Dundee Precious Metals Continues Record of Strong Free Cash Flow Generation; Announces 2022 Financial Results and Improved Three-Year Outlook
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Dundee Precious Metals Continues Record of Strong Free Cash Flow Generation;
Announces 2022 Financial Results and Improved Three-Year Outlook
Toronto, Ontario, February 16, 2023 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the
“Company”) today announced its operating and financial results for the fourth quarter and twelve months
ended December 31, 2022.
Highlights
(Unless otherwise stated, all monetary figures in this news release are expressed in U.S. dollars, and all operational and financial information contained
in this news release is related to continuing operations.)
Metals production: Produced 273,109 ounces of gold, in line with 2022 guidance and 30.8 million
pounds of copper, slightly below 2022 guidance.
Complex concentrate smelted: Throughput of 174,122 tonnes at Tsumeb, slightly below 2022
guidance.
All-in sustaining cost: Reported cost of sales per ounce of gold sold 1 of $975, and an all-in sustaining
cost per ounce of gold sold2 of $885, within the range of guidance for 2022.
Free cash flow: Generated $232.1 million of cash from operating activities and $166.4 million of free
cash flow2.
Adjusted net earnings: Reported net earnings attributable to common shareholders from continuing
operations of $35.9 million ($0.19 per share) and adjusted net earnings 2 of $129.0 million ($0.68 per
share).
Financial position: Ended the year with a strong balance sheet, including $433.2 million of cash, a
$150.0 million undrawn revolving credit facility, and no debt.
Returning capital to shareholders: Returned $44.1 million, or 27% of 2022 free cash flow, to
shareholders through dividends and share repurchases. Declared fourth quarter dividend of $0.04 per
common share payable on April 17, 2023 to shareholders of record on March 31, 2023.
Enhanced Normal Course Issuer Bid (“NCIB”): DPM’s Board of Directors has approved the renewal
of its NCIB, pending Toronto Stock Exchange (“TSX”) approval, for the purchase of up to $100 million
of the Company’s outstanding common shares, subject to certain internal parameters.
Strong sustainability performance: Scored in the 91st percentile among metals and mining companies
in the 2022 S&P Global Corporate Sustainability Assessment and was included in The Sustainability
Yearbook for the second consecutive year.
Ada Tepe life of mine (“LOM”) plan: Updated mineral reserve and mineral resource estimate and
optimized LOM plan for Ada Tepe with higher annual production, improved average grade and higher
gold recoveries.
Improved 2023 guidance and three-year outlook: Gold production expected to average 270,000
ounces over the next three years, with higher forecasted production in 2023 and 2024; improved all-in
sustaining cost profile; declining sustaining capital expenditures; and consistent smelter performance.
Development projects: DPM has taken the decision to extend the timeline for the optimization phase
of the updated feasibility study (“FS”) for Loma Larga in Ecuador, which is now expected to be completed
in the second half of 2023.
Exploration: High-grade discovery at the Čoka Rakita exploration prospect in Serbia where DPM is
expecting additional results from drilling in the second quarter and targeting an initial Mineral Resource
estimate in the fourth quarter of 2023. Continued exploration work at Tierras Coloradas in Ecuador and
advanced brownfield exploration at Chelopech and Ada Tepe.
1 Cost of sales per ounce of gold sold represents total cost of sales for Chelopech and Ada Tepe, divided by total payable gold in concentrate sold. This measure
is before treatment charges, freight and by-product credits, all of which are reflected in revenue, while all-in sustaining cost per ounce of gold sold is net of these
items.
2 All-in sustaining cost per ounce of gold sold, free cash flow, and adjusted net earnings are non-GAAP financial measures or ratios. These measures have no
standardized meanings under International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures presented by other
companies. Refer to the “Non-GAAP Financial Measures” section commencing on page 17 of this news release for more information, including reconciliations to
IFRS measures.
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CEO Commentary
“In 2022, we delivered strong operating results, achieving our gold production guidance while managing
industry cost pressures. We generated $166 million of free cash flow in 2022, of which we returned 27% to
shareholders through share repurchases and our sustainable quarterly dividend. We also continued to
invest in our future, as we progressed the feasibility study update at Loma Larga and announced a high-
grade discovery at Čoka Rakita in Serbia,” said David Rae, President and Chief Executive Officer.
