Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or
the “Company”) today announced its operating and financial results
for the first quarter of 2022. All operational and financial
information contained in this news release are related to
continuing operations, unless otherwise stated.
Highlights:
- Solid metals
production – Produced 62,915 ounces of gold and 7.7
million pounds of copper, in line with 2022 guidance;
- Strong all-in sustaining
cost performance – Reported cost of sales per ounce of
gold sold(1) of $1,103, and an all-in sustaining cost per ounce of
gold sold(2) of $684, which is below the low end of the 2022
guidance range;
- Chelopech Mineral Reserve
update and optimized mine plan – In March, DPM announced a
mine life extension to 2030, an optimized life of mine (“LOM”) plan
reflecting higher recoveries and better commercial terms, and an
updated Mineral Resource and Mineral Resource estimates for the
Chelopech mine;
- Significant free cash
flow – Generated $78.5 million in cash provided from
operating activities and $52.4 million of free cash flow(2);
- Solid adjusted net earnings
– Generated net earnings attributable to common
shareholders from continuing operations of $26.8 million and
adjusted net earnings(2) of $37.0 million or $0.19 per share;
- Growing financial
strength – Ended the quarter with $382.0
million in cash, an investment portfolio of $50.4 million, an
undrawn $150.0 million long-term revolving credit facility (“RCF”)
and no debt;
- Increasing returns of
capital to shareholders – Declared 2022 second quarter
dividend of $0.04 per common share payable on July 15, 2022 to
shareholders of record on June 30, 2022; and repurchased 1,489,100
common shares for a total value of $8.9 million in the
quarter;
- On track for 2022 guidance
and reduced outlook for all-in sustaining cost – All
operations on track to meet 2022 guidance; lowered 2023 and 2024
outlook for all-in sustaining cost per ounce of gold sold to $590
to $700 for 2023 and $690 to $800 for 2024 from previous outlook of
$630 to $760 and $720 to $860, respectively; and
- Progress at Loma
Larga – Received technical approval of the Environmental
Impact Assessment (“EIA”) study from the Ministry of Environment,
Water and Ecological Transition (“MAATE”). The process will now
advance with the Citizens Participation Process, followed by
another review by the MAATE and the issuance of the environmental
licence, which is expected in the third quarter of 2022.
“Our first quarter financial results reflect a
strong start to the year. With solid performance at Chelopech and
Ada Tepe and a continued focus on cost management, we achieved an
all-in sustaining cost of $684 per ounce of gold sold, which is
below the low end of our guidance range, and continued to generate
significant free cash flow,” said David Rae, President and Chief
Executive Officer.
“During the quarter, we announced an optimized
life of mine plan for Chelopech, which contributed to higher gold
and copper production, and an extension of the mine life to 2030.
We continue to advance our permitting activities for the Loma Larga
gold project in Ecuador, including obtaining technical approval for
the environmental impact assessment. We believe this is a strong
statement of support from the government and we look forward to
fully engaging with all other stakeholders.”
__________________________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 by-product credits, while all-in sustaining
cost per ounce of gold sold is net of by-product
credits.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 12 of this news release for more information, including
reconciliations to IFRS measures.
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 12 of this news release.
Key Financial and Operational
Highlights
$ millions, except where noted |
|
Three Months |
Ended March 31, |
|
2022 |
|
2021 |
|
Revenue |
|
153.8 |
|
138.0 |
|
Cost of sales |
|
97.3 |
|
85.6 |
|
Earnings before income taxes |
|
33.9 |
|
35.3 |
|
Net earnings attributable to common shareholders from continuing
operations |
|
26.8 |
|
20.7 |
|
Net earnings attributable to common shareholders(1) |
|
26.8 |
|
20.1 |
|
Basic earnings per share from continuing operations |
|
0.14 |
|
0.11 |
|
Basic earnings per share(1) |
|
0.14 |
|
0.11 |
|
Adjusted EBITDA(2) |
|
69.5 |
|
66.2 |
|
Adjusted net earnings(2) |
|
37.0 |
|
31.0 |
|
Adjusted basic earnings per
share(2) |
|
0.19 |
|
0.17 |
|
Cash provided from operating
activities |
|
78.5 |
|
47.6 |
|
Free cash flow(2) |
|
52.4 |
|
51.0 |
|
Capital expenditures incurred: |
|
|
|
|
|
Growth(3) |
|
6.1 |
|
1.6 |
|
Sustaining(4) |
|
8.8 |
|
17.4 |
|
Total capital expenditures |
|
14.9 |
|
19.0 |
|
Metals contained in
concentrate produced: |
|
|
|
|
|
Gold (ounces) |
|
|
|
|
|
Chelopech |
|
41,500 |
|
36,879 |
|
Ada Tepe |
|
21,415 |
|
33,379 |
|
Total gold in concentrate produced |
|
62,915 |
|
70,258 |
|
Copper (‘000s pounds) |
|
7,693 |
|
7,174 |
|
Payable metals in concentrate
sold: |
|
|
|
|
|
Gold (ounces) |
|
|
|
|
|
Chelopech |
|
36,313 |
|
35,534 |
|
Ada Tepe |
|
21,068 |
|
33,033 |
|
Total payable gold in concentrate sold |
|
57,381 |
|
68,567 |
|
Copper (‘000s pounds) |
|
6,541 |
|
7,279 |
|
Cost of sales per tonne of ore
processed(5): |
|
|
|
|
|
Chelopech |
|
68.94 |
|
60.46 |
|
Ada Tepe |
|
121.55 |
|
108.28 |
|
Cash cost per tonne of ore
processed(2): |
|
|
|
|
|
Chelopech |
|
48.07 |
|
41.64 |
|
Ada Tepe |
|
53.24 |
|
43.28 |
|
Cost of sales per ounce of
gold sold(6) |
|
1,103 |
|
825 |
|
All-in sustaining cost per
ounce of gold sold(2) |
|
684 |
|
522 |
|
Complex concentrate smelted
(tonnes) |
|
47,243 |
|
23,009 |
|
Cost of sales per tonne of
complex concentrate smelted(7) |
|
720 |
|
1,265 |
|
Cash
cost per tonne of complex concentrate smelted(2) |
|
480 |
|
967 |
|
1) These measures include discontinued
operations.2) 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 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) 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.4) 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.5) Cost of
sales per tonne of ore processed represents cost of sales for
Chelopech and Ada Tepe, respectively, divided by tonnes of ore
processed.6) 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.7) Cost of sales per tonne of
complex concentrate smelted represents cost of sales for Tsumeb,
divided by tonnes of complex concentrate smelted.
