Dundee Precious Metals Delivers Record Quarterly Free Cash Flow Generation; Announces 2023 Second Quarter Results
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Dundee Precious Metals Delivers Record Quarterly Free Cash Flow Generation;
Announces 2023 Second Quarter Results
Toronto, Ontario, August 1, 2023 – Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the “Company”)
announced its operating and financial results for the second quarter and six months ended June 30, 2023.
Highlights
(Unless otherwise stated, all monetary figures in this news release are expressed in U.S. dollars.)
• Strong metals production: Produced 76,306 ounces of gold and 7.9 million pounds of copper.
• All-in sustaining cost: Reported cost of sales per ounce of gold sold 1 of $929 and an all-in sustaining
cost per ounce of gold sold2 of $733.
• On track to achieve 2023 guidance: Both mining operations are on track to achieve their 2023 production
and cost guidance, while Tsumeb is tracking toward the low end of its 2023 production guidance and the
higher end of its cash cost per tonne guidance.
• Significant f ree cash flow : Generated $59.2 million of cash provided from operating activities and
achieved record quarterly free cash flow of $70.5 million.2
• Solid adjusted net earnings: Reported net earnings of $61.7 million ($0.33 per share) and adjusted
net earnings2 of $62.2 million ($0.33 per share).
• Growing financial position: Ended the quarter with a strong balance sheet, including $542.0 million of
cash, a $150.0 million undrawn revolving credit facility and no debt.
• Increasing return of capital to shareholders: Returned $48.9 million, or 36% of free cash flow , to
shareholders during the first half of 2023 through dividends and share repurchases . Declared second
quarter dividend of $0.04 per common share payable on October 16, 2023 to shareholders of record on
September 30, 2023.
• 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. Received technical approval for
the environmental impact assessment (“EIA”) for a 69 kV power line and initiated the associated public
consultation process.
• Strong results from exploration activities: Results from ongoing drilling activities at the Čoka Rakita
exploration prospect in Serbia reported in July 2023 extended the deposit to the south and also
confirmed and further extended the high-grade zone. With nine drill rigs currently active on-site and an
additional 3 0,000 metres of drilling planned, DPM continues to target a maiden Mineral Resource
estimate by year-end 2023.
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 , 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 13 of this news release for more information, including reconciliations to
IFRS measures.
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CEO Commentary
“We continued to deliver strong performance in the second quarter, including solid gold production ,
excellent all-in sustaining costs, and a record $70.5 million of free cash flow generation. Year-to-date, we
returned 36% of our free cash flow to shareholders through our enhanced share buyback program and our
sustainable quarterly dividend,” said David Rae, President and Chief Executive Officer.
“The most recent results from our ongoing drilling program at the high-quality Čoka Rakita deposit in Serbia
extended the deposit to the sout h and also confirmed and further extended the high-grade zone. We
continue to view Čoka Rakita as a promising prospect within our organic portfolio and we are aggressively
drilling to grow the deposit and test other nearby targets that share the same geological environment.
“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 13 of this news release.
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Key Operating and Financial Highlights
$ millions, except where noted
Ended June 30,
Three Months Six Months
2023 2022 Change 2023 2022 Change
Operating Highlights
Ore Processed t 740,936 746,027 (1%) 1,478,573 1,500,662 (1%)
Metals contained in concentrate produced:
Gold
Chelopech oz 44,463 49,245 (10%) 79,721 90,745 (12%)
Ada Tepe oz 31,843 23,659 35% 65,166 45,074 45%
Total gold in concentrate produced oz 76,306 72,904 5% 144,887 135,819 7%
Copper Klbs 7,913 8,809 (10%) 15,090 16,502 (9%)
Payable metals in concentrate sold:
Gold
Chelopech oz 33,853 39,681 (15%) 64,926 75,994 (15%)
Ada Tepe oz 31,212 23,028 36% 63,638 44,096 44%
Total payable gold in concentrate sold oz 65,065 62,709 4% 128,564 120,090 7%
Copper Klbs 6,585 7,242 (9%) 12,943 13,783 (6%)
Cost of sales per tonne of ore processed(1):
Chelopech $/t 62 52 18% 63 58 9%
Ada Tepe $/t 138 118 17% 138 117 18%
Cash cost per tonne of ore processed(2):
Chelopech $/t 50 48 4% 51 48 6%
Ada Tepe $/t 66 54 22% 66 53 25%
Cost of sales per ounce of gold sold(3) $/oz 929 852 9% 951 937 1%
