Second Quarter Financial and Operating Highlights:
- Record gold production – Produced 81,365 ounces of gold in concentrate, as
Ada Tepe delivered its highest quarterly production to date, and Chelopech continued its track record of consistent performance. Copper production was 9.4 million pounds; - Solid smelter performance – Achieved throughput of 58,516 tonnes at Tsumeb despite a 30-day reduction in throughput in April related to the management of staffing levels as a result of COVID-19;
- Record quarterly free cash flow generation – Generated
$75.5 million in cash flow from operating activities and a record$58.4 million of free cash flow(1); - Growing earnings – Reported record net earnings attributable to common shareholders of
$48.8 million , reflecting strong gold production and excellent cost performance from Chelopech andAda Tepe combined with higher gold prices. Reported adjusted net earnings(1) were$45.8 million or$0.25 per share; - Strong cost performance at all operations – Reported an all-in sustaining cost per ounce of gold(1) of
$729 and a cash cost per tonne of complex concentrate smelted(1) of$345 . Cash cost guidance forAda Tepe has been reduced to$44 to$50 per tonne to reflect strong operating performance; - Strengthened financial position – Ended the quarter with approximately
$226 million of cash resources, comprised of$76 million in cash and an undrawn$150 million long-term revolving credit facility (“RCF”), as well as an investment portfolio of$65 million ; and - Well-positioned to deliver 2020 guidance – With strong performance in the first half of the year, DPM is tracking towards the higher end of guidance for gold production and remains on track to meet previously issued guidance metrics.
“We continued to deliver exceptional performance in the second quarter, achieving record gold production and strong cost performance at all of our operations. Our strong operational results, combined with higher gold prices, generated record net earnings and free cash flow, demonstrating the significant potential of our operating assets. Based on our strong results and our expectations for the second half of the year, we remain on track for another milestone year in 2020,” said
“Our achievements in the first half of the year are a reflection of the outstanding efforts at all our sites to proactively respond to the challenges of the COVID-19 pandemic as we continue to prioritize the health and safety of our workforce and provide support in our local communities.”
Key Financial and Operational Highlights
$ millions, except where noted Ended | Three Months | Six Months | ||
2020 | 2019 | 2020 | 2019 | |
Revenue | 157.0 | 99.2 | 308.7 | 184.5 |
Cost of sales | 84.5 | 71.7 | 175.1 | 136.4 |
Earnings before income taxes | 53.7 | 17.7 | 101.8 | 16.7 |
Net earnings attributable to common shareholders | 48.8 | 16.0 | 92.0 | 14.5 |
Basic earnings per share | 0.27 | 0.09 | 0.51 | 0.08 |
Adjusted EBITDA(1) | 78.7 | 34.0 | 156.2 | 50.7 |
Adjusted net earnings(1) | 45.8 | 15.8 | 91.9 | 14.2 |
Adjusted basic earnings per share(1) | 0.25 | 0.09 | 0.51 | 0.08 |
Cash provided from operating activities | 75.5 | 9.3 | 84.9 | 23.8 |
Free cash flow(1) | 58.4 | 24.4 | 107.6 | 34.4 |
Metals contained in concentrate produced: | ||||
Gold (ounces) | ||||
Chelopech | 49,088 | 47,074 | 91,719 | 90,108 |
32,277 | 5,351 | 62,609 | 5,351 | |
Total gold in concentrate produced | 81,365 | 52,425 | 154,328 | 95,459 |
Copper (‘000s pounds) | 9,378 | 9,056 | 18,759 | 17,077 |
Silver (ounces) | 51,593 | 36,010 | 108,052 | 66,745 |
Payable metals in concentrate sold: Gold (ounces) | ||||
Chelopech | 36,723 | 41,424 | 75,488 | 80,983 |
| 34,115 | - | 63,604 | - |
Total payable gold in concentrate sold | 70,838 | 41,424 | 139,092 | 80,983 |
Copper (‘000s pounds) | 8,543 | 10,152 | 18,063 | 16,467 |
Silver (ounces) | 45,070 | 37,765 | 99,918 | 62,826 |
Cash cost per tonne of ore processed(1): | ||||
Chelopech | 37.65 | 35.35 | 36.98 | 35.03 |
| 44.00 | 47.78 | 41.99 | 47.78 |
All-in sustaining cost per ounce of gold(1) | 729 | 709 | 662 | 763 |
Complex concentrate smelted at Tsumeb (tonnes) | 58,516 | 61,667 | 123,526 | 124,489 |
Cash cost per tonne of complex concentrate smelted at Tsumeb(1) | 345 | 373 | 352 | 372 |
1) Adjusted EBITDA; adjusted net earnings; adjusted basic earnings per share; free cash flow; cash cost per tonne of ore processed; all-in sustaining cost per ounce of gold; and cash cost per tonne of complex concentrate smelted at Tsumeb, net of by-product credits, are not defined measures under IFRS. Refer to the “Non-GAAP Financial Measures” section of the MD&A for more details, including reconciliations to IFRS measures.