First Quarter Operating Highlights
In the first quarter of 2022, the Company
achieved solid operating performance at Chelopech and Ada Tepe.
Relative to the first quarter of 2021, Chelopech production was
higher due primarily to improved recoveries, while production at
Ada Tepe was lower as a result of mining in lower grade zones, as
planned. Based on first quarter operating results and higher
average quarterly metals production expected over the balance of
the year, Chelopech and Ada Tepe remain on track to achieve their
2022 production guidance. At Tsumeb, while complex concentrate
smelted was higher than the first quarter of 2021, due primarily to
the timing of the planned Ausmelt furnace maintenance shutdown, it
was below expectations for the quarter as a result of maintenance
to the off-gas system and reduced baghouse capacity. Additional
maintenance to both systems is expected to take place during the
Ausmelt furnace maintenance scheduled for the second quarter of
2022. As a result of these ongoing maintenance activities, the
smelter is expected to be at the lower end of its 2022 production
guidance.
Net Earnings and Adjusted Net Earnings
Net earnings attributable to common shareholders
from continuing operations in the first quarter of 2022 were $26.8
million ($0.14 per share) compared to $20.7 million ($0.11 per
share) in the corresponding period in 2021.
Net earnings attributable to common shareholders
from continuing operations in the first quarter of 2022 and 2021
were impacted by Tsumeb restructuring costs related to a
comprehensive initiative directed at optimizing the cost structure
of the smelter, unrealized gains or losses on Sabina Gold and
Silver Corp. (“Sabina”) special warrants and deferred income tax
adjustments not related to current period earnings, all of which
are not reflective of the Company’s underlying operating
performance and are excluded from adjusted net earnings.
Adjusted net earnings in the first quarter of
2022 were $37.0 million ($0.19 per share) compared to $31.0 million
($0.17 per share) in the corresponding period in 2021 due primarily
to higher realized gold and copper prices, higher toll rates,
sulphuric acid prices and throughput at Tsumeb, and lower treatment
charges at Chelopech, partially offset by lower volumes of metal
sold and higher operating costs.
Adjusted EBITDA
Adjusted EBITDA in the first quarter of 2022 was
$69.5 million compared to $66.2 million in the corresponding period
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.
Production, Delivery and Cost Measures
Gold contained in concentrate produced in the
first quarter of 2022 decreased by 10% to 62,915 ounces relative to
the corresponding period in 2021 due primarily to lower gold grades
at Ada Tepe in line with the production plan, partially offset by
improved gold recoveries at Chelopech.
Copper production in the first quarter of 2022
increased by 7% to 7.7 million pounds relative to the corresponding
period in 2021 due primarily to higher copper recoveries.
Payable gold in concentrate sold in the first
quarter of 2022 of 57,381 ounces was 16% lower than the
corresponding period in 2021 consistent with lower gold production.
Payable copper in concentrate sold in the first quarter of 2022 of
6.5 million pounds was 10% lower than the corresponding period in
2021 due primarily to the timing of deliveries, partially offset by
higher copper production.
Complex concentrate smelted at Tsumeb during the
first quarter of 2022 of 47,243 tonnes was higher than the
corresponding period in 2021 due primarily to the maintenance
shutdown in 2021 and below expectations for the quarter as a result
of maintenance to the off-gas system as well as reduced baghouse
capacity.
Cost of sales in the first quarter of 2022 of
$97.3 million was $11.7 million higher than the corresponding
period in 2021 due primarily to higher local currency operating
expenses reflecting higher prices for electricity and direct
materials in Bulgaria and higher volumes of complex concentrate
smelted at Tsumeb.
All-in sustaining cost per ounce of gold sold in
the first quarter of 2022 of $684 was 31% higher than the
corresponding period in 2021 due primarily to higher local currency
operating expenses in Bulgaria, lower volumes of gold sold and
higher cash outlays for sustaining capital expenditures, partially
offset by higher by-product credits reflecting higher realized
copper prices.
Cash cost per tonne of complex concentrate smelted in the first
quarter of 2022 of $480 was $487 lower than the corresponding
period in 2021 due primarily to the furnace maintenance shutdown
that took place in the first quarter of 2021.
A table comparing production, delivery and cash cost measures
for the first quarter of 2022 against 2022 guidance is located on
page 9 of this news release.
Cash Provided from Operating Activities
Cash provided from operating activities in the
first quarter of 2022 of $78.5 million was $30.9 million higher
than the corresponding period in 2021 due primarily to the 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 months ended
March 31, 2022 (the “MD&A”).
Free Cash Flow
Free cash flow in the first quarter of 2022 of
$52.4 million was comparable to the corresponding period in
2021.
Capital expenditures
Capital expenditures incurred during the first
quarter of 2022 were $15.0 million compared to $19.0 million in the
corresponding period in 2021.
Sustaining capital expenditures incurred during
the first quarter of 2022 were $8.8 million compared to $17.4
million in the corresponding period in 2021. This decrease was due
primarily to the timing of the Ausmelt furnace maintenance shutdown
at Tsumeb which occurred in the first quarter of 2021, with the
next shutdown scheduled to occur in the second quarter of 2022.
Growth capital expenditures incurred during the first quarter of
2022 were $6.2 million compared to $1.6 million in the
corresponding period in 2021 due primarily to capitalized costs
related to the development of the Loma Larga and Timok gold
projects.
