Dundee Precious Metals Announces 2024 Second Quarter Results; Record Free Cash Flow Generation Driven by Strong All-in Sustaining Cost Performance
TORONTO, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Dundee Precious Metals Inc. (TSX: DPM) ("DPM" or the "Company") announced its operating and financial results for the second quarter and six months ended June 30, 2024.
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.)
- Record free cash flow: Generated $82.4 million of free cash flow1 from continuing operations and $125.8 million of cash provided from operating activities from continuing operations.
- Record adjusted net earnings: Reported adjusted net earnings2 from continuing operations of $70.9 million ($0.39 per share1) and net earnings from continuing operations of $70.9 million ($0.39 per share).
- Continued capital discipline: Returned $32.5 million, or 23% of free cash flow, to shareholders during the first half of 2024 through dividends paid and shares repurchased.
- On track to meet 2024 guidance: With strong production of 67,644 ounces of gold and 7.9 million pounds of copper in the second quarter, and 130,371 ounces of gold and 14.6 million pounds of copper in the first half of 2024, DPM is well-positioned to achieve its annual production guidance.
- Generating robust margins: Reported all-in sustaining cost per ounce of gold sold1 of $710, and cost of sales per ounce of gold sold2 of $1,073. All-in sustaining cost per ounce of gold sold for 2024 is expected to be well within the annual guidance range.
- Substantial liquidity position: Ended the quarter with a strong balance sheet, including a total of $707.5 million of cash from continuing and discontinued operations, a $150.0 million undrawn revolving credit facility, and no debt.
- Advancing growth pipeline: Initiated the Čoka Rakita project pre-feasibility study ("PFS"), following positive results of the preliminary economic assessment ("PEA") announced in May 2024. Exploration activities to pursue additional targets on the Čoka Rakita licence and three additional licences are continuing.
- Tsumeb smelter sale update: In July 2024, all required Chinese regulatory approvals were received, with approval under the Namibia Competition Act still required. Following the smelter’s tolling agent electing to end its tolling agreement with Tsumeb, DPM is currently in discussions with Sinomine Resource Group Co Ltd (“Sinomine”) regarding amendments to the share purchase agreement (“SPA”), including an expected reduction of the cash consideration from $49.0 million to $20.0 million. The parties are also in discussions on a proposed arrangement whereby DPM would agree to step into the role of tolling agent for Tsumeb for a period ending four months following closing of the sale, which is expected in the third quarter of 2024.
______________________
1 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 17 of this news release for more information, including reconciliations to IFRS measures.
2 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.
CEO Commentary
“We generated record free cash flow of $82 million in the second quarter, reflecting our strong operating results, excellent all-in sustaining cost performance and the benefit of higher metal prices improving our already robust margins,” said David Rae, President and Chief Executive Officer.
“We continue to advance Čoka Rakita, our high-grade, low-cost growth project in Serbia. The PFS is on track for completion in Q1 2025, and permitting preparation activities are underway to support commencement of construction in mid-2026. We are also continuing our infill and scout drilling programs, where results have continued to demonstrate the robust nature of the deposit and significant exploration potential of Čoka Rakita and the surrounding licences.
“DPM is in a unique position in the industry, with a strong base of high-margin production driving significant free cash flow generation, and the balance sheet strength to internally fund our growth pipeline and exploration prospects while continuing to return capital to shareholders.”
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 (loss) before interest, taxes, depreciation and amortization (“adjusted EBITDA”)
- adjusted net earnings (loss)
- adjusted basic earnings (loss) 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 18 of this news release.
Key Operating and Financial Highlights
| $ millions, except where noted | Three Months | Six Months | ||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||
| Operating Highlights | ||||||||||||
| Ore Processed | t | 755,543 | 740,936 | 2 | % | 1,456,741 | 1,478,573 | (1 | %) | |||
| Metals contained in concentrate produced: | ||||||||||||
| Gold | ||||||||||||
| Chelopech | oz | 43,734 | 44,463 | (2 | %) | 81,229 | 79,721 | 2 | % | |||
| Ada Tepe | oz | 23,910 | 31,843 | (25 | %) | 49,142 | 65,166 | (25 | %) | |||
| Total gold in concentrate produced | oz | 67,644 | 76,306 | (11 | %) | 130,371 | 144,887 | (10 | %) | |||
| Copper | Klbs | 7,880 | 7,913 | 0 | % | 14,572 | 15,090 | (3 | %) | |||
| Payable metals in concentrate sold: | ||||||||||||
| Gold | ||||||||||||
| Chelopech | oz | 37,849 | 33,853 | 12 | % | 67,417 | 64,926 | 4 | % | |||
| Ada Tepe | oz | 22,974 | 31,212 | (26 | %) | 48,618 | 63,638 | (24 | %) | |||
| Total payable gold in concentrate sold | oz | 60,823 | 65,065 | (7 | %) | 116,035 | 128,564 | (10 | %) | |||
| Copper | Klbs | 6,469 | 6,585 | (2 | %) | 11,926 | 12,943 | (8 | %) | |||
| Cost of sales per tonne of ore processed(1): | ||||||||||||
| Chelopech | $/t | 68 | 62 | 10 | % | 68 | 63 | 8 | % | |||
| Ada Tepe | $/t | 139 | 138 | 1 | % | 143 | 138 | 4 | % | |||
| Cash cost per tonne of ore processed(2): | ||||||||||||
| Chelopech | $/t | 56 | 50 | 12 | % | 55 | 51 | 8 | % | |||
| Ada Tepe | $/t | 71 | 66 | 8 | % | 68 | 66 | 3 | % | |||
| Cost of sales per ounce of gold sold(3) | $/oz | 1,073 | 929 | 16 | % | 1,099 | 951 | 16 | % | |||
| All-in sustaining cost per ounce of gold sold(2) | $/oz | 710 | 733 | (3 | %) | 793 | 802 | (1 | %) | |||
| Financial Highlights | ||||||||||||
| Revenue | 156.8 | 132.5 | 18 | % | 280.6 | 258.9 | 8 | % | ||||
| Cost of sales | 65.2 | 60.4 | 8 | % | 127.5 | 122.3 | 4 | % | ||||
| Earnings (loss) before income taxes(4) | 71.8 | 69.2 | 4 | % | 124.4 | 118.2 | 5 | % | ||||
| From continuing operations | 80.2 | 57.1 | 40 | % | 126.5 | 103.1 | 23 | % | ||||
| From discontinued operations | (8.4 | ) | 12.1 | (170 | %) | (2.1 | ) | 15.1 | (114 | %) | ||
| Net earnings (loss)(4) | 62.5 | 61.7 | 1 | % | 108.2 | 108.3 | 0 | % | ||||
| From continuing operations | 70.9 | 49.6 | 43 | % | 110.3 | 93.2 | 18 | % | ||||
| From discontinued operations | (8.4 | ) | 12.1 | (170 | %) | (2.1 | ) | 15.1 | (114 | %) | ||
