Dundee Precious Metals Announces Pre-Feasibility Study Results for the Čoka Rakita Project with $735M of NPV5% and 41% IRR
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Dundee Precious Metals Announces Pre-Feasibility Study Results for the
Čoka Rakita Project with $735M of NPV5% and 41% IRR
Toronto, December 18, 2024 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or “the Company”) is
pleased to announce the results of a pre-feasibility study (“PFS”) for its Čoka Rakita project in Serbia. The
robust PFS economics and continued exploration success around Čoka Rakita serve as DPM’s basis for
proceeding to a feasibility study (“FS”) immediately for an accelerated construction decision, with first
concentrate production targeted for 2028.
PFS Highlights
(All dollar amounts in this news release are expressed in U.S. dollars, unless otherwise noted.)
Improvements in the PFS include increased ounces in the initial years and decreased all-in sustaining costs.
Project highlights include:
• Accelerated gold production in first 5 years, averaging 170,000 ounces of gold per year.
• Robust base case NPV5% of $735 million (after-tax) and IRR of 41% at a $1,900 per ounce gold price
assumption. Using a $2,500 gold price assumption, NPV5% is $1.2 billion (after-tax) and IRR is 58%.1,2
• First quartile all-in sustaining cost of $644 per ounce of gold (life of mine average).3
• Attractive initial capital of $379 million, well-within DPM’s funding capacity.
• Mineral Reserves of 1.36 million ounces supporting a 10-year mine life with 8 years of processing.
• Project timeline further de-risked by utilizing existing processing equipment from the Ada Tepe mine
and leveraging proximity to Chelopech mine to train and develop key personnel for operating roles.
• Advancing to feasibility study, expected to be completed by year-end 2025.
• Optimization and exploration activities ongoing to further unlock Čoka Rakita’s value potential.
Čoka Rakita project PFS highlights
(Based on a $1,900 per ounce gold price assumption)
Operating life 10 years
Total gold produced (life of mine) 1.2 million ounces
Average grade (life of mine) 6.38 grams per tonne
Average all-in sustaining cost (life of mine)3 $644 per ounce of gold
NPV (after-tax, 5% discount)1,2 $735 million
IRR (after-tax)2,3 41%
1. Economics from construction forward and assumes no initial capital is spent in advance of a construction decision and is based on financial years.
2. Current legislation in Serbia allows for tax relief for large investments for a maximum period of 10 years, subject to certain eligibility conditions being
maintained through the 10-year period. The PFS assumes that the Čoka Rakita project is eligible for this tax relief and the effective income tax rate
applied is 0% over the project’s 10-year mine life.
3. Cash cost per ounce of gold sold, all-in sustaining cost per ounce of gold sold and free cash flow are non-GAAP financial measures or ratios and have
no standardized meaning under IFRS Accounting Standards (“IFRS”) and may not be comparable to similar measures used by other issuers. As the
Čoka Rakita project is not in production, the Company does not have historical non -GAAP financial measures nor historical comparable measures
under IFRS, and therefore the foregoing prospective non -GAAP financial measures or ratios may not be reconciled to the nearest comparable
measures under IFRS. Refer to the “Non-GAAP Financial Measures” section of this news release for more information, including a detailed description
of each of these measures.
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“We are very excited by the results of the pre-feasibility study. In less than 24 months since announcing the
initial discovery of Čoka Rakita, we have outlined a very robust, highly value accretive project with the
potential to add high-margin gold production growth to our portfolio,” said David Rae, President and Chief
Executive Officer of Dundee Precious Metals.
“Given the project’s excellent economics, including a 41% IRR at a gold price of $1,900 per ounce, we are
immediately proceeding to a feasibility study while advancing permitting activities in parallel, with the goal
of commencing construction in mid-2026 to support first production of concentrate in 2028.
“We have the financial and technical resources to advance this high -quality growth project and continue
our exploration programs to further unlock the significant potential of Čoka Rakita and the surrounding
licences. This includes the two new high-grade Frasen and Dumitru Potok discoveries we announced earlier
this year, located within 1 kilometre of Čoka Rakita, which confirm our view of the significant potential for
large-scale high-grade mineralization.”
Pre-feasibility Study Overview
Čoka Rakita is located approximately 35 kilometres by road northwest of the city of Bor in Serbia, and
benefits from established infrastructure, including nearby roads and power lines. The project is a strong fit
with the Company’s underground mining and processing expertise and is approximately 320 kilometres
northwest of DPM’s Chelopech mine in Bulgaria, which will allow easy access to existing technical support
functions.
The PFS is based on a Mineral Reserve Estimate of 6.6 million tonnes (“Mt”) at 6.38 grams per tonne (“g/t”)
for 1.36 million contained gold ounces. The PFS contemplates underground mining of the Čoka Rakita
deposit with a relatively standard comminution, gravity and flotation flowsheet to process 850,000 tonnes
of ore per annum, producing saleable gravity and flotation gold concentrates. A portion of the gravity
concentrate will be smelted and sold as a doré for improved sales terms.
