Dundee Precious Metals Continues Track Record of Strong Free Cash Flow Generation; Announces 2023 First Quarter Results
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Dundee Precious Metals Continues Track Record of Strong Free Cash Flow Generation;
Announces 2023 First Quarter Results
Toronto, Ontario, May 3, 2023 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the “Company”)
announced its operating and financial results for the first quarter ended March 31, 2023.
Highlights
(Unless otherwise stated, all monetary figures in this news release are expressed in U.S. dollars, and all operational and fi nancial information contained
in this news release is related to continuing operations.)
• Strong metals production: Produced 68,581 ounces of gold and 7.2 million pounds of copper.
• All-in sustaining cost: Reported cost of sales per ounce of gold sold 1 of $974 and an all-in sustaining
cost per ounce of gold sold2 of $872, slightly above the 2023 guidance range due primarily to an
unfavourable mark-to-market adjustment to share-based compensation expenses as a result of DPM’s
strong share price performance, which impacted all-in sustaining cost by approximately $100 per ounce of
gold sold.
• On track to achieve 2023 guidance: Strong performance at each operation is expected for the balance
of the year and DPM remains on track to achieve its 2023 production and cost guidance.
• Significant f ree cash flow : Generated $70.9 million of cash provided from operating activities and
$65.0 million of free cash flow2.
• Solid adjusted net earnings: Reported net earnings of $46.6 million ($0.25 per share) and adjusted
net earnings2 of $46.1 million ($0.24 per share).
• Growing financial position: Ended the quarter with a strong balance sheet, including $473.0 million of
cash, a $150.0 million undrawn revolving credit facility, and no debt.
• Increasing return of capital to shareholders: Returned $15.9 million, or 24% of free cash flow during
the first quarter , to shareholders through dividends and share repurchases . Declared second quarter
dividend of $0.04 per common share payable on July 17, 2023 to shareholders of record on June 30,
2023.
• Chelopech mine life extension: Updated Mineral Reserve and Mineral Resource estimate and life of
mine plan for Chelopech supports a mine life that now extends to 2031.
• Development projects: Continued to progress the updated feasibility study (“FS”) for Loma Larga in
Ecuador, which is expected to be completed in the second half of 2023.
• Strong results from exploration activities : Assay results from the ongoing drill program at the Čoka
Rakita exploration prospect in Serbia reported in April 2023 extended the deposit to the east and
confirmed and extended the high -grade zone. Also reported encouraging results at Tierras Coloradas
in Loja, Ecuador, which confirmed the presence of a well-mineralized vein system.
1 Cost of sales per ounce of gold sold represents total cost of sal es for Chelopech and Ada Tepe, divided by total payable gold in concentrate sold , while all-in
sustaining cost per ounce of gold sold includes treatment and freight charges, net of by-product credits, all of which are reflected in revenue.
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 compa rable to similar measures presented by other
companies. Refer to the “Non-GAAP Financial Measures” section commencing on page 12 of this news release for more information, including reconciliations to
IFRS measures.
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CEO Commentary
“Our first quarter was an excellent start to the year, as we delivered strong production and financial results,
including a near-record $65 million of free cash flow generation . With quarterly production at each of our
operations expected to increase for the balance of the year, we are in a strong position to deliver on our
2023 guidance,” said David Rae, President and Chief Executive Officer.
“We returned 24% of our free cash flow to shareholders during the quarter through our enhanced share
buyback program and our sustainable quarterly dividend. We also continued to invest in our future, as we
progressed the optimized feasibility study at Loma Larga , and announced strong results fro m our
exploration activities at Čoka Rakita in Serbia and Tierras Coloradas in Ecuador.
“We continue to believe that DPM represents a compelling value opportunity for investors, given our strong
three-year outlook for gold production, attractive all-in sustaining costs, significant free cash flow generation
and exciting exploration prospects.”
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 prep ared 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, income 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 12 of this news release.