All-in sustaining cost per ounce of gold
sold(2) $/oz 733 792 (7%) 802 741 8%
Complex concentrate smelted t 49,483 21,054 135% 99,130 68,297 45%
Cost of sales per tonne of complex
concentrate smelted(4) $/t 454 1,426 (68%) 485 938 (48%)
Cash cost per tonne of complex concentrate
smelted(2) $/t 343 973 (65%) 368 632 (42%)
Financial Highlights
Revenue 167.5 134.5 25% 323.4 288.3 12%
Cost of sales 82.9 83.4 (1%) 170.4 176.6 (4%)
Earnings before income taxes 69.2 40.9 69% 118.2 74.8 58%
Net earnings 61.7 33.5 84% 108.3 60.3 80%
Per share 0.33 0.18 83% 0.57 0.32 78%
Adjusted EBITDA(2) 86.7 68.7 26% 155.1 138.1 12%
Adjusted net earnings(2) 62.2 33.3 87% 108.3 70.3 54%
Per share(2) 0.33 0.17 94% 0.57 0.37 54%
Cash provided from operating activities 59.2 72.5 (18%) 130.1 151.3 (14%)
Free cash flow(2) 70.5 41.2 71% 135.5 89.9 51%
Capital expenditures incurred(5):
Sustaining(6) 8.9 21.1 (58%) 16.6 30.0 (45%)
Growth(7) 6.8 7.6 (10%) 13.3 13.7 3%
Total capital expenditures 15.7 28.7 (45%) 29.9 43.7 (31%)
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 ounce of gold sold, c ash 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 r atios. Refer to the “Non -GAAP Financial Measures” section commencing on page 13 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 conc entrate smelted.
5) Capital expenditures incurred were reported on an accrual basis and do not represent the cash outlays for the cap ital expenditures.
6) 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 man agement and investors to assess the extent of non -discretionary
capital spending being incurred by the Company each period.
7) Growth capital expenditures are generally defined as capital expenditures that expand existing capacity, increase life of ass ets and/or increase future
earnings. This measure is used by management and investors to assess the extent of discretionary capital spending being under taken by the Company
each period.
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Performance Highlights
A table comparing production, sales and cash cost measures by asset for the second quarter and six months ended June 30, 2023 against
2023 guidance is located on page 10 of this news release.
The Company’s mining operations continued to perform well and delivered another quarter of strong
production. Gold production at Chelopech increased compared to Q1 2023 as a result of higher grades, as
expected per the mine plan. Ada Tepe continued to deliver strong performance, with gold production in-line
with expectations. All-in sustaining cost per ounce of gold sold for the second quarter was at the low-end of the
Company’s 2023 guidance range. Both mining operations are on track to achieve their 2023 production and
cost guidance, while Tsumeb is tracking toward the low end of its 2023 production guidance and the higher
end of its cash cost per tonne guidance.
Highlights include the following:
Chelopech, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of 2023 of
44,463 ounces and 79,721 ounces, respectively, was 10% and 12% lower than the corresponding periods in
2022 due primarily to lower gold grades and recoveries, in-line with the mine plan. Copper production in the
second quarter and first half of 2023 of 7.9 million pounds and 15.1 million pounds, respectively, was 10% and
9% lower than the corresponding periods in 2022 due primarily to lower copper grades.
All-in sustaining cost per ounce of gold sold in the second quarter and first half of 2023 of $776 and $851,
respectively, increased compared to $754 and $598 in the corresponding periods in 2022 due primarily to lower
by-product credits, lower volumes of gold sold, higher labour cost and higher prices for direct materials, as well
the timing of cash outlays for sustaining capital expenditures related to the upgrade of the tailings management
facility, which was completed during the second quarter, partially offset by lower treatment and freight charges.
Ada Tepe, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of 2023 of
31,843 ounces and 65,166 ounces, respectively, was 35% and 45% higher than the corresponding periods in
2022 due primarily to mining higher grade zones, in-line with the mine plan.
All-in sustaining cost per ounce of gold sold in the second quarter and first half of 2023 of $530 and $508,
respectively, was 15% and 27% lower compared to the corresponding periods in 2022 due primarily to higher
volumes of gold sold.
Consolidated Operating Highlights
Production: Gold contained in concentrate produced in the second quarter and first half of 2023 of 76,306
ounces and 144,887 ounces, respectively, was 5% and 7% higher than the corresponding periods in 2022 due
primarily to higher gold grades at Ada Tepe, partially offset by lower gold grades and recoveries at Chelopech,
in line with mine plans for both operations.
