DUNDEE PRECIOUS METALS ANNOUNCES PRELIMINARY ECONOMIC ASSESSMENT FOR THE TIMOK GOLD PROJECT, SERBIA (All monetary figures are expressed in U.S. dollars
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DUNDEE PRECIOUS METALS ANNOUNCES PRELIMINARY ECONOMIC ASSESSMENT
FOR THE TIMOK GOLD PROJECT, SERBIA
(All monetary figures are expressed in U.S. dollars unless otherwise stated)
Toronto, July 15, 2019 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or “the Company”)
is pleased to announce the results of a Preliminary Economic Assessment (“PEA”) on its Timok
Gold Project (“Timok”) located in the Bor mining district in Serbia. The PEA is based on the
updated mineral resource estimate completed in September 2018 (1) and provides a base case,
considering primarily oxide and transitional material types , upon which the project will now be
optimized for mining and processing strategies, including an economic evaluation of the larger
sulphide resource.
“This PEA provides a solid foundation for the Timok Gold Project,” said Rick Howes, President
and CEO. “ With further optimization, Timok has the potential to provide significant accretive
organic growth for relatively low initial capital in a region where we have had a presence for many
years. DPM discovered Timok in 2008 and the team has advanced the project while developing
strong relations with local communities and the government.”
PEA(2)(3) Highlights
After-tax NPV5% of $105 million and after-tax IRR of 18.6%
Cash cost of $618 per ounce (4)
All-in sustaining cost (“AISC”) (5) of $717 per ounce
Peak annual gold production of approximately 132,000 ounces
Initial capital costs of $136 million
Mine life of 9 years
The PEA was prepared by CSA Global Consultants Canada Ltd (“CSA Global”) and is dated April
30, 2019. The PEA is preliminary in nature and includes some inferred mineral resources that are
considered too speculative geologically to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves. U nlike mineral reserves, mineral
resources do not have demonstrated economic viability. There is no certainty that the PEA results
will be realized.
(1) See news release dated September 24, 2018 and titled “DPM Announces Updated Mineral Resource Estimate for the Timok
Gold Project” filed on SEDAR at www.sedar.com and available on the Company website at www.dundeeprecious.com
(2) Assumes a gold price of $1,250/ounce. All amounts are reported in US dollars unless otherwise stated.
(3) All-in sustaining cost per ounce of gold and cash cost per ounce are not measures recognized under IFRS and are referred
to as Non-GAAP measures. These measures have no standardized meanings under IFRS and may not be comparable to
similar measures presented by other companies. Refer to the “Non-GAAP Financial Measures” section of the Management’s
Discussion and Analysis for the three months ended March 31, 2019 for more information about Non-GAAP measures.
(4) Cash cost per ounce represents mining, processing and site general and administrative costs, royalty and offsite costs,
divided by payable gold of 661,000 ounces.
(5) All-in sustaining cost per ounce of gold represents mining, processing and site general and administrative costs, royalty,
offsite costs and sustaining capital expenditures, divided by payable gold of 661,000 ounces.
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The 2018 mineral resources update reclassified the mineralization into oxide, transitional and
sulphide material types that were initially classified as sulphide material. The inclusion of
significant amounts of oxide and transitional material types in the mineral resources, coupled with
encouraging metallurgical test work results, led to the assessment of a heap leach facility being
proposed in the PEA to process oxide and transitional material. The mining scenar io targeting
these material types also results in the mining of small amounts of higher-grade sulphide material,
which is proposed to be processed through the addition of a small concentrator in year three.
PEA Overview
Summary project metrics are presented in the following tables.
