Dundee Precious Metals Announces 2024 Second Quarter Results; Record Free Cash Flow Generation Driven by Strong All-in Sustaining Cost Performance
Dundee Precious Metals Announces 2024 Second Quarter Results;
Record Free Cash Flow Generation Driven by Strong All-in Sustaining Cost
Performance
Toronto, Ontario, August 1, 2024 – Dundee Precious Metals Inc. (TSX: DPM) ("DPM" or the
"Company") announced its operating and financial results for the second quarter and six months ended
June 30, 2024.
Highlights
(Unless otherwise stated, all monetary figures in this news release are expressed in U.S. dollars, and all operational and financial
information contained in this news release is related to continuing operations.)
• Record free cash flow: Generated $82.4 million of free cash flow 1 from continuing operations and
$125.8 million of cash provided from operating activities from continuing operations.
• Record adjusted net earnings: Reported adjusted net earnings2 from continuing operations of $70.9
million ( $0.39 per share 1) and net earnings from continuing operations of $70.9 million ( $0.39 per
share).
• Continued capital discipline: Returned $32.5 million, or 23% of free cash flow, to shareholders during
the first half of 2024 through dividends paid and shares repurchased.
• On track to meet 2024 guidance: With strong production of 67,644 ounces of gold and 7.9 million
pounds of copper in the second quarter, and 130,371 ounces of gold and 14.6 million pounds of copper
in the first half of 2024, DPM is well-positioned to achieve its annual production guidance.
• Generating robust margins: Reported all-in sustaining cost per ounce of gold sold 1 of $710, and cost
of sales per ounce of gold sold 2 of $1,073. All-in sustaining cost per ounce of gold sold for 2024 is
expected to be well within the annual guidance range.
• Substantial liquidity position: Ended the quarter with a strong balance sheet, including a total of
$707.5 million of cash from continuing and discontinued operations, a $150.0 million undrawn revolving
credit facility, and no debt.
• Advancing growth pipeline: Initiated the Čoka Rakita project pre-feasibility study ("PFS"), following
positive results of the preliminary economic assessment ("PEA") announced in May 2024. Exploration
activities to pursue additional targets on the Čoka Rakita licence and three additional licences are
continuing.
• Tsumeb smelter sale update: In July 2024, all required Chinese regulatory approvals were received,
with approval under the Namibia Competition Act still required. Following the smelter’s tolling agent
electing to end its tolling agreement with Tsumeb, DPM is currently in discussions with Sinomine
Resource Group Co Ltd (“Sinomine”) regarding amendments to the share purchase agreement
(“SPA”), including an expected reduction of the cash consideration from $49.0 million to $20.0 million.
The parties are also in discussions on a proposed arrangement whereby DPM would agree to step into
the role of tolling agent for Tsumeb for a period ending four months following closing of the sale, which
is expected in the third quarter of 2024.
1
1 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 IFRS Accounting 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 17 of this news release for more information, including reconciliations to IFRS measures.
2 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.
CEO Commentary
“We generated record free cash flow of $82 million in the second quarter, reflecting our strong operating
results, excellent all-in sustaining cost performance and the benefit of higher metal prices improving our
already robust margins,” said David Rae, President and Chief Executive Officer.
“We continue to advance Čoka Rakita, our high-grade, low-cost growth project in Serbia. The PFS is on
track for completion in Q1 2025, and permitting preparation activities are underway to support
commencement of construction in mid-2026. We are also continuing our infill and scout drilling programs,
where results have continued to demonstrate the robust nature of the deposit and significant exploration
potential of Čoka Rakita and the surrounding licences.
“DPM is in a unique position in the industry, with a strong base of high-margin production driving
significant free cash flow generation, and the balance sheet strength to internally fund our growth pipeline
and exploration prospects while continuing to return capital to shareholders.”
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 (“adjusted EBITDA”)
• adjusted net earnings (loss)
• adjusted basic earnings (loss) 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 17 of this news release.