Copper production in second quarter and first half of 2023 of 7.9 million pounds and 15.1 million pounds,
respectively, was 10% and 9% lower than the corresponding periods in 2022 due primarily to lower copper
grades.
Deliveries: Payable gold in concentrate sold in the second quarter and first half of 2023 of 65,065 ounces and
128,564 ounces, respectively, was 4% and 7% higher than the corresponding periods in 2022 primarily
reflecting higher gold production.
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Payable copper in concentrate sold in the second quarter and first half of 2023 of 6.6 million pounds and 12.9
million pounds, respectively, was 9% and 6% lower than the corresponding periods in 2022 primarily reflecting
lower copper production.
Complex concentrate: Complex concentrate smelted in the second quarter and first half of 2023 of 49,483
tonnes and 99,130 tonnes, respectively, was 28,429 tonnes and 30,833 tonnes higher than the corresponding
periods in 2022 due primarily to the timing of the Ausmelt furnace maintenance shutdown , which was
completed during the second quarter of 2022. Complex concentrate smelted in the first half of 2023 was below
expectations due to unplanned maintenance in the off-gas system. The Company is undertaking additional
maintenance in the off-gas system to resolve this issue during the Ausmelt furnace maintenance, which is
currently underway.
Cost measures: Cost of sales in the second quarter and first half of 2023 of $82.9 million and $170.4 million,
respectively, decreased compared to $83.4 million and $176.6 million in the corresponding periods in 2022,
due primarily to a stronger U.S. dollar relative to the South African Rand (“ZAR”) and lower depreciation
expense as a result of the impairment charge in respect of Tsumeb taken in the third quarter of 2022, partially
offset by higher local currency mine operating costs.
All-in sustaining cost per ounce of gold sold in the second quarter of 2023 of $733 was 7% lower than the
corresponding period in 2022 due primarily to lower treatment and freight charges at Chelopech as a result of
increased deliveries to third-party smelters and higher volumes of gold sold, partially offset by higher local
currency operating expenses reflecting higher labour costs and higher prices for direct materials, and lower by-
product credits as a result of lower volumes and realized prices of copper sold. All-in sustaining cost per ounce
of gold sold in first half of 2023 of $802 was 8% higher than the corresponding period in 2022 due primarily to
lower by-product credits as a result of lower volumes and realized prices of copper sold, higher local currency
operating expenses and higher share-based compensation reflecting DPM’s strong share price performance,
partially offset by lower treatment and freight charges at Chelopech and higher volumes of gold sold.
Cash cost per tonne of complex concentrate smelted in the second quarter and first half of 2023 of $343 and
$368, respectively, was 65% and 42% lower than the corresponding periods in 2022 due primarily to higher
volumes of complex concentrate smelted and a stronger U.S. dollar relative to the ZAR.
Capital expenditures: Capital expenditures incurred in the second quarter and first half of 2023 of $15.7 million
and $29.9 million, respectively, were 45% and 31% lower than the corresponding periods in 2022 of $28.7
million and $43.7 million.
Sustaining capital expenditures incurred in the second quarter and first half of 2023 of $8.9 million and $16.6
million, respectively, were 58% and 45% lower than the corresponding periods in 2022 of $21.1 million and
$30.0 million. While overall this was in-line with expectations, these decreases also reflected the timing of the
Ausmelt furnace maintenance shutdown at Tsumeb.
Growth capital expenditures incurred in the second quarter and first half of 2023, primarily related to the Loma
Larga gold project, were $6.8 million and $13.3 million, respectively, compared to $7.6 million and $13.7 million
in the corresponding periods in 2022.
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Consolidated Financial Highlights
Financial results from operations in the second quarter of 2023 reflected higher volume and prices of gold
sold, lower treatment charges at Chelopech and a strong U.S. dollar relative to the ZAR, which contributed
to the Company’s record quarterly free cash flow generation.
Revenue: Revenue in the second quarter and first half of 2023 of $167.5 million and $323.4 million,
respectively, was 25% and 12% higher than the corresponding periods in 2022 due primarily to lower
treatment and freight charges at Chelopech as a result of increased deliveries to third-party smelters, higher
volumes and realized prices of gold sold, and higher volumes of complex con centrate smelted as a result
of the timing of the Ausmelt furnace maintenance shutdown. This was partially offset by lower volumes and
realized prices of copper sold at Chelopech.