Response to Coronavirus (“COVID-19”)
To date, as a result of the proactive actions being taken within the regions in which we operate and by personnel at each of our sites, DPM has not experienced any material disruptions to its operations as a result of the worldwide COVID-19 pandemic. The Company’s Chelopech and
As previously reported, the Tsumeb smelter in
To date, MineRP continues to operate with minimal impact on its ability to service existing customers remotely, although it is experiencing some delays starting up new projects and converting a growing customer pipeline as customers satisfy themselves that implementation can be effectively executed remotely.
Net Earnings and Adjusted Net Earnings
Net earnings attributable to common shareholders were
Adjusted net earnings in the second quarter and first six months of 2020 were
The increases in both net earnings attributable to common shareholders and adjusted net earnings were due primarily to higher volumes of gold sold, higher realized gold prices and the favourable impact of a stronger
Adjusted EBITDA
Adjusted EBITDA(1) in the second quarter and first six months of 2020 was
Production, Delivery and Cost Measures
Gold contained in concentrate produced in the second quarter of 2020 increased by 55% to 81,365 ounces relative to the corresponding period in 2019 due primarily to production from
Gold contained in concentrate produced in the first six months of 2020 increased by 62% to 154,328 ounces relative to the corresponding period in 2019 due primarily to production from
Payable gold in concentrate sold in the second quarter of 2020 increased by 71% to 70,838 ounces relative to the corresponding period in 2019 due primarily to deliveries from
Payable gold in concentrate sold in the first six months of 2020 increased by 72% to 139,092 ounces relative to the corresponding period in 2019 due primarily to deliveries from
Complex concentrate smelted during the second quarter of 2020 of 58,516 tonnes was 5% lower than the corresponding period in 2019 due primarily to a 30-day reduction in throughput during the month of April in response to a government request to the natural resources sector to limit staffing levels as a result of COVID-19. Complex concentrate smelted in the first six months of 2020 of 123,526 tonnes was slightly lower than the corresponding period in 2019 due primarily to a reduction in throughput as a result of COVID-19, partially offset by a steadier state of operations in 2020.
A table comparing production, delivery and cash cost measures for the second quarter and first six months of 2020 to 2020 guidance can be found on page 7 of this news release.
Cost Measures
Cost of sales in the second quarter and first six months of 2020 of
All-in sustaining cost per ounce of gold in the second quarter of 2020 of
Cash cost per tonne of complex concentrate smelted in the second quarter of 2020 of
Cash cost per tonne of complex concentrate smelted in the first six months of 2020 of
Cash provided from operating activities
Cash provided from operating activities in the second quarter of 2020 was
In addition, during the second quarter and first six months of 2020,
Free Cash Flow
Free cash flow in the second quarter and first six months of 2020 was
Capital Expenditures
Capital expenditures incurred during the second quarter and first six months of 2020 were
Growth capital expenditures(1) incurred during the second quarter and first six months of 2020 were
As previously announced, the Company initiated a prefeasibility study, which is expected to be completed by the end of 2020.