“Our strong three-year outlook for gold production and attractive all-in sustaining costs, reflecting the
improved life of mine plan for Ada Tepe, combined with our financial strength and significant free cash flow
generation position us well to continue generating value for all of our stakeholders.
“Our focus in 2023 will be on continuing to deliver strong operating performance, achieving key milestones
at Loma Larga, and advancing our portfolio of prospective exploration targets.”
Use of non-GAAP Financial Measures
Certain financial measures referred to in this news release are not measures recognized under IFRS and
are referred to as non-GAAP financial measures or ratios. These measures have no standardized meanings
under IFRS and may not be comparable to similar measures presented by other companies. The definitions
established and calculations performed by DPM are based on management’s reasonable judgment and
are consistently applied. These measures are intended to provide additional information and should not be
considered in isolation or as a substitute for measures prepared in accordance with IFRS. Non-GAAP
financial measures and ratios, together with other financial measures calculated in accordance with IFRS,
are considered to be important factors that assist investors in assessing the Company’s performance.
The Company uses the following non-GAAP financial measures and ratios in this news release:
mine cash cost
cash cost per tonne of ore processed
mine cash cost of sales
cash cost per ounce of gold sold
all-in sustaining cost
all-in sustaining cost per ounce of gold sold
smelter cash cost
cash cost per tonne of complex concentrate smelted
adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”)
adjusted net earnings
adjusted basic earnings per share
cash provided from operating activities, before changes in working capital
free cash flow
average realized metal prices
For a detailed description of each of the non-GAAP financial measures and ratios used in this news release
and a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the “Non-
GAAP Financial Measures” section commencing on page 17 of this news release.
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Key Operating and Financial Highlights
$ millions, except where noted
Ended December 31,
Three Months Twelve Months
2022 2021 Change 2022 2021 Change
Operating Highlights
Metals contained in concentrate produced:
Gold
Chelopech oz 45,339 49,050 (8%) 179,135 177,001 1%
Ada Tepe oz 28,081 33,774 (17%) 93,974 132,964 (29%)
Total gold in concentrate produced oz 73,420 82,824 (11%) 273,109 309,965 (12%)
Copper Klbs 7,436 9,151 (19%) 30,835 34,688 (11%)
Payable metals in concentrate sold:
Gold
Chelopech oz 39,203 40,538 (3%) 151,580 149,297 2%
Ada Tepe oz 26,628 33,282 (20%) 91,117 129,754 (30%)
Total payable gold in concentrate sold oz 65,831 73,820 (11%) 242,697 279,051 (13%)
Copper Klbs 6,726 8,175 (18%) 27,224 32,680 (17%)
Cost of sales per tonne of ore
processed(1):
Chelopech $/t 71 60 18% 63 59 7%
Ada Tepe $/t 125 123 2% 120 115 5%
Cash cost per tonne of ore processed(2):
Chelopech $/t 51 54 (6%) 50 47 6%
Ada Tepe $/t 58 60 (3%) 55 52 6%
Cost of sales per ounce of gold sold(3) $/oz 990 819 21% 975 819 19%
All-in sustaining cost per ounce of gold
sold(2) $/oz 1,008 757 33% 885 657 35%
Complex concentrate smelted t 41,835 51,932 (19%) 174,122 189,705 (8%)
Cost of sales per tonne of complex
concentrate smelted(4) $/t 621 646 (4%) 694 678 2%
Cash cost per tonne of complex
concentrate smelted(2) $/t 443 447 (1%) 463 480 (3%)
Financial Highlights
Revenue 152.9 166.4 (8%) 569.8 641.4 (11%)
Cost of sales 91.1 94.1 (3%) 357.4 357.1 -%
Impairment charge - - -% 85.0 - 100%
Earnings before income taxes 37.6 60.3 (38%) 58.7 229.4 (74%)
Net earnings attributable to common
shareholders from continuing operations 33.3 52.1 (36%) 35.9 190.7 (81%)
Per share 0.18 0.27 (33%) 0.19 1.02 (81%)
Net earnings attributable to common
shareholders(5) 33.3 51.5 (35%) 35.9 210.1 (83%)
Per share(5) 0.18 0.27 (33%) 0.19 1.12 (83%)
Adjusted EBITDA(2) 58.3 84.3 (31%) 252.9 336.9 (25%)
Adjusted net earnings(2) 33.3 51.4 (35%) 129.0 202.0 (36%)
Per share(2) 0.18 0.27 (33%) 0.68 1.09 (38%)
Cash provided from operating activities 49.3 88.9 (45%) 232.1 253.5 (8%)
Free cash flow(2) 33.3 65.8 (49%) 166.4 252.4 (34%)
Capital expenditures incurred:
Growth(6) 11.2 7.4 50% 32.4 17.1 90%
Sustaining(7) 16.7 12.3 35% 58.2 52.5 11%
Total capital expenditures 27.9 19.7 41% 90.6 69.6 30%
1) Cost of sales per tonne of ore processed represents cost of sales for Chelopech and Ada Tepe, respectively, divided by tonnes of ore processed.