Chelopech Mineral Reserve and Mineral Resource
Update
On March 31, 2022, the Company announced a mine
life extension to 2030, an optimized LOM plan and updated Mineral
Resource and Mineral Reserve estimates for the Chelopech mine.
Chelopech successfully added 3.0 Mt to Mineral
Reserves, which more than offset 2021 production depletion of 2.2
Mt for a net addition of 0.8 Mt, extending the life of mine to
2030. The updated LOM plan adds approximately 286,000 ounces of
gold production and 47 million pounds of copper production between
2022 and 2030, relative to the previous mine plan reflecting higher
metallurgical recoveries and improved commercial terms.
Measured and Indicated Mineral Resources,
exclusive of Mineral Reserves, of 1.26 million ounces of gold and
270 million pounds of copper add further potential to extend mine
life, if such Mineral Resources are converted to Mineral
Reserves.
For additional information, including key
assumptions and parameters relating to the foregoing Mineral
Resource and Mineral Reserve Estimates, please refer to the
Company’s press release dated March 31, 2022 entitled “Dundee
Precious Metals Announces Mine Life Extension and Update to Mineral
Resource and Mineral Reserve Estimates for Chelopech”, as well as
the technical report for Chelopech entitled “NI 43-101 Technical
Report - Mineral Resource and Reserve Update, Chelopech Mine,
Chelopech, Bulgaria” dated March 31, 2022 (the “Chelopech Technical
Report”), both of which have been posted on the Company’s website
at www.dundeeprecious.com and have been filed on SEDAR at
www.sedar.com.
Loma Larga gold project, Ecuador
The Company continued with the optimization of
the feasibility study (“FS”) completed by INV Minerales Ecuador
S.A. (“INV”), renamed DPM Ecuador Inc. (“DPM Ecuador”), prior to
the acquisition by DPM, and progressed with several trade-off
studies aiming to further improve the project, based on DPM’s
expertise and experience.
Following closing of the acquisition, the
Company completed integration activities and intensified its
stakeholder engagement work, while advancing the permitting
process. A 15,800-metre drill program, which is planned to optimize
specific aspects of the previous FS and will consist of
metallurgical, geotechnical, hydrogeological and condemnation
drilling, was started and temporarily paused during the quarter as
a result of the filing of a constitutional protective action
(“Action”) against the MAATE by certain non-government
organizations and local agencies as discussed below. A total of 658
metres of condemnation drilling was completed during the first
quarter of 2022. The design of a metallurgical test program was
completed and DPM is targeting completion of a revised FS in
2022.
In April, DPM received technical approval of the
EIA study that was submitted by INV to the MAATE, and is now
appointing facilitators to carry out the Citizens Participation
Process. DPM and its EIA consultant will support the Citizens
Participation Process, assess all comments received, and make
necessary updates to the EIA in order to facilitate the MAATE
providing its final approval of the EIA and issuing the
environmental licence for the project, which is expected to be in
the third quarter of 2022.
As the permitting process progresses, DPM’s team
is proactively working with stakeholders to obtain the project’s
social licence to operate. The Company is also progressing
discussions that are expected to result in the execution of an
investor protection agreement with the government of Ecuador prior
to making any significant capital commitments.
On February 21, 2022, DPM paused drilling
activities as a result of the filing of the Action with the
Constitutional Judge of the Judicial Labor Unit of Cuenca (the
“Court”). The Court ordered the suspension of the environmental
permit required for current exploration and technical drilling
pending the hearing of the Action. The Company expects the hearing
of the Action to be scheduled shortly. The Action alleges that, in
granting the environmental permits, the MAATE violated certain
rights relating to prior consultation and protection of water and
nature and also seeks the annulment of DPM’s mining concessions for
the Loma Larga gold project. DPM Ecuador has been added to the
Action as a third-party intervenor and is working closely with the
MAATE as well as other government ministries and local stakeholders
that support the Loma Larga gold project in defending the Action.
DPM believes the Action is without merit and that its concessions
are legally valid and protected under the Ecuadorian law.
Timok gold project, Serbia
The Company continues to advance the Timok FS,
which is focused on the oxide portion of the deposit and is on
track for completion in the second quarter of 2022.
Exploration
At Chelopech, a total of 7,409 metres of diamond
drilling was completed in the first quarter of 2022, as part of the
brownfield exploration program which focused on:
- Infill and target
delineation drilling at the Wedge and West Shaft prospects within
the Sveta Petka exploration licence as part of commercial discovery
process at Sveta Petka;
- Scout drill
testing of the Petrovden gold-copper-molybdenum porphyry prospect,
aiming to delineate higher grade zones that may potentially be
amenable to underground mining; and
- Exploration
drilling to re-evaluate the high-sulphidation type copper-gold
mineralization defined historically at the Sharlo Dere prospect
within the mine concession area.
The Company’s application for a one-year
extension to the Sveta Petka exploration licence, which surrounds
the Chelopech mine, was approved in November 2021, allowing DPM to
commence work related to the commercial discovery phase. All
required permitting was received in March 2022, allowing the start
of an intensive Mineral Resource delineation drilling campaign
required for the further assessment and application for a
Commercial Discovery in early 2023.
At Ada Tepe, after completion of conceptual
targeting for possible feeder structures within the Khan Krum mine
concession area, 18 drill holes for a total of 5,120 metres, were
designed and are planned to be executed in the second quarter of
2022. Drilling also commenced within the Chiriite exploration
licence, with an 11-scout hole program underway to test the vein
swarms identified in 2021 by mapping and trenching at several
targets.
In Serbia, a total of 731 metres were drilled at
the Umka project during the first quarter of 2022. Plans for the
second quarter of 2022 are to conduct additional geophysics at the
Umka project to allow better definition of potential targets and
commence regional field activities on several other early-stage
licences.
In Ecuador, a 450-kilometre line HD Magnetic
helicopter-borne survey was completed in January 2022 on Tierras
Coloradas. The planning of a 2,000-metre drilling program and the
change in status of the project from early to advanced stage are in
progress.