| Basic earnings (loss) per share(4) | $/sh | 0.34 | 0.32 | 6 | % | 0.60 | 0.57 | 5 | % | |||
| From continuing operations | $/sh | 0.39 | 0.26 | 50 | % | 0.61 | 0.49 | 24 | % | |||
| From discontinued operations | $/sh | (0.05 | ) | 0.06 | (183 | %) | (0.01 | ) | 0.08 | (113 | %) | |
| Adjusted EBITDA(2),(4) | 89.1 | 86.7 | 3 | % | 155.0 | 155.1 | 0 | % | ||||
| From continuing operations | 93.1 | 73.0 | 28 | % | 147.6 | 136.7 | 8 | % | ||||
| From discontinued operations | (4.0 | ) | 13.7 | (129 | %) | 7.4 | 18.4 | (60 | %) | |||
| Adjusted net earnings (loss)(2),(4) | 64.2 | 62.2 | 3 | % | 105.6 | 108.3 | (3 | %) | ||||
| From continuing operations | 70.9 | 50.1 | 42 | % | 103.4 | 93.2 | 11 | % | ||||
| From discontinued operations | (6.7 | ) | 12.1 | (156 | %) | 2.2 | 15.1 | (85 | %) | |||
| Adjusted net earnings (loss) per share(2),(4) | $/sh | 0.35 | 0.33 | 6 | % | 0.58 | 0.57 | 2 | % | |||
| From continuing operations | $/sh | 0.39 | 0.27 | 44 | % | 0.57 | 0.49 | 16 | % | |||
| From discontinued operations | $/sh | (0.04 | ) | 0.06 | (167 | %) | 0.01 | 0.08 | (88 | %) | ||
| Cash provided from (used in) operating activities(4) | 116.6 | 59.2 | 97 | % | 170.1 | 130.1 | 31 | % | ||||
| From continuing operations | 125.8 | 54.6 | 131 | % | 161.6 | 120.3 | 34 | % | ||||
| From discontinued operations | (9.2 | ) | 4.6 | (301 | %) | 8.5 | 9.8 | (13 | %) | |||
| Free cash flow(2),(4) | 73.9 | 70.4 | 5 | % | 142.1 | 135.5 | 5 | % | ||||
| From continuing operations | 82.4 | 66.4 | 24 | % | 142.5 | 132.5 | 8 | % | ||||
| From discontinued operations | (8.5 | ) | 4.0 | (310 | %) | (0.4 | ) | 3.0 | (114 | %) | ||
| Capital expenditures incurred(5): | ||||||||||||
| Sustaining(6) | 7.9 | 6.1 | 29 | % | 13.6 | 13.4 | 1 | % | ||||
| Growth and other(7) | 3.6 | 6.9 | (48 | %) | 11.9 | 13.3 | (10 | %) | ||||
| Total capital expenditures | 11.5 | 13.0 | (11 | %) | 25.5 | 26.7 | (4 | %) | ||||
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 18 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 second quarter and six months ended June 30, 2024 against 2024 guidance is located on page 13 of this news release.
In the second quarter of 2024, the Company’s mining operations continued to deliver strong results. Gold production at Chelopech and Ada Tepe was in line with expectations, with higher copper grades expected at Chelopech over the balance of the year. Both mines remain on track to achieve their 2024 production and cost guidance.
Highlights include the following:
Chelopech, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of 2024 of 43,734 ounces and 81,229 ounces, respectively, was comparable to the corresponding periods in 2023 due primarily to lower gold grades, largely offset by higher gold recoveries. Copper production in the second quarter and first half of 2024 of 7.9 million pounds and 14.6 million pounds, respectively, were comparable to the corresponding periods in 2023, due primarily to lower copper grades, largely offset by higher copper recoveries.
All-in sustaining cost per ounce of gold sold in the second quarter of 2024 was $531 compared to $776 in the corresponding period in 2023 due primarily to higher by-product credits reflecting higher realized copper prices, lower treatment charges, higher volumes of gold sold and lower prices for power, partially offset by higher labour costs, higher freight charges and the timing of maintenance activities, as well as lower cash outlays for sustaining capital expenditures.
All-in sustaining cost per ounce of gold sold in the first half of 2024 was $670 compared to $851 in the corresponding period in 2023 due primarily to lower treatment charges as a result of DPM having secured more favourable commercial terms for the year under the current tight market for copper concentrates, higher volumes of gold sold and lower prices for power, partially offset by higher labour costs and higher freight charges as a result of the disruptions in key sea routes due to the Middle East conflicts, as well as lower cash outlays for sustaining capital expenditures.
Ada Tepe, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of 2024 of 23,910 ounces and 49,142 ounces, respectively, was in each case 25% lower than the corresponding periods in 2023 due primarily to mining lower-grade zones, in line with the mine plan.
All-in sustaining cost per ounce of gold sold in the second quarter and first half of 2024 of $699 and $638, respectively, was 32% and 26% higher than the corresponding periods in 2023 due primarily to lower volumes of gold sold.
Consolidated Operating Highlights
Production: Gold contained in concentrate produced in the second quarter and first half of 2024 of 67,644 ounces and 130,371 ounces, respectively, was 11% and 10% lower than the corresponding periods in 2023 due primarily to mining in lower grade zones at Ada Tepe and Chelopech, partially offset by higher gold recoveries at Chelopech, in line with the mine plans for both operations.
Copper production in the second quarter and first half of 2024 of 7.9 million pounds and 14.6 million pounds, respectively, were comparable to the corresponding periods in 2023, due primarily to lower copper grades, largely offset by higher copper recoveries.
Deliveries: Payable gold in concentrate sold in the second quarter and first half of 2024 of 60,823 ounces and 116,035 ounces, respectively, was 7% and 10% lower than the corresponding periods in 2023 primarily reflecting lower gold production, partially offset by the timing of deliveries.
Payable copper in concentrate sold in the second quarter of 2024 of 6.5 million pounds was comparable to the corresponding period in 2023, consistent with copper production. Payable copper in the first half of 2024 of 11.9 million pounds was 8% lower than the corresponding period in 2023, due primarily to the timing of deliveries and lower copper production in the first quarter of 2024.
Cost measures: Cost of sales in the second quarter and first half of 2024 of $65.2 million and $127.5 million, respectively, increased compared to $60.4 million and $122.3 million in the corresponding periods in 2023 due primarily to higher depreciation expenses, higher labour costs and the timing of maintenance activities, partially offset by lower prices for power.
All-in sustaining cost per ounce of gold sold in the second quarter of 2024 of $710 was 3% lower than the corresponding period in 2023 due primarily to higher by-product credits as a result of higher realized copper prices, lower treatment charges at Chelopech and lower cash outlays for sustaining capital expenditures, partially offset by lower volumes of gold sold, higher share-based compensation expenses reflecting DPM’s strong share price performance, higher labour costs, higher freight charges and the timing of maintenance activities.
