DUNDEE PRECIOUS METALS ANNOUNCES THIRD QUARTER 2020 RESULTS; DELIVERED STRONG OPERATING PERFORMANCE AND GENERATED RECORD FINANCIAL RESULTS (All monetary figures are expressed in U.S. dollars
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DUNDEE PRECIOUS METALS ANNOUNCES THIRD QUARTER 2020 RESULTS;
DELIVERED STRONG OPERATING PERFORMANCE AND GENERATED RECORD FINANCIAL RESULTS
(All monetary figures are expressed in U.S. dollars unless otherwise stated)
Toronto, Ontario, November 12 , 2020 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the
“Company”) today announced its operating and financial results for the third quarter of 2020.
THIRD QUARTER FINANCIAL AND OPERATING HIGHLIGHTS:
• Strong m etals production – Produced 79,844 ounces of gold in concentrate, as Ada Tepe and
Chelopech continued to deliver strong production and performance. Copper production was 9.2 million
pounds;
• Solid smelter performance – Throughput of 55,880 tonnes at Tsumeb, despite 15 days of scheduled
maintenance during the quarter;
• Strong cost performance at all operations – Reported an all-in sustaining cost per ounce of gold(1) of
$640 and a cash cost per tonne of complex concentrate smelted(1) of $407;
• Record quarterly free cash flow generation – Generated $42.3 million in cash flow from operating
activities and a record $59.0 million of free cash flow(1);
• Growing earnings – Reported record net earnings attributable to common shareholders of $53.7 million,
reflecting strong gold production combined with higher gold prices. Reported record adjusted net
earnings(1) of $51.3 million or $0.28 per share;
• Strengthened financial position – Ended the quarter with $252.4 million of cash resources, comprised
of $102.4 million in cash and an undrawn $150 million long-term revolving credit facility (“RCF”), as well
as an investment portfolio of $75.6 million; and
• Well-positioned to deliver 2020 gu idance – Tracking towards the upper end of guidance for gold
production and lowered 2020 all-in sustaining cost guidance range to $650 to $720 per ounce.
“Our operations continued to perform extremely well during the third quarter, delivering higher gold production
and a lower all-in sustaining cost year-over-year. Our strong operating results, combined with higher gold
prices, generated another quarter of record net earnings and free cash flow as we continue to demonstrate
the significant potential of our operating assets,” said David Rae, President and CEO.”
“Notably, we have significantly reduced our all-in sustaining cost guidance for the year, and we continue to
track towards the upper end of our gold production guidance. Our performance is a credit to the outstanding
efforts undertaken at each of our sites to effectively manage the challenges of the COVID-19 pandemic while
prioritizing the health and safety of our workforce and host communities.”
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KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
$ millions, except where noted
Ended September 30,
Three Months Nine Months
2020 2019 2020 2019
Revenue 158.0 94.9 466.7 279.4
Cost of sales 82.3 71.8 257.4 208.2
Earnings before income taxes 59.0 11.6 160.8 28.3
Net earnings attributable to common shareholders 53.7 7.3 145.7 21.8
Basic earnings per share 0.30 0.04 0.81 0.12
Adjusted EBITDA(1) 84.6 32.5 240.8 83.2
Adjusted net earnings(1) 51.3 4.2 143.2 18.4
Adjusted basic earnings per share(1) 0.28 0.02 0.79 0.10
Cash provided from operating activities 42.3 22.7 127.2 46.5
Free cash flow(1) 59.0 21.0 166.6 55.4
Metals contained in concentrate produced:
Gold (ounces)
Chelopech 49,823 40,328 141,542 130,436
Ada Tepe 30,021 25,314 92,630 30,665
Total gold in concentrate produced 79,844 65,642 234,172 161,101
Copper (‘000s pounds) 9,224 10,142 27,983 27,219
Silver (ounces) 48,507 55,842 156,559 122,587
Payable metals in concentrate sold:
Gold (ounces)
Chelopech 37,877 28,054 113,365 109,037
Ada Tepe 31,297 10,094 94,901 10,094
Total payable gold in concentrate sold 69,174 38,148 208,266 119,131
Copper (‘000s pounds) 7,560 6,604 25,623 23,071
Silver (ounces) 40,596 28,987 140,514 91,947
Cash cost per tonne of ore processed(1):
Chelopech 38.01 35.28 37.32 35.11
Ada Tepe 34.00 50.62 39.40 49.51
All-in sustaining cost per ounce of gold(1) 640 740 655 755
Complex concentrate smelted at Tsumeb (tonnes) 55,880 42,186 179,406 166,675
Cash cost per tonne of complex concentrate smelted at
Tsumeb(1) 407 516 369 408
1) Adjusted EBITDA; adjusted net earnings; adjusted basic earnings per share; free cash flow; cash cost per tonne of ore processed; all-in sustaining cost
per ounce of gold; and cash cost per tonne of complex concentrate smelted at Tsumeb are not defined measures under IFRS. Refer to the “Non-GAAP
Financial Measures” section of the MD&A (as defined below) for more details, including reconciliations to IFRS measures.
