Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the “Company”)
announced its operating and financial results for the quarter and
year ended December 31, 2023.
Highlights
(Unless otherwise stated, all monetary figures
in this news release are expressed in U.S. dollars, and all
operational and financial information contained in this news
release is related to continuing operations.)
- Strong metals
production: Produced 296,072 ounces of gold and 30.5
million pounds of copper, in line with 2023 guidance.
- All-in sustaining
cost: Reported cost of sales per ounce of gold sold1 of
$919 and an all-in sustaining cost per ounce of gold sold2 of $849,
in line with 2023 guidance.
- Significant free cash
flow: Generated $261.6 million of cash provided from
operating activities and free cash flow2 of $227.9 million.
- Solid adjusted net
earnings: Reported net earnings of $182.0 million ($0.98
per share) and adjusted net earnings2 of $180.0 million ($0.97 per
share2).
- Growing financial
position: Ended the year with a strong balance sheet,
including $595.3 million of cash, a $150.0 million undrawn
revolving credit facility, and no debt.
- Return of capital to
shareholders: Returned $95.8 million, or 42% of free cash
flow, to shareholders during 2023 through dividends paid and shares
repurchased. Declared fourth quarter dividend of $0.04 per common
share payable on April 15, 2024 to shareholders of record on
March 31, 2024.
- Strong sustainability
performance: DPM scored in the 91st percentile among
metals and mining companies in the 2023 S&P Global Corporate
Sustainability Assessment for the third consecutive year, and was
included in the 2024 Sustainability Yearbook.
- Chelopech life of mine
("LOM") plan: Updated Mineral Reserve and Mineral Resource
estimate and LOM plan with improved grades and recoveries support a
mine life that now extends to 2032.
- Strong 2024 guidance and
updated three-year outlook: 2024 production expected to be
between 245,000 and 285,000 ounces of gold at an all-in sustaining
cost of between $790 to $930 per ounce of gold sold.
- Strategic review of the
Tsumeb smelter: DPM has decided to undertake a strategic
review of the Tsumeb smelter, including a potential sale, as the
smelter is no longer seen as strategic to DPM's asset
portfolio.
- Acquisition of
Osino: On December 18, 2023, DPM announced an agreement to
acquire Osino Resources Corp. ("Osino"), which holds the
advanced-stage Twin Hills gold project. Completion of the
acquisition remains subject to certain customary conditions,
including approval of Osino securityholders and regulatory approval
under the Namibia Competition Act.
- Čoka Rakita: In
December 2023, announced a maiden Mineral Resource estimate ("MRE")
of 1.78 million ounces for the Čoka Rakita project in Serbia and
continues to advance the preliminary economic assessment ("PEA"),
which is on-track for completion in Q2 2024. DPM is continuing the
drilling program focused on extending the limits of Čoka Rakita,
which remains open to the northeast and southwest, and is also
aggressively pursuing additional skarn targets on four
licences.
- Loma Larga: At the
Loma Larga project in Ecuador, progressed activities related to
permitting and stakeholder relations.
______________________
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, adjusted net earnings and adjusted basic earnings per
share are non-GAAP financial measures or ratios. These measures
have no standardized meanings under IFRS Accounting 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 21 of this news release for more information,
including reconciliations to IFRS measures.
CEO Commentary
"2023 was an exceptional year for DPM. We
delivered strong operating results, achieved our gold production
and all-in sustaining cost guidance, generated $228 million of free
cash flow, significantly increased our return of capital to
shareholders and further strengthened our balance sheet," said
David Rae, President and Chief Executive Officer. "We also
continued to deliver on our ESG priorities and scored in the 91st
percentile among metals and mining companies in the S&P Global
Corporate Sustainability Assessment for the third consecutive
year.
"During the year, we significantly transformed
our growth pipeline by advancing the Čoka Rakita project in Serbia
from discovery to a 1.8 million ounce gold deposit within 11
months.
"As we enter 2024, DPM is in a unique position
in the industry, with a strong base of production, attractive
all-in sustaining costs, significant free cash flow generation and
the financial strength to internally fund our growth pipeline and
exploration prospects while continuing to return capital to
shareholders through our quarterly dividend."
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 22 of this news release.
Key Operating and
Financial Highlights
|
$ millions, except where noted |
|
Fourth Quarter |
|
Full Year |
|
|
2023 |
2022 |
Change |
|
2023 |
2022 |
|
Change |
|
Operating Highlights |
|
|
|
|
|
|
|
|
|
Ore Processed |
t |
735,524 |
759,241 |
(3 |
%) |
|
2,952,711 |
2,991,782 |
|
(1 |
%) |
|
Metals contained in concentrate produced: |
|
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
Chelopech |
oz |
41,871 |
45,339 |
(8 |
%) |
|
161,872 |
179,135 |
|
(10 |
%) |
|
Ada Tepe |
oz |
35,212 |
28,081 |
25 |
% |
|
134,200 |
93,974 |
|
43 |
% |
|
Total gold in concentrate produced |
oz |
77,083 |
73,420 |
5 |
% |
|
296,072 |
273,109 |
|
8 |
% |
|
Copper |
Klbs |
8,229 |
7,436 |
11 |
% |
|
30,547 |
30,835 |
|
(1 |
%) |
|
Payable metals in concentrate sold: |
|
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
Chelopech |
oz |
36,276 |
39,203 |
(7 |
%) |
|
135,862 |
151,580 |
|
(10 |
%) |
|
Ada Tepe |
oz |
33,288 |
26,628 |
25 |
% |
|
129,881 |
91,117 |
|
43 |
% |
|
Total payable gold in concentrate sold |
oz |
69,564 |
65,831 |
6 |
% |
|
265,743 |
242,697 |
|
9 |
% |
|
Copper |
Klbs |
7,009 |
6,726 |
4 |
% |
|
26,651 |
27,224 |
|
(2 |
%) |
|
Cost of sales per tonne of ore processed(1): |
|
|
|
|
|
|
|
|
|
Chelopech |
$/t |
64 |
71 |
(10 |
%) |
|
63 |
63 |
|
0 |
% |
|
Ada Tepe |
$/t |
146 |
125 |
17 |
% |
|
140 |
120 |
|
17 |
% |
|
Cash cost per tonne of ore processed(2): |
|
|
|
|
|
|
|
|
|
Chelopech |
$/t |
51 |
51 |
0 |
% |
|
50 |
50 |
|
0 |
% |
|
Ada Tepe |
$/t |
72 |
58 |
24 |
% |
|
67 |
55 |
|
22 |
% |
|
Cost of sales per ounce of gold sold(3) |
$/oz |
877 |
990 |
(11 |
%) |
|
919 |
975 |
|
(6 |
%) |
|
All-in sustaining cost per ounce of gold sold(2) |
$/oz |
876 |
1,008 |
(13 |
%) |
|
849 |
885 |
|
(4 |
%) |
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
Revenue |
|
139.3 |
113.0 |
23 |
% |
|
520.1 |
433.5 |
|
20 |
% |
|
Cost of sales |
|
61.0 |
65.1 |
(6 |
%) |
|
244.2 |
236.7 |
|
3 |
% |
|
Earnings (loss) before income taxes(4) |
|
63.9 |
37.6 |
70 |
% |
|
216.7 |
58.7 |
|
269 |
% |
|
From continuing operations |
|
58.5 |
26.4 |
122 |
% |
|
205.7 |
139.4 |
|
48 |
% |
|
From discontinued operations |
|
5.4 |
11.2 |
(52 |
%) |
|
11.0 |
(80.7 |
) |
114 |
% |
|
Net earnings (loss)(4) |
|
57.5 |
33.3 |
72 |
% |
|
192.9 |
35.9 |
|
437 |
% |
|
From continuing operations |
|
52.1 |
22.1 |
136 |
% |
|
182.0 |
116.6 |
|
56 |
% |
|
From discontinued operations |
|
5.4 |
11.2 |
(52 |
%) |
|
10.9 |
(80.7 |
) |
114 |
% |
|
Basic earnings (loss) per share(4) |
|
0.32 |
0.18 |
78 |
% |
|
1.04 |
0.19 |
|
447 |
% |
|
From continuing operations |
|
0.29 |
0.12 |
142 |
% |
|
0.98 |
0.61 |
|
61 |
% |
|
From discontinued operations |
|
0.03 |
0.06 |
(50 |
%) |
|
0.06 |
(0.42 |
) |
114 |
% |
|
Adjusted EBITDA(2),(4) |
|
79.6 |
58.3 |
37 |
% |
|
287.2 |
252.9 |
|
14 |
% |
|
From continuing operations |
|
72.0 |
45.5 |
58 |
% |
|
268.4 |
222.9 |
|
20 |
% |
|
From discontinued operations |
|
7.6 |
12.8 |
(41 |
%) |
|
18.8 |
30.0 |
|
(37 |
%) |
|
Adjusted net earnings(2),(4) |
|
55.5 |
33.3 |
66 |
% |
|
190.9 |
129.0 |
|
48 |
% |
|
From continuing operations |
|
50.1 |
22.1 |
127 |
% |
|
180.0 |
118.9 |
|
51 |
% |
|
From discontinued operations |
|
5.4 |
11.2 |
(52 |
%) |
|
10.9 |
10.1 |
|
8 |
% |
|
Adjusted net earnings per share(2),(4) |
|
0.31 |
0.18 |
72 |
% |
|
1.03 |
0.68 |
|
51 |
% |
|
From continuing operations |
|
0.28 |
0.12 |
133 |
% |
|
0.97 |
0.62 |
|
56 |
% |
|
From discontinued operations |
|
0.03 |
0.06 |
(50 |
%) |
|
0.06 |
0.06 |
|
(1 |
%) |
|
Cash provided from operating activities(4) |
|
78.2 |
49.3 |
59 |
% |
|
275.7 |
232.1 |
|
19 |
% |
|
From continuing operations |
|
71.3 |
48.5 |
47 |
% |
|
261.6 |
209.6 |
|
25 |
% |
|
From discontinued operations |
|
6.9 |
0.8 |
807 |
% |
|
14.1 |
22.5 |
|
(37 |
%) |
|
Free cash flow(2),(4) |
|
51.8 |
33.3 |
56 |
% |
|
231.9 |
166.4 |
|
39 |
% |
|
From continuing operations |
|
49.3 |
30.0 |
64 |
% |
|
227.9 |
150.5 |
|
51 |
% |
|
From discontinued operations |
|
2.5 |
3.3 |
(24 |
%) |
|
4.0 |
15.9 |
|
(75 |
%) |
|
Capital expenditures incurred(5): |
|
|
|
|
|
|
|
|
|
Sustaining(6) |
|
8.0 |
12.9 |
(38 |
%) |
|
31.2 |
39.4 |
|
(21 |
%) |
|
Growth(7) |
|
10.0 |
11.2 |
(11 |
%) |
|
29.3 |
31.4 |
|
(7 |
%) |
|
Total capital expenditures |
|
18.0 |
24.1 |
(25 |
%) |
|
60.5 |
70.8 |
|
(15 |
%) |
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, cash cost per tonne of ore processed, all-in sustaining cost
per ounce of gold sold, cash cost per tonne of complex concentrate
smelted, adjusted EBITDA, adjusted net earnings, adjusted basic
earnings per share and free cash flow are non-GAAP financial
measures or ratios. Refer to the “Non-GAAP Financial Measures”
section commencing on page 22 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) These measures include discontinued
operations.5) Capital expenditures incurred were reported on an
accrual basis and do not represent the cash outlays for the capital
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 management
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 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.