Assumptions Units
Gold price $/oz 1,250
Production Profile
Total tonnes of mineralized material mined and processed MTonnes 18.9
Total tonnes waste mined MTonnes 49.7
Strip ratio waste:feed 2.6:1
Head grade g/t Au 1.36
Peak tonnes per day mineralized material mined Tonnes 8,219
Average gold recovery % 81.5
Total gold ounces mined Oz 826,000
Total gold ounces recovered Oz 673,000
Average annual gold production Oz 75,000
Peak annual gold production Oz 132,000
Mine life Years 9
Unit Operating Costs
LOM average cash cost $/oz Au 618
AISC(1) $/oz Au 717
Project Economics
Royalties % 5.0
Average annual EBITDA $M 47
Pre-tax NPV 5% / After-tax NPV 5% $M 108 / 105
Pre-tax NPV 7.5% / After-tax NPV 7.5% $M 78 / 75
Pre-tax IRR / After-tax IRR % 18.9 / 18.6
Undiscounted operating pre-tax cash flow / after-tax cash flow $M 195 / 191
After-tax payback period Years 4.1
(1) All-in sustaining cost per ounce of gold represents mining, processing and site general and administrative costs, royalty,
offsite costs and sustaining capital expenditures, divided by payable gold of 661,000 ounces.
Mining
The PEA assumes open pit mining of approximately 30,000 tonnes per day (“tpd”) at a strip ratio
of 2.6:1 using an owner-operated fleet. The mining assumptions are based on the selection of
optimized open pit shells focused on oxide and transitional material types, but also assumes the
mining of higher-grade sulphide material within these shells. Phased pit designs, including ramps
and benches, were produced based on the selected pit shells.
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Mining Parameters Units LOM Total / Average
Oxide mineralized material MTonnes 12.4
Grade g/t Au 1.16
Transitional mineralized material MTonnes 3.0
Grade g/t Au 1.25
Sulphide mineralized material MTonnes 3.5
Grade g/t Au 2.17
Waste material MTonnes 49.7
Total material mined MTonnes 68.6
Total contained gold oz 826,000
The PEA uses cut-off grades to determine whether material extracted from within the pit designs
will be sent for processing. The cut -off grades used in this study vary depending on recoveries
and mining costs and are summarized in the following table.
Material Type Units
Domain
Bigar Hill Korkan Korkan
West
Oxide material processing cut-off g/t Au 0.19 0.19 0.24
Transitional material processing cut-off g/t Au 0.25 0.25 0.25
Sulphide material processing cut-off g/t Au 0.69 0.69 0.69
Processing
The PEA envisions the crushing and stacking of material onto a lined heap leach facility at a rate
of up to 2.5 million tonnes per annum (“Mtpa”). Leached gold will be recovered from solution using
a traditional Adsorption-Desorption-Recovery plant to produce doré bars, which will be sold to a
refinery.
Given that some relatively higher-grade sulphide material is mined within the open pit designs, a
0.5 Mtpa sulphide concentrator will start production in year three of the operation to produce a
clean gold-bearing concentrate from the mineralized sulphide material. This concentrate will be
sold to local or global smelters.
The heap leach processing of oxide and transitional material does not produce any tailings. The
relatively small amount of tailings from the concentrator will be filtered and dry stacked onto the
lined heap leach facility, negating any need for a tailings dam.
Metallurgical Results
During 2018 and 2019, DPM conducted metallurgical test work at SGS Minerals Services,
Lakefield, Ontario. The test work included coarse ore bottle roll tests as well as column leach tests
to determine heap leach recoveries of the various domains and types of mineralization found at
Timok.
The metallurgical test work, concluded in the second quarter of 2019, returned encouraging
results of gold extractions of around 85-90% for the oxide material and 62-67% for the transitional
material of the three domains – Bigar Hill, Korkan and Korkan West. These extraction rates were
obtained at a crush size of 16mm and typical reagent consumption rates.
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The assumed recoveries for the sulphide material of Bigar Hill and Korkan were based on the
flotation test work programs undertaken at SGS Mineral Services, UK during 2012 and 2013. No
further test work, including optimization work, has been conducted on the sulphide material since
the re-classification of the deposit into oxide, transitional and sulphide materials.
The gold recoveries assumed for the financial analysis in the PEA study are summarized in the
following table.