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Key Operating and Financial Highlights
$ millions, except where noted Three Months Six Months
2024 2023 Change 2024 2023 Change
Operating Highlights
Ore Processed t 755,543 740,936 2% 1,456,741 1,478,573 (1%)
Metals contained in concentrate produced:
Gold
Chelopech oz 43,734 44,463 (2%) 81,229 79,721 2%
Ada Tepe oz 23,910 31,843 (25%) 49,142 65,166 (25%)
Total gold in concentrate produced oz 67,644 76,306 (11%) 130,371 144,887 (10%)
Copper Klbs 7,880 7,913 0% 14,572 15,090 (3%)
Payable metals in concentrate sold:
Gold
Chelopech oz 37,849 33,853 12% 67,417 64,926 4%
Ada Tepe oz 22,974 31,212 (26%) 48,618 63,638 (24%)
Total payable gold in concentrate sold oz 60,823 65,065 (7%) 116,035 128,564 (10%)
Copper Klbs 6,469 6,585 (2%) 11,926 12,943 (8%)
Cost of sales per tonne of ore processed(1):
Chelopech $/t 68 62 10% 68 63 8%
Ada Tepe $/t 139 138 1% 143 138 4%
Cash cost per tonne of ore processed(2):
Chelopech $/t 56 50 12% 55 51 8%
Ada Tepe $/t 71 66 8% 68 66 3%
Cost of sales per ounce of gold sold(3) $/oz 1,073 929 16% 1,099 951 16%
All-in sustaining cost per ounce of gold sold(2) $/oz 710 733 (3%) 793 802 (1%)
Financial Highlights
Revenue 156.8 132.5 18% 280.6 258.9 8%
Cost of sales 65.2 60.4 8% 127.5 122.3 4%
Earnings (loss) before income taxes(4) 71.8 69.2 4% 124.4 118.2 5%
From continuing operations 80.2 57.1 40% 126.5 103.1 23%
From discontinued operations (8.4) 12.1 (170%) (2.1) 15.1 (114%)
Net earnings (loss)(4) 62.5 61.7 1% 108.2 108.3 0%
From continuing operations 70.9 49.6 43% 110.3 93.2 18%
From discontinued operations (8.4) 12.1 (170%) (2.1) 15.1 (114%)
Basic earnings (loss) per share(4) $/sh 0.34 0.32 6% 0.60 0.57 5%
From continuing operations $/sh 0.39 0.26 50% 0.61 0.49 24%
From discontinued operations $/sh (0.05) 0.06 (183%) (0.01) 0.08 (113%)
Adjusted EBITDA(2),(4) 89.1 86.7 3% 155.0 155.1 0%
From continuing operations 93.1 73.0 28% 147.6 136.7 8%
From discontinued operations (4.0) 13.7 (129%) 7.4 18.4 (60%)
Adjusted net earnings (loss)(2),(4) 64.2 62.2 3% 105.6 108.3 (3%)
From continuing operations 70.9 50.1 42% 103.4 93.2 11%
From discontinued operations (6.7) 12.1 (156%) 2.2 15.1 (85%)
Adjusted net earnings (loss) per share(2),(4) $/sh 0.35 0.33 6% 0.58 0.57 2%
From continuing operations $/sh 0.39 0.27 44% 0.57 0.49 16%
From discontinued operations $/sh (0.04) 0.06 (167%) 0.01 0.08 (88%)
Cash provided from (used in) operating
activities(4) 116.6 59.2 97% 170.1 130.1 31%
From continuing operations 125.8 54.6 131% 161.6 120.3 34%
From discontinued operations (9.2) 4.6 (301%) 8.5 9.8 (13%)
Free cash flow(2),(4) 73.9 70.4 5% 142.1 135.5 5%
From continuing operations 82.4 66.4 24% 142.5 132.5 8%
From discontinued operations (8.5) 4.0 (310%) (0.4) 3.0 (114%)
Capital expenditures incurred(5):
Sustaining(6) 7.9 6.1 29% 13.6 13.4 1%
Growth and other(7) 3.6 6.9 (48%) 11.9 13.3 (10%)
Total capital expenditures 11.5 13.0 (11%) 25.5 26.7 (4%)
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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 17 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) These measures include discontinued operations.
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 Highlights
A table comparing production, sales and cash cost measures by asset for the second quarter and six months ended June 30, 2024
against 2024 guidance is located on page 12 of this news release.
In the second quarter of 2024, the Company’s mining operations continued to deliver strong results. Gold
production at Chelopech and Ada Tepe was in line with expectations, with higher copper grades expected
at Chelopech over the balance of the year. Both mines remain on track to achieve their 2024 production
and cost guidance.
Highlights include the following:
Chelopech, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of
2024 of 43,734 ounces and 81,229 ounces, respectively, was comparable to the corresponding periods in
2023 due primarily to lower gold grades, largely offset by higher gold recoveries. Copper production in the
second quarter and first half of 2024 of 7.9 million pounds and 14.6 million pounds, respectively, were
comparable to the corresponding periods in 2023, due primarily to lower copper grades, largely offset by
higher copper recoveries.
