Dundee Precious Metals Announces Positive Pre-Feasibility Study and Encouraging New Exploration Results for the Timok Gold Project in Serbia
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Dundee Precious Metals Announces Positive Pre-Feasibility Study and Encouraging
New Exploration Results for the Timok Gold Project in Serbia
(All dollar amounts in this news release are expressed in U.S. dollars, unless otherwise noted.)
Toronto, February 23, 2021 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or “the Company”)
is pleased to announce the results of a pre-feasibility study (“PFS”) for its Timok Gold Project (the “Timok
project” or “Timok”) in Serbia. The PFS is focused on the development of the oxide and transitional
portions of the project and confirms Timok’s potential as an attractive organic growth opportunity within
the Company’s portfolio. Based on the results of the PFS, the Company has received Board approval
to proceed with a feasibility study (“FS”).
Highlights
• Positive pre-feasibility study results, including:
▪ After-tax NPV5% of $135 million and internal rate of return of 21% (based on a $1,500 per ounce
gold price assumption);
▪ 547,000 gold ounces recovered over an 8-year mine life, with annual gold production estimated
to average approximately 80,000 ounces in years 1 to 6, and approximately 70,000 ounces
per year over the life of mine;
▪ Life of mine average all-in sustaining cost of $693 per ounce1; and
▪ Initial capital cost estimate of $211 million.
• Opportunity to optimize capital costs : DPM has identified a number of initiatives to reduce the
initial capital estimate and optimize overall economics , including the potential for contractor mining,
which will be evaluated as part of the FS.
• Potential to add additional existing resources to the mine plan: While the FS will continue to
focus on the oxide portion of the deposit, there is potential to incorporate additional existing Mineral
Resources into the mine plan by processing the sulphide portion of the ore body , which will be
evaluated in parallel with the FS. Timok contains an additional 1.3 million ounces in Indicated Mineral
Resources, contained within 32.3 million tonnes (Mt) at a grade (g/t) of 1.27 g/t.2
• Adding value through exploration: Encouraging new results from exploration activities, which were
focused on adding resources to extend the project life, including:
▪ 40.5 metres at 2.83 g/t Au from drill hole BIDD125 at the Chocolate South oxide prospect3
▪ 36 metres at 5.26 g/t Au, including 7 m etres at 14.45 g/t Au, from drill hole RADD013 at the
new Čoka Rakita sulphide prospect
1 All-in sustaining cost per ounce of gold represents mining, processing, site general and administrative costs (“G&A”), water treatment costs,
royalties, treatment and refining charges and sustaining capital , divided by payable gold ounces, and excludes corporate G&A. All-in sustaining
cost per ounce of gold and certain other measures presented herein are Non -GAAP Measures. Refer to the “Non -GAAP Financial Measures”
section of the Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2020 , available on our website at
www.dundeeprecious.com and on SEDAR at www.sedar.com.
2 Refer to the Mineral Resource and Mineral Reserve section of the news release on pages 6-7 for more information regarding Mineral Resource
estimate for the Timok gold project.
3 As previously disclosed in the MD&A for the period ended December 31, 2020, available on our website at www.dundeeprecious.com and on
SEDAR at www.sedar.com.
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“The Timok project continues to advance as a potential future growth opportunity for DPM,” said David
Rae, President and Chief Executive Officer. “With additional optimization opportunities to enhance the
project and very encouraging exploration results, we believe Timok represents an attractive opportunity
to provide organic growth in a region where we have had a presence for many years.”
Pre-feasibility study overview
The PFS is based on a total Mineral Reserve estimate of 19.2 Mt at 1.07 g/t of gold for 662 thousand
contained gold ounces. As previously disclosed, the PFS focused on the oxide and transitional portion
of the Mineral Resource, with potential upside from the sulphide to be considered in parallel with the
feasibility study following further metallurgical test work.
The PFS contemplates the open-pit mining of the oxide and transitional material of the Bigar Hill, Korkan
and Korkan West deposit s, with three -stage crushing and stacking of material onto a valley fill heap
leach. Leached gold will be recovered from the pregnant leach solution using a traditional Adsorption -
Desorption-Recovery (“ADR”) plant to produce doré bars. The PFS assumes a 17-month construction
and commissioning period, with start-up of production targeted for the first quarter of 2026.