Performance
Highlights
A table comparing production, sales and cash
cost measures by asset for the quarter and year ended December 31,
2023 against 2023 guidance is located on page 18 of this news
release.
In the fourth quarter of 2023, the Company’s
mining operations continued to perform well and delivered another
quarter of strong production. Ada Tepe achieved record quarterly
gold production, and production from Chelopech was in-line with
expectations.
For the full year, DPM achieved its annual
guidance for the gold and copper production as well as all-in
sustaining cost per ounce of gold sold.
Highlights include the following:
Chelopech, Bulgaria: Gold contained in
concentrate produced in the fourth quarter and full year of 2023 of
41,871 ounces and 161,872 ounces, respectively, was 8% and 10%
lower than the corresponding periods in 2022 due primarily to lower
gold grades, partially offset by higher volumes of ore processed,
in-line with the mine plan. Copper production in the fourth quarter
of 2023 of 8.2 million pounds was 11% higher than the corresponding
period in 2022 due primarily to higher copper grades. Copper
production in 2023 of 30.5 million pounds was comparable to 2022
due primarily to lower copper grades largely offset by higher
volumes of ore processed.
All-in sustaining cost per ounce of gold sold in
the fourth quarter of 2023 was $985 compared to $1,127 in the
corresponding period in 2022 due primarily to lower cash outlays
for sustaining capital expenditures, higher by-product credits
reflecting higher volumes and prices of copper sold and lower
prices for power, partially offset by lower volumes of gold sold
and a stronger Euro relative to the U.S. dollar.
All-in sustaining cost per ounce of gold sold in
2023 was $955 compared to $858 in 2022 due primarily to lower
volumes of gold sold, lower by-product credits reflecting lower
volumes and prices of copper sold, higher prices for labour and
direct materials and a stronger Euro relative to the U.S. dollar,
partially offset by lower treatment and freight charges as a result
of increased deliveries to third-party smelters and lower prices
for power, as well as lower cash outlays for sustaining capital
expenditures.
Ada Tepe, Bulgaria: Gold
contained in concentrate produced in the fourth quarter and full
year of 2023 of 35,212 ounces and 134,200 ounces, respectively, was
25% and 43% higher than the corresponding periods in 2022 due
primarily to mining higher grade zones, partially offset by lower
volumes of ore processed, in-line with the mine plan. The Ada Tepe
mine achieved record production for both the quarter and the
year.
All-in sustaining cost per ounce of gold sold in
the fourth quarter and full year of 2023 of $475 and $500,
respectively, was 14% and 26% lower than the corresponding periods
in 2022 due primarily to higher volumes of gold sold, as well as
the timing of cash outlays for sustaining capital expenditures.
Consolidated Operating
Highlights
Production: Gold contained in
concentrate produced in the fourth quarter and full year of 2023 of
77,083 ounces and 296,072 ounces, respectively, was 5% and 8%
higher than the corresponding periods in 2022 due primarily to
mining in higher grade zones at Ada Tepe, partially offset by lower
gold grades at Chelopech, in-line with the mine plans for both
operations.
Copper production in the fourth quarter of 2024
of 8.2 million pounds was 11% higher than the corresponding period
in 2022 due primarily to higher copper grades. Copper production in
2023 of 30.5 million pounds was comparable to 2022 due primarily to
lower copper grades largely offset by higher volumes of ore
processed.
Deliveries: Payable gold in
concentrate sold in the fourth quarter and full year of 2023 of
69,564 ounces and 265,743 ounces, respectively, was 6% and 9%
higher than the corresponding periods in 2022 primarily reflecting
higher gold production.
Payable copper in concentrate sold in the fourth
quarter of 2023 of 7.0 million pounds was 4% higher than the
corresponding period in 2022 due primarily to higher copper
production, partially offset by the timing of deliveries. Payable
copper in 2023 of 26.7 million pounds was comparable to 2022,
consistent with copper production.
Cost measures: Cost of sales in
the fourth quarter of 2023 of $61.0 million decreased compared to
$65.1 million in the corresponding period in 2022 due primarily to
lower prices for power and lower depreciation expenses. Cost of
sales in 2023 of $244.2 million increased compared to $236.7
million in 2022 due primarily to higher local currency mine
operating costs reflecting higher costs for labour and direct
materials, partially offset by lower prices for power.
All-in sustaining cost per ounce of gold sold in
the fourth quarter of 2023 of $876 was 13% lower than the
corresponding period in 2022 due primarily to higher volumes of
gold sold, lower cash outlays for sustaining capital expenditures,
lower prices for power, and higher by-product credits as a result
of higher volumes and realized prices of copper sold, partially
offset by a stronger Euro relative to the U.S. dollar.
All-in sustaining cost per ounce of gold sold in
2023 of $849 was 4% lower than 2022 due primarily to higher volumes
of gold sold, lower treatment and freight charges at Chelopech and
lower prices for power, partially offset by higher local currency
mine operating costs reflecting higher costs for labour and direct
materials, lower by-product credits as a result of lower volumes
and realized prices of copper sold, and higher share-based
compensation expenses reflecting DPM’s strong share price
performance.
Capital expenditures: Capital
expenditures incurred in the fourth quarter and full year of 2023
of $18.0 million and $60.5 million, respectively, were 25% and 15%
lower than the corresponding periods in 2022 of $24.1 million and
$70.8 million.
Sustaining capital expenditures incurred the
fourth quarter of 2023 of $8.0 million were 38% lower than the
corresponding period in 2022 of $12.9 million due primarily to
the planned upgrade of the tailings management facility at
Chelopech, which occurred throughout 2022 and was completed in the
second quarter of 2023. Sustaining capital expenditures in 2023 of
$31.2 million were 21% lower than 2022 of $39.4 million due
primarily to the completion of the tailings management facility
upgrade at Chelopech, as well as the inclusion of the capitalized
lease and leasehold improvements related to the new head office in
2022.
Growth capital expenditures incurred during the
fourth quarter and full year of 2023, primarily related to the Loma
Larga gold project, were $10.0 million and $29.3 million,
respectively, compared to $11.2 million and $31.4 million in the
corresponding periods in 2022.
Consolidated Financial Highlights
Financial results in 2023 reflected higher
volumes and realized prices of gold sold, partially offset by
higher planned exploration and evaluation expenses.
Revenue: Revenue in the fourth
quarter of 2023 of $139.3 million was 23% higher than the
corresponding period in 2022 due primarily to higher volumes and
realized prices of gold sold.
Revenue in 2023 of $520.1 million was 20% higher
than 2022 due primarily to higher volumes and realized prices of
gold sold, and lower treatment and freight charges at Chelopech as
a result of increased deliveries to third-party smelters, partially
offset by lower volumes and realized prices of copper sold.
Net
earnings: Net earnings from
continuing operations in the fourth quarter of 2023 of $52.1
million ($0.29 per share) increased compared to $22.1 million
($0.12 per share) in the corresponding period in 2022 due primarily
to higher volumes and realized prices of gold and copper sold,
partially offset by higher planned exploration and evaluation
expenses. Net earnings from continuing operations in 2023 of $182.0
million ($0.98 per share) increased compared to $116.6 million
($0.61 per share) in 2022 due primarily to higher volumes and
realized prices of gold sold, lower treatment and freight charges
at Chelopech and higher interest income, partially offset by higher
planned exploration and evaluation expenses, and higher share-based
compensation expenses reflecting DPM’s strong share
performance.