All-in sustaining cost per ounce of gold sold in the second quarter of 2024 was $531 compared to $776 in
the corresponding period in 2023 due primarily to higher by-product credits reflecting higher realized
copper prices, lower treatment charges, higher volumes of gold sold and lower prices for power, partially
offset by higher labour costs, higher freight charges and the timing of maintenance activities , as well as
lower cash outlays for sustaining capital expenditures.
All-in sustaining cost per ounce of gold sold in the first half of 2024 was $670 compared to $851 in the
corresponding period in 2023 due primarily to lower treatment charges as a result of DPM having secured
more favourable commercial terms for the year under the current tight market for copper concentrates,
higher volumes of gold sold and lower prices for power, partially offset by higher labour costs and higher
freight charges as a result of the disruptions in key sea routes due to the Middle East conflicts , as well as
lower cash outlays for sustaining capital expenditures.
Ada Tepe, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of 2024
of 23,910 ounces and 49,142 ounces, respectively, was in each case 25% lower than the corresponding
periods in 2023 due primarily to mining lower-grade zones, in line with the mine plan.
All-in sustaining cost per ounce of gold sold in the second quarter and first half of 2024 of $699 and $638,
respectively, was 32% and 26% higher than the corresponding periods in 2023 due primarily to lower
volumes of gold sold.
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Consolidated Operating Highlights
Production: Gold contained in concentrate produced in the second quarter and first half of 2024 of
67,644 ounces and 130,371 ounces, respectively, was 11% and 10% lower than the corresponding
periods in 2023 due primarily to mining in lower grade zones at Ada Tepe and Chelopech, partially offset
by higher gold recoveries at Chelopech, in line with the mine plans for both operations.
Copper production in the second quarter and first half of 2024 of 7.9 million pounds and 14.6 million
pounds, respectively, were comparable to the corresponding periods in 2023, due primarily to lower
copper grades, largely offset by higher copper recoveries.
Deliveries: Payable gold in concentrate sold in the second quarter and first half of 2024 of 60,823 ounces
and 116,035 ounces, respectively, was 7% and 10% lower than the corresponding periods in 2023
primarily reflecting lower gold production, partially offset by the timing of deliveries.
Payable copper in concentrate sold in the second quarter of 2024 of 6.5 million pounds was comparable
to the corresponding period in 2023, consistent with copper production . Payable copper in the first half of
2024 of 11.9 million pounds was 8% lower than the corresponding period in 2023, due primarily to the
timing of deliveries and lower copper production in the first quarter of 2024.
Cost measures: Cost of sales in the second quarter and first half of 2024 of $65.2 million and $127.5
million, respectively, increased compared to $60.4 million and $122.3 million in the corresponding periods
in 2023 due primarily to higher depreciation expenses, higher labour costs and the timing of maintenance
activities, partially offset by lower prices for power.
All-in sustaining cost per ounce of gold sold in the second quarter of 2024 of $710 was 3% lower than the
corresponding period in 2023 due primarily to higher by-product credits as a result of higher realized
copper prices, lower treatment charges at Chelopech and lower cash outlays for sustaining capital
expenditures, partially offset by lower volumes of gold sold, higher share-based compensation expenses
reflecting DPM’s strong share price performance, higher labour costs, higher freight charges and the
timing of maintenance activities.
All-in sustaining cost per ounce of gold sold in the first half of 2024 of $793 was comparable to the
corresponding period in 2023 due primarily to lower treatment charges at Chelopech , lower cash outlays
for sustaining capital expenditures and lower prices for power, largely offset by lower volumes of gold
sold, higher freight charges, higher labour costs and the timing of maintenance activities.
Capital expenditures: Capital expenditures incurred in the second quarter and first half of 2024 were
$11.5 million and $25.5 million , respectively, compared to the corresponding periods in 2023 of $13.0
million and $26.7 million.
Sustaining capital expenditures incurred in the second quarter and first half of 2024 were $7.9 million and
$13.6 million , respectively, compared to the corresponding periods in 2023 of $6.1 million and $13.4
million, due primarily to the timing of expenditures.