Exploration
At Chelopech, diamond drilling from surface continued through the second quarter of 2020 at the Wedge South target and at the Krasta prospect. A new target, the West Shaft target, was identified approximatively one kilometre west of the Chelopech mine and drilling to test this zone commenced in late June. At Ada Tepe, field activities and drilling continued at the near mine prospects with minimal disruption from COVID-19 precautionary measures. In
Financial Position and Liquidity
As at
Capital Allocation and Declaration of Dividend
Consistent with the Company’s disciplined capital allocation framework, on
On
The level of the Company’s dividend is based on establishing a sustainable level having regard for the Company’s free cash flow outlook and is expected to allow the Company to build additional balance sheet strength to support further growth, a key element of DPM’s strategy. The declaration, amount and timing of any future dividend are at the sole discretion of the Board of Directors and will be assessed based on the Company’s capital allocation framework, having regard for the Company’s financial position, overall market conditions, and its outlook for sustainable free cash flow, capital requirements, and other factors considered relevant by the Board of Directors.
On-Track to Meet 2020 Guidance
DPM’s 2020 production guidance remains unchanged from the guidance issued in
DPM’s 2020 all-in sustaining cost guidance of
If the US$/ZAR exchange rate and copper prices remain unchanged from current spot levels over the balance of the year, all-in sustaining cost and cash cost per tonne of complex concentrate smelted for 2020 are expected to be at or below the lower end of guidance.
DPM has also increased the guidance for evaluation expenditures from
For additional information regarding the Company’s detailed guidance for 2020, please refer to the “Three-Year Outlook” section of the MD&A.
(1) Adjusted net earnings, adjusted basic earnings per share, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), all-in sustaining cost per ounce of gold, cash cost per tonne of complex concentrate smelted at Tsumeb, net of by-product credits, free cash flow, and growth and sustaining capital expenditures have no standardized meaning under International Financial Reporting Standards ("IFRS"). Presenting these measures from period to period helps management and investors evaluate earnings and cash flow trends more readily in comparison with results from prior periods. Refer to the “Non-GAAP Financial Measures” section of the Management’s Discussion and Analysis for the three and six months ended
Review of Production, Delivery and Cost Measures
Q2 2020 | YTD | 2020 guidance(1) | |||||||
Chelopech | Tsumeb | Consolidated | Chelopech | Tsumeb | Consolidated | ||||
Ore processed (‘000s tonnes) | 556.0 | 224.5 | - | 780.5 | 1,101.8 | 458.0 | - | 1,559.8 | 2,855 – 3,092 |
Metals contained in concentrate produced | |||||||||
Gold (‘000s ounces) | 49.1 | 32.3 | - | 81.4 | 91.7 | 62.6 | - | 154.3 | 257 – 299 |
Copper (million pounds) | 9.4 | - | - | 9.4 | 18.8 | - | - | 18.8 | 35 – 40 |
Payable metals in concentrate sold | |||||||||
Gold (‘000s ounces) | 36.7 | 34.1 | - | 70.8 | 75.5 | 63.6 | - | 139.1 | 229 – 267 |
Copper (million pounds) | 8.6 | - | - | 8.6 | 18.1 | - | - | 18.1 | 33 – 38 |
All-in sustaining cost per ounce of gold(2) | - | - | - | 729 | - | - | - | 662 | 700 - 780 |
Complex concentrate smelted (‘000s tonnes) | - | - | 58.5 | 58.5 | - | - | 123.5 | 123.5 | 230 – 265 |
Cash cost per tonne of complex concentrate smelted(2) | - | - | 345 | 345 | - | - | 352 | 352 | 370 – 450 |
- As disclosed in the MD&A for the period ended
December 31, 2019 , issued onFebruary 13, 2020 , and available at www.sedar.com and www.dundeeprecious.com. - All-in sustaining cost per ounce of gold and cash cost per tonne of complex concentrate smelted are not defined measures under IFRS. Refer to the “Non-GAAP Financial Measures” section of the MD&A for reconciliations to IFRS measures.