Adjusted net earnings:
Adjusted net earnings from continuing operations in the fourth
quarter and full year of 2023 of $50.1 million ($0.28 per share)
and $180.0 million ($0.97 per share), respectively, increased
compared to $22.1 million ($0.12 per share) and $118.9 million
($0.62 per share) in the corresponding periods in 2022 due
primarily to the same factors affecting net earnings, except for
adjusting items mainly related to gains or losses on
derivatives.
Earnings before income
taxes: Earnings before income taxes from continuing
operations in the fourth quarter and full year of 2023 of $58.5
million and $205.7 million, respectively, increased compared to
$26.4 million and $139.4 million in the corresponding periods in
2022, reflecting the same factors that affected net earnings from
continuing operations, except for income taxes, which are
excluded.
Adjusted EBITDA: Adjusted
EBITDA from continuing operations in the fourth quarter and full
year of 2023 was $72.0 million and $268.4 million, respectively,
compared to $45.5 million and $222.9 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
activities: Cash provided from operating activities of
continuing operations in the fourth quarter of 2023 of $71.3
million was 47% higher than the corresponding period in 2022 due
primarily to higher adjusted EBITDA from continuing operations
generated in the quarter, as well as the timing of deliveries and
subsequent receipt of cash partially offset by the timing of
payments to suppliers. Cash provided from operating activities of
continuing operations in 2023 of $261.6 million was 25% higher than
2022 due primarily to higher adjusted EBITDA from continuing
operations generated in the year, partially offset by the timing of
deliveries and subsequent receipt of cash and the timing of
payments to suppliers.
Free cash flow: Free cash flow
from continuing operations in the fourth quarter and full year of
2023 of $49.3 million and $227.9 million, respectively, was $19.3
million and $77.4 million higher than the corresponding periods in
2022 due primarily to higher adjusted EBITDA from continuing
operations generated in the periods and lower cash outlays for
sustaining capital expenditures. Free cash flow is calculated
before changes in working capital.
Discontinued Operations
In 2023, the Company decided to undertake a
strategic review of its Tsumeb operation, including a potential
sale, given that the smelter is no longer expected to process any
Chelopech concentrate commencing in 2024 and as a result, it is no
longer seen as strategic to DPM's asset portfolio. As a result, the
assets and liabilities of Tsumeb have been presented as held for
sale in the consolidated statement of financial position as at
December 31, 2023 and the operating results and cash flows of
Tsumeb have been presented as discontinued operations in the
consolidated statements of earnings (loss) and cash flows for the
years ended December 31, 2023 and 2022. As a consequence, certain
comparative figures in the consolidated statements of earnings
(loss) and cash flows have been reclassified to conform with
current year presentation.
Complex concentrate smelted in the fourth
quarter of 2023 of 67,891 tonnes was 26,056 tonnes higher than the
corresponding period in 2022 reflecting improved operating
performance as a result of the maintenance work which occurred in
the third quarter of 2023, compared to a 17-day shutdown to repair
a water leak in the off-gas system and instability in the power
grid as a result of abnormally heavy rainfall in December 2022.
Complex concentrate smelted in 2023 of 188,803 tonnes was 14,681
tonnes higher than the corresponding period in 2022 due primarily
to increased plant availability following the completion of the
maintenance work in the third quarter of 2023.
Cash cost per tonne of complex concentrate
smelted in the fourth quarter of 2023 of $320 was $123 lower than
the corresponding period in 2022 due primarily to higher volumes of
complex concentrate smelted reflecting improved operating
performance following the Ausmelt furnace maintenance shutdown,
partially offset by lower sulphuric acid by-product credits. Cash
cost per tonne of complex concentrate smelted in 2023 of $414 was
$49 lower than 2022 due primarily to higher volumes of complex
concentrate smelted and a weaker ZAR relative to the U.S. dollar,
partially offset by lower sulphuric acid by-product credits.
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 $162.1
million to $595.3 million in 2023 due primarily to earnings
generated in the year and the cash proceeds from the disposition of
B2Gold Corp. shares following its acquisition of Sabina Gold and
Silver Corp (“Sabina”), partially offset by cash outlays for
capital expenditures, dividends paid and payments for shares
repurchased, as well as changes in working capital.
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 2023, the Company returned a total of
$95.8 million to shareholders through payments for shares
repurchased under the NCIB of $65.6 million and dividends paid of
$30.2 million, representing approximately 42% of its free cash flow
generated during the year.
Share Repurchases
During the year ended December 31, 2023, the
Company purchased a total of 9,738,063 shares with a total cost of
$65.6 million at an average price per share of $6.74
(Cdn$9.10).
The Board of Directors has approved the renewal
of the NCIB (the “New Bid”) and the Company expects to seek
acceptance thereof from the TSX in due course during the first
quarter of 2024. If accepted, the New Bid will be made in
accordance with the applicable rules and policies of the TSX and
applicable Canadian securities laws, and the Company expects be
able to purchase up to 10% of the public float of common shares
over a period of twelve months commencing after the receipt of TSX
approval.
In the event that the New Bid is accepted by the
TSX, the actual timing and number of common shares that may be
purchased thereunder 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. The Company is currently reviewing its capital
allocation strategy in balancing between the capital required for
its growth projects and return of capital to shareholders.
Quarterly Dividend
On February 14, 2024, the Company declared
a dividend of $0.04 per common share payable on April 15, 2024
to shareholders of record on March 31, 2024.
Development Projects
Update
Čoka Rakita, Serbia
In December 2023, DPM announced an Inferred
Mineral Resource of 9.79 Mt at a grade of 5.67 g/t for 1.78 million
ounces of gold at Čoka Rakita, and subsequently filed a technical
report entitled “Maiden Mineral Resource Estimate - Čoka Rakita
Gold Project, Serbia”, with an effective date of November 26, 2023,
(the Čoka Rakita Technical Report”). The maiden MRE was completed
after only one full year of drilling on the project, and is based
on approximately 81,000 metres of drilling in 173 holes. The
Inferred Mineral Resource contains a significant portion of gold
ounces within a continuous high-grade core of mineralization that
amounts to 2.81 Mt at a grade of 10.12 g/t Au for 0.914 million
ounces of gold.3
Based on the favourable size and quality of the
MRE, DPM will continue to accelerate the project and expects to
complete a PEA in the second quarter of 2024, targeting a
throughput rate of 850,000 tonnes per annum.
Čoka Rakita benefits from good infrastructure,
including existing nearby roads and power lines. The project is
located in close regional proximity to DPM's existing operations in
Bulgaria and is a strong fit with the Company's underground mining
and processing expertise, with metallurgical test work
demonstrating gold recoveries of approximately 90% by gravity
concentration and conventional flotation.
The Company has budgeted between $10 million and
$13 million on the PEA for the project in 2024.
Loma Larga, Ecuador
At the Loma Larga project in Ecuador, the
Company continued to progress activities related to permitting and
stakeholder relations. In October 2023, a new President of Ecuador
was elected and the Company is working with the newly formed
government to fulfill the requirements of the August 2023 ruling by
the Provincial Court of Azuay, which found that free, prior and
informed consultation of certain local indigenous populations must
be carried out by the state and that environmental consultation
with communities in the project’s area of influence and certain
additional reports on the impact of the project on water resources
and the Quimsacocha National Recreation Area would need to be
provided by the Ministry of Environment, Water and Ecological
Transition to the court prior to advancing the project to the
exploitation phase.4
In line with this ruling, the Government of
Ecuador commenced the environmental consultation process for the
Loma Larga project. DPM will continue to support the Government of
Ecuador and proactively engage with stakeholders for the
fulfillment of the conditions established by the court.
As previously reported, DPM will continue with
the optimization phase of the updated FS in order to evaluate
additional opportunities and to potentially incorporate the results
of drilling, once these activities are able to recommence. DPM will
continue to take a disciplined approach with respect to future
investments in the Loma Larga project, based on the receipt of key
milestones, overall operating environment in-country, and other
capital allocation priorities.
The Company maintains a constructive
relationship with government institutions and other stakeholders
involved with the development of the project.
The Company has budgeted between $10 million and
$11 million for the project in 2024, approximately half of the
amount spent in 2023.
______________________3 For further
details, refer to the technical report "Maiden Mineral Resource
Estimate - Čoka Rakita Gold Project, Serbia," dated January 24,
2024, available on Company’s website at www.dundeeprecious.com and
on SEDAR+ at www.sedarplus.ca.4 For further details , please
see the news releases issued on February 24, 2022, July 13, 2022,
and August 18, 2023, which are available on the Company’s website
at www.dundeeprecious.com and on SEDAR+ at www.sedarplus.ca.
Exploration
Čoka Rakita, Serbia
In the fourth quarter, exploration activities in
Serbia continued to focus on an accelerated drilling program at the
Čoka Rakita deposit, with approximately 19,500 metres
completed.
The Company also continued scout drilling to
test other camp-wide targets near Čoka Rakita and completed
additional deep magneto-telluric (MT) survey covering the Čoka
Rakita and Dumitru Potok targets, which highlighted a deep,
high-conductivity anomaly that is currently being tested. Scout
drilling intercepted favourable geological indicators on the north
and north west flank of the system where additional marble hosted
skarn mineralization was encountered.