2) Cash cost per tonne of ore processed, all-in sustaining cost per ounce of gold sold, cash cost per tonne of complex concentrate smelted, adjusted
EBITDA, adjusted net earnings, adjusted basic earnings per share and free cash flow are non-GAAP financial measures or ratios. Refer to the “Non-
GAAP Financial Measures” section commencing on page 17 of this news release for more information, including reconciliations to IFRS measures.
3) Cost of sales per ounce of gold sold represents total cost of sales for Chelopech and Ada Tepe, divided by total payable gold in concentrate sold.
4) Cost of sales per tonne of complex concentrate smelted represents cost of sales for Tsumeb, divided by tonnes of complex concentrate smelted.
5) These measures include discontinued operations for the twelve months of 2021.
6) Growth capital expenditures are generally defined as capital expenditures that expand existing capacity, increase life of assets and/or increase future
earnings. This measure is used by management and investors to assess the extent of discretionary capital spending being undertaken by the Company
each period.
7) Sustaining capital expenditures are generally defined as expenditures that support the ongoing operation of the asset or business without any
associated increase in capacity, life of assets or future earnings. This measure is used by management and investors to assess the extent of non-
discretionary capital spending being incurred by the Company each period.
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Performance Highlights
A table comparing production, delivery and cash cost measures by asset for the fourth quarter and twelve months of 2022 against 2022
guidance is located on page 14 of this news release.
The Company’s mining operations continued to deliver strong operating results and despite inflationary cost
pressures, the Company achieved an all-in sustaining cost per ounce of gold sold within the guidance range
for the year.
Chelopech, Bulgaria: Chelopech continued its track record of strong performance, producing 45,339 ounces
of gold and 7.4 million pounds of copper in the fourth quarter. In 2022, Chelopech produced 179,135 ounces
of gold, achieving its annual guidance for gold, and 30.8 million pounds of copper which was 3% below the low
end of the guidance range.
All-in sustaining cost per ounce of gold sold in the fourth quarter of 2022 was $1,253. For 2022, all-in sustaining
cost per ounce of gold sold was $957, 6% above the high end of the guidance range for the year, reflecting
lower by-product credits as a result of lower volumes of copper sold, higher freight charges, the local inflationary
environment and higher cash outlays for sustaining capital, partially offset by a stronger U.S. dollar.
Ada Tepe, Bulgaria: Ada Tepe delivered its highest quarterly production in the fourth quarter of 2022,
producing 28,081 ounces of gold. Following the completion of a pushback in the third quarter, gold grades
increased as planned and the operation is well positioned for higher grades in 2023, as per the mine plan.
Annual production of 93,974 ounces of gold was at the higher end of its guidance range for the year. In January
2023, the Company released an updated Mineral Reserve and Mineral Resource estimate and LOM plan for
Ada Tepe, which reflects a 22% increase in recovered gold ounces, a 13% increase in average gold grade and
a 1% increase in recovery, compared to the previous LOM plan.3 The additional estimated production from Ada
Tepe has been reflected in the Company’s improved three-year outlook.