Third Quarter Operating Highlights
In the third quarter of 2020, the Company achieved record net earnings and free cash flow reflecting
continued strong operating performance at Chelopech and Ada Tepe, combined with strong gold prices.
Ada Tepe continued to deliver impressive performance, w ith production in the period higher than planned
as a result of higher gold grades and higher volumes of ore treated. Chelopech continue d its consistent
track record in the third quarter, with gold production higher than expected due to higher gold recoveries in
pyrite concentrate. Chelopech and Ada Tepe are on track to achieve the upper end of their respective 2020
production guidance. Tsumeb also had a strong quarter, processing 55,880 tonnes of complex concentrate,
despite 15 days of scheduled maintenanc e during the period, and remains on track to achieve its 2020
production guidance.
Net Earnings and Adjusted Net Earnings
Net earnings attributable to common shareholders were $53.7 million ($0.30 per share) and $145.7 million
($0.81 per share) for the third quarter and first nine months of 2020, respectively, compared to $7.3 million
($0.04 per share) and $21.8 million ($0.12 per share) for the same periods in 2019.
Adjusted net earnings in the third quarter and first nine months of 2020 were $51.3 million ($0.28 per share)
and $143.2 million ($0.79 per share), respectively, compared to $4.2 million ($0.02 per share) and $18.4 million
($0.10 per share) for the corresponding periods in 2019.
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These increases were due primarily to higher volumes of gold sold, higher realized gold prices and the
favourable impact of a stronger U.S. dollar relative to the ZAR, partially offset by higher depreciation.
Adjusted EBITDA
Adjusted EBITDA (1) in the third quarter and first nine months of 2020 was $ 84.6 and $ 240.8 million,
respectively, compared to $32.5 million and $83.2 million in the corresponding period s in 2019, reflecting
higher volumes of gold sold, higher realized gold prices and the favourable impact of a stronger U.S. dollar
relative to the ZAR.
Production, Delivery and Cost Measures
Gold contained in concentrate produced in the third quarter of 2020 increased by 22% to 79,844 ounces,
relative to the corresponding period in 2019 , due primarily to higher gold grades and recoveries at
Chelopech and higher volumes of ore processed at Ada Tepe, partially offset by lower gold grades at Ada
Tepe. Ada Tepe achieved commercial production in June 2019 and full design capacity in the third quarter
of 2019. Copper production in the third quarter of 2020 decreased by 9% to 9.2 million pounds, relative to
the corresponding period in 2019, due primarily to lower copper grades and recoveries.
Gold contained in concentrate produced in the first nine months of 2020 increased by 45% to 234,172
ounces, relative to the corresponding period in 2019, due primarily to additional production from Ada Tepe
and higher gold grades at Chelopech. Copper production in the first nine months of 2020 increased by 3%
to 28.0 million pounds, relative to the corresponding period in 2019, due primarily to higher copper grades,
partially offset by lower copper recoveries.