Returning capital to shareholders
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.Share
repurchases under the Normal-Course Issuer Bid (“NCIB”)
During the first quarter of 2022, DPM purchased
a total of 1,489,100 common shares, all of which were cancelled, at
an average price of $5.98 (Cdn$7.59) per share, for a total value
of $8.9 million (Cdn$11.3 million).
Pursuant to the Company’s NCIB, which it renewed
on March 1, 2022, the Company is able to purchase up to an
additional 9,000,000 common shares representing approximately 5% of
the total outstanding common shares as at February 17, 2022, over a
period of twelve months which ends on February 28, 2023.
Declaration of dividend
On February 17, 2022, the Company declared a
dividend of $0.04 per common share, representing a 33% increase
over the previous quarterly dividend, resulting in total dividend
distributions of $7.6 million (2021 – $5.5 million).
On May 4, 2022, the Company declared a dividend
of $0.04 per common share payable on July 15, 2022 to shareholders
of record on June 30, 2022.
Three-Year Outlook
With solid operating performance from the
Chelopech and Ada Tepe mines in the first quarter of 2022 and
higher average quarterly production expected at all operations over
the balance of the year, DPM is on track to meet its guidance for
2022 for all operations, including expected gold production of
250,000 to 290,000 ounces and copper production of 32 to 37 million
pounds, as well as all-in sustaining cost per ounce of gold sold of
$750 to $890, with expected smelter concentrate throughput to be at
the lower end of its 210,000 to 240,000 tonne range.
The Company’s three-year outlook previously
issued in DPM’s MD&A for the three and twelve months ended
December 31, 2021, remains unchanged, except for the 2023 and 2024
outlook in respect of all-in sustaining cost per ounce of gold
sold, which was lowered and is now expected to be $590 to $700 for
2023 and $690 to $800 for 2024, down from $630 to $760 and $720 to
$860, respectively, as previously issued in February 2022,
reflecting expected grades in concentrate produced and volumes of
gold-copper concentrate delivered to third party smelters outlined
in the most recently issued Chelopech Technical Report.
For additional information regarding the
Company’s detailed guidance for 2022 and three-year outlook, please
refer to the “Three-Year Outlook” section of the MD&A.
Conflict in Ukraine
On February 24, 2022, Russia launched an
invasion of Ukraine which, as of the date hereof, is still ongoing.
Given the role each country plays around global energy and
agricultural trade, the international community’s imposition of a
variety of sanctions on Russia, and the withdrawal of foreign
products and services to Russia, this invasion is putting further
strains on the global supply chain and adding additional pricing
pressure above and beyond what previously was attributable to the
COVID-19 pandemic.
The Company’s Chelopech and Ada Tepe mines are
located in Eastern Europe in Bulgaria. Bulgaria does not share a
border with either Russia or Ukraine and is part of the North
Atlantic Treaty Organization and the European Union. The main
sources of Bulgaria’s electric energy are nuclear and coal
facilities, which together comprise approximately 80% of Bulgaria’s
total energy generation. Although Russia has recently announced
that it is halting natural gas deliveries to Bulgaria,
approximately 5% of Bulgari’s total energy supply is generated from
natural gas and DPM does not anticipate any disruption of power
supply to its mines as a result. Furthermore, the Company does not
source any supplies from Russia or Russian companies. As a result,
the impact of the conflict in Ukraine on the Company has been
limited to increased costs for energy, fuel and other direct
materials. Further escalation of the conflict, including an
outbreak of and/or expansion of hostilities into other countries or
regions within Europe could have a material adverse effect on the
Company’s operations due to, among other factors, disruption in the
Company’s supply chain, increased input costs, and increased risk
(or perception of increased risk) in the profile of the Company’s
operations in Eastern Europe. The Company continues to monitor and
will proactively manage the situation, although there is no
assurance that the Company’s operations will not be adversely
affected by current geopolitical tensions. The Company’s 2022
guidance and outlook for 2023 and 2024 are predicated on the
conflict in Ukraine having no material impact on DPM’s production
and costs.
For additional details, refer to the news
release entitled “Dundee Precious Metal’s Bulgarian Operations
Unaffected by Reduced Natural Gas Supply to Bulgaria” dated April
27, 2022, which has been posted on the Company’s website at
www.dundeeprecious.com and have been filed on SEDAR at
www.sedar.com.
COVID-19
To date, with the proactive measures taken by
each of the Company’s operations, the COVID-19 pandemic has had
minimal impact on DPM’s production. DPM is closely monitoring the
COVID-19 situation and has put measures in place to safeguard the
health of its workforce and support the continuity of its
operations. Given the highly uncertain and evolving nature of this
situation, the Company is not able to reliably estimate the
likelihood, timing, duration, severity and scope of this pandemic
and the potential impact it could have on the Company’s future
operating and financial results. As a result, the 2022 guidance,
and outlook for 2023 and 2024, is predicated on the COVID-19
pandemic continuing to be effectively managed with minimal impact
on DPM’s operations.
For additional details on the conflict in
Ukraine and COVID-19, including the related risks faced by the
Company, refer to the “Overview – Operational and Financial
Highlights” sections contained in the MD&A.
Selected Production, Delivery and Cost Performance versus
Guidance
|
Q1 2022 |
2022 |
|
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
|
ConsolidatedGuidance |
|
Ore processed (‘000s tonnes) |
541 |
214 |
- |
755 |
|
2,900 – 3,100 |
|
Metals contained in
concentrate produced |
|
|
|
|
|
|
|
Gold (‘000s ounces) |
42 |
21 |
- |
63 |
|
250 – 290 |
|
Copper (million pounds) |
8 |
- |
- |
8 |
|
32 – 37 |
|
Payable metals in concentrate
sold |
|
|
|
|
|
|
|
Gold (‘000s ounces) |
36 |
21 |
- |
57 |
|
220 – 255 |
|
Copper (million pounds) |
7 |
- |
- |
7 |
|
28 – 32 |
|
All-in sustaining cost per
ounce of gold sold(1) |
563 |
893 |
- |
684 |
|
750 – 890 |
|
Complex concentrate
smelted(‘000s tonnes) |
- |
- |
47 |
47 |
|
210 – 240 |
|
Cash
cost per tonne of complex concentrate smelted |
- |
- |
480 |
480 |
|
380 – 460 |
|
1) All-in sustaining cost per ounce of gold
sold is expected to be $740 to $900 for Chelopech and $770 to $880
for Ada Tepe, respectively, in 2022 guidance.