Following the grant of the two new exploration
licences over the area hosting the Timok gold project, the Company
is currently preparing an aggressive exploration program and plans
to start testing the favourable stratigraphy for carbonate
replacement and skarns on the new Potaj Čuka exploration licence,
located to the north of Čoka Rakita, as well as on the new Pešter
Jug exploration licence, which is to the west of Čoka Rakita. This
program is expected to commence in early 2024, pending approval of
the work program and permitting procedures, with approximately
25,000 meters of drilling planned for the first year of exploration
at these targets.
In 2024, the Company has budgeted a total of $20
million to $22 million for Serbian exploration activities.
Tierras Coloradas, Ecuador
At the Tierras Coloradas licence in Ecuador, DPM
completed a total of approximately 6,500 metres of a planned
10,000-metre campaign during 2023 with assay results pending. The
primary focus of the drilling campaign is further assessing the
extension and geometry of the Aparecida and La Tuna vein systems
and testing additional recently-discovered high-grade vein and soil
anomalies related with signatures for high-sulphidation epithermal
or porphyry deposits. During 2023, detailed surface mapping was
performed in conjunction with soil and rock chip-channel sampling,
in order to determine the surface footprint and identify additional
targets. Additional field work will continue in the first quarter
of 2024.
The Company invested approximately $5 million at
Tierras Coloradas in 2023 and has budgeted another $4 million to $5
million in 2024 to support the expanded drilling program and
anticipates that the remainder of the 10,000-metre drilling
campaign will be completed by the end of the first quarter of 2024.
DPM will also take a disciplined approach with respect to future
investment in Tierras Coloradas, based on the the drilling results,
overall operating environment in-country and other capital
allocation priorities.
Chelopech, Bulgaria
DPM continues to focus on extending Chelopech's
mine life through it successful in-mine exploration program and an
aggressive brownfield exploration program. Positive results from
drilling at the Sharlo Dere West and Sharlo Dere prospects, located
within the mine concession and proximal to existing Chelopech
underground development, highlight potential for further mine life
extensions. DPM has completed its initial phase of infill drilling
at Sharlo Dere, with the objective of including a Mineral Resource
estimate for Sharlo Dere within its next Mineral Resource update
for the Chelopech mine.
In January 2024, the Company received the
Commercial Discovery Certificate from the Bulgarian authorities for
the Sveta Petka exploration licence, which includes the Wedge, West
Shaft, Krasta and Petrovden prospects. This allows the Company to
apply for concession rights in 2024 for the area which is now
designated as Chelopech North.
In 2024, the Company has budgeted a total of $2
million to $3 million for in-mine exploration activities, which is
included in the guidance for growth capital expenditures, and $4
million to $5 million for brownfield exploration activities at
Chelopech.
Ada Tepe, Bulgaria
During the fourth quarter of 2023, exploration
activities at the Ada Tepe camp were focused on a target
delineation campaign and scout drilling at the new Krumovitsa
exploration licence. Scout drilling of several epithermal
sediments-hosted targets was advanced in the fourth quarter, and is
planned to continue in the first quarter of 2024.
Permitting for drilling at the Kara Tepe
prospect, located on the Chiirite licence, is ongoing and pending
the positive outcome of the EIA process, drilling is expected to
commence in the second quarter of 2024.
The Company has planned a total of $4 million to
$5 million for Ada Tepe brownfield exploration activities and
another $1 million to $2 million for Ada Tepe greenfield
exploration activities in 2024.
Detailed 2024
Guidance
The following sections of this news release,
under the headings “Detailed 2024 Guidance” and “Three-Year Outlook
(2024 to 2026)”, represent forward-looking information and readers
are cautioned that actual results may vary materially from the
Company’s expectations. Refer to the “Cautionary Note Regarding
Forward Looking Statements” located on page 20 of this news release
and the “Risks and Uncertainties” section of the MD&A issued on
February 14, 2024, available on the Company’s website
(www.dundeeprecious.com) and filed on SEDAR+
(www.sedarplus.ca).
The Company’s detailed guidance for 2024 is set
out in the following table:
|
$ millions, unless otherwise indicated |
Chelopech |
Ada Tepe |
Tsumeb |
Corporate and Other |
Consolidated Guidance |
|
Ore processed |
Kt |
2,090 - 2,200 |
710 - 800 |
- |
- |
2,800 - 3,000 |
|
Cash cost per tonne of ore processed(1) |
$/t |
53 - 58 |
68 - 75 |
- |
- |
- |
|
Metals contained in concentrate produced(2),(3) |
|
|
|
|
|
|
|
Gold |
Koz |
155 - 175 |
90 - 110 |
- |
- |
245 - 285 |
|
Copper |
Mlbs |
29 - 34 |
- |
- |
- |
29 - 34 |
|
Payable metals in concentrate sold(3) |
|
|
|
|
|
|
|
Gold |
Koz |
130 - 145 |
80 - 100 |
- |
- |
210 - 245 |
|
Copper |
Mlbs |
23 - 27 |
- |
- |
- |
23 - 27 |
|
All-in sustaining cost per ounce of gold sold(1),(4) |
$/oz |
650 - 790 |
710 - 830 |
- |
- |
790 - 930 |
|
Complex concentrate smelted(5) |
Kt |
- |
- |
200 - 230 |
- |
200 - 230 |
|
Cash cost per tonne of complex concentrate smelted(1),(5) |
$/t |
- |
- |
310 - 360 |
- |
310 - 360 |
|
Corporate general and administrative expenses(6) |
|
- |
- |
- |
24 - 27 |
24 - 27 |
|
Exploration expenses(1) |
|
- |
- |
- |
- |
33 - 39 |
|
Evaluation expenses(1),(7) |
|
- |
- |
- |
- |
10 - 13 |
|
Sustaining capital expenditures(1),(5),(8) |
|
14 - 18 |
11 - 14 |
9 - 11 |
2 - 3 |
36 - 46 |
|
Growth and other capital expenditures(1),(5),(8),(9) |
|
2 - 3 |
0 - 1 |
0 - 1 |
14 - 15 |
16 - 20 |
1) Based on a Euro/US$ exchange rate of 1.10, a
US$/ZAR exchange rate of 18.00, a copper price of $3.75 per pound
and a sulphuric acid price of $105 per tonne, where applicable.2)
Metals contained in concentrate produced are prior to deductions
associated with smelter terms.3) Gold produced includes gold in
pyrite concentrate produced of 50,000 to 55,000 ounces and payable
gold sold includes payable gold in pyrite concentrate sold of
35,000 to 39,000 ounces.4) Allocated general and administrative
expenses are reflected in consolidated all-in sustaining cost per
ounce of gold sold; however are not reflected in the all-in
sustaining cost per ounce of gold sold for Chelopech and Ada Tepe,
given that the nature of such expenses is more reflective of the
Company’s consolidated all-in sustaining cost and not pertaining to
the individual operations of the Company.5) These measures relate
to or include discontinued operations.6) Excludes share-based
compensation expense of approximately $6 million, before
mark-to-market adjustments from movements in the Company’s share
price, given the volatile nature of this expense.7) Guidance on
evaluation expenses relates to Čoka Rakita gold project which was
initiated in 2023.8) Represents capital expenditures on an accrual
basis and do not represent the cash outlays for the capital
expenditures.9) Growth and other capital expenditures in Corporate
and Other include the estimated running cost for the Loma Larga
gold project of $10 million to $11 million, as well as a
capitalized lease related to electric mobile equipment carried from
2023 of $4 million as part of the Company’s ESG
initiatives.
Acquisition of Osino
In December 2023, the Company announced that it
had entered into a definitive agreement to acquire Osino. The
acquisition of Osino is subject to the approval of Osino's
securityholders as well as applicable regulatory approvals,
including approval under the Namibia Competition Act. In addition,
each of DPM and Osino has the right to terminate the transaction in
certain circumstances. Provided that all approvals are obtained and
neither party exercises its right to terminate, the transaction is
expected to close in the first half of 2024, following which DPM
will provide an update to its 2024 guidance and three-year outlook
in due course.
Key Assumptions and
Sensitivities
Certain key cost measures in the Company’s
detailed guidance for 2024 are sensitive to market assumptions,
including copper price and foreign exchange rates. The following
table demonstrates the effect of a 10% change in these market
assumptions on the consolidated all-in sustaining cost as well as
the smelter cash cost from discontinued operations provided in the
2024 guidance.
|
|
2024 assumptions |
Hypothetical change |
All-in sustaining cost
($/oz) |
Smelter cash cost
($/t) |
|
Copper |
$3.75/lb |
+/- 10% |
+/- $44/oz |
N/A |
|
Euro/US$ |
1.10 |
+/- 10% |
+/- $108/oz |
N/A |
|
US$/ZAR(1),(2) |
18.00 |
+/- 10% |
N/A |
-$35/t /+ $31/t |
1) Relates to discontinued operations.2) As at
December 31, 2023, approximately 62% of projected Namibian dollar
operating expenses related to discontinued operations for 2024 have
been hedged with option contracts providing a weighted average
floor rate of 17.94 and a weighted average ceiling rate of
20.24.
Three-Year Outlook (2024 to
2026)
Highlights of the Company’s updated three-year
outlook include:
- Maintains strong gold production levels: Over
the next three years, gold production is expected to average
approximately 240,000 ounces per year based on current mine plans,
with a forecasted reduction in the current 2026 outlook as Ada Tepe
reaches the end of its mine life. The outlook for production will
be updated, pending the completion of the Osino acquisition, which
is targeted for the first half of 2024.
- Stable copper production: Copper production
over the next three years is expected to average approximately 33
million pounds per year based on current mine plans, with higher
forecasted production in 2025 as compared to the previous
outlook.