Payable gold in concentrate sold in the third quarter of 2020 increased by 81% to 69,174 ounces, relative
to the corresponding period in 2019, due primarily to increased concentrate deliveries combined with higher
gold production as a result of higher grades. Payable copper in concentrate sold in the third quarter of 2020
of 7.5 million pounds was 14% higher than the corresponding period in 2019 due primarily to the timing of
gold-copper concentrate deliveries from Chelopech.
Payable gold in concentrate sold in the first nine months of 2020 increased by 75% to 208,266 ounces,
relative to the corresponding period in 2019 , due primarily to higher deliveries from Ada Tepe . Payable
copper in concentrate sold in the first nine months of 2020 of 25.6 million pounds was 11% higher than the
corresponding period in 2019 due primarily to the timing of gold-copper concentrate deliveries from
Chelopech and higher copper grades, partially offset by lower copper recoveries.
Complex concentrate smelted during the third quarter of 2020 of 55,880 tonnes was 32% higher than the
corresponding period in 2019. This reflects 15 days of scheduled maintenance to replace certain equipment
in the offgas system during the period, compared with 27 days of maintenance in the same period in 2019.
Complex concentrate smelted in the first nine months of 2020 of 179,406 t onnes was 8% higher than the
corresponding period in 2019 due primarily to a stead ier state of operations in 2020. No additional
significant maintenance is planned prior to the Ausmelt furnace reline, which is currently scheduled to occur
in the first quarter of 2021.
A table comparing production, delivery and cash cost measures for the third quarter and first nine months
of 2020 to 2020 guidance can be found on page 7 of this news release.
Cost Measures
Cost of sales in the third quarter and first nine months of 2020 of $ 82.3 million and $257.4 million,
respectively, was $10.5 million and $49.2 million higher than the corresponding period s in 2019 due
primarily to increased deliveries from Ada Tepe and Chelopech and higher depreciation from Ad a Tepe
following the start of commercial production in June 2019. This was partially offset by the favourable impact
of a stronger U.S. dollar relative to the ZAR and lower depreciation at Tsumeb as a result of an impairment
charge taken in the fourth quarter of 2019.
All-in sustaining cost per ounce of gold in the third quarter and first nine months of 2020 of $640 and $655,
respectively, was 14% and 13% lower than the corresponding periods in 2019 . This was due primarily to
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low cost production from Ada Tepe and higher by -product credits, partially offset by higher treatment
charges for Chelopech, higher general and administrative expenses as a result of higher share -based
compensation, and higher cash outflows for sustaining capital expenditures.
Cash cost per tonne of complex concentrate smelted in the third quarter and f irst nine months of 2020 of
$407 and $369, respectively, was 21% and 10% lower than the corresponding periods in 2019 due primarily
to higher volumes of complex concentrate s melted, the favourable impact of a weaker ZAR relative to the
U.S. dollar and higher acid deliveries, partially offset by lower acid prices.
Cash provided from operating activities
Cash provided from operating activities in the third quarter and first nine months of 2020 of $42.3 million
and $127.2 million, respectively, compared with $22.7 million and $46.5 million in the corresponding periods
in 2019, is not reflective of the significant increase in earnings in 2020 as a result of increases in n on-cash
working capital of $27.9 million and $67.0 million in the third quarter and first nine months of 2020,
respectively. The third quarter increase was due primarily to the timing of a $25.0 million customer receipt
that came in just after quarter -end. The increase for the first nine months was also impacted by longer
settlement terms on Ada Tepe sales, increased deliveries and higher gold prices.
In addition, during the third quarter and first nine months of 2020, Ada Tepe delivered 6,992 ounces and
27,094 ounces of gold, respectively, pursuant to a prepaid forward gold sales arrangement resulting in $9.6
million and $37.1 million of deferred revenue being recognized in revenue during the third quarter and first
nine months of 2020, respectively, with no corresponding impact on cash as these deliveries were in partial
satisfaction of the $50.0 million of upfront proceeds received in 2016. The Company has 6,99 3 ounces of
gold remaining to be delivered under this arrangement, which will be completed during the fourth quarter
of 2020.