This news release and DPM’s unaudited condensed
interim consolidated financial statements and MD&A for the
three months ended March 31, 2022 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 has been prepared in accordance with Canadian
regulatory requirements set out in National Instrument 43-101
Standards of Disclosure for Mineral Projects (“NI 43-101”) of the
Canadian Securities Administrators 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.
First Quarter 2022 Results Conference Call and Webcast
On Thursday, May 5, 2022 at 9 AM EDT, 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: |
|
Thursday, May 5, 2022 |
Time: |
|
9:00 AM EDT |
Webcast: |
|
https://edge.media-server.com/mmc/p/5r22i6xn |
|
|
|
North America Toll Free: |
|
1-844-402-0878 |
International: |
|
1-478-219-0512 |
|
|
|
Toll Free Replay: |
|
1-855-859-2056 |
International Replay: |
|
1-404-537-3406 |
Passcode: |
|
9630647 |
Replay Available Until: |
|
Thursday, May12, 2022 (available for 7 days following the
call) |
|
|
|
Virtual Annual Meeting of Shareholders
DPM’s Annual Meeting of Shareholders will be
held on Thursday, May 5, 2022 at 4:00 PM EDT and will be conducted
virtually via a live audio webcast. Materials for the meeting,
including a user guide for accessing the virtual meeting, are
available on our website at:
https://www.dundeeprecious.com/English/Investors/Disclosure-and-Reporting/default.aspx#agm-section
The details for the meeting, including the link
to the audio webcast, are as follows:
Date: |
|
Thursday, May 5, 2022 |
Time: |
|
4:00 PM EDT |
Webcast: |
|
https://meetnow.global/MT6WZ6Z |
|
|
|
For further information, please contact:
David
RaePresident and Chief Executive OfficerTel: (416)
365-5092drae@dundeeprecious.com |
|
Hume
KyleExecutive Vice President and Chief Financial
OfficerTel: (416) 365-5091hkyle@dundeeprecious.com |
|
Jennifer
CameronDirector, Investor RelationsTel: (416)
219-6177jcameron@dundeeprecious.com |
|
About Dundee Precious
Metals
Dundee Precious Metals Inc. is a Canadian-based
international gold mining company with operations and projects
located in Bulgaria, Namibia, Ecuador and Serbia. The Company’s
purpose is to unlock resources and generate value to thrive and
grow together. This overall purpose is supported by a foundation of
core values, which guides how the Company conducts its business and
informs a set of complementary strategic pillars and objectives
related to ESG, innovation, optimizing our existing portfolio, and
growth. The Company’s resources are allocated in-line with its
strategy to ensure that DPM delivers value for all of its
stakeholders. DPM’s shares are traded on the Toronto Stock Exchange
(symbol: DPM).
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 generally, but not always, identified
by the use of forward looking terminology such as “plans”,
“expects”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “guidance”, “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:
expected cash flows; the price of gold, copper, silver and
sulphuric acid; toll rates, metals exposure and stockpile interest
deductions at Tsumeb; Tsumeb’s ability to continue to benefit from
the Export Processing Zones Act and expected new Sustainable
Special Economic Zone regime in Namibia; the estimation of Mineral
Reserves and Mineral Resources and the realization of such mineral
estimates; estimated capital costs, all-in sustaining costs,
operating costs and other financial metrics, including those set
out in the outlook and guidance provided by the Company; currency
fluctuations; the impact of any impairment charges; the processing
of Chelopech concentrate; timing of further optimization work at
Tsumeb; potential benefits of any upgrades and/or expansion,
including the potential rotary holding furnace installation at the
Tsumeb smelter; DPM’s strategy, plans, targets and goals in respect
of environmental, social and governance issues, including climate
change, greenhouse gas emissions reduction targets, tailings
management facilities and human rights initiatives; results of
economic studies, including the Timok prefeasibility study (“PFS”)
and the Loma Larga FS; expected milestones; success of exploration
activities; the timing of the completion and results of a FS for
the Timok gold project; expectations with respect to the potential
to incorporate additional existing Mineral Resources into the Timok
mine plan by processing the sulphide portion of the ore body;
development of the Loma Larga gold project, including expected
production, successful negotiations of an investment protection
agreement and exploitation agreement and granting of environmental
and construction permits in a timely manner; success of permitting
activities; permitting timelines; success of investments, including
potential acquisitions; requirements for additional capital;
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 its
exploration and development activities; government regulation of
mining and smelting operations; environmental risks; reclamation
expenses; potential or anticipated outcome of title disputes or
claims; benefits of digital initiatives; the timing and amount of
dividends; the timing and number of common shares of the Company
that may be purchased pursuant to the NCIB; and timing and possible
outcome of pending litigation or legal proceedings, if any.