All-in sustaining cost per ounce of gold sold in the first half of 2024 of $793 was comparable to the corresponding period in 2023 due primarily to lower treatment charges at Chelopech, lower cash outlays for sustaining capital expenditures and lower prices for power, largely offset by lower volumes of gold sold, higher freight charges, higher labour costs and the timing of maintenance activities.
Capital expenditures: Capital expenditures incurred in the second quarter and first half of 2024 were $11.5 million and $25.5 million, respectively, compared to the corresponding periods in 2023 of $13.0 million and $26.7 million.
Sustaining capital expenditures incurred in the second quarter and first half of 2024 were $7.9 million and $13.6 million, respectively, compared to the corresponding periods in 2023 of $6.1 million and $13.4 million, due primarily to the timing of expenditures.
Growth and other capital expenditures incurred during the second quarter and first half of 2024, primarily related to the Loma Larga gold project, were $3.6 million and $11.9 million, respectively, compared to $6.9 million and $13.3 million in the corresponding periods in 2023, due primarily to lower expenditures related to the Loma Larga gold project as expected. Growth and other capital expenditures in the first half of 2024 also included a $4.0 million expenditure for the electric mobile equipment received in the first quarter of 2024 related to the Company’s ESG initiatives.
Consolidated Financial Highlights
Financial results in the second quarter of 2024 reported record free cash flow generation, reflecting higher realized metal prices combined with the Company’s strong all-in sustaining cost performance, partially offset by lower volumes of metals sold and higher planned exploration and evaluation expenses.
Revenue: Revenue in the second quarter of 2024 of $156.8 million was 18% higher than the corresponding period in 2023, due primarily to higher realized prices of metals sold, partially offset by lower volumes of gold sold at Ada Tepe. Revenue in the first half of 2024 of $280.6 million was 8% higher than the corresponding period in 2023, due primarily to higher realized prices of metals sold and lower treatment charges at Chelopech, partially offset by lower volumes of gold sold at Ada Tepe.
Net earnings: Net earnings from continuing operations in the second quarter and first half of 2024 of $70.9 million ($0.39 per share) and $110.3 million ($0.61 per share), respectively, increased compared to $49.6 million ($0.26 per share) and $93.2 million ($0.49 per share) in the corresponding periods in 2023 due primarily to higher revenue and higher interest income, partially offset by higher planned exploration and evaluation expenses and higher income taxes.
Adjusted net earnings: Adjusted net earnings from continuing operations in the second quarter and first half of 2024 of $70.9 million ($0.39 per share) and $103.4 million ($0.57 per share), respectively, increased compared to $50.1 million ($0.27 per share) and $93.2 million ($0.49 per share) in the corresponding periods in 2023 due primarily to the same factors affecting net earnings, with the exception of adjusting items primarily related to the net termination fee received from Osino Resources Corp. (“Osino”).
Earnings before income taxes: Earnings before income taxes from continuing operations in the second quarter and first half of 2024 of $80.2 million and $126.5 million, respectively, increased compared to $57.1 million and $103.1 million in the corresponding periods in 2023, 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 second quarter and first half of 2024 was $93.1 million and $147.6 million, respectively, compared to $73.0 million and $136.7 million in the corresponding periods in 2023, 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 second quarter and first half of 2024 of $125.8 million and $161.6 million, respectively, was $71.2 million and $41.3 million higher than the corresponding periods in 2023 due primarily to higher adjusted EBITDA from continuing operations generated in the periods, as well as the timing of deliveries and subsequent receipt of cash combined with the timing of payments to suppliers.
Free cash flow: Free cash flow from continuing operations in the second quarter and first half of 2024 of $82.4 million and $142.5 million, respectively, was $16.0 million and $10.0 million higher than the corresponding periods in 2023 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.
Tsumeb Smelter Sale Update
On March 7, 2024, DPM announced that it had entered into a definitive SPA with a subsidiary of Sinomine for the sale of its 98% interest in the Tsumeb smelter for a cash consideration of $49.0 million, on a debt-free and cash-free basis, subject to normal working capital adjustments following closing (the “Tsumeb Disposition”). In addition, pursuant to the SPA, DPM is entitled to be paid all cash collected from IXM S.A. (“IXM”) with respect to the outstanding metal recoverable at Tsumeb, estimated to be $14.1 million as at June 30, 2024. The Tsumeb Disposition is subject to customary closing conditions, including approval under the Namibia Competition Act and approvals required from Chinese regulatory authorities for overseas investments. In July 2024, all Chinese regulatory approvals were received. The transaction is expected to close in the third quarter of 2024.
As a result of Tsumeb's pending change of control, IXM elected to terminate the existing tolling agreement it had with Tsumeb (the "IXM Tolling Agreement"). Under the IXM Tolling Agreement, the cash value of all unprocessed concentrates and secondary materials became due and payable on July 31, 2024, however, both IXM and the Company have agreed to extend this period to August 9, 2024 in the interim, with a final settlement expected on August 29, 2024 (the “IXM Extension Date”). On the IXM Extension Date, Tsumeb will be required to purchase all unprocessed concentrates and secondary materials owed by Tsumeb to IXM estimated to be approximately $80 million, which amount could vary depending on, among other things, volumes of inventory, payable metals contained in the inventory and market metal prices at the time of the purchase. In addition, IXM is required to pay Tsumeb in cash for the estimated metal recoverable.
DPM and Sinomine are currently discussing amendments to the SPA whereby the consent of IXM for the change of control of Tsumeb will be removed from the closing conditions of the transaction and the cash consideration payable for the sale of the Tsumeb Smelter to Sinomine is expected to be reduced from $49.0 million to $20.0 million. In addition, the parties are discussing a proposed arrangement pursuant to which DPM would agree to step into IXM's position as a tolling agent and enter into a new tolling agreement with Tsumeb (the "DPM Tolling Agreement") on substantially the same commercial terms as the IXM Tolling Agreement, for a period starting from the IXM Extension Date and ending four months following closing of the sale (the “Financing Period”). It is proposed that on the IXM Extension Date, DPM would purchase the above estimated $80 million of inventory from Tsumeb and during the Financing Period, DPM would purchase new-metal bearing materials and sell the copper blister produced by Tsumeb until the end of the DPM Tolling Agreement, at which time Sinomine would pay DPM for all inventories owed by the smelter to DPM. Discussions are ongoing between the parties with respect to the foregoing proposed arrangements which will be subject to definitive documentation.
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 June 30, 2024 and December 31, 2023, and the operating results and cash flows of Tsumeb have been presented as discontinued operations in the condensed interim consolidated statements of earnings (loss) and cash flows for the three and six months ended June 30, 2024 and 2023. As a consequence, certain comparative figures in the condensed interim consolidated statements of earnings (loss) and cash flows have been reclassified to conform with current year presentation.