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Growth and other capital expenditures incurred during the second quarter and first half of 2024, primarily
related to the Loma Larga gold project, were $3.6 million and $11.9 million, respectively, compared to $6.9
million and $13.3 million in the corresponding periods in 2023, due primarily to lower expenditures related
to the Loma Larga gold project as expected. Growth and other capital expenditures in the first half of 2024
also included a $4.0 million expenditure for the electric mobile equipment received in the first quarter of
2024 related to the Company’s ESG initiatives.
Consolidated Financial Highlights
Financial results in the second quarter of 2024 reported record free cash flow generation, reflecting higher
realized metal prices combined with the Company’s strong all-in sustaining cost performance, partially
offset by lower volumes of metals sold and higher planned exploration and evaluation expenses.
Revenue: Revenue in the second quarter of 2024 of $156.8 million was 18% higher than the
corresponding period in 2023, due primarily to higher realized prices of metals sold, partially offset by
lower volumes of gold sold at Ada Tepe. Revenue in the first half of 2024 of $280.6 million was 8% higher
than the corresponding period in 2023, due primarily to higher realized prices of metals sold and lower
treatment charges at Chelopech, partially offset by lower volumes of gold sold at Ada Tepe.
Net earnings: Net earnings from continuing operations in the second quarter and first half of 2024 of
$70.9 million ($0.39 per share) and $110.3 million ($0.61 per share), respectively, increased compared to
$49.6 million ($0.26 per share) and $93.2 million ($0.49 per share) in the corresponding periods in 2023
due primarily to higher revenue and higher interest income, partially offset by higher planned exploration
and evaluation expenses and higher income taxes.
Adjusted net earnings: Adjusted net earnings from continuing operations in the second quarter and first
half of 2024 of $70.9 million ( $0.39 per share) and $103.4 million ( $0.57 per share), respectively,
increased compared to $50.1 million ( $0.27 per share) and $93.2 million ( $0.49 per share) in the
corresponding periods in 2023 due primarily to the same factors affecting net earnings, with the exception
of adjusting items primarily related to the net termination fee received from Osino Resources Corp.
(“Osino”).
Earnings before income taxes: Earnings before income taxes from continuing operations in the second
quarter and first half of 2024 of $80.2 million and $126.5 million , respectively, increased compared to
$57.1 million and $103.1 million in the corresponding periods in 2023, reflecting the same factors that
affected net earnings from continuing operations, except for income taxes, which are excluded.
Adjusted EBITDA: Adjusted EBITDA from continuing operations in the second quarter and first half of
2024 was $93.1 million and $147.6 million, respectively, compared to $73.0 million and $136.7 million in
the corresponding periods in 2023, 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 of continuing
operations in the second quarter and first half of 2024 of $125.8 million and $161.6 million, respectively,
was $71.2 million and $41.3 million higher than the corresponding periods in 2023 due primarily to higher
adjusted EBITDA from continuing operations generated in the periods, as well as the timing of deliveries
and subsequent receipt of cash combined with the timing of payments to suppliers.
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Free cash flow: Free cash flow from continuing operations in the second quarter and first half of 2024 of
$82.4 million and $142.5 million , respectively, was $16.0 million and $10.0 million higher than the
corresponding periods in 2023 due primarily to higher adjusted EBITDA from continuing operations
generated in the periods and lower cash outlays for sustaining capital expenditures. Free cash flow is
calculated before changes in working capital.
Tsumeb Smelter Sale Update
On March 7, 2024, DPM announced that it had entered into a definitive SPA with a subsidiary of Sinomine
for the sale of its 98% interest in the Tsumeb smelter for a cash consideration of $49.0 million, on a debt-
free and cash-free basis, subject to normal working capital adjustments following closing (the “Tsumeb
Disposition”). In addition, pursuant to the SPA, DPM is entitled to be paid all cash collected from IXM S.A.
(“IXM”) with respect to the outstanding metal recoverable at Tsumeb, estimated to be $14.1 million as at
June 30, 2024. The Tsumeb Disposition is subject to customary closing conditions, including approval
under the Namibia Competition Act and approvals required from Chinese regulatory authorities for
overseas investments. In July 2024, all Chinese regulatory approvals were received. The transaction is
expected to close in the third quarter of 2024.