The PFS assumes start of construction mid-2026 with first production of gold concentrate targeted for the
second half of 2028.
The process flowsheet and project schedule allow DPM to leverage the use of existing processing
equipment and infrastructure from the Ada Tepe operation in Bulgaria, which will be decommissioned and
refurbished following the mine’s closure in mid -2026. Several benefits of this approach were identified,
including de-risking the project timeline in terms of long -lead items and supply chain risk, as well as the
ability to leverage the Company’s processing expertise, training and maintenance practices.
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The following table summarizes key inputs, operating statistics and results of the Čoka Rakita PFS:
Key Operating and Financial Assumptions and Metrics
Assumptions
Gold price $ per ounce $1,900
Government royalty (NSR) % 5.0
Production and costs
Mineral Reserve million tonnes 6.6
Average gold grade mined (life of mine) grams per tonne 6.38
Annual throughput tonnes per annum 850,000
Average gold grade processed (life of mine) grams per tonne 6.38
Average gold metallurgical recovery % 86.8
Total gold produced (life of mine) million ounces 1.2
Average annual gold production (life of mine) thousand ounces 147
Average annual gold production (first five years) thousand ounces 170
Life of mine operating unit costs
$ million $ per tonne processed
Mining $251 38
Processing $166 25
General & administrative $98 15
Royalties $107 16
Offsite cost $69 10
Total cash costs1 $691 $104
Total cash costs1 $ per gold ounce $596
All-in sustaining cost1 $ per gold ounce $644
Capital estimates
Initial capital $ millions $379
Sustaining capital (life of mine) $ millions $29
Closure costs2 $ millions $27
Project economics
Free cash flow (after-tax)1,3,4 $ millions $1,077
NPV (after-tax, 5% discount)3,4 $ millions $735
IRR (after-tax)3,4 % 41%
Payback period3,4 years 1.7
1. Cash costs, all-in sustaining cost per ounce and free cash flow are non-GAAP measures or ratios. Refer to the “Non-GAAP Financial
Measures” section of this news release for more information.
2. Closure costs include a non-recoverable VAT of approximately $2.3 million.
3. Economics from construction forward, assumes no initial capital spent in advance of a construction decision, and are based on
financial years.
4. Current legislation in Serbia allows for tax relief for large investments for a maximum period of 10 years, subject to certain eligibility
conditions being maintained through the 10-year period. The PFS assumes that the Čoka Rakita project is eligible for this tax relief
and the effective income tax rate applied is 0% over the project’s 10-year mine life.
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Mining and Processing
The PFS mine plan assumes access from surface via two declines and a spiral ramp to truck the mined
material to surface . The anticipated mining method is conventional sublevel long-hole open stoping and
utilizing paste backfill with cemented rock fill, and unconsolidated rock fill used where the mining sequence
permits, leveraging DPM’s experience and expertise from its underground Chelopech mine.
The PFS is based on a Probable Mineral Reserve of 6.6 million tonnes. The PFS mine plan and design has
been optimized to access the high -grade core of mineralization in the initial years. Production in the first
five full years is expected to average 170,000 ounces per year from an average gold head grade of 7.42
g/t. The average life of mine gold production is expected to be approximately 147,000 ounces per year from
an average gold head grade of 6.38 g/t.
The PFS is based on a process flowsheet consisting of crushing and grinding to a particle size (P80) of 53
µm, followed by gravity concentration and sulphide flotation. The gravity concentrate will be marketable
directly to gold refineries, and the sulphide flotation concentrate will be suitable for processing by smelters
in the region. Testwork results to date indicates that the final concentrates do not contain any deleterious
elements above smelter penalty thresholds. A portion of the gravity concentrate will be smelted and sold
as a doré. Average payability for the flotation concentrate is expected to be 97.5%, average payability for
the gravity concentrate is expected to be 99.8% and average payability for the doré is expected to be
99.9%, with a combined life of mine weighted average of 98.5%.
The production schedule as outlined in the PFS is presented in the table below:
Unit Total /
average
Pre
production Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Ore mined Kt 6,633 76 596 855 855 855 855 855 853 833
Gold grade g/t 6.38 10.17 10.70 7.17 8.35 6.38 5.25 5.61 4.76 3.73
Ore processed Kt 6,633 – 672 855 855 855 855 855 853 833
Gold grade g/t 6.38 – 10.63 7.17 8.35 6.38 5.25 5.61 4.76 3.73
Recoveries
Doré % 22.7 – 23.0 23.2 23.7 22.8 22.2 22.4 21.9 21.2
Gravity % 13.4 – 13.5 13.6 13.9 13.4 13.0 13.2 12.9 12.4
Flotation % 50.7 – 47.8 50.6 50.0 51.1 51.8 51.6 52.2 53.2
Combined % 86.8 – 84.3 87.4 87.6 87.3 87.1 87.2 87.0 86.8
Gold production Koz. 1,161 – 194 172 201 153 126 134 114 87
All-in sustaining cost1 $/oz. $644 – 560 475 560 550 664 750 737 1,019
1. All-in sustaining cost per ounce is a non-GAAP measure. Refer to the “Non-GAAP Financial Measures” section of this news release
for more information.