Complex concentrate smelted in the second quarter and first half of 2024 of 52,858 tonnes and 107,631 tonnes, respectively, was 3,375 tonnes and 8,501 tonnes higher than the corresponding periods in 2023 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 second quarter of 2024 of $375 was $32 higher than the corresponding period in 2023 due primarily to higher operating expenses reflecting higher labour costs, direct materials and transportation, partially offset by higher volumes of complex concentrate smelted reflecting improved operating performance following the Ausmelt furnace maintenance shutdown and higher sulphuric acid by-product credits. Cash cost per tonne of complex concentrate smelted in the first half of 2024 of $352 was $16 lower than the corresponding period in 2023 due primarily to higher volumes of complex concentrate smelted and higher sulphuric acid by-product credits, partially offset by higher operating expenses.
Balance Sheet Strength and Financial Flexibility
The Company continues to maintain a strong financial position, with a growing cash position, no debt and an undrawn $150 million revolving credit facility.
Cash and cash equivalents of continuing operations increased by $106.4 million to $701.7 million in the first half of 2024 due primarily to earnings generated during the period. Cash and cash equivalents of discontinued operations increased by $4.0 million to $5.8 million in the first half of 2024 due primarily to a $9.0 million cash settlement with IXM on the estimated metal recoverable, partially offset by the loss generated in the period.
Return of Capital to Shareholders
In line with its disciplined capital allocation framework, DPM continues to return excess capital to shareholders, which currently includes a sustainable quarterly dividend and periodic share repurchases under its Normal Course Issuer Bid ("NCIB").
During the first half of 2024, the Company returned a total of $32.5 million to shareholders through dividends paid of $14.5 million, as well as payments for shares repurchased of $18.0 million following the renewal of the NCIB in late March.
Share Repurchases
The Company renewed its NCIB effective March 18, 2024, pursuant to which the Company is able to purchase up to 15,500,000 common shares representing approximately 9.8% of the public float as at March 6, 2024, over a period of twelve months commencing March 18, 2024 and terminating on March 17, 2025.
During the six months ended June 30, 2024, the Company purchased a total of 2,327,011 shares with a total cost of $18.4 million at an average price per share of $7.90 (Cdn$10.80).
The actual timing and number of common shares that may be purchased under the NCIB will be undertaken in accordance with DPM’s capital allocation framework, having regard for such things as DPM’s financial position, business outlook and ongoing capital requirements, as well as its share price and overall market conditions. The Company continually reviews its capital allocation strategy of balancing between the capital required for its growth projects and return of capital to shareholders.
Quarterly Dividend
On August 1, 2024, the Company declared a dividend of $0.04 per common share payable on October 15, 2024 to shareholders of record on September 30, 2024.
Development Projects Update
Čoka Rakita, Serbia
DPM continues to focus on advancing the high-quality Čoka Rakita project, which has rapidly progressed since the announcement of the initial discovery in January 2023. On May 1, 2024, DPM announced the positive results of the PEA, which outlined a highly-attractive organic growth project with robust economics, meaningful production and attractive costs. Based on the positive PEA results, DPM will continue to advance the project. A PFS was initiated in April, and is expected to be completed by the first quarter of 2025.
Permitting preparation activities are underway with a detailed timeline to support commencement of construction in mid-2026, with good support and engagement from key regional and national authorities. The Company initiated preparations related to the environmental impact assessment (“EIA”), including monitoring for baseline studies for surface water, ground water, air quality and biodiversity, and plans to initiate soil monitoring and a social study. The EIA is expected to be submitted in the first quarter of 2026.
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.
Loma Larga, Ecuador
At the Loma Larga gold project in Ecuador, the Company continued to progress activities related to permitting and stakeholder relations. The Company continues to support the government in fulfilling the requirements of the August 2023 ruling by the Provincial Court of Azuay in connection with the Constitutional Protective Action that was filed in 2022.
In line with this ruling, the Government of Ecuador commenced the environmental consultation process for the Loma Larga gold project in the first quarter of 2024. The information phase of the environmental consultation process was successfully completed in April 2024. While legislation establishing the process for the free, prior and informed consultation has not been finalized by Congress, the Ministry of Energy and Mines ("Ministry") has outlined an interim procedure, which will be used for the Loma Larga gold project, and DPM is working with the Ministry to initiate this process. The baseline ecosystem and water studies are currently in progress.
The Company maintains a constructive relationship with government institutions and other stakeholders involved with the development of the project.
Exploration
Čoka Rakita, Serbia
Exploration activities in Serbia continued to focus on an accelerated drilling program at the Čoka Rakita licence, including infill, geotechnical and hydro-geological drilling, as well as scout drilling at the Rakita South, Dumitru Potok and Frasen targets, with 43,390 metres completed during the second quarter of 2024.
Results from the ongoing infill drilling program at Čoka Rakita continue to confirm continuity of the mineralization and to deliver high-grade intercepts, with 11,913 metres of drilling completed during the quarter.
Scout drilling continued with 9,129 metres completed during the quarter.
At the Dumitru Potok and Frasen exploration targets, which are located to the north of Čoka Rakita, scout holes have confirmed the conceptual targeting model, and have consistently exhibited the presence of skarn alteration and mineralization within more reactive lithological units.
On the Potaj Čuka and Pešter Jug exploration licences, multiple targets have been defined and drilling has commenced on the Potaj Čuka licence during the quarter. A drilling campaign at the Umka exploration licence focused on testing for manto-like copper-gold skarn targets commenced in April, completing 2,661 metres during the second quarter.
Tierras Coloradas, Ecuador
At the Tierras Coloradas licence, the drilling campaign was completed in the second quarter with a total of 11,700 metres executed to date. The primary focus of the program, which commenced in 2023, was to further assess the extension and geometry of the Aparecida and La Tuna vein systems and to test other additional porphyry and epithermal targets.
DPM will evaluate the results of the current drilling campaign to determine the next stage of exploration. In the interim, additional mapping and rock sampling aimed at delineating additional drilling targets is ongoing.
Chelopech, Bulgaria
DPM continues to focus on extending Chelopech's mine life through its successful in-mine exploration program and an aggressive brownfield exploration program.
During the second quarter of 2024, brownfield exploration activities at Chelopech were focused on evaluating the current geological model and planning underground and surface positions within the mine concession. A 25-metre by 25-metre drilling grid was designed to evaluate the extensions of already known mineralization, and to confirm several historical high-grade intercepts at the Sharlo Dere prospect. Diamond core drilling commenced in late May resulting in a total of 2,537 metres during the quarter.
Based on internal technical reviews, DPM now plans to defer the inclusion of the Sharlo Dere prospect within the annual Mineral Resource and Mineral Reserve update for Chelopech. The prospect will be reassessed subsequent to the current phase of drilling.
The Company successfully completed the defence of the Geological Report for the Brevene exploration licence at the end of June 2024. DPM expects to obtain the Geological Discovery certificate in the fourth quarter of 2024, which provides a one-year extension of the exploration rights for the Brevene licence to complete additional work aiming for Commercial Discovery.