All-in sustaining cost per ounce of gold sold in the fourth quarter of 2022 was $648. For 2022, all-in sustaining
cost per ounce of gold sold in 2022 was $765, which was 13% below the low end of its guidance range for the
year, reflecting a stronger U.S. dollar and higher than expected volume of gold sold.
Tsumeb, Namibia: Performance during the fourth quarter of 2022 at the Tsumeb smelter was impacted by a
17-day shutdown to repair a water leak in the off-gas system as well as instability in the power grid as a result
of abnormally heavy rainfall in December. As a result, complex concentrate smelted for the year of 174,122
tonnes was 6% below the low end of its 2022 guidance range.
Cash cost per tonne of complex concentrate smelted in the fourth quarter was $443. In 2022, cash cost per
tonne of complex concentrate smelted of $463 was towards the higher end of the updated guidance range,
due primarily to the fixed cost nature of the facility and the impact of lower volumes of complex concentrate
smelted, partially offset by a stronger U.S. dollar.
3 For more information regarding the Mineral Reserve and Mineral Resource estimate and updated LOM plan for Ada Tepe, refer to the news release dated
January 12, 2023, available on our website at www.dundeeprecious.com and SEDAR at www.sedar.com.
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Consolidated Operating Highlights
Production: Gold contained in concentrate produced in the fourth quarter and twelve months of 2022 of 73,420
ounces and 273,109 ounces, respectively, was 11% and 12% lower than the corresponding periods in 2021
due primarily to mining in lower grade zones at Ada Tepe, partially offset by higher gold recoveries at
Chelopech, in line with the mine plans for both operations.
Copper production in the fourth quarter and twelve months of 2022 of 7.4 million pounds and 30.8 million
pounds, respectively, was 19% and 11% lower than the corresponding periods in 2021 due primarily to lower
copper grades.
Deliveries: Payable gold in concentrate sold in the fourth quarter and twelve months of 2022 of 65,831 ounces
and 242,697 ounces, respectively, was 11% and 13% lower than the corresponding periods in 2021 primarily
reflecting lower gold production. Payable copper in concentrate sold in the fourth quarter and twelve months of
2022 of 6.7 million pounds and 27.2 million pounds, respectively, was 18% and 17% lower than the
corresponding periods in 2021 due primarily to lower copper production.
Complex concentrate: Complex concentrate smelted during the fourth quarter of 2022 of 41,835 tonnes was
19% lower than the corresponding period in 2021 due primarily to the 17-day shutdown and instability in the
power grid, as described above. Complex concentrate smelted during 2022 of 174,122 tonnes was 8% lower
than 2021 due primarily to unplanned downtime as a result of maintenance to the off-gas and baghouse
systems during the year, partially mitigated by near record-level quarterly production in the third quarter of 2022.
Cost measures: Cost of sales in the fourth quarter of 2022 of $91.1 million was 3% lower than the
corresponding period in 2021 due primarily to a stronger U.S. dollar, partially offset by higher local currency
mine operating expenses in Bulgaria. Cost of sales in 2022 of $357.4 million was comparable to 2021 due
primarily to a stronger U.S. dollar largely offset by higher local currency mine operating expenses in Bulgaria
and higher depreciation.
All-in sustaining cost per ounce of gold sold in the fourth quarter of 2022 of $1,008 was 33% higher than the
corresponding period in 2021 due primarily to higher local currency operating expenses reflecting the local
inflationary environment, lower by-product credits as a result of lower volumes of copper sold, and lower
volumes of gold sold, partially offset by a stronger U.S. dollar. All-in sustaining cost per ounce of gold sold
in 2022 of $885 was 35% higher than 2021 due primarily to lower volumes of gold sold, lower by-product
credits, higher freight charges and higher local currency operating expenses, partially offset by a stronger
U.S. dollar.
Cash cost per tonne of complex concentrate smelted in the fourth quarter and twelve months of 2022 of $443
and $463, respectively, was comparable to the corresponding periods in 2021 due primarily to higher sulphuric
acid by-product credits and lower labour costs related to the cost optimization initiative undertaken in 2022,
partially offset by lower volumes of complex concentrate smelted and higher inflationary local currency
operating expenses.