Key Operating and Financial Assumptions and Metrics
Gold price $ per ounce $1,500
Production Profile
Total ore mined million tonnes 19.2
Total waste material million tonnes 48.3
Strip ratio waste:ore 2.5:1
Average grade g/t 1.07
Average gold recovery % 82.6%
Total ounces mined K oz. 661.7
Total ounces recovered K oz. 547.0
Average annual gold production K oz. 68.4
Mine life years 8
Life of Mine Unit Costs
Mining $ per tonne $7.89
Processing $ per tonne $5.43
General and administrative (G&A) $ per tonne $1.76
Royalty $ per tonne $2.14
Refining charge $ per tonne $0.04
Total cash costs4 $ per tonne $17.25
Total cash costs4 $ per ounce $606
All-in sustaining cost4 $ per ounce $693
Project economics
Royalty % 5.0% Net Smelter Return
Average annual EBITDA4 $ millions $64
After-tax NPV (after-tax, 5% discount) $ millions $135
After-tax NPV (after-tax, 7.5% discount) $ millions $102
After-tax IRR % 20.6%
4 All-in sustaining cost per ounce, total cash costs per tonne or ounce and EBITDA are Non -GAAP Measures. Refer to the MD&A for the period
ended December 31, 2020, available on our website at www.dundeeprecious.com and on SEDAR at www.sedar.com for more information on
these Non-GAAP measures.
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Production profile
Over the life of mine, ore is expected to be processed at an average rate of 2.5 Mtpa, with higher than
average grade mined in the early years , a strip ratio of 2.5:1 , and gold recovery for the heap leach
estimated to average 8 2.6%. Mining is expected to extend for 7 years, with residual heap leach gold
production in year 8.
During the first six years of production, Timok is forecast to produce an average of approximately 80,000
ounces per year . Over the life of mine, Timok is expected to produce an average of approximately
70,000 gold ounces per year at an average all-in sustaining cost of $693 per ounce over its 8-year mine
life.
Unit Total /
average
Pre-
production Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Mining
Ore mined Mt 19.2 0.1 2.7 3.5 2.4 2.5 3.3 3.1 1.6 –
Waste mined Mt 48.3 3.3 7.3 6.5 7.6 7.5 6.7 6.9 2.6 –
Total material Mt 67.6 3.3 10.0 10.0 10.0 10.0 10.0 10.0 4.2 –
Strip ratio t:t 2.5:1 44.2:1 2.7:1 1.9:1 3.2:1 2.9:1 2.1:1 2.2:1 1.6:1 –
Processing
Ore processed Mt 19.2 – 2.0 2.5 2.5 2.5 2.5 2.5 2.5 2.2
Grade g/t Au 1.07 – 1.23 1.20 1.01 1.28 1.28 1.28 0.89 0.34
Ounces contained K oz. 662 – 79 97 82 103 103 103 71 24
Ounces recovered K oz. 547 – 67 81 68 87 85 83 57 19
Initial capital expenditures
The initial project capital costs are expected to be approximately $211 million , which includes the
construction of a valley fill heap leach facility, three-stage crushing and agglomeration circuit, ADR plant,
47 Mt partially lined waste rock dumps and additional infrastructure , including haul and access roads,
water treatment, power supply and site services.
Relative to the preliminary economic assessment (“PEA”), the initial capital estimate for the PFS reflects
an increased level of detailed engineering and updated estimates at a higher degree of confidence. It
also reflects a +/- 30% level of accuracy with a P50 contingency. The PFS estimate also includes costs
associated with partially lined waste dumps, a revised estimate for haul and access roads , land
acquisition, operational readiness, and updated estimates for engineering, procurement, construction
management (“EPCM”). As part of the FS work, DPM will explore opportunities to optimize the initial
capital required for the project.
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$ millions
Initial capital estimate
Pre-stripping $8.6
Mining (mine fleet, haul and access roads) $36.7
Processing (heap leach, processing plant) $52.7
Infrastructure $17.2
Waste rock facilities and Other $16.7
Total direct costs $131.9
Construction Indirect & owner’s costs 42.1
EPCM 15.8
Total indirect costs $57.8
Contingency 21.0
Total initial capital $211.0
Sustaining and closure
Sustaining capital expenditures $24.4
Closure and rehabilitation costs $23.3
Total capital $258.7
Totals in the table above may not add due to rounding.