Ada Tepe, Bulgaria
During the second quarter of 2024, exploration activities at the Ada Tepe camp were focused on target delineation at the Krumovitsa exploration licence, including systematic geological mapping, geophysical survey, stream sediments, soil and rock sampling, scout drilling and 3D modelling and interpretation.
Scout drilling at the Podrumche and Kandilka prospects commenced at the end of March and is ongoing, with a total of 3,117 meters of drilling completed to date. Permitting for the next phase of drilling sites is in process and is expected to be completed in the third quarter of 2024.
During the second quarter, soil and stream sediments sampling campaigns were completed. The assay results received from several streams in the southern-most area of the Krumovitsa licence outlined distinctive anomalies in gold, reaching up to 1.45 g/t. Results from the soil sampling program at the Hrastovo prospect also contoured gold anomalies reaching up to 0.45 g/t.
On the Chiirite exploration licence, several mapping routes accompanied by rock chip sampling were completed in the northeastern area of the licence. A zone of hydrothermal alteration was followed up for over 1 kilometre along strike where grab samples returned up to 24 g/t Au. Permitting at the Kara Tepe prospect is ongoing and drilling is planned to start in the third quarter of 2024, focused on skarn/carbonate replacement gold targets.
2024 Guidance and Three-year Outlook
With solid operating performance from the Chelopech and Ada Tepe mines in the first half of 2024, DPM is on track to meet its 2024 guidance for both mining operations, including expected gold production of 245,000 to 285,000 ounces, copper production of 29 to 34 million pounds, and an all-in sustaining cost of $790 to $930 per ounce of gold sold.
For additional information regarding the Company's detailed guidance for 2024 and current three-year outlook, please refer to the “Three-Year Outlook” section of the MD&A.
Selected Production, Delivery and Cost Performance versus Guidance
| Q2 2024 | YTD June 2024 | 2024 Consolidated Guidance | ||||||||
| Chelopech | Ada Tepe | Tsumeb | Consolidated | Chelopech | Ada Tepe | Tsumeb | Consolidated | |||
| Ore processed | Kt | 559.0 | 196.5 | – | 755.5 | 1,080.1 | 376.6 | – | 1,456.7 | 2,800 – 3,000 |
| Metals contained in concentrate produced | ||||||||||
| Gold | Koz | 43.7 | 23.9 | – | 67.6 | 81.2 | 49.1 | – | 130.3 | 245 – 285 |
| Copper | Mlbs | 7.9 | – | – | 7.9 | 14.6 | – | – | 14.6 | 29 – 34 |
| Payable metals in concentrate sold | ||||||||||
| Gold | Koz | 37.8 | 23.0 | – | 60.8 | 67.4 | 48.6 | – | 116.0 | 210 – 245 |
| Copper | Mlbs | 6.5 | – | – | 6.5 | 11.9 | – | – | 11.9 | 23 – 27 |
| All-in sustaining cost per ounce of gold sold | $/oz | 531 | 699 | – | 710 | 670 | 638 | – | 793 | 790 –930 |
| Complex concentrate smelted(1) | Kt | – | – | 52.9 | 52.9 | – | – | 107.6 | 107.6 | 200 – 230 |
| Cash cost per tonne of complex concentrate smelted(1) | $/t | – | – | 375 | 375 | – | – | 352 | 352 | 310 – 360 |
1) Related to discontinued operations.
Second Quarter 2024 Results Conference Call and Webcast
At 9 a.m. EDT on Friday, August 2, 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 | Friday, August 2, 2024 9 a.m. EDT |
| Call registration | https://register.vevent.com/register/BI402a5a6075e34d7fb9d6c79f79329cd9 |
| Webcast link | https://edge.media-server.com/mmc/p/osjb3oe7 |
| Replay | Archive will be available on www.dundeeprecious.com |
This news release and DPM’s unaudited condensed interim financial statements and MD&A for the three and six months ended June 30, 2024 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), Director, Corporate Technical Services, 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: forecasted results of production in 2024 and the ability of the Company to meet previously provided guidance in respect thereof; the completion of the Tsumeb Disposition and the anticipated timing thereof, including the negotiation and entering into of arrangements necessary to complete the transaction as result of the termination of the IXM Tolling Agreement, and the receipt of all necessary approvals in connection therewith; payments of dividends and repurchases of shares pursuant to NCIB, including the number of shares that may be repurchased thereunder; expected cash flows; the price of gold, copper, silver and sulphuric acid; 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; results of economic studies; the intention to complete the PFS in respect of the Čoka Rakita project and the anticipated timing thereof; anticipated steps in the continued development of the Čoka Rakita project, including exploration, permitting activities, and environmental assessments, the timing for completion and anticipated results thereof; the development of the Loma Larga gold project, including the timing for completion and possible outcome of the environmental consultation process in respect thereof; potential legislative initiatives and changes that may affect the Company’s operating and development projects; exploration activities at the Company’s operating and development properties and the anticipated results thereof; permitting requirements, the ability of the Company to obtain such permits, and the anticipated timing thereof; and statements under the heading “2024 Guidance and Three-year Outlook”.