Net earnings: Net earnings in the second quarter of 2023 of $61.7 million ($0.33 per share) increased
compared to $33.5 million ($0.18 per share) in the corresponding period in 2022, due primarily to higher
revenue and higher interest income, partially offset by higher planned exploration and evaluation expenses.
Net earnings in first half of 2023 of $108.3 million ($0.5 7 per share) increased compared to $60.3 million
($0.32 per share) in the corresponding period in 2022 due primarily to higher revenue, lower cost of sales
and higher interest income, partially offse t by higher planned exploration and evaluation expenses and
higher share -based compensation expenses as a result of DPM’s strong share price performance. Net
earnings in the second quarter and first half of 2022 also included restructuring costs related to a cost
optimization initiative at Tsumeb.
Adjusted net earnings: Adjusted net earnings in the second quarter and first half of 2023 of $62.2 million
($0.33 per share) and $108.3 million ($0.5 7 per share), respectively, increased compared to $33.3 million
($0.17 per share) and $70.3 million ($0.37 per share) in the corresponding periods in 2022 due primarily to
the same factors affecting net earnings, except for adjusting items primarily related to the Tsumeb
restructuring costs in 2022.
Earnings before income taxes: Earnings before income taxes in the second quarter and first half of 2023
of $69.2 million and $118.2 million, respectively, increased compared to $40.9 million and $74.8 million in
the corresponding periods in 2022, reflecting the same factors that affected net earnings, except for income
taxes, which are excluded.
Adjusted EBITDA : Adjusted EBITDA in the second quarter and first half of 2023 of $86.7 million and
$155.1 million, respectively, increased compared to $68.6 million and $138 .1 million in the corresponding
periods 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 activ ities: Cash provided from operating activities in the second quarter
and first half of 2023 of $59.2 million and $130. 1 million, respectively, was 1 8% and 14% lower than the
corresponding periods in 2022, due primarily to the timing of deliveries and subsequent receipt of cash, and
the timing of payments to suppliers, partially offset by higher earnings generated.
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Free cash flow : Free cash flow in the second quarter and first half of 2023 of $70.5 million and $135.5
million, respectively, was $29.3 m illion and $45.6 million higher than the corresponding periods in 2022,
due primarily to higher earnings generated and timing of cash outlays for sustaining capital expenditures .
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.
Cash and cash equivalents increased by $108.8 million to $542.0 million in the first half of 2023 due primarily
to cash generated in the period, plus the cash proceeds from the disposition of B2Gold Corp (“B2Gold”) shares
following its acquisition of Sabina Gold and Silver Corp (“Sabina”), partially offset by cash outlays for capital
expenditures, dividends paid and shares repurchased, as well as changes in working capital.
On April 19, 2023, DPM’s 6.5% ownership interest in Sabina was exchanged for 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”).
During the first half of the year, the Company returned a total of $48.9 million to shareholders, representing
approximately 36% of its free cash flow generated during this period. This included the repurchase of 4,798,095
shares at an average price of $7.05 (Cdn$9.50) per share for a total value of approximately $33.7 million, and
$15.2 million of dividends paid.
As at June 30, 2023, the Company had an automatic share repurchase plan in place under the NCIB with its
designated broker which terminated on July 26, 2023, pursuant to which the Company repurchased an
additional 1,169,923 shares in July 2023, all of which were cancelled as at August 1, 2023. As at June 30,
2023, the Company recognized a liability of $8.1 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 through the NCIB. As at August 1, 2023, the shares repurchased totalled $42.1 million. 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 fi nancial
position, business outlook and ongoing capital requirements, as well as its share price and overall market
conditions.
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Quarterly Dividend
On August 1, 2023, the Company’s Board of Directors declared a dividend of $0.04 per common share payable
on October 16, 2023 to shareholders of record on September 30, 2023.
Development Projects Update
Loma Larga, Ecuador
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.
Drilling activities, as well as the Citizens Participation Process for the project 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.
During the second quarter, the EIA for the 69 kV power line received technical approval, and the associated
public consultation process has been initiated.
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 c ompletion 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 Loma Larga project.
Exploration
Čoka Rakita, Serbia
In Serbia, exploration activities focused on an accelerated drilling program at the Čoka Rakita deposit, with
nine drill rigs currently in operation. In mid-July, the Company released additional assay results which extended
the deposit to the south and continued to confirm and further extend the high-grade zone.
The 40,000-metre infill and extensional drill program is largely complete, including infill drilling at 60-metre by
60-metre spacing. DPM has commenced an additional 30,000-metre infill drilling program at a 30-metre by 30-
metre spacing.
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.sedarplus.ca.