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Consolidated Financial Highlights
Revenue: Revenue during the fourth quarter and twelve months of 2022 of $152.9 million and $569.8 million,
respectively, was 8% and 11% lower than the corresponding periods in 2021 due primarily to lower volumes of
gold and copper sold.
Net earnings: Net earnings attributable to common shareholders from continuing operations in the fourth
quarter of 2022 were $33.3 million ($0.18 per share) compared to $52.1 million ($0.27 per share) in the
corresponding period in 2021, due primarily to lower volumes of metal sold.
Net earnings attributable to common shareholders from continuing operations in 2022 were $35.9 million ($0.19
per share) compared to $190.7 million ($1.02 per share) in 2021, due primarily to an impairment charge of
$85.0 million in respect of Tsumeb, as well as lower volumes of metal sold, partially offset by a stronger U.S.
dollar.
Adjusted net earnings: Adjusted net earnings in the fourth quarter and twelve months of 2022 were $33.3
million ($0.18 per share) and $129.0 million ($0.68 per share), respectively, compared to $51.4 million ($0.27
per share) and $202.0 million ($1.09 per share) in the corresponding periods in 2021 due primarily to the same
factors affecting net earnings attributable to common shareholders from continuing operations, with the
exception of the adjusting items primarily related to the Tsumeb impairment charge.
Earnings before income taxes: Earning before income taxes in the fourth quarter and twelve months of 2022
was $37.6 million and $58.7 million, respectively, compared to $60.3 million and $229.4 million in the
corresponding periods in 2021. These changes reflect the same factors that affected net earnings attributable
to common shareholders from continuing operations, except for income tax, which is excluded.
Adjusted EBITDA: Adjusted EBTIDA in the fourth quarter and twelve months of 2022 was $58.3 million and
$252.9 million, respectively, compared to $84.3 million and $336.9 million in the corresponding periods in 2021,
reflecting the same factors that affected adjusted net earnings, except for interest, income tax, depreciation
and amortization, which are excluded from adjusted EBITDA.
Cash provided from operating activities: Cash provided from operating activities in the fourth quarter and
twelve months of 2022 of $49.3 million and $232.1 million, respectively, was 45% and 8% lower than the
corresponding periods in 2021, due primarily to the same factors impacting earnings before income taxes,
excluding a non-cash impairment charge in respect of Tsumeb, as well as timing of deliveries and subsequent
receipt of cash.
For a detailed discussion on the factors affecting cash provided from operating activities, refer to the “Liquidity
and Capital Resources” section contained in the Management’s Discussion and Analysis for the three and
twelve months ended December 31, 2022 (the “MD&A”).
Free cash flow: Free cash flow in the fourth quarter and twelve months of 2022 of $33.3 million and $166.4
million, respectively, was 49% and 34% lower than the corresponding periods in 2021, due primarily to the
same factors impacting earnings before income taxes, excluding the non-cash impairment charge in respect
of Tsumeb.
Capital expenditures: Capital expenditures incurred during the fourth quarter and twelve months of 2022 were
$27.9 million and $90.6 million, respectively, compared to $19.7 million and $69.6 million in the corresponding
periods in 2021.
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Sustaining capital expenditures incurred during the fourth quarter and twelve months of 2022 of $16.7 million
and $58.2 million, respectively, were comparable to the corresponding periods in 2021 of $12.3 million and
$52.5 million.
Growth capital incurred during the fourth quarter and twelve months of 2022 were $11.2 million and $32.4
million, respectively, compared to $7.4 million and $17.1 million in the corresponding periods in 2021, due
primarily to activities related to the development of the Loma Larga and Timok gold projects
Balance Sheet Strength and Financial Flexibility
The Company continues to maintain a strong financial position, with a growing cash position, no debt and a
$150 million revolving credit facility which remains undrawn.
For the twelve months ended December 31, 2022, cash increased by $98.8 million to $433.2 million, due
primarily to earnings generated in the period as well as a favourable period over period change in working
capital primarily related to timing of deliveries and subsequent receipt of cash, partially offset by cash outlays
for capital expenditures, dividend payments and share repurchases.
In July 2022, DPM entered into a new four-year revolving credit facility with a consortium of four banks. The
facility matures in July 2026 and provides more flexibility and generally more favourable terms and conditions
compared with DPM’s previous revolving credit facility. Under the new facility, DPM is permitted to borrow up
to $150 million, which can be increased up to $250 million, subject to certain conditions.