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; risks arising from the current inflationary environment and the impact on operating costs and other financial metrics, including risks of recession; 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; risks arising from counterparties being unable to or unwilling to fulfill their contractual obligations to the Company; the speculative nature of mineral exploration, development and production, including changes in mineral production performance, exploitation and exploration results; the Company’s dependence on its operations at the Chelopech mine and Ada Tepe mine; possible inaccurate estimates relating to future production, operating costs and other costs for operations; possible variations in ore grade and recovery rates; inherent uncertainties in respect of conclusions of economic evaluations, economic studies and mine plans; uncertainties with respect to the timing of the PFS and the EIA; the Company’s dependence on continually developing, replacing and expanding its mineral reserves; the ability of the Company to complete the proposed Tsumeb Disposition, including there being no assurance that the parties will successfully negotiate and enter into definitive arrangements necessary to complete the transaction as a result of the termination of the IXM Tolling Agreement, and the ability of the parties to obtain all necessary regulatory approvals, certain of which may be outside of the control of DPM, and the anticipated timing thereof; uncertainties and risks inherent to developing and commissioning new mines into production, which may be subject to unforeseen delays; risks related to the possibility that future exploration results will not be consistent with the Company’s expectations, that quantities or grades of reserves will be diminished, and that resources may not be converted to reserves; risks associated with the fact that certain of the Company's initiatives are still in the early stages and may not materialize; changes in project parameters, including schedule and budget, as plans continue to be refined; risks related to the financial results of operations, changes in interest rates, and the Company's ability to finance its operations; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; 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; accidents, labour disputes and other risks inherent to the mining industry; failure to achieve certain cost savings or the potential benefits of any upgrades and/or expansion; risks related to the Company's ability to manage environmental and social matters, including risks and obligations related to closure of the Company's mining properties; risks related to climate change, including extreme weather events, resource shortages, emerging policies and increased regulations relating to related to greenhouse gas emission levels, energy efficiency and reporting of risks; land reclamation and mine closure requirements, and costs associated therewith; the Company's controls over financial reporting and obligations as a public company; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; opposition by social and non-governmental organizations to mining projects and smelting operations; uncertainties with respect to realizing the anticipated benefits from the development of the Loma Larga or Čoka Rakita projects; cyber-attacks and other cybersecurity risks; competition in the mining industry; exercising judgment when undertaking impairment assessments; claims or litigation; limitations on insurance coverage; changes in values of the Company's investment portfolio; changes in laws and regulations, including with respect to taxes, and the Company's ability to successfully obtain all necessary permits and other approvals required to conduct its operations; employee relations, including unionized and non-union employees, and the Company's ability to retain key personnel and attract other highly skilled employees; effects of changing tax laws in several jurisdictions; ability to successfully integrate acquisitions or complete divestitures; unanticipated title disputes; volatility in the price of the common shares of the Company; potential dilution to the common shares of the Company; damage to the Company’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the Company’s handling of environmental matters or dealings with community groups, whether true or not; risks related to holding assets in foreign jurisdictions; conflicts of interest between the Company and its directors and officers; the timing and amounts of dividends; there being no assurance that the Company will purchase additional common shares of the Company under the NCIB 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 | Three Months | Six Months | ||||||||
| unless otherwise indicated | 2024 | 2023 | 2024 | 2023 | ||||||
| Chelopech | ||||||||||
| Ore processed | t | 559,026 | 550,888 | 1,080,150 | 1,097,018 | |||||
| Cost of sales | 37,950 | 34,192 | 73,743 | 69,504 | ||||||
| Add/(deduct): | ||||||||||
| Depreciation and amortization | (7,962 | ) | (6,655 | ) | (15,654 | ) | (13,268 | ) | ||
| Change in concentrate inventory | 1,119 | 55 | 1,510 | (716 | ) | |||||
| Mine cash cost(1) | 31,107 | 27,592 | 59,599 | 55,520 | ||||||
| Cost of sales per tonne of ore processed(2) | $/t | 68 | 62 | 68 | 63 | |||||
| Cash cost per tonne of ore processed(2) | $/t | 56 | 50 | 55 | 51 | |||||
| Ada Tepe | ||||||||||
| Ore processed | t | 196,517 | 190,048 | 376,591 | 381,555 | |||||
| Cost of sales | 27,286 | 26,243 | 53,722 | 52,801 | ||||||
| Add/(deduct): | ||||||||||
| Depreciation and amortization | (13,596 | ) | (13,648 | ) | (28,051 | ) | (27,540 | ) | ||
| Change in concentrate inventory | 284 | (19 | ) | (4 | ) | (99 | ) | |||
| Mine cash cost(1) | 13,974 | 12,576 | 25,667 | 25,162 | ||||||
| Cost of sales per tonne of ore processed(2) | $/t | 139 | 138 | 143 | 138 | |||||
| Cash cost per tonne of ore processed(2) | $/t | 71 | 66 | 68 | 66 | |||||
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 three months ended June 30, 2024 | Chelopech | Ada Tepe | Total | ||||
| Cost of sales(1) | 37,950 | 27,286 | 65,236 | ||||
| Add/(deduct): | |||||||
| Depreciation and amortization | (7,962 | ) | (13,596 | ) | (21,558 | ) | |
| Treatment charges, transportation and other related selling costs(2) | 17,904 | 272 | 18,176 | ||||
| By-product credits(3) | (30,574 | ) | (305 | ) | (30,879 | ) | |
| Mine cash cost of sales | 17,318 | 13,657 | 30,975 | ||||
| Rehabilitation related accretion and depreciation expenses(4) | 65 | 319 | 384 | ||||
| Allocated general and administrative expenses(5) | - | - | 7,060 | ||||
| Cash outlays for sustaining capital expenditures(6) | 2,559 | 1,920 | 4,479 | ||||
| Cash outlays for leases(6) | 143 | 170 | 313 | ||||
| All-in sustaining cost | 20,085 | 16,066 | 43,211 | ||||
| Payable gold in concentrate sold(7) | oz | 37,849 | 22,974 | 60,823 | |||
| Cost of sales per ounce of gold sold(8) | $/oz | 1,003 | 1,188 | 1,073 | |||
| Cash cost per ounce of gold sold(8) | $/oz | 458 | 594 | 509 | |||
| All-in sustaining cost per ounce of gold sold(8) | $/oz | 531 | 699 | 710 | |||
| $ thousands, unless otherwise indicated For the three months ended June 30, 2023 | Chelopech | Ada Tepe | Total | ||||
| Cost of sales(1) | 34,192 | 26,243 | 60,435 | ||||
| Add/(deduct): | |||||||
| Depreciation and amortization | (6,655 | ) | (13,648 | ) | (20,303 | ) | |
| Treatment charges, transportation and other related selling costs(2) | 19,649 | 1,490 | 21,139 | ||||
| By-product credits(3) | (25,754 | ) | (306 | ) | (26,060 | ) | |
| Mine cash cost of sales | 21,432 | 13,779 | 35,211 | ||||
| Rehabilitation related accretion expenses(4) | 315 | 293 | 608 | ||||
| Allocated general and administrative expenses(5) | - | - | 4,890 | ||||
| Cash outlays for sustaining capital expenditures(6) | 4,251 | 2,210 | 6,461 | ||||
| Cash outlays for leases(6) | 282 | 267 | 549 | ||||
| All-in sustaining cost | 26,280 | 16,549 | 47,719 | ||||
| Payable gold in concentrate sold(7) | oz | 33,853 | 31,212 | 65,065 | |||
| Cost of sales per ounce of gold sold(8) | $/oz | 1,010 | 841 | 929 | |||
| Cash cost per ounce of gold sold(8) | $/oz | 633 | 441 | 541 | |||
| All-in sustaining cost per ounce of gold sold(8) | $/oz | 776 | 530 | 733 | |||
1) Included in cost of sales were share-based compensation expense of $0.4 million (2023 – $0.1 million) in the second quarter of 2024.
2) Represent revenue deductions for treatment charges, refining charges, penalties, freight and final settlements to adjust for any differences relative to the provisional invoice.
3) Represent copper and silver revenue.
4) Included in cost of sales and finance cost in the condensed interim consolidated statements of earnings (loss).
5) Represent an allocated portion of DPM’s general and administrative expenses, including a share-based compensation expense of $2.4 million (2023 –reversal of $0.3 million) for the second quarter of 2024, 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 condensed interim consolidated statements of cash flows.
