be received by the end of 2022 . All permits related to the
drilling campaign have been received and drilling activities have commenced.
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Returning capital to shareholders
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.
Share repurchases under the Normal-Course Issuer Bid (“NCIB”)
During the six months ended June 30, 2022, the Company purchased a total of 1,598,800 shares, of which
1,528,400 were cancelled as at June 30, 2022 with the remaining shares cancelled in July 2022. The
Company also cancelled an additional 29,600 shares that were repurchased in 2021, resulting in a total of
1,558,000 shares being cancelled during the six months ended June 30, 2022. The total cost of these
purchases was $9.5 million at an average price of $5.92 (Cdn$7.55) per share. Pursuant to the Company’s
NCIB, which it renewed on March 1, 2022, the Company is able to purchase up to an additional 9,000,000
common shares representing approximately 5% of the total outstanding common shares as at February 17,
2022, over a period of twelve months which ends on February 28, 2023.
Declaration of dividend
On July 28, 2022, the Company declared a dividend of $0.04 per common share payable on October 1 7,
2022 to shareholders of record on September 30, 2022.
Three-Year Outlook
With solid operating performance from the Chelopech and Ada Tepe mines , DPM is on track to meet its
guidance for 2022 for mine operations, including expected gold production of 250,000 to 290,000 ounces
and copper production of 32 to 37 million pounds, as well as all-in sustaining cost per ounce of gold sold of
$750 to $890.
The three-year outlook previously issued in DPM’s MD&A for the three months ended March 31, 2022
remains unchanged, except for the following updates:
• Complex concentrate smelted: In the second quarter of 2022, the 2022 guidance in respect of complex
concentrate smelted was lowered to 185,000 to 200,000 tonnes , compared to 210,000 to 240,000
tonnes as previously issued in February 2022, due to water leaks resulting in unplanned downtime and
additional maintenance to the off-gas and baghouse systems in the first six months of 2022; and
• Cash cost per tonne of complex concentrate smelted: In the second quarter of 2022, the 2022 guidance
in respect of cash cost per tonne of complex concentrate smelted was increased to $420 to $ 480
compared to $380 to $460 as previously issued in February 2022, as a result of lower than expected
volumes of complex concentrate smelted.
For additional information regarding the Company’s detailed guidance for 202 2 and three-year outlook ,
please refer to the “Three-Year Outlook” section of the MD&A.
Conflict in Ukraine
On February 24, 2022, Russia launched an invasion of Ukraine which, as of the date hereof, is still ongoing.
Given the role each country plays around global energy and agricultural trade, the international community’s
imposition of a variety of sanc tions on Russia, and the withdrawal of foreign products and services to
Russia, this invasion is putting further strains on the global supply chain and adding additional pricing
pressure above and beyond what previously was attributable to the coronavirus (“COVID-19”) pandemic.
The Company’s Chelopech and Ada Tepe mines are located in Eastern Europe in Bulgaria. Bulgaria does
not share a border with either Russia or Ukraine and is part of the North Atlantic Treaty Organization and
the European Union. The main sources of Bulgaria’s electric energy are nuclear and coal facilities, which
together comprise approximately 80% of Bulgaria’s total energy generation. Although Russia has halted
natural gas deliveries to Bulgaria, approximately 5% of Bulgaria’s total energy supply is generated from
natural gas and DPM has not experienced and does not anticipate any disruption of power supply to its