This news release and DPM’s unaudited condensed interim consolidated financial statements and MD&A for the three and six months ended
Qualified Person
The technical information in this press release, with respect to the Company’s material mineral projects, has been prepared in accordance with Canadian regulatory requirements set out in NI 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators and the
Second Quarter 2020 Results
On
The call-in numbers and webcast details are as follows:
Date: Friday, July 31, 2020 Time: 9:00 AM EDT Webcast: https://edge.media-server.com/mmc/p/ddaygmb3 International: +1-478-219-0512 Passcode: 9089809 Replay: 1-855-859-2056 Outside Replay Passcode: 9089809 Replay Available Until: 7 days following the call |
About
Cautionary Note Regarding Forward Looking Statements
This press 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”, “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 press release relate to, among other things: measures the Company is undertaking in response to the COVID-19 outbreak, including its impacts on the Company’s global supply chains, the level of and duration of reductions or curtailments in operating levels at Tsumeb or any of the Company’s mining operations or exploration; expected cash flow; price of gold, copper, silver and acid, toll rates, metals exposure and stockpile interest deductions; the estimation of Mineral Reserves and Mineral Resources and the realization of such mineral estimates; the estimated capital costs, operating costs, key project operating costs and financial metrics and other project economics, including the three-year outlook provided by the Company; currency fluctuations; the impact of any impairment charges; the processing of Chelopech concentrate; timing of further optimization work at Tsumeb; potential benefits of the planned rotary furnace installation at the Tsumeb smelter; results of economic studies; success of exploration activities; achieving the results set out in the PEA; the results of the prefeasibility study for the Timok gold project (the “PFS”); the commencement and completion of the PFS; success of permitting activities; permitting timelines; success of investments, including potential acquisitions; requirements for additional capital; government regulation of mining and smelting operations; environmental risks; reclamation expenses; potential or anticipated outcome of title disputes or claims; benefits of digital initiatives; the payment of dividends; the timing and number of common shares of the Company that may be purchased pursuant to the NCIB; and timing and possible outcome of pending litigation. 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 press release, such factors include, among others: risks relating to the Company’s business generally and as magnified by the impact of COVID-19, including changes to the Company’s supply chain, product shortages, delivery and shipping issues, closure and/or failure of plant, equipment or processes to operate as anticipated, employees and contractors becoming infected with COVID-19, lost work hours and labour force shortages; fluctuations in metal and acid prices, toll rates and foreign exchange rates; possible variations in ore grade and recovery rates; inherent uncertainties in respect of conclusions of economic evaluations and economic studies, including the PEA and the PFS; changes in project parameters as plans continue to be refined; uncertainties with respect to actual results of current exploration activities; uncertainties and risks inherent to developing and commissioning new mines into production, which may be subject to unforeseen delays; uncertainties inherent with conducting business in foreign jurisdictions where corruption, civil unrest, political instability and uncertainties with the rule of law may impact the Company’s activities; limitations on insurance coverage; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; actual results of current reclamation activities; social and non-governmental organizations opposition to mining projects and smelting operations; unanticipated title disputes; claims or litigation; the failure to realize on the potential benefits of the planned rotary furnace installation at the Tsumeb smelter; cyber-attacks; there being no assurance that the Company will purchase additional common shares of the Company under the NCIB; risks related to the implementation, cost and realization of benefits from digital initiatives; failure to realize projected financial results from MineRP; risks related to operating a technology business reliant on the ownership, protection and ongoing development of key intellectual properties; as well as those risk factors discussed or referred to in the Company’s MD&A under the heading “Risks and Uncertainties” and under the heading “Cautionary Note Regarding Forward Looking Statements” which include further details on material assumptions used to develop such Forward Looking Statements and material risk factors that could cause actual results to differ materially from Forward Looking Statements, and other documents (including without limitation the Company’s most recent Annual Information Form) filed from time to time with the securities regulatory authorities in all provinces and territories of
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.
For further information, please contact:
President and Chief Executive Officer Tel: (416) 365-5092 drae@dundeeprecious.com |
Executive Vice President and Chief Financial Officer Tel: (416) 365-5091 hkyle@dundeeprecious.com |
Director, Investor Relations Tel: (416) 219-6177 jcameron@dundeeprecious.com |
Source:
2020 GlobeNewswire, Inc., source