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Capital Expenditures
The PFS estimates initial project capital costs of approximately $379 million includes development of the
underground mine, construction of an 850,000 tonne per annum processing plant utilizing existing
equipment from the Ada Tepe mine and processing facility, a 3.93 Mt fully lined dry tailings storage facility,
and additional infrastructure, including haul and access roads, water treatment, power supply and site
services.
The PFS includes several enhancements to the PEA design, resulting in improved economic benefits to
the project. This included improved mine access layout to incorporate a second decline and portal, change
of the SAG mill to an AG mill and pebble crusher, the addition of a secondary grinding mill, and the addition
of a gravity gold circuit and gold room.
The following table breaks down the initial capital estimate:
$ millions
Initial capital estimates
Mining 85
Earthworks 35
Equipment and infrastructure 117
Mobile equipment 4
Total direct costs 241
Owners cost 14
Operational readiness 28
General indirect costs 46
Total indirect cost 88
Contingency 50
Total initial capital expenditures 379
Sustaining and closure
Sustaining capital expenditures $29
Closure costs1 $27
1. Closure costs include a non-recoverable VAT of approximately $2.3 million.
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Čoka Rakita Gold Price Sensitivity Estimates
The table below shows the gold price sensitivity for the project:
Gold price sensitivities
Base case
Average gold price
($/oz.) $1,500 $1,700 $1,900 $2,300 $2,500
NPV1,2
(after-tax, 5% discount) $410 $573 $735 $1,059 $1,222
IRR1,2
(after-tax) 28.3% 35.1 41.4% 52.5% 58%
Payback
(years) 2.3 1.9 1.7 1.4 1.2
1. Economics from construction forward, assumes no initial capital spent in advance of a construction decision, and are based on
financial years.
2. Current legislation in Serbia allows for tax relief for large investments for a maximum period of 10 years, subject to certain eligibility
conditions being maintained through the 10-year period. The PFS assumes that the Čoka Rakita project is eligible for this tax relief
and the effective income tax rate applied is 0% over the project’s 10-year mine life.
Mineral Resource and Mineral Reserve (“MRMR”) Estimate
In conjunction with the PFS, DPM has updated the Mineral Resource Estimate (“MRE”) for Čoka Rakita.
The database cut-off was August 30, 2024, which is also the effective date of the MRE. Drill hole spacing
is approximately 30 metres by 30 metres over the deposit footprint, with infill drilling reaching a spacing of
between 20 metres to 15 metres within the high-grade core of the deposit. The updated MRE incorporates
detailed understanding of the geologic controls and deposit architecture.
To support the MRE, a comprehensive sensitivity analysis was completed on assumptions and parameters
used in the estimate, which identified the optimum top cutting strategy, composite length, block size, search
parameters and domaining strategy. The MRE satisfies reasonable prospects of eventual e conomic
extraction (“RPEEE”) by demonstrating the spatial continuity of the minerali zation based on a 2 g/t Au
reporting cut-off grade and optimized stope volumes. The cut-off grade assumes a gold price of $1,700 per
ounce. The MRE was classified as Indicated and Inferred Mineral Resources, informed by drill spacing
supported by a drill hole spacing study, QA/QC, quality of data, confidence in geological and mineralization
interpretations.
The Mineral Reserve Estimate is based only on Indicated Mineral Resources identified in the block model.
Optimized stope shapes were generated with respect to the design and economic criteria established such
as cut-off grade, deposit geometry criteria and stope shape parameters. The stopes were then sequenced
to suit the mining method (long-hole longitudinal retreat) and scheduled to produce the production profile
and life of mine plan. Mineral Reserves are based on an in-situ cut-off grade of 2.5 g/t Au for stopes and
1.0 g/t Au for development, which assumes a gold price of $1,500 per ounce of gold.
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The Mineral Reserve Estimate for Čoka Rakita is show below and is effective as of August 30, 2024.
Čoka Rakita Mineral Reserve Estimate
(Effective date August 30, 2024)
Reserve Category Tonnes
(Mt) Gold Grade (g/t) Contained Gold
(Moz.)