Project optimization opportunities
As the Company proceeds with the FS, several optimization opportunities have been identified. The FS
will continue to focus on the oxide and transitional portion of the Mineral Resource, and DPM will also
explore the potential to incorporate the additional oxide, transitional and sulphide portions of the Mineral
Resource, which includes an additional 32.3 Mt of Indicated Mineral Resource at 1.27 g/t Au for 1.3
million ounces of gold.
DPM will also be reviewing opportunities to reduce capital costs, which include optimizing the design of
the haul road s, reducing the requirements for partially lining waste rock dumps based on further acid
rock drainage test work, and exploring owner execution for bulk earthworks and contractor mining.
Prospective exploration targets
DPM continues to advance exploration activities at Timok to add to the project mine life, including at the
prospective Chocolate, Chocolate South and Čoka Rakita targets which have generated encouraging
results following the effective date for the current Mineral Resource estimate (see Appendix - Figure 1).
In 2020, exploration activities focused on drilling targeted shallow oxide gold mineralization to support
the growth of the Mineral Resource estimate.
Multiple drill holes from a program at the Chocolate target, which is located a pproximately 300 metres
south-east of the main Bigar Hill d eposit, intercepted shallow oxide, transitional and sulfide gold
mineralization. The Chocolate prospect is found within the stratigraphy that hosts the sediment hosted
gold at the Timok project.
Infill and extensional drilling at Chocolate continued during the last quarter of 2020. Highlights included5:
▪ 37 metres at 0.82 g/t Au from drill hole BIDD134
▪ 8 metres at 2.96 g/t Au from drill hole BIDD146
5 As previously disclosed in the MD&A for the period ended December 31, 2020, available on our website at www.dundeeprecious.com and on
SEDAR at www.sedar.com.
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In late 2020, an extension of similar style mineralization has been outlined at Chocolate South, with
notable intercepts of:
▪ 40.5 metres at 2.83 g/t Au from drill hole BIDD1256
▪ 20 metres at 1.47 g/t Au from drill hole BIDD161
See Appendix - Table 1 for significant drill intercepts fro m the Chocolate South prospect during early
2021.
In the fourth quarter of 2020 , d rilling commenced at Čoka Rakita , which is a highly prospective
exploration target located 3 kilometres south-east of Bigar Hill. Drilling is designed to test the potential
for porphyry related epithermal and carbonate replacement gold mineralization. While drilling is ongoing
and assays are pending for several holes, highlights of the initial results from three holes include:
▪ 36 metres at 5.26 g/t Au, including 7 metres at 14.45 g/t Au, from drill hole RADD013
▪ 9 metres at 5.03 g/t from drill hole RADD014
▪ 22 metres at 2.59 g/t Au, including 5 metres at 6.16 g/t Au, from drill hole RADD016
See Appendix - Table 2 for significant drill intercepts from the Čoka Rakita prospect during late 2020
and early 2021.
Approximately 14,000 metres of drilling is planned for 2021, including exploration and infill drilling in
support of the FS. Exploration drilling at Timok will be focused on shallow oxide resource delineation at
the Chocolate and Chocolate South targets, proximal to Bigar Hill, as well as target delineation drilling
on Čoka Rakita and other under-explored sulphide targets.
Stakeholder Engagement
Consistent with the approach across all operations, DPM seeks to build and maintain strong
partnerships with local communities and governments . Since discovering Timok in 2008, DPM has
developed strong relationships in the region and with the national government and will continue to
proactively engage with all stakeholders as the project advances.
Planning for the project will be highly focused on ensuring responsible environmental management,
social development, and the operation and closure of Timok in accordance with industry best practices.
The Company is committed to working closely with local communities around the Timok project to
understand and support local development opportunities , with a focus on maximizing benefits of the
project for stakeholders in Serbia.
Next Steps
Based on the results of the PFS, DPM is proceeding with an FS for the Timok project, which is expected
to be completed by the first quarter of 2022. In its detailed 2021 guidance, t he Company included a
range of $11 to $13 million for growth capital expenditures, and $2 to $3 million for evaluation
expenditures to reflect the costs of the FS, other studies and related drilling.7
Work on b aseline environment al assessments required for the Strategic Environmental Assessment
(“SEA”), a site layout design (the “Spatial Plan”) and a report on reserves to be submitted to the relevant
6 As previously disclosed in the MD&A for the period ended December 31, 2020, available on our web site at www.dundeeprecious.com and on
SEDAR at www.sedar.com.
7 For more information regarding the Company’s detailed guidance for 2021, r efer to the MD&A for the period ended December 31, 2020, available
on our website at www.dundeeprecious.com and on SEDAR at www.sedar.com.