Forward Looking Statements are based on certain
key assumptions and the opinions and estimates of management and
Qualified Person (in the case of technical and scientific
information), as of the date such statements are made, and they
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Company to be materially different from any other future
results, performance or achievements expressed or implied by the
Forward Looking Statements. In addition to factors already
discussed in this news release, such factors include, among others:
fluctuations in metal and sulphuric acid prices, toll rates and
foreign exchange rates; continuation or escalation of the conflict
in Ukraine; risks relating to the Company’s business generally and
the impact of global pandemics, including COVID-19, resulting in
changes to the Company’s supply chain, product shortages, delivery
and shipping issues, closure and/or failure of plant, equipment or
processes to operate as anticipated, employees and contractors
becoming infected, low vaccination rates, lost work hours and
labour force shortages; regulatory changes, including changes
impacting the complex concentrate market; inability of Tsumeb to
secure complex copper concentrate on terms that are economic;
possible variations in ore grade and recovery rates; inherent
uncertainties in respect of conclusions of economic evaluations and
economic studies, including the Timok PFS and the Loma Larga FS;
uncertainties with respect to timing of the Timok FS; changes in
project parameters, including schedule and budget, as plans
continue to be refined; uncertainties with respect to realizing the
anticipated benefits from the acquisition of INV Metals Inc. and
the development of the Loma Larga gold project; uncertainties with
respect to actual results of current exploration activities;
uncertainties and risks inherent to developing and commissioning
new mines into production, which may be subject to unforeseen
delays; uncertainties inherent with conducting business in foreign
jurisdictions where corruption, civil unrest, political instability
and uncertainties with the rule of law may impact the Company’s
activities; limitations on insurance coverage; accidents, labour
disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; actual results of
current and planned reclamation activities; opposition by social
and non-governmental organizations to mining projects and smelting
operations; unanticipated title disputes; claims or litigation;
failure to achieve certain cost savings or the potential benefits
of any upgrades and/or expansion, including the potential rotary
holding furnace installation at the Tsumeb smelter; increased costs
and physical risks, including extreme weather events and resource
shortages, related to climate change; cyber-attacks and other
cybersecurity risks; there being no assurance that the Company will
purchase additional common shares of the Company under the NCIB;
risks related to the implementation, cost and realization of
benefits from digital initiatives; uncertainties with respect to
realizing the targeted MineRP earn-outs as well as those risk
factors discussed or referred to in the Company’s annual MD&A
and AIF for the year ended December 31, 2021, and other documents
filed from time to time with the securities regulatory authorities
in all provinces and territories of Canada and available on SEDAR
at www.sedar.com.
The reader has been cautioned that the foregoing
list is not exhaustive of all factors and assumptions which may
have been used. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in Forward
Looking Statements, there may be other factors that cause actions,
events or results not to be anticipated, estimated or intended.
There can be no assurance that Forward Looking Statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements. The
Company’s Forward Looking Statements reflect current expectations
regarding future events and speak only as of the date hereof. Other
than as it may be required by law, the Company undertakes no
obligation to update Forward Looking Statements if circumstances or
management’s estimates or opinions should change. Accordingly,
readers are cautioned not to place undue reliance on Forward
Looking Statements.
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 used by management and investors to assist with
assessing the Company’s performance, including its ability to
generate sufficient cash flow to meet its return objectives and
support its investing activities and debt service obligations. In
addition, the Human Capital and Compensation Committee of the Board
of Directors uses certain of these measures, together with other
measures, to set incentive compensation goals and assess
performance. 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.
Non-GAAP Cash Cost and All-in Sustaining
Cost Measures
Mine cash cost; smelter cash cost; mine cash
cost of sales; and all-in sustaining cost are non-GAAP financial
measures. Cash cost per tonne of ore processed; all-in sustaining
cost per ounce of gold sold; and cash cost per tonne of complex
concentrate smelted are non-GAAP ratios. These measures capture the
important components of the Company’s production and related costs.
Management and investors utilize these metrics as an important tool
to monitor cost performance at the Company’s operations. In
addition, the Human Capital and Compensation Committee of the Board
of Directors uses certain of these measures, together with other
measures, to set incentive compensation goals and assess
performance.
The following tables provide a reconciliation of
the Company’s cash cost per tonne of ore processed and cash cost
per tonne of complex concentrate smelted to its cost of sales:
$ thousands, unless otherwise indicatedFor the three months
ended March 31, 2022 |
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
|
Ore processed (mt) |
540,892 |
|
213,743 |
|
- |
|
|
|
Complex concentrate smelted
(mt) |
- |
|
- |
|
47,243 |
|
|
|
Cost of sales |
37,291 |
|
25,980 |
|
34,012 |
|
97,283 |
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
(5,936 |
) |
(13,580 |
) |
(4,285 |
) |
|
|
Other non-cash expenses(1) |
(243 |
) |
- |
|
- |
|
|
|
Bulgarian government subsidy for electricity(2) |
(3,098 |
) |
(1,055 |
) |
- |
|
|
|
Change in concentrate inventory |
(2,016 |
) |
35 |
|
- |
|
|
|
Sulphuric acid revenue(3) |
- |
|
- |
|
(7,057 |
) |
|
|
Mine cash cost / Smelter cash cost(4) |
25,998 |
|
11,380 |
|
22,670 |
|
|
|
Cost of sales per tonne of ore processed(5) |
68.94 |
|
121.55 |
|
- |
|
|
|
Cash cost per tonne of ore
processed(5) |
48.07 |
|
53.24 |
|
- |
|
|
|
Cost of sales per tonne of
complex concentrate smelted(6) |
- |
|
- |
|
720 |
|
|
|
Cash
cost per tonne of complex concentrate smelted(6) |
- |
|
- |
|
480 |
|
|
|
$ thousands, unless otherwise indicatedFor the three months
ended March 31, 2021 |
Chelopech |
|
Ada Tepe |
|
Tsumeb |
|
Total |
|
Ore processed (mt) |
543,602 |
|
218,654 |
|
- |
|
|
|
Complex concentrate smelted
(mt) |
- |
|
- |
|
23,009 |
|
|
|
Cost of sales |
32,864 |
|
23,675 |
|
29,104 |
|
85,643 |
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
(5,969 |
) |
(14,020 |
) |
(3,898 |
) |
|
|
Other non-cash expenses(1) |
- |
|
- |
|
(652 |
) |
|
|
Change in concentrate inventory |
(4,258 |
) |
(192 |
) |
- |
|
|
|
Sulphuric acid revenue(3) |
- |
|
- |
|
(2,295 |
) |
|
|
Mine cash cost / Smelter cash cost(4) |
22,637 |
|
9,463 |
|
22,259 |
|
|
|
Cost of sales per tonne of ore
processed(5) |
60.46 |
|
108.28 |
|
- |
|
|
|
Cash cost per tonne of ore
processed(5) |
41.64 |
|
43.28 |
|
- |
|
|
|
Cost of sales per tonne of
complex concentrate smelted(6) |
- |
|
- |
|
1,265 |
|
|
|
Cash
cost per tonne of complex concentrate smelted(6) |
- |
|
- |
|
967 |
|
|
|
1) Relates to slow moving inventory provision
included in cost of sales in the condensed interim consolidated
statements of earnings (loss).2) Included in other expense in
the condensed interim consolidated statements of earnings
(loss).3) Represents a by-product credit for
Tsumeb.4) Cash costs are reported in U.S. dollars, although
the majority of costs incurred are denominated in non-U.S. dollars,
and consist of all production related expenses including mining,
processing, services, royalties and general and
administrative.5) Represents cost of sales and mine cash cost,
respectively, divided by tonnes of ore processed.6) Represents
cost of sales and smelter cash cost, respectively, divided by
tonnes of complex concentrate smelted.