For a detailed discussion on the factors affecting cash provided from operating activities, refer to the
“Liquidity and Capital Resources” section contained in the MD&A.
Free Cash Flow
Free cash flow in the third quarter and first nine months of 2020 was $ 59.0 million and $16 6.6 million,
respectively, compared to $21.0 million and $55.4 million in the corresponding periods in 2019. These
increases were due primarily to higher volumes of gold sold, higher realized gold prices and the favourable
impact of a stronger U.S. dollar relative to the ZAR, partially offset by higher cash outflows for sustaining
capital expenditures and the impact of the prepaid forward gold sales arrangement.
Capital Expenditures
Capital expenditures incurred during the third quarter and first nine months of 2020 were $13.2 million and
$35.5 million, respectively, compared to $13.3 million and $53.7 million in the corresponding periods in 2019.
Growth capital expenditures (1) incurred during the third quarter and first nine months of 2020 were $1.0
million and $5.2 million, respectively, compared to $2.3 million and $35.0 million in the corresponding
periods in 2019. These decreases were related principally to the construction of the Ada Tepe gold mine,
which was completed in 2019.
Sustaining capital expenditures(1) incurred during the third quarter and first nine months of 2020 were $12.2
million and $30.3 million, respectively, in line with guidance, compared to $11.0 million and $18.7 million in
the corresponding periods in 2019. The year-over-year increase was due primarily to spending at Ada Tepe,
which commenced commercial production in June 2019, and the work on the tailing s management facility
at Chelopech.
Timok Gold Project, Serbia (the “Timok gold project”)
Following encouraging results from the optimization work completed in 2019 , the Company initiated a pre-
feasibility study (“PFS”) for the Timok gold project, which will now focus on the oxide portion of the Mineral
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Resource. Additional potential upside from the sulphide portion of the Mineral Resource will require
additional variability testwork and will be considered as part of a p otential feasibility study. The PFS is
progressing well and is on track for completion in the fourth quarter of 2020 with a release in the first quarter
of 2021.
Exploration
At Chelopech, an intensive diamond drilling program commenced in the third quarter of 2020 at the West Shaft
prospect, located approximately one kilometre south-west of the Chelopech mine. This was initiated following
an intercept of significant high sulphidation Au-Cu mineralization in June 2020, as part of near min e scout
drilling programs. Additionally, deep directional drilling is continuing at the Wedge prospect, with a focus on
testing more conceptual targets in proximity to the Chelopech mine.
As part of sustained efforts to support a mine life extension at Ada Tepe, mapping, core re -logging and
conceptual modelling led to the identification of additional near-mine exploration targets. A significant drilling
program is planned in the fourth quarter of 2020 to test these areas. A target delineation drilling program was
completed at Chatal Kaya, within the Chiriite exploration license, to ascertain the along strike and down-dip
extents of the epithermal vein hosted gold mineralization.
In Serbia, targeted delineation drilling of oxide mineralization proximal to Bigar Hill, the main deposit of the
Timok gold project, has been successful at identifying additional shallow oxide gold mineralization at the
Chocolate prospect. Further infill and target delineation drilling programs are scheduled to be completed in the
fourth quarter of 2020.
Financial Position and Liquidity
DPM ended the third quarter of 2020 with a cash position of $102.4 million, $75.6 million of investments,
comprised primarily of its 9.4% interest in Sabina Gold and Silver Corp. (“Sabina”) and 19.4% equity interest
in INV Metals Inc. (“INV”), and $150.0 million of undrawn capacity under its RCF.
Capital Allocation and Declaration of Dividend
As part of its strategy, the Company adheres to a disciplined capital allocation framework that is based on
three fundamental considerations – balance sheet strength, reinvestment in the business, and the return of
capital to shareholders. With Ade Tepe contributing its first full year of production since its successful
commissioning and ramp -up in 2019, 2020 marks the beginning of a period of significant free cash flow
generation, which will be used to further strengthen DPM’s balance sheet, reinvest in the business, and
return cash to shareholders by way of dividends.