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Key Operating and Financial Highlights
$ thousands, except where otherwise indicated
Ended March 31,
Three Months
2023 2022 Change
Operating Highlights
Ore processed t 737,637 754,635 (2%)
Metals contained in concentrate produced:
Gold
Chelopech oz 35,258 41,500 (15%)
Ada Tepe oz 33,323 21,415 56%
Total gold in concentrate produced oz 68,581 62,915 9%
Copper Klbs 7,177 7,693 (7%)
Payable metals in concentrate sold:
Gold
Chelopech oz 31,073 36,313 (14%)
Ada Tepe oz 32,426 21,068 54%
Total payable gold in concentrate sold oz 63,499 57,381 11%
Copper Klbs 6,358 6,541 (3%)
Cost of sales per tonne of ore processed(1):
Chelopech $/t 65 63 3%
Ada Tepe $/t 139 117 19%
Cash cost per tonne of ore processed(2):
Chelopech $/t 51 48 6%
Ada Tepe $/t 66 53 25%
Cost of sales per ounce of gold sold(3) $/oz 974 1,030 (5%)
All-in sustaining cost per ounce of gold sold(2) $/oz 872 684 27%
Complex concentrate smelted t 49,647 47,243 5%
Cost of sales per tonne of complex concentrate smelted(4) $/t 515 720 (28%)
Cash cost per tonne of complex concentrate smelted(2) $/t 392 480 (18%)
Financial Highlights
Revenue 155.8 153.8 1%
Cost of sales 87.5 93.1 (6%)
Earnings before income taxes 49.0 33.9 45%
Net earnings 46.6 26.8 74%
Per share $/sh 0.25 0.14 79%
Adjusted EBITDA(2) 68.4 69.5 (2%)
Adjusted net earnings(2) 46.1 37.0 25%
Per share(2) $/sh 0.24 0.19 26%
Cash provided from operating activities 70.9 78.8 (10%)
Free cash flow(2) 65.0 52.4 24%
Capital expenditures incurred:
Sustaining(5) 7.7 8.8 (12%)
Growth(6) 6.5 6.2 5%
Total capital expenditures 14.2 15.0 (5%)
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 com plex 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 12 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) Sustaining capital expenditures are generally defined as expenditures that support the ongoing operation of the asset or busi ness 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.
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.
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Performance Highlights
A table comparing first quarter 2023 production, sales and cash cost measures by asset against 2023 guidance is located on page nine of
this news release.
The Company’s mining operations continued to deliver strong operating results, including a near record-level
of gold production at Ada Tepe and continued consistent performance at Chelopech. All-in sustaining cost per
ounce of gold sold for the first quarter was slightly above the high end of guidance range for the year, due
primarily to an unfavourable mark-to-market adjustment to share-based compensation expenses as a result of
DPM’s strong share price performance, which impacted all-in sustaining cost by approximately $100 per ounce
of gold sold. Both mines remain on track to achieve their 2023 production and cost guidance.
Highlights include the following:
Chelopech, Bulgaria: Chelopech continued its track record of strong performance, producing 35,258 ounces
of gold and 7.2 million pounds of copper in first quarter 2023. Gold production was in-line with expectations
while copper production was slightly lower than planned to due to lower copper grades. Grades and recoveries
are expected to be higher for the balance of the year.
All-in sustaining cost per ounce of gold sold in f irst quarter 2023 was $ 932 compared to $428 in the
corresponding period in 2022 due primarily to higher treatment and freight charges, lower by-product credits
as a result of lower volumes and prices of copper sold, higher cash outlays for sustaining capital expenditures
related to the upgrade of Chelopech’s tailings management facility, which is expected to be completed in the
second quarter, as well as lower volumes of gold sold, higher labour costs and higher prices for direct materials,
partially offset by a stronger U.S. dollar.
Ada Tepe, Bulgaria: Ada Tepe delivered a near-record level of performance during the first quarter, producing
33,323 ounces of gold.
All-in sustaining cost per ounce of gold sold in f irst quarter 2023 was $ 486 compared to $783 in the
corresponding period in 2022 due primarily to higher volumes of gold sold, lower cash outlays for sustaining
capital expenditures and a stronger U.S. dollar.
Consolidated Operating Highlights
Production: Gold contained in concentrate produced in first quarter 2023 of 68,581 ounces was 9% higher
than the corresponding period in 2022, due primarily to higher gold grades at Ada Tepe, partially offset by lower
recoveries at Chelopech, in line with the mine plans for both operations.
Copper production in first quarter 2023 of 7.2 million pounds was 7% lower than the corresponding period in
2022 due primarily to lower copper recoveries.
Deliveries: Payable gold in concentrate sold in first quarter 2023 of 63,499 ounces was 11% higher than the
corresponding period in 2022, reflecting higher gold production and timing of shipments. Payable copper in
concentrate sold in first quarter 2023 of 6.4 million pounds was 3% lower than the corresponding period in 2022
due primarily to lower copper production, partially offset by the timing of shipments.
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Complex concentrate: Complex concentrate smelted in first quarter 2023 of 49,647 tonnes was comparable
to the corresponding period in 2022, but below expectation s due to unplanned maintenance to the off -gas
system. The Company plans to undertake additional maintenance in the off-gas system concurrently with the
Ausmelt furnace maintenance, scheduled for third quarter 2023, which is expected to result in improved
quarterly performance.