The following table provides, for the periods
indicated, a reconciliation of the Company’s all-in sustaining cost
per ounce of gold sold to its cost of sales:
$ thousands, unless otherwise indicatedFor the three months
ended March 31, 2022 |
|
Chelopech |
|
Ada Tepe |
|
Total |
|
Cost of sales |
|
37,291 |
|
25,980 |
|
63,271 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(5,936 |
) |
(13,580 |
) |
(19,516 |
) |
Treatment charges, transportation and other related selling
costs(1) |
|
15,506 |
|
638 |
|
16,144 |
|
Other non-cash expenses(2) |
|
(243 |
) |
- |
|
(243 |
) |
Bulgarian government subsidy for electricity(3) |
|
(3,098 |
) |
(1,055 |
) |
(4,153 |
) |
By-product credits(4) |
|
(31,008 |
) |
(200 |
) |
(31,208 |
) |
Mine cash cost of sales |
|
12,512 |
|
11,783 |
|
24,295 |
|
Rehabilitation related
accretion expenses(5) |
|
84 |
|
38 |
|
122 |
|
General and administrative
expenses(6) |
|
4,928 |
|
2,306 |
|
7,234 |
|
Cash outlays for sustaining
capital(7) |
|
2,689 |
|
4,346 |
|
7,035 |
|
Cash outlays for
leases(7) |
|
241 |
|
332 |
|
573 |
|
All-in sustaining cost |
|
20,454 |
|
18,805 |
|
39,259 |
|
Payable gold in concentrate sold (ounces)(8) |
|
36,313 |
|
21,068 |
|
57,381 |
|
Cost of sales per ounce of
gold sold(9) |
|
1,027 |
|
1,233 |
|
1,103 |
|
All-in
sustaining cost per ounce of gold sold |
|
563 |
|
893 |
|
684 |
|
$ thousands, unless otherwise indicatedFor the three months
ended March 31, 2021 |
|
Chelopech |
|
Ada Tepe |
|
Total |
|
Cost of sales |
|
32,864 |
|
23,675 |
|
56,539 |
|
Add/(deduct): |
|
|
|
|
Depreciation and amortization |
|
(5,969 |
) |
(14,020 |
) |
(19,989 |
) |
Treatment charges, transportation and other related selling
costs(1) |
|
17,817 |
|
880 |
|
18,697 |
|
By-product credits(4) |
|
(28,255 |
) |
(258 |
) |
(28,513 |
) |
Mine cash cost of sales |
|
16,457 |
|
10,277 |
|
26,734 |
|
Rehabilitation related
accretion expenses(5) |
|
51 |
|
31 |
|
82 |
|
General and administrative
expenses(6) |
|
2,103 |
|
1,684 |
|
3,787 |
|
Cash outlays for sustaining
capital(7) |
|
2,115 |
|
2,467 |
|
4,582 |
|
Cash outlays for
leases(7) |
|
207 |
|
397 |
|
604 |
|
All-in sustaining costs |
|
20,933 |
|
14,856 |
|
35,789 |
|
Payable gold in concentrate sold (ounces)(8) |
|
35,534 |
|
33,033 |
|
68,567 |
|
Cost of sales per ounce of
gold sold(9) |
|
925 |
|
717 |
|
825 |
|
All-in
sustaining cost per ounce of gold sold |
|
589 |
|
450 |
|
522 |
|
1) Represents revenue deductions for
treatment charges, refining charges, penalties, freight and final
settlements to adjust for any differences relative to the
provisional invoice.2) Represents slow moving inventory
provision included in cost of sales in the condensed interim
consolidated statements of earnings (loss).3) Included in
other expense in the condensed interim consolidated statements of
earnings (loss).4) Represents copper and silver
revenue.5) Included in finance cost in the condensed interim
consolidated statements of earnings (loss).6) Represents an
allocated portion of DPM’s general and administrative expenses,
including share-based compensation, based on Chelopech’s and Ada
Tepe’s proportion of total revenue.7) Included in cash flow
used in investing activities and financing activities,
respectively, in the condensed interim consolidated statements of
cash flows.8) Includes payable gold in pyrite concentrate sold
in the first quarter of 2022 of 7,791 ounces (2021 – 9,384
ounces).9) Represents cost of sales and mine cash cost of
sales, respectively, divided by payable gold in concentrate
sold.
Adjusted net earnings and adjusted basic
earnings per share
Adjusted net earnings is a non-GAAP financial
measure and adjusted basic earnings per share is a non-GAAP ratio
used by management and investors to measure the underlying
operating performance of the Company. Presenting these measures
from period to period helps management and investors evaluate
earnings trends more readily in comparison with results from prior
periods.
Adjusted net earnings are defined as net
earnings attributable to common shareholders, adjusted to exclude
specific items that are significant, but not reflective of the
underlying operations of the Company, including:
- impairment
charges or reversals thereof;
- unrealized and
realized gains or losses related to investments carried at fair
value;
- significant tax
adjustments not related to current period earnings; and
- non-recurring or
unusual income or expenses that are either not related to the
Company’s operating segments or unlikely to occur on a regular
basis.