On November 12, 2020, the Company declared a dividend of $0.02 per common share payable on January
15, 2021 to shareholders of record on December 31, 2020, resulting in an aggregate of $0.08 per common
share of dividends being declared in 2020.
The Company’s dividend has been set at a level that is considered to be sustainable based on the
Company’s free cash flow outlook and is expected to allow the Company to build additional balance sheet
strength to support further growth, a key element of DPM’s strategy. The declaration, amount and timing of
any future dividend are at the sole discretion of the Board of Directors and will be assessed based on the
Company’s capital allocation framework, having regard for the Company’s financial position, overall market
conditions, and its outlook for sustainable free cash flow, capital requirements, and other factors considered
relevant by the Board of Directors.
Response to Coronavirus (“COVID-19”)
To date, as a result of the proactive actions being taken within the regio ns in which we operate and by
personnel at each of our sites, the Company has not experienced any material disruptions to its operations
as a result of the COVID -19 pandemic. The Company’s Chelopech and Ada Tepe mines in Bulgaria
continue to operate at full capacity and have not experienced any disruptions to their operations.
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As previously reported, the Tsumeb smelter in Namibia curtailed its operations by shutting down ancillary
plants for 30 days during the month of April in response to a government directive to the natural resources
sector aimed at limiting staffing levels . Full operations resumed in May with ongoing management of the
number of employees and contractors working at site and continued observance of the COVID-19 controls
that have been established across all sites. The smelter remains on track to achieve 2020 annual guidance.
To date , MineRP continues to operate with minimal impact on its ability to service existing customers
remotely, although, there have been some delays starting up new projects and converting a growing
customer pipeline as customers satisfy themselves that implemen tation can be effectively executed
remotely. This is particularly evident in certain regions where the impact of COVID -19 has been higher as
new business has lagged in these regions.
On-Track to Meet or Beat 2020 Guidance
DPM’s 2020 production guidance remains unchanged from the guidance issued in February 2020, including
expected gold production of 257,000 to 299,000 ounces and 35 to 40 million pounds of copper. Based on
the strong operating performance achieved in the first nine mon ths of 2020, annual production and
deliveries at Chelopech and Ada Tepe are expected to be at the upper end of the 2020 guidance. As a
result, the all-in sustaining cost guidance was reduced to a range of $650 to $720 per ounce of gold from
the previously-issued guidance of $700 to $780 per ounce of gold. Tsumeb remains on track to achieve its
2020 production guidance and is expected to achieve the lower end of its 2020 cost guidance due primarily
to the weakening of the ZAR relative to the U.S. dollar.
The Company’s outlook for 2021 and 2022 remains unchanged from the outlook issued in February 2020,
except for the 2021 outlook for Ada Tepe’s sustaining capital expenditures, which has been increased to a
range of $15 million to $19 million, from $4 million to $5 million. This increase is due primarily to accelerating
grade control drilling, which was previously planned over several years and treated as an operating cost,
in order to provide large representative and high quality samples for better grade control and mine planning
over the life of mine.
For additional information regarding the Company’s detailed guidance for 2020, please refer to the “Three-
Year Outlook” section of the MD&A.
(1) Adjusted net earnings, adjusted basic earnings per share, adjusted earnings before interest, taxes, depreciation and amortization
(“EBITDA”), all-in sustaining cost per ounce of gold, cash cost per tonne of complex concentrate smelted at Tsumeb, net of by-product
credits, free cash flow, and growth and sustaining capital expenditures have no standardized meaning under International Financial
Reporting Standards ("IFRS"). Presenting these measures from period to period helps management and investors evaluate earnings
and cash flow trends more readily in comparison with results from prior periods. Refer to the “Non-GAAP Financial Measures” section
of the Management’s Discussion and Analysis for the t hree and nine months ended September 30, 2020 (the “MD&A”) for further
discussion of these items, including reconciliations to IFRS measures.