Cost measures: Cost of sales in first quarter 2023 of $87.5 million was 6% lower than the corresponding period
in 2022 due primarily to a stronger U.S. dollar and lower depreciation expense as a result of the impairment
charge in respect of Tsumeb taken in third quarter 2022, partially offset by higher local currency mine operating
costs and royalties.
All-in sustaining cost per ounce of gold sold in first quarter 2023 of $872 was 27% higher than the corresponding
period in 2022 due primarily to higher share -based compensation expenses reflecting DPM’s strong share
price performance, higher treatment and freight charges, lower by-product credits as a result of lower volumes
and prices of copper sold, higher labour costs and higher prices for direct materials, partially offset by higher
volumes of gold sold and a stronger U.S. dollar.
Cash cost per tonne of complex concentrate smelted in first quarter 2023 of $392 was 18% lower than the
corresponding period in 2022 due primarily to a stronger U.S. dollar and lower labour costs as a result of a cost
optimization initiative undertaken in 2022.
Capital expenditures: Capital expenditures incurred in first quarter 2023 were $14.2 million compared to $15.0
million in the corresponding period in 2022.
Sustaining capital expenditures incurred in first quarter 2023 of $7.7 million were 12% lower than the
corresponding period in 2022 of $8.8 million, in-line with expectations.
Growth capital incurred in first quarter 2023, primarily related to the Loma Larga gold project, was $6.5 million
compared to $6.2 million in the corresponding period in 2022.
Consolidated Financial Highlights
Financial results from operations in the first quarter reflected higher volumes of gold sold and a strong U.S.
dollar, partially offset by higher share-based compensation ex pense reflecting DPM’s strong share price
performance and higher planned exploration expenses.
Revenue: Revenue in first quarter 2023 of $155.8 million was comparable to the corresponding period in 2022,
due primarily to higher volumes of gold sold at Ada Tepe, largely offset by lower revenue at Chelopech as a
result of lower volumes of metal sold, higher treatment and freight charges and lower realized copper prices.
Net earnings: Net earnings in first quarter 2023 were $46.6 million ($0.25 per share) compared to $26.8 million
($0.14 per share) in the corresponding period in 2022, due primarily to higher volumes of gold sold and a
stronger U.S. dollar, partially offset by higher share-based compensation, higher local currency mine operating
costs and royalties, and higher planned exploration expenses. Net earnings in the first quarter 2022 also
included Tsumeb restructuring costs related to the cost optimization initiative at the smelter.
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Adjusted net earnings: Adjusted net earnings in first quarter 2023 were $46.1 million ($0.24 per share)
compared to $37.0 million ($0.19 per share) in the corresponding period in 2022, due primarily to the same
factors affecting net earnings, with the exception of adjusting items primarily related to the Tsumeb restructuring
costs in 2022.
Earnings before income taxes: Earnings before income taxes in first quarter 2023 were $49.0 million
compared to $33.9 million in the corresponding period in 2022. These changes reflect the same factors that
affected net earnings except for income taxes, which are excluded.
Adjusted EBITDA: Adjusted EBITDA in first quarter 2023 was $68.4 million compared to $69.5 million in the
corresponding period in 2022, reflecting the same factors that affected adjusted net earnings except for interest,
income taxes, depreciation and amortization, which are excluded from adjusted EBITDA.
Cash provided from operating activities: Cash provided from operating activities in first quarter 2023 of
$70.9 million was 10% lower than the corresponding period in 2022, due primarily to the timing of payments to
suppliers plus the timing of deliveries and subsequent receipt of cash , partially offset by the same factors
impacting earnings before income taxes.
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 months
ended March 31, 2023 (the “MD&A”).
Free cash flow: Free cash flow in f irst quarter 2023 of $ 65.0 million was $12.7 million higher than the
corresponding period in 2022, due primarily to the same factors impacting earnings before income taxes. Free
cash flow is calculated before changes in working capital.
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 three months ended March 31, 2023, cash and cash equivalents increased by $39.9 million to $473.0
million due primarily to earnings generated in the period, partially offset by cash outlays for capital expenditures,
dividends paid and shares repurchased, as well as changes in working capital primarily related to timing of
payments to suppliers and cash redemptions on share-based compensation liabilities.
On April 19, 2023, DPM’s 6.5% ownership interest in Sabina Gold and Silver Corp. (“Sabina”) was exchanged
for B2Gold Corp. (“B2Gold”) common shares as a result of the acquisition of Sabina by B2Gold. The Company
has subsequently disposed of all B2Gold common shares held for cash proceeds of $56.5 million.
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”).