Material Type
Domain
Average Bigar Hill Korkan Korkan
West
Oxide material (to doré) 91% 91% 73% 88%
Transitional material (to doré) 69% 69% 69% 69%
Sulphide material (to sulphide
concentrate) 75% 75% 75% 75%
Operating Costs (1)
Operating Costs LOM
($ million)
$/oz Au
Recovered
$/tonne of
Oxide &
Transitional
Feed
$/tonne of
Sulphide
Feed
Mining costs 162 245 9 9
Processing costs 138 209 5 16
G&A costs 31 47 2 2
Cash Costs 331 501 15 27
Royalty (5% NSR to
Serbian Gov’t) 40 60 2 3
Offsite costs
(Treatment and
Refining Charges)
38 57 0 10
Total Cash Costs 409 618 18 39
Sustaining capital 65 99 3 3
AISC(2) 474 717 21 43
(1) Due to rounding, some columns may not total exactly as shown.
(2) All-in sustaining cost per ounce of gold represents mining, processing and site general and administrative costs, royalty,
offsite costs and sustaining capital expenditures, divided by payable gold of 661,000 ounces.
Capital Costs
Capital Costs Initial
($million)
Sulphide
Processing
($million)
Sustaining
Capital
($million)
LOM
($ million)
Mining 35 – 5 40
Processing 33 30 16 80
Infrastructure 34 – 4 38
Total Direct Costs 103 30 25 158
Indirect & Owner's Costs 18 – 18 35
Total Indirect Costs 18 – 18 35
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Contingency 15 – 13 28
Reclamation – – 10 10
Total Capital 136 30 65 232
Due to rounding, some columns may not total exactly as shown.
Optimization Opportunities
As the PEA mining scenario targeted primarily oxide and transitional material types, with limited
amounts of higher grade sulphide material included, a scenario that targets additional sulphide
material will be evaluated . The geometry of the mineralization is such that if the pit shell were
optimized to include more sulphide material, additional oxide and transitional material would also
be included . A parallel optimi zation of recoveries, processing strategies and throughputs to
balance the processing methods with the adjusted feed materials could also generate additional
value.
Additional metallurgical test work will also provide opportunities for optimization of the processing
methods, costs and recoveries for all gold bearing material types. The previous test work done
on flotation recoveries pre -dates the re-classification of the deposit into oxide, transitional and
sulphide materials. Further flotation test work on specifically what is now classified as sulphide
material, excluding the oxide and transitional materials, may result in improved performance.
Ongoing exploration work targeting additional shallow oxide material in the vicinity of the current
resource could also generate further value to the project.
Exploration
Exploration activities planned for 2019 at the Timok Gold Project include up to 5,000 m of diamond
drilling with the aim of increasing oxide and transitional mineral resources. High priority drill targets
exist close to the Bigar Hill and Korkan deposits as well as within geochemical and geophysical
anomalies over a five km stretch of similar geology north of the Korkan deposit that is within the
Potaj Cuka – Tisnica licence. DPM is currently waiting for extensions to the Potaj Cuka – Tisnica
and Bigar Istok licences, which are expected imminently, as they have reached the expiry of the
most recent three-year term.
In addition to these planned exploration activities, further drilling of the existing Bigar Hill, Korkan
and Korkan West mineral resources planned for 2019 include s approximately 7,000 m of infill
drilling, 4,300 m of condemnation drilling and 2,200 m of geotechnical drilling.
Environmental, Social and Permitting
The project design provides a foundation for responsible environmental and social development,
operation and closure. The design includes a relatively small footprint comprised of pits, waste
rock dumps, a small plant area, and a heap leach pad, all of which will be rehabilitated at the end
of the mine life. The small volume of tailings generated during the project can be placed onto the
existing lined heap leach pads , eliminating the need for a separate tailing s facility. The
development of the project will bring economic benefits and growth opportunities to a historical
mining and industrial region.
Environmental and social risks associated with the project relate to surface water, groundwater,
biodiversity and economic displacement associated with land acquisition. These risks are typical
of similar gold mining projects and will be managed by DPM in accordance with good international
practice. The project will also be developed in compliance with the European Bank for
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Reconstruction and Development performance requirements which specify compliance with
European Union standards for environmental protection and safety.