Proven – – –
Probable 6.63 6.38 1.359
Total Proven & Probable 6.63 6.38 1.359
1. At the time of this report, there are no Proven Mineral Reserves for the Čoka Rakita Project.
2. The Mineral Reserves disclosed are classified as Probable and are based on the 2014 CIM Definition Standards and 2019 CIM
Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines.
3. The Inferred Mineral Resources are treated as waste and do not contribute to Mineral Reserves estimation.
4. The Mineral Reserves estimate has an effective date of August 30, 2024.
5. The reference point at which the Mineral Reserves are defined is where the ore is delivered to the process plant and therefore not
inclusive of milling recoveries or payable metal deductions.
6. Long-term metal price assumed for the evaluation of the Mineral Reserves is $1,500/oz for gold.
7. Mineral Reserves are based on a global rounded cut-off grade of 2.5 g/t (in-situ) and includes incremental ore from development
at a reduced cut-off grade of 1.0 g/t Au.
8. Mineral Reserves account for 10% external mining dilution and 95% mining recovery applied to the stopes
9. Contained Metal is calculated as follows: Au Contained Metal, (oz) = Tonnage (Mt) * Grade (g/t) / 31.1035.
10. Figures have been rounded to reflect that this is an estimate and totals may not match the sum of all components.
The Mineral Resource estimate, exclusive of Mineral Reserves, is shown below and is effective as of August
30, 2024.
Čoka Rakita Mineral Resource Estimate
(Effective date August 30, 2024)
Resource Category Tonnes
(Mt)
Gold Grade
(g/t)
Contained Gold
(Koz.)
Measured – – –
Indicated 1.45 3.30 154
Total Measured & Indicated 1.45 3.30 154
Inferred 0.11 3.11 11
1. The cut-off grade value of 2 g/t assumes a gold price of $1,700/oz., gold recovery of 88.8%, 0% dilution, operating costs of $71.7/t
(mining, processing and G&A), sustaining capital of $11.19/t, as well as offsite and royalty costs.
2. Mineral Resources are reported with DSO underground mining shapes generated at a 2 g/t Au cut -off grade to ensure Mineral
Resources meet RPEEE criteria. The stope optimization process allows for blocks below the cut -off grade to be included within
the fina l shapes in order to emulate the internal dilution that would be experienced during underground mining as per CIM
Estimation of Mineral Resources and Mineral Reserves Best Practices Guidelines prepared by the CIM Mineral Resource and
Mineral Reserve Committee and adopted by the CIM Council on November 29, 2019.
3. Mineral Resources are reported exclusive of Mineral Reserves.
4. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
5. Figures have been rounded to reflect that this is an estimate and totals may not match the sum of all components.
The Qualified Persons (“QPs”) are not aware of any environmental, permitting, legal, title, taxation, socio-
economic, marketing, or political factors that might materially affect the estimate of Mineral Resource and
Mineral Reserves.
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Permitting and Stakeholder Engagement
Permitting activities have continued to advance , with a detailed permitting timeline focused on supporting
commencement of construction in mid-2026.
Work continues on baseline studies required for the Environmental and Social Impact Assessment (“ESIA”),
as well as the final report on mineral resources and reserves (the Elaborate of Reserves) to be submitted
to the relevant authorities for receipt of the Certificate of Resources and Reserves as required under the
Serbian permitting process. While a decision by the Serbian government to initiate the development of the
Special Purpose Spatial Plan is currently pending, the Company’s approach includes having all preparatory
work completed and ready for submission while continuing to proactively engage with relevant stakeholders
to mitigate the risk of administrative delays.
Consistent with the approach across all operations, DPM seeks to build and maintain strong partnerships
with local communities and governments. The Company has had a local presence in Serbia since 2004
and has developed strong relationships in the region a nd 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 Čoka Rakita in accordance with industry best practices and
in-line with European Union standards . The Company is committed to working closely with local
communities around the project to understand and support local development opportunities, with a focus
on maximizing benefits of the project for stakeholders in Serbia.
Optimization Opportunities and Next Steps
Based on the PFS, DPM is proceeding immediately to a FS, which is expected to be completed by year -
end 2025. Activities in 2025 will include completing surface and underground geotechnical and
hydrogeological drilling, advancing permitting, progressing the design to the bas ic engineering level, and
commencing operational readiness activities, leveraging the project’s regional proximity to DPM’s
Chelopech underground mine to train and develop key personnel for operating roles.
Several optimization opportunities have been identified which DPM will advance as part of the FS work.
This includes:
• The potential to add additional gold ounces to the mining inventory through mine design optimization ,
based on a higher confidence Mineral Resource and Mineral Reserve estimate due to closer drill
spacing.
• Optimization of the decline construction schedule, which is an activity currently on the project critical
path.
• Finalizing site earthworks and water management infrastructure, following completion of geotechnical
and hydrogeological drilling and modelling.