As a result of Tsumeb's pending change of control, IXM elected to terminate the existing tolling agreement
it had with Tsumeb (the "IXM Tolling Agreement"). Under the IXM Tolling Agreement, the cash value of all
unprocessed concentrates and secondary materials became due and payable on July 31, 2024, however,
both IXM and the Company have agreed to extend this period to August 9, 2024 in the interim, with a final
settlement expected on August 29, 2024 (the “IXM Extension Date”). On the IXM Extension Date, Tsumeb
will be required to purchase all unprocessed concentrates and secondary materials owed by Tsumeb to
IXM estimated to be approximately $80 million, which amount could vary depending on, among other
things, volumes of inventory, payable metals contained in the inventory and market metal prices at the
time of the purchase. In addition, IXM is required to pay Tsumeb in cash for the estimated metal
recoverable.
DPM and Sinomine are currently discussing amendments to the SPA whereby the consent of IXM for the
change of control of Tsumeb will be removed from the closing conditions of the transaction and the cash
consideration payable for the sale of the Tsumeb Smelter to Sinomine is expected to be reduced from
$49.0 million to $20.0 million. In addition, the parties are discussing a proposed arrangement pursuant to
which DPM would agree to step into IXM's position as a tolling agent and enter into a new tolling
agreement with Tsumeb (the "DPM Tolling Agreement") on substantially the same commercial terms as
the IXM Tolling Agreement, for a period starting from the IXM Extension Date and ending four months
following closing of the sale (the “Financing Period”). It is proposed that on the IXM Extension Date, DPM
would purchase the above estimated $80 million of inventory from Tsumeb and during the Financing
Period, DPM would purchase new-metal bearing materials and sell the copper blister produced by
Tsumeb until the end of the DPM Tolling Agreement, at which time Sinomine would pay DPM for all
inventories owed by the smelter to DPM. Discussions are ongoing between the parties with respect to the
foregoing proposed arrangements which will be subject to definitive documentation.
As a result, the assets and liabilities of Tsumeb have been presented as held for sale in the consolidated
statement of financial position as at June 30, 2024 and December 31, 2023, and the operating results and
cash flows of Tsumeb have been presented as discontinued operations in the condensed interim
consolidated statements of earnings (loss) and cash flows for the three and six months ended June 30,
2024 and 2023. As a consequence, certain comparative figures in the condensed interim consolidated
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statements of earnings (loss) and cash flows have been reclassified to conform with current year
presentation.
Complex concentrate smelted in the second quarter and first half of 2024 of 52,858 tonnes and 107,631
tonnes, respectively, was 3,375 tonnes and 8,501 tonnes higher than the corresponding periods in 2023
due primarily to increased plant availability following the completion of the maintenance work in the third
quarter of 2023.
Cash cost per tonne of complex concentrate smelted in the second quarter of 2024 of $375 was $32
higher than the corresponding period in 2023 due primarily to higher operating expenses reflecting higher
labour costs, direct materials and transportation, partially offset by higher volumes of complex concentrate
smelted reflecting improved operating performance following the Ausmelt furnace maintenance shutdown
and higher sulphuric acid by-product credits. Cash cost per tonne of complex concentrate smelted in the
first half of 2024 of $352 was $16 lower than the corresponding period in 2023 due primarily to higher
volumes of complex concentrate smelted and higher sulphuric acid by-product credits, partially offset by
higher operating expenses.
Balance Sheet Strength and Financial Flexibility
The Company continues to maintain a strong financial position, with a growing cash position, no debt and
an undrawn $150 million revolving credit facility.
Cash and cash equivalents of continuing operations increased by $106.4 million to $701.7 million in the
first half of 2024 due primarily to earnings generated during the period. Cash and cash equivalents of
discontinued operations increased by $4.0 million to $5.8 million in the first half of 2024 due primarily to a
$9.0 million cash settlement with IXM on the estimated metal recoverable, partially offset by the loss
generated in the period.
Return of Capital to Shareholders
In line with its disciplined capital allocation framework, DPM continues to return excess capital to
shareholders, which currently includes a sustainable quarterly dividend and periodic share repurchases
under its Normal Course Issuer Bid ("NCIB").
During the first half of 2024, the Company returned a total of $32.5 million to shareholders through
dividends paid of $14.5 million, as well as payments for shares repurchased of $18.0 million following the
renewal of the NCIB in late March.
Share Repurchases
The Company renewed its NCIB effective March 18, 2024 , pursuant to which the Company is able to
purchase up to 15,500,000 common shares representing approximately 9.8% of the public float as at
March 6, 2024 , over a period of twelve months commencing March 18, 2024 and terminating on
March 17, 2025.
During the six months ended June 30, 2024, the Company purchased a total of 2,327,011 shares with a
total cost of $18.4 million at an average price per share of $7.90 (Cdn$10.80).
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