The transportation and use of cyanide in the heap leach process presents both perceived and
real risks to surface and groundwater quality . However, DPM is a signatory to the International
Cyanide Management Code, which provides standards of practice for protection of communities
and the environment during transportation of cyanide and specific usage requirements on
handling, storage, operation, disposal and decommissioning.
A permitting schedule was developed to comply with the Serbian legal system. Serbia is
considering the adoption of European Union requirements and the Company is consulting with
regulatory authorities regularly to anticipate and manage future changes to the system. The
project will be subject to scrutiny by regulatory authorities and other stakeholders during the
permitting process. There are six formal hearing and consulta tion periods included within the
spatial plan, strategic environmental assessment and environmental impact assessment
processes, and a range of other points at which the public and other interested parties will be
consulted. The Company will continue to engage in meaningful conversations with all
stakeholders as the project moves forward.
Next steps
Based on the results of the PEA, DPM intends to conduct a geotechnical and hydrogeological
study, as well as further optimization work to target additional sulphide material, prior to
commencing a preliminary feasibility study (“PFS”). The intent of the optimization work is to define
the mining and processing scenarios to be studied in the PFS and to confirm whether the project
has the potential to achieve a return that is consistent with the Company’s capital allocation
framework. Development of a permitting and approvals plan incorporating the ESIA process and
approvals, as well as all additional licensing (major permits and authorizations) requirements, was
initiated in the fourth quarter of 2018 and will continue during the PFS phase, if commenced.
Mineral Resources Estimate
The previously disclosed mineral resources statement for the Timok Gold Project is summarized
in the table below.
Mineral Resources estimates: Timok Gold Project, Serbia, as at May 15, 2018
Deposit
Indicated Mineral Resource Inferred Mineral Resource
Tonnage
(Mt)
Au Tonnage
(Mt)
Au
(g/t) K oz (g/t) K oz
Bigar Hill
Oxide 12.4 1.14 455 0.7 0.7 16
Transitional 5.9 1.21 229 0.4 1.0 12
Sulphide 11.1 1.72 615 0.1 1.6 7
Total 29.4 1.38 1,299 1.2 0.9 34
Korkan
Oxide 5.8 0.90 166 0.2 0.5 4
Transitional 2.8 1.06 97 0.1 0.7 3
Sulphide 3.3 1.91 205 0.0 1.1 0
Total 11.9 1.22 468 0.4 0.6 7
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Korkan West
Oxide 2.9 1.03 98 1.0 0.8 24
Transitional 0.3 0.85 8 0.2 0.8 6
Sulphide 0.0 1.33 1 0.0 0.9 0
Total 3.2 1.02 106 1.2 0.8 31
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 21.8 1.06 742 2.0 0.7 48
Total Transitional 9.2 1.15 338 0.7 0.9 22
Total Sulphide 15.9 1.79 916 0.2 1.5 8
Grand Total 46.9 1.32 1,996 2.9 0.8 78
Source: A technical report entitled “NI 43-101 Technical Report – Mineral Resource Estimate Update for the Timok
Gold Project, Serbia” dated November 7, 2018 (filed on SEDAR at www.sedar.com).
Notes:
1. The effective date of the Mineral Resource estimates is May 15, 2018
2. Mineral Resources are reported in accordance with CIM guidelines.
3. A cut-off of 0.20 g/t Au for the oxide material, 0.25 g/t Au for the transitional material, and 0.60 g/t Au for the
sulphide material, is applied at Bigar Hill.
4. A cut-off of 0.20 g/t Au for the oxide material, 0.25 g/t Au for the transitional material, and 0.65 g/t Au for the
sulphide material, is applied at Korkan and Korkan West.
5. A cut-off of 0.35 g/t Au for the oxide material, 0.40 g/t Au for the transitional material, and 1.05 g/t Au for the
sulphide material, is applied at Kraku Pester.