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authorities (“Elaborate of Reserves”) are underway, as required under the Serbian permitting process .
Following the expiry of the Timok exploration license in July 2021, completion of these technical studies
is required to secure exploitation rights for the project and will form the basis for the Serbian feasibility
study. These activities are expected to commence in the first quarter of 2021. Approval for the Elaborate
of Reserves is expected to be received in the first half of 2022, as per statutory timeframes for this
process.
Baseline studies for the Environmental Social Impact Assessment (“ES IA”) have commenced, with the
Company targeting the second quarter of 2024 for the closeout of the ESIA and public hearings, followed
by receipt of permits for the construction of mine facilities, which DPM estimates would occur in the
fourth quarter of 2024. DPM also intends to evaluate opportunities to accelerate this timeline as part of
the FS process.
Gold price sensitivity
Metric $1,250 $1,500 $1,750 $2,000
IRR 10.2% 20.6% 29.4% 37.1%
NPV (after-tax, 5% discount) $40 $135 $231 $326
Mineral Resource and Reserve Estimates
Mineral Resource estimates (“MRE”) have been updated for the Bigar Hill, Korkan and Korkan West
gold deposits. Since the previous MRE in 2018, 218 additional drill holes have been completed, totalling
approximately 27,400 metres. Drilling was mostly on the flanks of each prospect, designed to reclassify
these areas to an indicated Mineral Resource Category. The previous MRE for the Kraku Pester deposit
from 2018 remains current and has not been updated.
The Mineral Reserve estimate for the Timok project is shown below and are effective as of May 29,
2020.
Timok Probable Mineral Reserve Estimate
(As at May 29, 2020)
Deposit Ore Type Tonnes (Mt) Au Grade
(g/t)
Contained Ounces
(K oz.)
Strip ratio
(waste:ore)
Bigar Hill
Oxide 8.8 1.19 334
Transitional 1.9 1.09 67
Sub total 10.7 1.17 401 2.85
Korkan
Oxide 3.4 0.90 97
Transitional 1.2 1.02 39
Sub total 4.6 0.93 137 2.69
Korkan
West
Oxide 3.7 0.99 118
Transitional 0.3 0.74 6
Sub total 4.0 0.97 124 1.42
Total
Oxide 15.8 1.08 549
Transitional 3.4 1.04 113
Total 19.2 1.07 662 2.52
Footnotes:
1. The effective date of the Mineral Reserve estimate is May 29, 2020.
2. The Mineral Reserve estimate has been reported in accordance with guidelines of the Canadian Institute of Mining, Metallurgy and Petroleum
(“CIM”).
3. A cut-off grade of 0.21 g/t Au for the oxide material and 0.24 g/t Au for the transitional material is applied to all deposits.
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4. Mineral Reserves were estimated at a gold price of US$1,250/oz. and include modifying factors related to mining cost , dilution and recovery,
process recoveries and costs, G&A, royalties and rehabilitation costs.
5. Figures have been rounded to an appropriate level of precision for the reporting of Mineral Reserves.
6. Due to rounding, some columns may not compute exactly as shown.
7. Mineral Reserves are stated as in-situ dry tonnes. All figures are in metric tonnes.
The updated Mineral Resource estimate, exclusive of Mineral Reserves, is shown below and is effective
as of May 29, 2020.
Timok Mineral Resource Estimate, exclusive of Mineral Reserves
(As at May 29, 2020)
Deposit Material
Type
Indicated Inferred
Tonnes
(Mt)
Grade
(g/t)
Contained
Ounces
(K oz.)
Tonnes
(Mt)
Grade
(g/t)
Contained
Ounces
(K oz.)