- All-in sustaining cost: All-in sustaining cost
per ounce of gold sold is expected to range between $790 and $930
in 2024, which is higher than previously expected due primarily to
lower by-product credits reflecting a lower copper price assumption
and lower volumes of copper sold, and higher local currency
operating costs. 2025 outlook for all-in sustaining cost per ounce
of gold sold remains unchanged from the previous outlook range of
$720 to $880, which is lower than 2024 due primarily to higher
anticipated volumes of copper sold. All-in sustaining cost per
ounce of gold sold in 2026 is expected to be between $760 and $900,
higher than 2025 due primarily to lower volume of gold sold from
Ada Tepe.
- Sustaining capital expenditures: Sustaining
capital expenditures are expected to trend lower over the next
three years due primarily to the gradual reduction in activities at
Ada Tepe as the mine approaches its end of life in 2026.
The Company’s three-year outlook is set out in
the following table:
|
$ millions, unless otherwise indicated |
|
2023 Results |
2024 Guidance |
2025 Outlook |
2026 Outlook |
|
Gold contained in concentrate produced(1),(2) |
|
|
|
|
|
|
Chelopech |
Koz |
162 |
155 - 175 |
160 - 185 |
140 - 155 |
|
Ada Tepe |
Koz |
134 |
90 - 110 |
70 - 85 |
50 - 65 |
|
Total |
Koz |
296 |
245 - 285 |
230 - 270 |
190 - 220 |
|
Copper contained in concentrate produced(1) |
|
|
|
|
|
|
Chelopech |
Mlbs |
31 |
29 - 34 |
31 - 36 |
30 - 35 |
|
All-in sustaining cost per ounce of gold sold(3),(4) |
$/oz |
849 |
790 - 930 |
720 - 880 |
760 - 900 |
|
Complex concentrate smelted(5) |
Kt |
189 |
200 - 230 |
200 - 230 |
200 - 230 |
|
Cash cost per tonne of complex concentrate smelted(3),(5) |
$/t |
414 |
310 - 360 |
310 - 360 |
310 - 360 |
|
Sustaining capital expenditures(3),(6) |
|
|
|
|
|
|
Chelopech |
|
19 |
14 - 18 |
12 - 15 |
12 - 15 |
|
Ada Tepe |
|
10 |
11 - 14 |
8 - 10 |
4 - 5 |
|
Tsumeb(5) |
|
14 |
9 - 11 |
12 - 15 |
10 - 12 |
|
Corporate digital initiatives |
|
2 |
2 - 3 |
2 - 3 |
2 - 3 |
|
Consolidated |
|
45 |
36 - 46 |
34 - 43 |
28 - 35 |
1) Metals contained in concentrate produced are
prior to deductions associated with smelter terms.2) Gold produced
includes gold in pyrite concentrate produced of 50,000 to 55,000
ounces for 2024, 48,000 to 54,000 ounces in 2025, and 45,000 to
49,000 ounces in 2026.3) Based on, where applicable, a Euro/US$
exchange rate of 1.10, a US$/ZAR exchange rate of 18.00, and a
copper price of $3.75 per pound for all years, and a sulphuric acid
price of $105 per tonne for 2024, $79 per tonne for 2025 and $82
per tonne for 2026, where applicable.4) Reflects DPM general and
administrative expenses being allocated based on Chelopech and Ada
Tepe’s proportion of total revenue, including discontinued
operations. Removing Tsumeb from the allocation would increase
all-in sustaining cost by an average of $35 per ounce of gold sold
for each of the three years.5) Related to discontinued
operations.6) Represents capital expenditures on an accrual basis
and do not represent the cash outlays for the capital
expenditures.
The estimated metals contained in concentrate
produced and payable metals in concentrate sold detailed in the
Company’s 2024 guidance and three-year outlook are not expected to
occur evenly throughout the period and are forecast to vary from
quarter to quarter depending on mine sequencing, the timing of
concentrate deliveries and planned outages, including furnace
maintenance shutdowns at Tsumeb. The rate of capital expenditures
is also expected to vary from quarter to quarter based on the
schedule for, and execution of, each capital project.
Additional detail on the Company’s three-year
outlook is set out below:
Chelopech
Gold and copper contained in concentrate
produced are expected to be consistent with production schedules
and expected grades outlined in the most recently issued technical
report. Gold contained in concentrate produced remains unchanged
from the previous outlook for 2024 and 2025, with the outlook for
2026 slightly below the 2025 production level, in-line with the
mine plan. The outlook for copper contained in concentrate produced
remains unchanged in 2024 and 2025 from the previous outlook and is
expected to remain at the consistent production level in 2026.
Cash cost per tonne of ore processed in 2024 is
expected to be higher than 2023, due primarily to higher local
currency operating costs.
All-in sustaining cost per ounce of gold sold in
2024 is expected to be lower than 2023, due primarily to lower
treatment charges as all Chelopech concentrates will now be
delivered to third-party smelters, partially offset by higher local
currency operating costs.
Sustaining capital expenditures in 2024 are
expected to be lower than 2023 results, mainly due to the
completion of the tailings management facility in 2023. Sustaining
capital expenditures are expected to trend lower in 2025 and 2026
due primarily to lower expenditures related to mobile equipment.
Growth capital expenditures related to resource development
drilling and margin improvement projects are expected to be between
$2 million and $3 million in 2024, relatively consistent year over
year.
Ada Tepe
Gold contained in concentrate produced remains
unchanged from the previous outlook for 2024 and 2025 and is
expected to be lower in 2024, in-line with the mine plan as the
mine reaches its end of life before the end of 2026.
Cash cost per tonne of ore processed is expected
to be higher in 2024 as compared to 2023, due primarily to higher
local currency operating costs.
All-in sustaining cost per ounce of gold sold is
expected to be higher in 2024 as compared to 2023, due primarily to
lower volumes of gold sold and higher local currency operating
costs.
Sustaining capital expenditures are expected to
be slightly higher than the previous outlook range of $10 million
to $12 million in 2024 due primarily to higher deferred stripping
costs and increased costs related to Ada Tepe’s integrated waste
management facility, before reducing to a range of $8 million to
$10 million in 2025, in line with the previous outlook, and
reducing further to a range of $4 million to $5 million in 2026 as
the mine reaches the end of its life.
Loma Larga gold project
Growth capital expenditures for 2024 associated
with the Loma Larga gold project are expected to be between $10
million and $11 million, approximately half of the amount spent in
2023, covering the estimated running costs for the year, which
mainly include general and administrative expenses, certain
permitting, social and environmental related activities. In 2023,
higher spend was a result of the additional scope of work related
to the updated FS work as well as increased activities related to
stakeholder engagement. DPM will continue to take a disciplined
approach with respect to future investments in the Loma Larga gold
project, based on the receipt of key milestones, overall operating
environment in-country and other capital allocation priorities.
Exploration and evaluation
expenses
Exploration expenditures in 2024 are expected to
be between $33 million and $39 million due primarily to higher
expected drilling activities at Čoka Rakita and at the new Potaj
Čuka prospect located to the north of Čoka Rakita in Serbia, as
well as a new drilling program at the new Krumovitsa licence at Ada
Tepe in Bulgaria.
Evaluation expenditures in 2024 are expected to
be between $10 million and $13 million related to the PEA
for the Čoka Rakita project, which is expected to be completed in
the second quarter of 2024. If positive results are achieved from
the PEA and the Company decides to proceed with a pre-feasibility
study (“PFS”), the Company may increase its guidance for evaluation
expenditures. The amount and timing for this additional funding is
dependent on the timing of the completion of the PEA.
Selected Production, Delivery and Cost
Performance versus Guidance
|
|
|
Q4 2023 |
2023 |
2023 Consolidated Guidance |
|
|
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
Chelopech |
Ada Tepe |
Tsumeb |
Consolidated |
|
Ore processed |
Kt |
564.8 |
170.7 |
– |
735.5 |
2,205.1 |
747.6 |
– |
2,952.7 |
2,820 – 3,010 |
|
Metals contained in concentrate produced |
|
|
|
|
|
|
|
|
|
|
|
Gold |
Koz |
41.9 |
35.2 |
– |
77.1 |
161.9 |
134.2 |
– |
296.1 |
270 – 315 |
|
Copper |
Mlbs |
8.2 |
– |
– |
8.2 |
30.5 |
– |
– |
30.5 |
30 – 35 |
|
Payable metals in concentrate sold |
|
|
|
|
|
|
|
|
|
|
|
Gold |
Koz |
36.3 |
33.3 |
– |
69.6 |
135.9 |
129.9 |
– |
265.8 |
245 – 290 |
|
Copper |
Mlbs |
7.0 |
– |
– |
7.0 |
26.7 |
– |
– |
26.7 |
26 – 31 |
|
All-in sustaining cost per ounce of gold sold(1) |
$/oz |
985 |
475 |
– |
876 |
955 |
500 |
– |
849 |
700 – 860 |
|
Complex concentrate smelted(2) |
Kt |
– |
– |
67.9 |
67.9 |
– |
– |
188.8 |
188.8 |
200 – 230 |
|
Cash cost per tonne of complex concentrate smelted(2) |
$/t |
– |
– |
320 |
320 |
– |
– |
414 |
414 |
340 – 410 |
1) The guidance ranges for all-in sustaining
cost per ounce of gold sold for Chelopech and Ada Tepe for 2023
were $700 to $880 and $530 to $630, respectively.2) Related to
discontinued operations.