The following table provides a reconciliation of
adjusted net earnings to net earnings attributable to common
shareholders from continuing operations:
$ thousands, except per share amounts |
|
Three Months |
Ended March 31, |
|
2022 |
|
2021 |
|
Net
earnings attributable to common shareholders from continuing
operations |
26,825 |
|
20,719 |
|
Add/(deduct): |
|
|
|
|
|
Net losses related to Sabina special warrants, net of income taxes
of $nil for all periods |
388 |
|
5,399 |
|
Tsumeb restructuring costs |
9,829 |
|
- |
|
Deferred tax expense adjustments not related to current period
earnings(1) |
- |
|
4,904 |
|
Adjusted net earnings |
|
37,042 |
|
31,022 |
|
Basic earnings per share |
|
0.14 |
|
0.11 |
|
Adjusted basic earnings per share |
|
0.19 |
|
0.17 |
|
1) Represents changes in unrecognized tax
benefits included in net earnings related to unrealized gains
(losses) on publicly traded securities, which, together with the
related deferred income tax expense (recovery), were recognized in
other comprehensive income (loss).
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure
used by management and investors to measure the underlying
operating performance of the Company’s operating segments.
Presenting these measures from period to period helps management
and investors evaluate earnings trends more readily in comparison
with results from prior periods. In addition, the Human Capital and
Compensation Committee of the Board of Directors uses adjusted
EBITDA, together with other measures, to set incentive compensation
goals and assess performance.
Adjusted EBITDA excludes the following from
earnings before income taxes:
- depreciation and
amortization;
- interest
income;
- finance
cost;
- impairment
charges or reversals thereof;
- unrealized and
realized gains or losses related to investments carried at fair
value; and
- non-recurring or
unusual income or expenses that are either not related to the
Company’s operating segments or unlikely to occur on a regular
basis.
The following table provides a reconciliation of
adjusted EBITDA to earnings before income taxes:
$ thousands |
|
Three Months |
Ended March 31, |
|
2022 |
|
2021 |
|
Earnings before income taxes |
|
33,890 |
|
35,277 |
|
Add/(deduct): |
|
|
|
Depreciation and amortization |
|
24,254 |
|
24,178 |
|
Tsumeb restructuring costs |
|
9,829 |
|
- |
|
Finance cost |
|
1,363 |
|
1,403 |
|
Interest income |
|
(249 |
) |
(92 |
) |
Net losses related to Sabina special warrants |
|
388 |
|
5,399 |
|
Adjusted EBITDA |
|
69,475 |
|
66,165 |
|
Cash provided from operating activities,
before changes in working capital
Cash provided from operating activities, before
changes in working capital, is a non-GAAP financial measure defined
as cash provided from operating activities excluding changes in
working capital as set out in the Company’s consolidated statements
of cash flows. This measure is used by the Company and investors to
measure the cash flow generated by the Company’s operating segments
prior to any changes in working capital, which at times can distort
performance.
Free cash flow
Free cash flow is a non-GAAP financial measure
defined as cash provided from operating activities, before changes
in working capital, less cash outlays for sustaining capital,
mandatory principal repayments and interest payments related to
debt and leases. This measure is used by the Company and investors
to measure the cash flow available to fund growth capital
expenditures, dividends and share repurchases.
The following table provides a reconciliation of
cash provided from operating activities, before changes in working
capital and free cash flow to cash provided from operating
activities:
$ thousands |
|
Three Months |
Ended March 31, |
|
2022 |
|
2021 |
|
Cash provided from operating activities |
|
78,539 |
|
47,591 |
|
Add: |
|
|
|
Changes in working capital |
|
(14,268 |
) |
15,277 |
|
Cash
provided from operating activities, before changes in working
capital |
64,271 |
|
62,868 |
|
Cash outlays for sustaining
capital |
|
(10,397 |
) |
(10,222 |
) |
Principal repayments related
to leases |
|
(1,131 |
) |
(1,057 |
) |
Interest payments |
|
(365 |
) |
(582 |
) |
Free cash flow |
|
52,378 |
|
51,007 |
|
Average realized metal
prices
Average realized gold and copper prices are
non-GAAP ratios used by management and investors to highlight the
price actually realized by the Company relative to the average
market price, which can differ due to the timing of sales, hedging
and other factors.
Average realized gold and copper prices
represent the average per unit price recognized in the Company’s
consolidated statements of earnings (loss) prior to any deductions
for treatment charges, refining charges, penalties, freight and
final settlements to adjust for any differences relative to the
provisional invoice.
The following table provides a reconciliation of
the Company’s average realized gold and copper prices to its
revenue:
$ thousands, unless otherwise indicated |
|
Three Months |
Ended March 31, |
|
2022 |
|
2021 |
|
Total revenue from continuing operations |
|
153,801 |
|
138,030 |
|
Add/(deduct): |
|
|
|
Tsumeb revenue |
|
(31,093 |
) |
(8,908 |
) |
Treatment charges and other deductions(1) |
|
16,144 |
|
21,389 |
|
Silver revenue |
|
(1,234 |
) |
(1,123 |
) |
Revenue from gold and copper |
|
137,618 |
|
149,388 |
|
Revenue from gold |
|
107,645 |
|
121,998 |
|
Payable gold in concentrate
sold (ounces) |
|
57,381 |
|
68,567 |
|
Average realized gold price
per ounce |
|
1,876 |
|
1,779 |
|
Revenue from copper |
|
29,973 |
|
27,390 |
|
Payable copper in concentrate
sold (‘000s pounds) |
|
6,541 |
|
7,279 |
|
Average
realized copper price per pound |
|
4.58 |
|
3.76 |
|
1) Represents revenue deductions for
treatment charges, refining charges, penalties, freight and final
settlements to adjust for any differences relative to the
provisional invoice.
Dundee Precious Metals (TSX:DPM)
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