7) Includes payable gold in pyrite concentrate sold in the second quarter of 2024 of 10,052 ounces (2023 – 8,454 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 six months ended June 30, 2024 | Chelopech | Ada Tepe | Total | ||||
| Cost of sales(1) | 73,743 | 53,722 | 127,465 | ||||
| Add/(deduct): | |||||||
| Depreciation and amortization | (15,654 | ) | (28,051 | ) | (43,705 | ) | |
| Treatment charges, transportation and other related selling costs(2) | 33,360 | 961 | 34,321 | ||||
| By-product credits(3) | (52,774 | ) | (583 | ) | (53,357 | ) | |
| Mine cash cost of sales | 38,675 | 26,049 | 64,724 | ||||
| Rehabilitation related accretion and depreciation expenses(4) | 149 | 673 | 822 | ||||
| Allocated general and administrative expenses(5) | - | - | 15,764 | ||||
| Cash outlays for sustaining capital expenditures(6) | 6,024 | 3,967 | 9,991 | ||||
| Cash outlays for leases(6) | 340 | 338 | 678 | ||||
| All-in sustaining cost | 45,188 | 31,027 | 91,979 | ||||
| Payable gold in concentrate sold(7) | oz | 67,417 | 48,618 | 116,035 | |||
| Cost of sales per ounce of gold sold(8) | $/oz | 1,094 | 1,105 | 1,099 | |||
| Cash cost per ounce of gold sold(8) | $/oz | 574 | 536 | 558 | |||
| All-in sustaining cost per ounce of gold sold(8) | $/oz | 670 | 638 | 793 | |||
| $ thousands, unless otherwise indicated For the six months ended June 30, 2023 | Chelopech | Ada Tepe | Total | ||||
| Cost of sales(1) | 69,504 | 52,801 | 122,305 | ||||
| Add/(deduct): | |||||||
| Depreciation and amortization | (13,268 | ) | (27,540 | ) | (40,808 | ) | |
| Treatment charges, transportation and other related selling costs(2) | 40,925 | 2,566 | 43,491 | ||||
| By-product credits(3) | (52,350 | ) | (628 | ) | (52,978 | ) | |
| Mine cash cost of sales | 44,811 | 27,199 | 72,010 | ||||
| Rehabilitation related accretion expenses(4) | 620 | 597 | 1,217 | ||||
| Allocated general and administrative expenses(5) | - | - | 15,560 | ||||
| Cash outlays for sustaining capital expenditures(6) | 9,243 | 3,966 | 13,209 | ||||
| Cash outlays for leases(6) | 555 | 556 | 1,111 | ||||
| All-in sustaining cost | 55,229 | 32,318 | 103,107 | ||||
| Payable gold in concentrate sold(7) | oz | 64,926 | 63,638 | 128,564 | |||
| Cost of sales per ounce of gold sold(8) | $/oz | 1,071 | 830 | 951 | |||
| Cash cost per ounce of gold sold(8) | $/oz | 690 | 427 | 560 | |||
| All-in sustaining cost per ounce of gold sold(8) | $/oz | 851 | 508 | 802 | |||
1) Included in cost of sales were share-based compensation expenses of $0.8 million (2023 - $1.1 million)in the first half of 2024.
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 condensed interim consolidated statements of earnings (loss).
5) Represents an allocated portion of DPM’s general and administrative expenses, including a share-based compensation expense of $5.6 million 2023 – $6.3 million) in the first half of 2024, 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 condensed interim consolidated statements of cash flows.
7) Includes payable gold in pyrite concentrate sold in 2024 of 17,520 ounces (2023 – 17,426 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, unless otherwise indicated | Three Months | Six Months | ||||||||
| Ended June 30, | 2024 | 2023 | 2024 | 2023 | ||||||
| Complex concentrate smelted | t | 52,858 | 49,483 | 107,631 | 99,130 | |||||
| Tsumeb cost of sales | 27,203 | 22,465 | 53,027 | 48,056 | ||||||
| Deduct: | ||||||||||
| Depreciation and amortization | (2,006 | ) | (846 | ) | (3,683 | ) | (1,699 | ) | ||
| Sulphuric acid revenue | (5,351 | ) | (4,648 | ) | (11,462 | ) | (9,905 | ) | ||
| Smelter cash cost | 19,846 | 16,971 | 37,882 | 36,452 | ||||||
| Cost of sales per tonne of complex concentrate smelted(1) | $/t | 515 | 454 | 493 | 485 | |||||
| Cash cost per tonne of complex concentrate smelted(1) | $/t | 375 | 343 | 352 | 368 | |||||
1) Represents cost of sales and smelter cash cost, respectively, divided by tonnes of complex concentrate smelted.
Adjusted net earnings (loss) and adjusted basic earnings (loss) per share
Adjusted net earnings (loss) is a non-GAAP financial measure and adjusted basic earnings (loss) 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 (loss) 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 (loss) to net earnings (loss):
| $ thousands, except per share amounts | Three Months | Six Months | ||||||
| Ended June 30, | 2024 | 2023 | 2024 | 2023 | ||||
| Continuing Operations: | ||||||||
| Net earnings from continuing operations | 70,849 | 49,665 | 110,275 | 93,238 | ||||
| Add/(deduct): | ||||||||
| Net termination fee received from Osino, net of income taxes of $nil | - | - | (6,901 | ) | - | |||
| Deferred tax recovery adjustments not related to current period earnings | - | 464 | - | - | ||||
| Adjusted net earnings from continuing operations | 70,849 | 50,129 | 103,374 | 93,238 | ||||
| Basic earnings per share from continuing operations | $/sh | 0.39 | 0.26 | 0.61 | 0.49 | |||
| Adjusted basic earnings per share from continuing operations | $/sh | 0.39 | 0.27 | 0.57 | 0.49 | |||
| Discontinued Operations: | ||||||||
| Net earnings (loss) from discontinued operations | (8,434 | ) | 12,071 | (2,120 | ) | 15,098 | ||
| Add: | ||||||||
| Tsumeb Disposition related costs, net of income taxes of $nil | 1,724 | - | 4,315 | - | ||||
| Adjusted net earnings (loss) from discontinued operations | (6,710 | ) | 12,071 | 2,195 | 15,098 | |||
| Basic earnings (loss) per share from discontinued operations | $/sh | (0.05 | ) | 0.06 | (0.01 | ) | 0.08 | |
| Adjusted basic earnings (loss) per share from discontinued operations | $/sh | (0.04 | ) | 0.06 | 0.01 | 0.08 | ||
| Consolidated: | ||||||||
| Net earnings | 62,415 | 61,736 | 108,155 | 108,336 | ||||
| Add/(deduct): | ||||||||
| Net termination fee received from Osino, net of income taxes of $nil | - | - | (6,901 | ) | - | |||
| Deferred tax recovery adjustments not related to current period earnings | - | 464 | - | - | ||||
| Tsumeb Disposition related costs, net of income taxes of $nil | 1,724 | - | 4,315 | - | ||||