Fourth Quarter
2023 Results Conference Call and
Webcast
At 9 a.m. EDT on Thursday, February 15,
2024, DPM will host a conference call and audio webcast to discuss
the results, followed by a question-and-answer session. To
participate via conference call, register in advance at the link
provided below to receive the dial-in information as well as a
unique PIN code to access the call.
The call registration and webcast details are as
follows:
|
Conference call date and time |
Thursday, February 15, 2024 9 a.m. EST |
|
Call registration |
https://register.vevent.com/register/BI1ef3267869cc4929b9a5b18b7d32e17a |
|
Webcast link |
https://edge.media-server.com/mmc/p/wxpsvu35 |
|
Replay |
Archive will be available on www.dundeeprecious.com |
This news release and DPM’s audited consolidated
financial statements and MD&A for the quarter and year ended
December 31, 2023 are posted on the Company’s website at
www.dundeeprecious.com and have been filed on SEDAR+ at
www.sedarplus.ca.
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.
About Dundee Precious
Metals
Dundee Precious Metals Inc. is a Canadian-based
international gold mining company with operations and projects
located in Bulgaria, Namibia, Serbia and Ecuador. 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).
For further information, please contact:
|
David Rae President and Chief Executive Officer
Tel: (416) 365-5191 drae@dundeeprecious.com |
Navin Dyal Chief Financial Officer Tel: (416)
365-5191 navin.dyal@dundeeprecious.com |
Jennifer Cameron Director, Investor Relations Tel:
(416) 219-6177 jcameron@dundeeprecious.com |
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: the
completion of the acquisition of Osino; expected cash flows; the
price of gold, copper, silver and sulphuric acid; the strategic
review of Tsumeb and the potential outcome thereof; 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
processing of Chelopech concentrate; results of economic studies;
expected milestones; timing and success of exploration activities
at the Company's operating and exploration properties; the timing
of the completion and results of a PEA in respect of Čoka Rakita;
the timing of the completion and results of an updated feasibility
study for the Loma Larga project; the timing and possible outcome
of pending litigation or legal proceedings, including the timing of
the legal proceedings related to Loma Larga and resumption of
drilling activities thereat; development of the Loma Larga gold
project, including expected production, successful negotiations of
an exploitation agreement and granting of environmental and
construction permits in a timely manner; anticipated timing for
completion of the acquisition of Osino, including receipt of all
required regulatory and shareholder approvals; anticipated benefits
and synergies resulting from the proposed acquisition of Osino,
including additional mineral resources and future production,
expectations regarding the financial strength of the Company
following completion of the transaction and future exploration,
development and growth potential; the anticipated timing for any
construction decision in respect of the Twin Hills project and any
update to the Company’s anticipated future production as result of
any such construction decision; success of permitting activities;
permitting timelines; success of investments, including potential
acquisitions; government regulation of mining and smelting
operations; the timing and amount of dividends; the anticipated
timing for the application for approval of the NCIB and receipt
thereof from the TSX; and the anticipated timing of the
commencement of the NCIB and the number of common shares of the
Company that may be purchased thereunder.
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:
customary conditions being fulfilled for the acquisition of Osino,
including the approval of securityholders and regulatory approvals;
neither Osino nor DPM exercising thier rights to terminate the
definitive agreement in respect of the proposed acquisition of
Osino; fluctuations in metal and sulphuric acid prices, toll rates
and foreign exchange rates; risks arising from the current
inflationary environment and the impact on operating costs and
other financial metrics, including risks of recession and risk that
the power subsidy in Bulgaria may be discontinued; the
commencement, continuation or escalation of geopolitical and/or
intrastate conflicts and crises, including without limitation, in
Ukraine, the Middle East, Ecuador, and other jurisdictions from
time to time, and their direct and indirect effects on the
operations of DPM; the continued exemption from the Council of
Europe’s sanctions in favour of Bulgaria with respect to the import
of Russian oil and economic sanctions against Russia and Russian
persons, or against other countries or persons, which may impact
supply chains; risks relating to the Company’s business generally
and the impact of global pandemics resulting in changes to the
Company’s supply chain, product shortages, delivery and shipping
issues; regulatory changes, including changes impacting the complex
concentrate market; inability of Tsumeb to secure complex copper
concentrate on terms that are economic; the anticipated timing for
completion and result of the strategic review in respect of Tsumeb;
possible variations in ore grade and recovery rates; inherent
uncertainties in respect of conclusions of economic evaluations,
economic studies and mine plans, including the Loma Larga FS and
the Čoka Rakita PEA; uncertainties with respect to timing of the
updated Loma Larga FS and the Čoka Rakita PEA; changes in project
parameters, including schedule and budget, as plans continue to be
refined; uncertainties with respect to realizing the anticipated
benefits from the Loma Larga and the Čoka Rakita gold projects;
uncertainties with respect to actual results of current exploration
activities; the Company’s ability to complete the proposed
acquisition of Osino, including the ability to obtain all required
regulatory and shareholder approvals; the ability of the Company to
realize the anticipated benefits of the proposed acquisition of
Osino, including the ability to develop and commence production
from the Twin Hills project successfully or at all following any
construction decision that may be made in respect thereof;
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; 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 receive
approval from the TSX to undertake the NCIB nor that it will
purchase additional common shares of the Company thereunder; risks
related to the implementation, cost and realization of benefits
from digital initiatives as well as those risk factors discussed or
referred to in the Company’s annual MD&A and annual information
form for the year ended December 31, 2023, the MD&A, 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.sedarplus.ca.
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.
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; cash cost per ounce
of gold sold; 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 to its cost of sales:
|
$ thousands |
|
Fourth Quarter |
|
Full Year |
|
unless otherwise indicated |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
Chelopech |
|
Ore processed |
t |
564,825 |
|
553,088 |
|
|
2,205,107 |
|
2,138,792 |
|
|
Cost of sales |
|
36,025 |
|
39,438 |
|
|
139,550 |
|
133,929 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Depreciation and amortization |
|
(7,225 |
) |
(7,456 |
) |
|
(27,443 |
) |
(26,132 |
) |
|
Change in concentrate inventory |
|
(80 |
) |
(3,985 |
) |
|
(827 |
) |
(1,671 |
) |
|
Mine cash cost(1) |
|
28,720 |
|
27,997 |
|
|
111,280 |
|
106,126 |
|
|
Cost of sales per tonne of ore processed(2) |
$/t |
64 |
|
71 |
|
|
63 |
|
63 |
|
|
Cash cost per tonne of ore processed(2) |
$/t |
51 |
|
51 |
|
|
50 |
|
50 |
|
|
|
|
|
|
|
|
|
|
Ada Tepe |
|
Ore processed |
t |
170,699 |
|
206,153 |
|
|
747,604 |
|
852,990 |
|
|
Cost of sales |
|
24,956 |
|
25,703 |
|
|
104,657 |
|
102,739 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Depreciation and amortization |
|
(12,920 |
) |
(13,948 |
) |
|
(54,593 |
) |
(55,984 |
) |
|
Change in concentrate inventory |
|
313 |
|
193 |
|
|
164 |
|
181 |
|
|
Mine cash cost(1) |
|
12,349 |
|
11,948 |
|
|
50,228 |
|
46,936 |
|
|
Cost of sales per tonne of ore processed(2) |
$/t |
146 |
|
125 |
|
|
140 |
|
120 |
|
|
Cash cost per tonne of ore processed(2) |
$/t |
72 |
|
58 |
|
|
67 |
|
55 |
|
1) 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.2) Represents cost of sales and mine cash cost,
respectively, divided by tonnes of ore processed.