6. Figures have been rounded to the appropriate level of precision for the reporting of Mineral Resources.
7. Due to rounding, some columns or rows may not compute exactly as shown.
8. The Mineral Resources are stated as in situ dry tonnes. All figures are in metric tonnes.
9. The models are reported above surfaces based on conceptual US$1,400 gold price pit shells to support
assumptions relating to reasonable prospects of eventual economic extraction.
10. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The estimate of
Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio -political,
marketing, or other relevant issues.
Technical Information
The PEA and other scientific and technical information contained in this news release were
prepared by CSA Global, in accordance with the Canadian regulatory requirements set out in
National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”), and has
been reviewed and approved by, as it relates to mineral resources: Maria O’Connor, BSc, MAIG,
Principal R esource Geologist (CSA Global); as it relates t o metallurgy and processing: Gary
Patrick BSc, MAusIMM (CP) Senior Associate Metallurgist (CSA Global); as it relates to sampling,
drilling, exploration and QAQC: David Muir, BSc (Hons) Geology, Data Manager (CSA Global);
as it relates to mining , infrastructure, mining costs, environment and permitting : Greg Trout,
P.Eng., Principal Mining Engineer (AGP Mining Consultants); and as it relates to financial
modelling and economic analysis: Alex Vere sezan, P.Eng., Manager, Mining Americas (CSA
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Global). Maria O’Connor, Gary Patrick, David Muir, Greg Trout and Alex Veresezan are all
independent Qualified Persons (“QP”), as defined under NI 43-101.
Ross Overall, Corporate Senior Resource Geologist of DPM , who is a QP and not independent
of the Company, has reviewed and approved the contents of this release.
The mineral resource and mineral reserve estimates contained herein may be subject to legal,
political, environmental or other risks that could materially affect the potential development of such
mineral resources. See the Technical Report, which will be published within 45 days of this
announcement, for more information with respect to the key assumptions, parameters, methods
and risks of determination associated with the foregoing.
Cautionary note to U.S. investors concerning estimates of mineral resources
These estimates have been prepared in accordance with the requirements of Canadian securities
laws, which differ from the requirements of U.S. securities laws. The terms “mineral resource”,
“measured mineral resource”, “indicated mineral resource” and “infe rred mineral resource” are
defined in NI 43-101 and recognized by Canadian securities laws but are not defined terms under
the U.S. Securities and Exchange Commission (“SEC”) Guide 7 (“SEC Guide 7”) or recognized
under U.S. securities laws. U.S. investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be upgraded to mineral reserves . “Inferred
mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred
mineral resource” will ever be upgraded to a higher category. Under Canadian securities laws,
estimates of “inferred mineral resources” may not form the basis of feasibi lity or pre -feasibility
studies. U.S. investors are cautioned not to assume that all or any part of an inferred
mineral resource exists or is economically or legally mineable . Accordingly, these mineral
resource estimates and related information may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure requirements under the U.S.
federal securities laws and the rules and regulations thereunder, including SEC Guide 7.
About Dundee Precious Metals
Dundee Precious Metals Inc. is a Canadian based, international gold mining company engaged
in the acquisition of mineral properties, exploration, development, mining and processing of
precious metals. The Company's operating assets include the Chelopech opera tion, which
produces a gold-copper concentrate containing gold, copper and silver and a pyrite concentrate
containing gold, located east of Sofia, Bulgaria; the Ada Tepe operation, which produces a gold
concentrate containing gold and silver, located in southern Bulgaria; and the Tsumeb smelter, a
complex copper concentrate processing facility located in Namibia. DPM also holds interests in a
number of developing gold and explorati on properties located in Canada and Serbia, and its
10.3% interest in Sabina Gold & Silver Corp.
Cautionary Note Regarding Forward Looking Statements
Certain statements and other information included in this press release and our other disclosure
documents constitute “forward looking statements” or “forward looking information” within the
meaning of applicable securities legislation, which we refer to collectively hereinafter as “Forward
Looking Statements”. Forward Looking Statements are statements that are not historical facts
and are generally, but not always, identified by the use of forward looking terminology such as
“plans”, “expects”, or “does not expect”, “is expected”, “budget”, “scheduled”, “estimat es”,