| Adjusted net earnings | 64,139 | 62,200 | 105,569 | 108,336 | ||||
| Basic earnings per share | $/sh | 0.34 | 0.32 | 0.60 | 0.57 | |||
| Adjusted basic earnings per share | $/sh | 0.35 | 0.33 | 0.58 | 0.57 | |||
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 | Three Months | Six Months | |||||||
| Ended June 30, | 2024 | 2023 | 2024 | 2023 | |||||
| Continuing Operations: | |||||||||
| Earnings before income taxes from continuing operations | 80,220 | 57,173 | 126,499 | 103,144 | |||||
| Add/(deduct): | |||||||||
| Depreciation and amortization | 22,108 | 20,870 | 44,944 | 41,912 | |||||
| Finance costs | 696 | 916 | 1,402 | 1,715 | |||||
| Interest income | (9,935 | ) | (6,001 | ) | (18,342 | ) | (10,079 | ) | |
| Net termination fee received from Osino | - | - | (6,901 | ) | - | ||||
| Adjusted EBITDA from continuing operations | 93,089 | 72,958 | 147,602 | 136,692 | |||||
| Discontinued Operations: | |||||||||
| Earnings (loss) before income taxes from discontinued operations | (8,434 | ) | 12,071 | (2,120 | ) | 15,098 | |||
| Add/(deduct): | |||||||||
| Depreciation and amortization | 2,005 | 846 | 3,683 | 1,699 | |||||
| Finance costs | 736 | 799 | 1,536 | 1,629 | |||||
| Interest income | (23 | ) | (20 | ) | (45 | ) | (39 | ) | |
| Tsumeb Disposition related costs | 1,724 | - | 4,315 | - | |||||
| Adjusted EBITDA from discontinued operations | (3,992 | ) | 13,696 | 7,369 | 18,387 | ||||
| Consolidated: | |||||||||
| Earnings before income taxes | 71,786 | 69,244 | 124,379 | 118,242 | |||||
| Add/(deduct): | |||||||||
| Depreciation and amortization | 24,113 | 21,716 | 48,627 | 43,611 | |||||
| Finance costs | 1,432 | 1,715 | 2,938 | 3,344 | |||||
| Interest income | (9,958 | ) | (6,021 | ) | (18,387 | ) | (10,118 | ) | |
| Net termination fee received from Osino | - | - | (6,901 | ) | - | ||||
| Tsumeb Disposition related costs | 1,724 | - | 4,315 | - | |||||
| Adjusted EBITDA | 89,097 | 86,654 | 154,971 | 155,079 | |||||
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 expenditures, 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 (used in) operating activities, before changes in working capital and free cash flow to cash provided from (used in) operating activities:
| $ thousands | Three Months | Six Months | |||||||
| Ended June 30, | 2024 | 2023 | 2024 | 2023 | |||||
| Continuing Operations: | |||||||||
| Cash provided from operating activities of continuing operations | 125,793 | 54,571 | 161,593 | 120,268 | |||||
| Excluding: | |||||||||
| Changes in working capital | (26,394 | ) | 19,821 | 7,222 | 28,227 | ||||
| Cash provided from operating activities of continuing operations, before changes in working capital | 99,399 | 74,392 | 168,815 | 148,495 | |||||
| Cash outlays for sustaining capital expenditures(1) | (5,351 | ) | (6,925 | ) | (11,311 | ) | (13,891 | ) | |
| Principal repayments related to leases | (1,153 | ) | (740 | ) | (2,125 | ) | (1,457 | ) | |
| Interest payments(1) | (467 | ) | (312 | ) | (699 | ) | (619 | ) | |
| Other non-cash items | (10,000 | ) | - | (12,200 | ) | - | |||
| Free cash flow from continuing operations | 82,428 | 66,415 | 142,480 | 132,528 | |||||
| Discontinued Operations: | |||||||||
| Cash provided from (used in) operating activities of discontinued operations | (9,139 | ) | 4,606 | 8,530 | 9,809 | ||||
| Excluding: | |||||||||
| Changes in working capital | (6,774 | ) | 2,684 | (16,607 | ) | (1,196 | ) | ||
| Cash provided from (used in) operating activities of discontinued operations, before changes in working capital | (15,913 | ) | 7,290 | (8,077 | ) | 8,613 | |||
| Cash outlays for sustaining capital expenditures(1) | (1,878 | ) | (2,512 | ) | (2,999 | ) | (4,205 | ) | |
| Principal repayments related to leases | (697 | ) | (616 | ) | (1,364 | ) | (1,177 | ) | |
| Interest payments(1) | (77 | ) | (132 | ) | (166 | ) | (281 | ) | |
| Other non-cash items | 10,000 | - | 12,200 | - | |||||
| Free cash flow from discontinued operations | (8,565 | ) | 4,030 | (406 | ) | 2,950 | |||
| Consolidated: | |||||||||
| Cash provided from operating activities | 116,654 | 59,177 | 170,123 | 130,077 | |||||
| Excluding: | |||||||||
| Changes in working capital | (33,168 | ) | 22,505 | (9,385 | ) | 27,031 | |||
| Cash provided from operating activities, before changes in working capital | 83,486 | 81,682 | 160,738 | 157,108 | |||||
| Cash outlays for sustaining capital expenditures(1) | (7,229 | ) | (9,437 | ) | (14,310 | ) | (18,096 | ) | |
| Principal repayments related to leases | (1,850 | ) | (1,356 | ) | (3,489 | ) | (2,634 | ) | |
| Interest payments(1) | (544 | ) | (444 | ) | (865 | ) | (900 | ) | |
| Free cash flow | 73,863 | 70,445 | 142,074 | 135,478 | |||||
1) Included in cash used in investing and financing activities, respectively, in the condensed interim 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, unless otherwise stated | Three Months | Six Months | ||||||||
| Ended June 30, | 2024 | 2023 | 2024 | 2023 | ||||||
| Total revenue | 156,838 | 132,518 | 280,629 | 258,886 | ||||||
| Add/(deduct): | ||||||||||
| Treatment charges and other deductions(1) | 18,176 | 21,139 | 34,321 | 43,491 | ||||||
| Silver revenue | (1,334 | ) | (1,249 | ) | (2,610 | ) | (2,329 | ) | ||
| Revenue from gold and copper | 173,680 | 152,408 | 312,340 | 300,048 | ||||||
| Revenue from gold | 144,099 | 127,597 | 261,557 | 249,398 | ||||||
| Payable gold in concentrate sold | oz | 60,823 | 65,065 | 116,035 | 128,564 | |||||
| Average realized gold price per ounce | $/oz | 2,369 | 1,961 | 2,254 | 1,940 | |||||
| Revenue from copper | 29,581 | 24,811 | 50,783 | 50,650 | ||||||
| Payable copper in concentrate sold | Klbs | 6,469 | 6,585 | 11,926 | 12,943 | |||||
| Average realized copper price per pound | $/lb | 4.57 | 3.77 | 4.26 | 3.91 | |||||
1) Represent revenue deductions for treatment charges, refining charges, penalties, freight and final settlements to adjust for any differences relative to the provisional invoice.