Return of Capital to Shareholders
In line with its disciplined capital allocation framework, DPM continues to return excess capital to shareholders,
which currently includes a sustainable quarterly dividend and periodic share repurchases under its normal
course issuer bid (“NCIB”).
During 2022, the Company returned a total of $44.1 million to shareholders, representing approximately 27%
of its free cash flow generated in the year. This included the repurchase of 2,471,500 shares at an average
price of $5.51 (Cdn$7.14) per share for a total value of approximately $13.6 million (Cdn$17.6 million), and
$30.5 million of dividends distributed during the year.
Quarterly Dividend
On February 16, 2023, the Company’s Board of Directors declared a dividend of $0.04 per common share
payable on April 17, 2023, to shareholders of record on March 31, 2023.
Enhanced NCIB
The Board has approved the renewal of the NCIB (“New Bid”), subject to approval by the TSX. If accepted,
the New Bid will be made in accordance with the applicable rules and policies of the TSX and applicable
Canadian securities laws. Pursuant to the New Bid, it is expected that the Company will be able to purchase
up to 16,500,000 common shares, representing approximately 10% of the public float as of February 16, 2023,
over a period of twelve months commencing after the TSX approval. The New Bid will also allow the Company
to implement an Issuer Repurchase Agreement and automatic share repurchase plan with its designated
broker in order to facilitate the purchase of its shares.
Assuming the full number of shares are repurchased under this New Bid, and at the Company’s current share
price, this represents an authorized return of capital of up to $100 million. The actual timing and number of
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common shares that may be purchased pursuant to the NCIB will be undertaken in accordance with DPM’s
capital allocation framework, having regard for such things as DPM’s financial position, business outlook and
ongoing capital requirements, as well as its share price and overall market conditions.
Development Projects Update
Loma Larga, Ecuador
Drilling activities, as well as the Citizens Participation Process for the Environmental Impact Assessment,
remain paused pending the outcome of the appeals process related to the decision on the constitutional
protective action following the hearing held in mid-October 2022. The decision on the appeal is expected to
provide clarity on the consultation process and whether an indigenous consultation could be completed in
parallel, as originally planned by the Company, or would need to be completed prior to resuming the Citizens
Participation Process. The expected timing for receipt of the environmental licence is subject to the outcome
of the appeal process.
Given the delays in timing for recommencing drilling activities and further advancing the environmental
permitting process, DPM has taken the decision to extend the timeline for the optimization phase of the updated
FS for Loma Larga, which is now expected to be completed in the second half of 2023. This will allow DPM
time to evaluate additional optimization opportunities that have been identified to leverage the Company’s
significant operating expertise with similar deposits, in particular Chelopech in Bulgaria, which shares similar
geology, mining method and processing flow sheet to the Loma Larga project; and to potentially incorporate
the results of the drilling program supporting the updated FS optimization once DPM is able to recommence
those activities.
Prior to the acquisition, DPM had determined that the initial capital estimate for the project, prepared by the
previous owner in April 2020, was low. Since then, the Company has incorporated certain scope changes to
the project as part of the updated FS work, to enhance project execution and meet DPM’s operating standards.
DPM has also seen inflationary pressures consistent with general industry trends. Combined, these factors are
expected to result in a significant increase to the estimated capital and operating costs for the project. This may
impact economics and other parameters, including Mineral Resource and Mineral Reserve estimates, which
are being assessed as the additional work required for the updated FS progresses. DPM views Loma Larga
as a high-quality project with the potential to generate compelling economic returns following this optimization
work.
The Company has progressed discussions with the government of Ecuador in respect of an investor protection
agreement, which is targeted to be complete by the end of the first quarter of 2023. In-line with its disciplined
approach to project development, DPM does not anticipate making any significant capital commitments to the
project prior to the completion of the investor protection agreement and receipt of the environmental licence.
The Company maintains a constructive relationship with government institutions and other stakeholders
involved with the development of the project. After the announcement of the local election results, the DPM
team welcomed the newly elected leaders and plans to engage with them in a proactive manner to build support
for the project.