Bigar Hill Oxide 5.2 0.79 132 0.0 0.69 0
Transitional 6.2 0.94 186 0.0 0.94 1
Sulphide 10.9 1.63 572 0.6 1.79 36
Total 22.3 1.24 890 0.7 1.73 37
Korkan Oxide 2.2 0.70 49 0.0 0.42 0
Transitional 2.0 0.78 50 0.1 0.54 1
Sulphide 3.4 1.89 206 0.0 1.17 0
Total 7.6 1.25 305 0.1 0.56 2
Korkan West Oxide 0.0 0.74 1 – – –
Transitional 0.0 0.64 0 0.0 0.15 0
Sulphide 0.0 1.12 0 – – –
Total 0.1 0.71 2 0.0 0.15 0
Kraku Pester Oxide 0.7 0.95 22 0.1 1.3 5
Transitional 0.1 0.95 4 0.0 1.2 0
Sulphide 1.5 2.01 95 0.0 1.8 0
Total 2.3 1.61 122 0.1 1.3 6
Total
Oxide 8.2 0.78 205 0.2 1.1 5
Transitional 8.3 0.90 241 0.1 0.7 3
Sulphide 15.8 1.72 873 0.6 1.8 37
Total 32.3 1.27 1,319 0.9 1.5 45
Footnotes:
1. The effective date of the Mineral Resource estimate for Bigar Hill, Korkan and Koran West is May 29, 2020. The effective date of the Mineral
Resource estimate for Kraku Pester is May 15, 2018.
2. Measured, Indicated and Inferred Mineral Resources have been re ported in accordance with CIM guidelines.
3. A gold cut-off grade of 0.19 g/t for the oxide material, 0.216 g/t for the transitional material and 0.571 g/t for the sulphide material is applied at
Bigar Hill, Korkan and Korkan West.
4. A gold cut-off grade of 0. 35 g/t for the oxide material, 0.40 g/t for the transitional material and 1.05 g/t for the sulphide material is applied at
Kraku Pester.
5. Figures have been rounded to the appropriate level of precision for the reporting of Mineral Resources, and some columns may not compute
exactly as shown due to rounding.
6. Block models have been reported with a conceptual pit shell using a $1,400 per ounce gold price to support assumptions relating to the
reasonable prospects of eventual economic extraction.
7. Mineral Reserves and Resources may be subject to legal, political, environmental and other risks and uncertainties.
8. Estimates of Measured and Indicated Mineral Resources are reported exclusive of those Mineral Resources modified to produce M ineral
Reserves.
A technical report for the Timok gold project, prepared in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects (“ NI 43-101”), will be filed under the Company’s profile on
SEDAR at www.sedar.com within 45 days of this news release.
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Technical Information
The Mineral Resource estimates for Bigar Hill, Korkan and Koran West and Mineral Reserve estimate
for Timok and other scientific and technical information which supports this news release were prepared
by DRA Americas Inc. (“DRA Americas”), in accordance with Canadian regulatory requirements set out
in NI 43-101, and has been reviewed and approved by Shadrac Ibrango, P.Geo, MBA, Lead Geology &
Hydrogeology Consultant (DRA Americas); Daniel Gagnon, P.Eng., Senior VP Mining Geology & Met -
Chem Operations (DRA Americas); Volodymyr Lisk ovych, PhD, Principal Process Engi neer (DRA
Americas); Reywen Bigirimana, M.Sc., PMP, Regional Estimating Manager (DRA Americas); Philip de
Weerdt, P.Eng , PMP, MBA, Project Manager (DRA Americas). Shadrac Ibrango, Daniel Gagnon,
Volodymyr Liskovych, Reywen Bigirimana and Philip de Weerdt are Qualified Persons (“QP”) as defined
under NI 43-101 and are independent of the Company.
The Mineral Resource estimate for Kraku Pester set out in this news release was prepared by CSA
Global (UK) Limited in 2018 in accordance with Canadian regulatory requirements set out in N I 43-101
and remains current. Information in this release relating to Kraku Pester has been reviewed and
approved by Galen White, FAusIMM, Principal Consultant (CSA Global). Galen White is a QP as defined
under NI 43-101 and is independent of the Company.
Ross Overall, Corporate Mineral Resource Manager, of the Company, is a QP, as defined under NI 43-
101, and has reviewed and approved the contents of this news release.
About Dundee Precious Metals Inc.
Dundee Precious Metals Inc. is a Canadian -based international gold mining company with operations
and projects located in Bulgaria, Namibia and Serbia. The Compa ny’s purpose is to unlock resources
and generate value to thrive and growth together. This overall purpose is supported by a foundation of
core values, which guides how the Company conducts its business and informs a set of complementary
strategic pillars and objectives related to ESG, innovation, optimizing our existing portfolio, and growth.
The Company’s resources are allocated in -line with its strategy to ensure that DPM delivers value for
all of its stakeholders. DPM’s shares are traded on the Toronto Stock Exchange (symbol: DPM).
For further information please contact:
David Rae
President and Chief Executive Officer
Tel: (416) 365-5092
Jennifer Cameron
Director, Investor Relations
Tel: (416) 219-6177