The following table provides, for the periods
indicated, a reconciliation of the Company’s cash cost per ounce of
gold sold and all-in sustaining cost per ounce of gold sold to its
cost of sales:
|
$ thousands, unless otherwise indicated For the quarter
ended December 31, 2023 |
|
Chelopech |
Ada Tepe |
Total |
|
Cost of sales(1) |
|
36,025 |
|
24,956 |
|
60,981 |
|
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(7,225 |
) |
(12,920 |
) |
(20,145 |
) |
|
Treatment charges, transportation and other related selling
costs(2) |
|
27,679 |
|
1,090 |
|
28,769 |
|
|
By-product credits(3) |
|
(26,938 |
) |
(328 |
) |
(27,266 |
) |
|
Mine cash cost of sales |
|
29,541 |
|
12,798 |
|
42,339 |
|
|
Rehabilitation related accretion and depreciation expenses(4) |
|
275 |
|
276 |
|
551 |
|
|
Allocated general and administrative expenses(5) |
|
- |
|
- |
|
9,435 |
|
|
Cash outlays for sustaining capital(6) |
|
5,602 |
|
2,557 |
|
8,159 |
|
|
Cash outlays for leases(6) |
|
310 |
|
169 |
|
479 |
|
|
All-in sustaining cost |
|
35,728 |
|
15,800 |
|
60,963 |
|
|
Payable gold in concentrate sold(7) |
oz |
36,276 |
|
33,288 |
|
69,564 |
|
|
Cost of sales per ounce of gold sold(8) |
$/oz |
993 |
|
750 |
|
877 |
|
|
Cash cost per ounce of gold sold(8) |
$/oz |
814 |
|
384 |
|
609 |
|
|
All-in sustaining cost per ounce of gold sold(8) |
$/oz |
985 |
|
475 |
|
876 |
|
|
$ thousands, unless otherwise indicated For the quarter ended
December 31, 2022 |
|
Chelopech |
Ada Tepe |
Total |
|
Cost of sales(1) |
|
39,438 |
|
25,703 |
|
65,141 |
|
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(7,456 |
) |
(13,948 |
) |
(21,404 |
) |
|
Treatment charges, transportation and other related selling
costs(2) |
|
26,529 |
|
864 |
|
27,393 |
|
|
By-product credits(3) |
|
(24,717 |
) |
(260 |
) |
(24,977 |
) |
|
Mine cash cost of sales |
|
33,794 |
|
12,359 |
|
46,153 |
|
|
Rehabilitation related accretion expenses(4) |
|
264 |
|
295 |
|
559 |
|
|
Allocated general and administrative expenses(5) |
|
- |
|
- |
|
7,412 |
|
|
Cash outlays for sustaining capital(6) |
|
9,879 |
|
1,840 |
|
11,719 |
|
|
Cash outlays for leases(6) |
|
251 |
|
280 |
|
531 |
|
|
All-in sustaining cost |
|
44,188 |
|
14,774 |
|
66,374 |
|
|
Payable gold in concentrate sold(7) |
oz |
39,203 |
|
26,628 |
|
65,831 |
|
|
Cost of sales per ounce of gold sold(8) |
$/oz |
1,006 |
|
965 |
|
990 |
|
|
Cash cost per ounce of gold sold(8) |
$/oz |
862 |
|
464 |
|
701 |
|
|
All-in sustaining cost per ounce of gold sold(8) |
$/oz |
1,127 |
|
555 |
|
1,008 |
|
1) Included in cost of sales were share-based
compensation expenses of $0.4 million (2022 - $0.4 million) in the
fourth quarter of 2023.2) Represents revenue deductions for
treatment charges, refining charges, penalties, freight and final
settlements to adjust for any differences relative to the
provisional invoice.3) Represents copper and silver revenue.4)
Included in cost of sales and finance cost in the consolidated
statements of earnings (loss).5) Represents an allocated portion of
DPM’s general and administrative expenses, including a share-based
compensation expense of $1.9 million (2022 – $1.5 million) for the
fourth quarter of 2023, based on Chelopech’s and Ada Tepe’s
proportion of total revenue, including revenue from discontinued
operations. Allocated general and administrative expenses are
reflected in consolidated all-in sustaining cost per ounce of gold
sold and are not reflected in the cost measures for Chelopech and
Ada Tepe.6) Included in cash used in investing activities and
financing activities, respectively, in the consolidated statements
of cash flows.7) Includes payable gold in pyrite concentrate sold
in the fourth quarter of 2023 of 8,700 ounces (2022 – 10,408
ounces).8) Represents cost of sales, mine cash cost of sales and
all-in sustaining cost, respectively, divided by payable gold in
concentrate sold.
|
$ thousands, unless otherwise indicated For the
year ended December 31,
2023 |
|
Chelopech |
Ada Tepe |
Total |
|
Cost of sales(1) |
|
139,550 |
|
104,657 |
|
244,207 |
|
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(27,443 |
) |
(54,593 |
) |
(82,036 |
) |
|
Treatment charges, transportation and other related selling
costs(2) |
|
101,083 |
|
5,247 |
|
106,330 |
|
|
By-product credits(3) |
|
(105,040 |
) |
(1,260 |
) |
(106,300 |
) |
|
Mine cash cost of sales |
|
108,150 |
|
54,051 |
|
162,201 |
|
|
Rehabilitation related accretion and depreciation expenses(4) |
|
1,195 |
|
1,173 |
|
2,368 |
|
|
Allocated general and administrative expenses(5) |
|
- |
|
- |
|
30,976 |
|
|
Cash outlays for sustaining capital(6) |
|
19,314 |
|
8,783 |
|
28,097 |
|
|
Cash outlays for leases(6) |
|
1,122 |
|
898 |
|
2,020 |
|
|
All-in sustaining cost |
|
129,781 |
|
64,905 |
|
225,662 |
|
|
Payable gold in concentrate sold(7) |
oz |
135,862 |
|
129,881 |
|
265,743 |
|
|
Cost of sales per ounce of gold sold(8) |
$/oz |
1,027 |
|
806 |
|
919 |
|
|
Cash cost per ounce of gold sold(8) |
$/oz |
796 |
|
416 |
|
610 |
|
|
All-in sustaining cost per ounce of gold sold(8) |
$/oz |
955 |
|
500 |
|
849 |
|
|
$ thousands, unless otherwise indicated For the year ended December
31, 2022 |
|
Chelopech |
Ada Tepe |
Total |
|
Cost of sales(1) |
|
133,929 |
|
102,739 |
|
236,668 |
|
|
Add/(deduct): |
|
|
|
|
|
Depreciation and amortization |
|
(26,132 |
) |
(55,984 |
) |
(82,116 |
) |
|
Treatment charges, transportation and other related selling
costs(2) |
|
111,016 |
|
2,943 |
|
113,959 |
|
|
By-product credits(3) |
|
(110,959 |
) |
(793 |
) |
(111,752 |
) |
|
Mine cash cost of sales |
|
107,854 |
|
48,905 |
|
156,759 |
|
|
Rehabilitation related accretion expenses(4) |
|
1,020 |
|
1,353 |
|
2,373 |
|
|
Allocated general and administrative expenses(5) |
|
- |
|
- |
|
22,940 |
|
|
Cash outlays for sustaining capital(6) |
|
20,285 |
|
10,193 |
|
30,478 |
|
|
Cash outlays for leases(6) |
|
959 |
|
1,185 |
|
2,144 |
|
|
All-in sustaining cost |
|
130,118 |
|
61,636 |
|
214,694 |
|
|
Payable gold in concentrate sold(7) |
oz |
151,580 |
|
91,117 |
|
242,697 |
|
|
Cost of sales per ounce of gold sold(8) |
$/oz |
884 |
|
1,128 |
|
975 |
|
|
Cash cost per ounce of gold sold(8) |
$/oz |
712 |
|
537 |
|
646 |
|
|
All-in sustaining cost per ounce of gold sold(8) |
$/oz |
858 |
|
676 |
|
885 |
|
1) Included in cost of sales were share-based
compensation expenses of $1.8 million (2022 - $1.2 million) in
2023.2) Represents revenue deductions for treatment charges,
refining charges, penalties, freight and final settlements to
adjust for any differences relative to the provisional invoice.3)
Represents copper and silver revenue.4) Included in cost of sales
and finance cost in the consolidated statements of earnings
(loss).5) Represents an allocated portion of DPM’s general and
administrative expenses, including a share-based compensation
expense of $9.0 million (2022 – $3.2 million) in 2023, based on
Chelopech and Ada Tepe’s proportion of total revenue, including
revenue from discontinued operations. Allocated general and
administrative expenses are reflected in consolidated all-in
sustaining cost per ounce of gold sold and are not reflected in the
cost measures for Chelopech and Ada Tepe.6) Included in cash used
in investing activities and financing activities, respectively, in
the consolidated statements of cash flows.7) Includes payable gold
in pyrite concentrate sold in 2023 of 37,732 ounces (2022 – 40,828
ounces).8) Represents cost of sales, mine cash cost of sales and
all-in sustaining cost, respectively, divided by payable gold in
concentrate sold.
The following tables provide a reconciliation of the Company’s
cash cost per tonne of complex concentrate smelted to its cost of
sales from discontinued operations:
|
$ thousands |
|
Fourth Quarter |
|
Full Year |
|
unless otherwise indicated |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
Complex concentrate smelted |
t |
67,891 |
|
41,835 |
|
|
188,803 |
|
174,122 |
|
|
Tsumeb cost of sales |
|
27,874 |
|
25,968 |
|
|
99,047 |
|
120,779 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Depreciation and amortization |
|
(1,490 |
) |
(800 |
) |
|
(4,834 |
) |
(17,023 |
) |
|
Sulphuric acid revenue |
|
(4,679 |
) |
(6,625 |
) |
|
(15,988 |
) |
(23,052 |
) |
|
Smelter cash cost |
|
21,705 |
|
18,543 |
|
|
78,225 |
|
80,704 |
|
|
Cost of sales per tonne of complex concentrate smelted(1) |
$/t |
411 |
|
621 |
|
|
525 |
|
694 |
|
|
Cash cost per tonne of complex concentrate smelted(1) |
$/t |
320 |
|
443 |
|
|
414 |
|
463 |
|
1) Represents cost of sales and smelter cash cost, respectively,
divided by tonnes of complex concentrate smelted.