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Selected Production, Delivery and Cost Measures and Guidance
Q3 2020 YTD September 2020 2020
Guidance(1) Chelopech Ada Tepe Tsumeb Consolidated Chelopech Ada Tepe Tsumeb Consolidated
Ore processed
(‘000s tonnes) 558.4 219.3 - 777.7 1,660.2 677.3 - 2,337.5 2,855 – 3,092
Metals contained in
concentrate produced
Gold (‘000s ounces) 49.8 30.0 - 79.8 141.5 92.6 - 234.1 257 – 299
Copper (million pounds) 9.2 - - 9.2 28.0 - - 28.0 35 – 40
Payable metals in
concentrate sold
Gold (‘000s ounces) 37.9 31.3 - 69.2 113.4 94.9 - 208.3 229 – 267
Copper (million pounds) 7.5 - - 7.5 25.6 - - 25.6 33 – 38
All-in sustaining cost
per ounce of gold(2) - - - 640 - - - 655 650 - 720
Complex concentrate
smelted
(‘000s tonnes)
- - 55.9 55.9 - - 179.4 179.4 230 – 265
Cash cost per tonne of
complex concentrate
smelted(2)
- - 407 407 - - 369 369 370 – 450
1) As disclosed in the MD&A and available at www.sedar.com and www.dundeeprecious.com
2) All-in sustaining cost per ounce of gold and cash cost per tonne of complex concentrate smelted are not defined measures under IFRS. Refer to the “Non-GAAP Financial Measures” section of the MD&A for reconciliations
to IFRS measures.
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This news release and DPM’s unaudited condensed interim consolidated financial statements and MD&A
for the three and nine months ended September 30 , 2020 are posted on the Company’s website at
www.dundeeprecious.com and have been filed on SEDAR at www.sedar.com.
Qualified Person
The technical and scientific information in this news release, with respect to the Company’s material mineral
projects, has been prepared in accordance with Canadian regulatory requirements set out in NI 43-101
Standards of Disclosure for Mineral Projects of the Canadian Securities Ad ministrators and the Canadian
Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral
Reserves, and has been reviewed and approved by Ross Overall, B.Sc. (Applied Geology), Corporate
Mineral Resource Manager of DPM, who is a Qualified Person as defined under NI 43-101, and who is not
independent of the Company.
Third quarter 2020 Results
On Friday, November 13, 2020 at 9:00 AM E ST, DPM will host a conference call and audio webcast to
discuss the results, followed by a question -and-answer session. Participants are encouraged to dial into
the call 15 minutes before its scheduled start time or to join via the audio webcast to reduce hold time in
advance of the call.
The call-in numbers and webcast details are as follows:
Date: Friday, November 13, 2020
Time: 9:00 AM EST
Webcast: https://edge.media-server.com/mmc/p/3pmxch77
Canada and USA Toll Free: 1-844-402-0878
International: +1-478-219-0512
Passcode: 8269926
Replay: 1-855-859-2056
Outside Canada or USA: 1-404-537-3406
Replay Passcode: 8269926
Replay Available Until: 7 days following the call
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 operation, 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 operations, 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 exploration properties located in Canada,
Serbia and Ecuador, including its 9.4% interest in Sabina and 19.4% interest in INV.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This news release contains “forward looking statements” or “forward looking information” (collectively,
“Forward Looking Statements”) that involve a number of risks and uncertainties. Forward Looking
Statements are statements that are not historical facts and are g enerally, but not always, identified by the
use of forward looking terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “outlook”, “intends”, “anticipates”, “believes”, or variations of such words and
phrases or that state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken,
occur or be achieved, or the negative of any of these terms or similar expressions. The Forward Looking
Statements in this news release relate to , among other things: measures the Company is undertaking in
response to the COVID-19 outbreak, including its impacts on the Company’s global supply chains, the level
of and duration of reductions or curtailments in operating levels at any of the Company’s operations or in