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In first quarter 2023, the Company returned a total of $15.9 million to shareholders, representing approximately
24% of its free cash flow generated in the quarter. This included the repurchase of 1,291,207 shares at an
average price of $6.45 (Cdn$8.82) per share for a total value of approximately $8.3 million (Cdn$11.3 million),
and $7.6 million of dividends paid in first quarter 2023.
As at March 31, 2023, the Company had an active automatic share repurchase plan in place under the NCIB
with its designated broker which terminated on May 1, 2023, pursuant to which the Company repurchased an
additional 1,092,888 shares in April 2023, all of which were cancelled as at May 3, 2023. As at March 31, 2023,
the Company recognized a liability of $8.3 million for the amount repurchased under the plan.
Enhanced NCIB
The Company renewed its NCIB in February 2023 and is able to purchase up to 16,500,000 common shares,
representing approximately 10% of the public float as at February 16, 2023, over a period of twelve months
which commenced on March 1, 2023 and terminates on February 28, 2024.
The Company’s Board of Directors has authorized management to repurchase up to $100 million of the
Company’s shares over through the NCIB. The actual timing and number of 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.
Quarterly Dividend
On May 3, 2023, the Company’s Board of Directors declared a dividend of $0.04 per common share payable
on July 17, 2023, to shareholders of record on June 30, 2023.
Development Projects Update
Loma Larga, Ecuador
Drilling activities, as well as the Citizens Participation Process for the Environmental Impact Assessment
(“EIA”), remain paused pending the outcome of the appeals process related to the decision on the
Constitutional Protective Action (the “Action”) following the hearing held in mid-October 2022.3 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.
DPM continues to advance the updated FS, including optimization work leveraging the Company’s significant
expertise at Chelopech in Bulgaria, which shares similar geology, mining method and processing flow sheet to
the Loma Larga project. The updated FS is targeted for completion in the second half of 2023.
The Company continues to progress discussions with the government of Ecuador in respect of an investor
protection agreement. The agreement is substantially complete and is progressing through the approvals of
the various government ministries. 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.
3 For further details on the Action, please see the news releases issued on February 24, 2022 and July 13, 2022, which are available on the Company’s website at
www.dundeeprecious.com and have been filed on SEDAR at www.sedar.com.
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The Company maintains a constructive relatio nship with government institutions and other stakeholders
involved with the development of the project.
Exploration
In Serbia, exploration activities in first quarter 2023 focused on target delineation at the Čoka Rakita discovery
where DPM has outlined a large, high-grade footprint that remains open in multiple directions. In mid-April, the
Company released additional assay results which extended the deposit to the east and confirmed and extended
the high-grade zone. Prospective copper-gold mineralization has also been identified at depth. DPM continues
to advance its 40,000 -metre infill and extensional drill ing program to support a maiden Mineral Resource
estimate at Čoka Rakita by the end of the year.
Additionally, approximately 10,000 metres of drilling is planned at the adjacent Umka exploration licence, which
is located south of Čoka Rakita and shares a similar geological environment.
During the quarter, DPM reported the results of a 2,700 -metre diamond drilling program completed at the
Tierras Coloradas licence in Ecuador. Th e drill results confirmed two well -mineralized high-grade vein
systems that remain open in multiple directions. The Company plans to follow up on these results with an
expanded 10,000-metre drilling program, which is expected to commence in the second half of 2023. DPM has
increased its 2023 exploration budget at Tierras Coloradas in support of the expanded drilling program, and
now expects to spend between $4 million and $5 million compared to the original budget of $1 million to $2
million.
At Chelopech, DPM continued to advance the brownfield exploration program, with seven drill rigs focused on
the drilling campaign at Sveta Petka, as well as testing conceptual targets on the Brevene exploration licence
and drilling deeper extensions of the Chelopech deposit. The application for a Commercial Discovery for Sveta
Petka was submitted to the Bulgarian authorities in mid -February. Pending a positive decision on the EIA,
approval is expected by the end of 2023.
At Ada Tepe, exploration activities were focused on target delineation for the Surnak and Kupel prospects,
within the mine concession, and the Kara Tepe prospect located within the Chiirite exploration licence. This
included systematic geological mapping, rock sampling, trenching, drilling and 3D modelling.
Exploration expenses are expected to be towards the high end of the Company’s 2023 guidance.
2023 Guidance and Three-year Outlook
With solid operating performance from the Chelopech and Ada Tepe mines in the first quarter and higher
average quarterly production expected at all operations over the balance of the year, DPM is on track to meet
its 2023 guidance.
The Company’s three-year outlook issued in February 2023 remains unchanged.
For additional information regarding the Company’s detailed guidance for 2023 and three-year outlook, please
refer to the “Three-Year Outlook” section of the MD&A.