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 (loss), 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 (loss):
|
$ thousands |
|
Fourth Quarter |
|
Full Year |
|
except per share amounts |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
Continuing Operations: |
|
|
|
|
|
|
|
Net earnings from continuing operations |
|
52,045 |
|
22,062 |
|
181,976 |
|
116,584 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Net gains on derivatives, net of income taxes of $nil |
|
(2,004 |
) |
- |
|
(2,004 |
) |
- |
|
|
Net loss on Sabina special warrants, net of income taxes of
$nil |
|
- |
|
- |
|
- |
|
2,369 |
|
|
Adjusted net earnings from continuing operations |
|
50,041 |
|
22,062 |
|
179,972 |
|
118,953 |
|
|
Basic earnings per share from continuing operations |
$/sh |
0.29 |
|
0.12 |
|
0.98 |
|
0.61 |
|
|
Adjusted basic earnings per share from continuing operations |
$/sh |
0.28 |
|
0.12 |
|
0.97 |
|
0.62 |
|
|
|
|
|
|
|
|
|
|
Discontinued Operations: |
|
|
|
|
|
|
|
Net earnings (loss) from discontinued operations |
|
5,431 |
|
11,258 |
|
10,963 |
|
(80,661 |
) |
|
Add/(deduct): |
|
|
|
|
|
|
|
Tsumeb impairment charges |
|
- |
|
- |
|
- |
|
85,000 |
|
|
Tsumeb restructuring costs |
|
- |
|
- |
|
- |
|
5,735 |
|
|
Adjusted net earnings from discontinued operations |
|
5,431 |
|
11,258 |
|
10,963 |
|
10,074 |
|
|
Basic earnings (loss) per share from discontinued operations |
$/sh |
0.03 |
|
0.06 |
|
0.06 |
|
(0.42 |
) |
|
Adjusted basic earnings per share from discontinued operations |
$/sh |
0.03 |
|
0.06 |
|
0.06 |
|
0.06 |
|
|
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
Net earnings |
|
57,476 |
|
33,320 |
|
192,939 |
|
35,923 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Net gains on derivatives, net of income taxes of $nil |
|
(2,004 |
) |
- |
|
(2,004 |
) |
- |
|
|
Net loss on Sabina special warrants, net of income taxes of
$nil |
|
- |
|
- |
|
- |
|
2,369 |
|
|
Tsumeb impairment charges |
|
- |
|
- |
|
- |
|
85,000 |
|
|
Tsumeb restructuring costs |
|
- |
|
- |
|
- |
|
5,735 |
|
|
Adjusted net earnings |
|
55,472 |
|
33,320 |
|
190,935 |
|
129,027 |
|
|
Basic earnings per share |
$/sh |
0.32 |
|
0.18 |
|
1.04 |
|
0.19 |
|
|
Adjusted basic earnings per share |
$/sh |
0.31 |
|
0.18 |
|
1.03 |
|
0.68 |
|
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 (loss) before income taxes:
|
$ thousands |
Fourth Quarter |
|
Full Year |
|
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
Continuing Operations: |
|
Earnings before income taxes from continuing operations |
58,454 |
|
26,374 |
|
|
205,702 |
|
139,403 |
|
|
Add/(deduct): |
|
|
|
|
|
|
Depreciation and amortization |
20,777 |
|
21,940 |
|
|
84,408 |
|
84,229 |
|
|
Finance costs |
957 |
|
770 |
|
|
3,499 |
|
3,340 |
|
|
Interest income |
(6,171 |
) |
(3,656 |
) |
|
(23,250 |
) |
(6,494 |
) |
|
Net gains on derivatives |
(2,004 |
) |
- |
|
|
(2,004 |
) |
- |
|
|
Net losses on Sabina special warrants |
- |
|
- |
|
|
- |
|
2,369 |
|
|
Adjusted EBITDA from continuing operations |
72,013 |
|
45,428 |
|
|
268,355 |
|
222,847 |
|
|
|
|
|
|
|
|
|
Discontinued Operations: |
|
Earnings (loss) before income taxes from discontinued
operations |
5,431 |
|
11,258 |
|
|
10,963 |
|
(80,661 |
) |
|
Add/(deduct): |
|
|
|
|
|
|
Depreciation and amortization |
1,490 |
|
800 |
|
|
4,834 |
|
17,023 |
|
|
Finance costs |
717 |
|
785 |
|
|
3,089 |
|
2,985 |
|
|
Interest income |
(17 |
) |
(17 |
) |
|
(78 |
) |
(60 |
) |
|
Tsumeb impairment charges |
- |
|
- |
|
|
- |
|
85,000 |
|
|
Tsumeb restructuring costs |
- |
|
- |
|
|
- |
|
5,735 |
|
|
Adjusted EBITDA from discontinued operations |
7,621 |
|
12,826 |
|
|
18,808 |
|
30,022 |
|
|
|
|
|
|
|
|
|
Consolidated: |
|
Earnings before income taxes |
63,885 |
|
37,632 |
|
|
216,665 |
|
58,742 |
|
|
Add/(deduct): |
|
|
|
|
|
|
Depreciation and amortization |
22,267 |
|
22,740 |
|
|
89,242 |
|
101,252 |
|
|
Finance costs |
1,674 |
|
1,555 |
|
|
6,588 |
|
6,325 |
|
|
Interest income |
(6,188 |
) |
(3,673 |
) |
|
(23,328 |
) |
(6,554 |
) |
|
Net gains on derivatives |
(2,004 |
) |
- |
|
|
(2,004 |
) |
- |
|
|
Net losses on Sabina special warrants |
- |
|
- |
|
|
- |
|
2,369 |
|
|
Tsumeb impairment charges |
- |
|
- |
|
|
- |
|
85,000 |
|
|
Tsumeb restructuring costs |
- |
|
- |
|
|
- |
|
5,735 |
|
|
Adjusted EBITDA |
79,634 |
|
58,254 |
|
|
287,163 |
|
252,869 |
|
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 which includes changes in share-based
compensation liabilities, 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 |
Fourth Quarter |
|
Full Year |
|
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
Continuing Operations: |
|
Cash provided from operating activities of continuing
operations |
71,268 |
|
48,527 |
|
|
261,626 |
|
209,589 |
|
|
Add: |
|
|
|
|
|
|
Changes in working capital |
(11,973 |
) |
(5,173 |
) |
|
899 |
|
(18,718 |
) |
|
Cash provided from operating activities of continuing operations,
before changes in working capital |
59,295 |
|
43,354 |
|
|
262,525 |
|
190,871 |
|
|
Cash outlays for sustaining capital(1) |
(8,798 |
) |
(12,095 |
) |
|
(30,192 |
) |
(36,191 |
) |
|
Principal repayments related to leases |
(916 |
) |
(662 |
) |
|
(2,959 |
) |
(2,584 |
) |
|
Interest payments(1) |
(245 |
) |
(558 |
) |
|
(1,459 |
) |
(1,562 |
) |
|
Free cash flow from continuing operations |
49,336 |
|
30,039 |
|
|
227,915 |
|
150,534 |
|
|
|
|
|
|
|
|
|
Discontinued Operations: |
|
Cash provided from operating activities of discontinued
operations |
6,911 |
|
762 |
|
|
14,056 |
|
22,463 |
|
|
Add: |
|
|
|
|
|
|
Changes in working capital |
1,128 |
|
8,237 |
|
|
5,824 |
|
13,861 |
|
|
Cash provided from operating activities of discontinued operations,
before changes in working capital |
8,039 |
|
8,999 |
|
|
19,880 |
|
36,324 |
|
|
Cash outlays for sustaining capital(1) |
(4,834 |
) |
(5,065 |
) |
|
(12,969 |
) |
(17,632 |
) |
|
Principal repayments related to leases |
(681 |
) |
(545 |
) |
|
(2,482 |
) |
(2,036 |
) |
|
Interest payments(1) |
(98 |
) |
(165 |
) |
|
(492 |
) |
(753 |
) |
|
Free cash flow from discontinued operations |
2,426 |
|
3,224 |
|
|
3,937 |
|
15,903 |
|
|
|
|
|
|
|
|
|
Consolidated: |
|
Cash provided from operating activities |
78,179 |
|
49,289 |
|
|
275,682 |
|
232,052 |
|
|
Add: |
|
|
|
|
|
|
Changes in working capital |
(10,845 |
) |
3,064 |
|
|
6,723 |
|
(4,857 |
) |
|
Cash provided from operating activities, before changes in working
capital |
67,334 |
|
52,353 |
|
|
282,405 |
|
227,195 |
|
|
Cash outlays for sustaining capital(1) |
(13,632 |
) |
(17,160 |
) |
|
(43,161 |
) |
(53,823 |
) |
|
Principal repayments related to leases |
(1,597 |
) |
(1,207 |
) |
|
(5,441 |
) |
(4,620 |
) |
|
Interest payments(1) |
(343 |
) |
(723 |
) |
|
(1,951 |
) |
(2,315 |
) |
|
Free cash flow |
51,762 |
|
33,263 |
|
|
231,852 |
|
166,437 |
|
1) Included in cash used in investing and
financing activities, respectively, in the consolidated statements
of cash flows.
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 |
|
Fourth Quarter |
|
Full Year |
|
unless otherwise stated |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
Total revenue |
|
139,339 |
|
112,968 |
|
|
520,091 |
|
433,490 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
Treatment charges and other deductions(1) |
|
28,769 |
|
27,393 |
|
|
106,330 |
|
113,959 |
|
|
Silver revenue |
|
(1,020 |
) |
(446 |
) |
|
(4,459 |
) |
(3,319 |
) |
|
Revenue from gold and copper |
|
167,088 |
|
139,915 |
|
|
621,962 |
|
544,130 |
|
| Revenue from
gold |
|
140,843 |
|
115,341 |
|
|
520,122 |
|
435,657 |
|
| Payable gold
in concentrate sold |
oz |
69,564 |
|
65,831 |
|
|
265,743 |
|
242,697 |
|
| Average
realized gold price per ounce |
$/oz |
2,025 |
|
1,752 |
|
|
1,957 |
|
1,795 |
|
| Revenue from
copper |
|
26,245 |
|
24,574 |
|
|
101,840 |
|
108,473 |
|
| Payable
copper in concentrate sold |
Klbs |
7,009 |
|
6,726 |
|
|
26,651 |
|
27,224 |
|
|
Average realized copper price per pound |
$/lb |
3.74 |
|
3.65 |
|
|
3.82 |
|
3.98 |
|
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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