(All monetary figures are expressed in Canadian Dollars unless
otherwise stated)
Dundee Precious Metals Inc. ("DPM" or the "Company") (TSX:
DPM)(TSX: DPM.WT)(TSX: DPM.WT.A) today announced its unaudited
results for the fourth quarter and the year ended December 31,
2008. DPM reported a fourth quarter net loss of $80.0 million
(basic and diluted net loss per share of $1.03), including a $47.0
million write-down in the carrying value of its Back River project
located in Nunavut, Canada. This compares with fourth quarter 2007
net loss of $9.5 million (basic and diluted net loss per share of
$0.15). For the year 2008, the Company had a net loss of $79.2
million (basic and diluted net loss per share of $1.20). This
compares with net earnings of $15.4 million (basic net earnings per
share of $0.27 and diluted earnings per share of $0.26) for the
year 2007.
"As we move through this period of low economic activity and
metal prices, DPM is taking steps to streamline and restructure the
organization and its operations and to realize value in the short
to intermediate term, through cost reductions and the sale of
assets", said Jonathan Goodman, President and CEO of DPM.
"We have placed the mine in Armenia on temporary care and
maintenance and suspended all exploration activity. In addition, we
renegotiated certain terms of our Deno Gold concession licensing
agreements with the Republic of Armenia, aimed at securing the
long-term viability of this operation, and secured a processing
outlet for our Chelopech concentrate. We continue to develop
strategies to optimize the profitability of the Chelopech
operation, including the interim expansion of the mine and mill to
1.2 million tonnes of ore per year, and to complete our project
investment plans to bring the facility to two million tonnes per
year."
The following table summarizes the Company's financial and
operating results for the periods indicated:
----------------------------------------------------------------------------
$ millions, except per share amounts Three Months Twelve Months
------------------ -------------------
Ended December 31, 2008 2007 2008 2007
----------------------------------------------------------------------------
Net Revenue $ 15.9 $ 22.3 $ 105.0 $ 122.4
Cost of Sales 35.1 25.6 109.6 82.5
----------------------------------------------------------------------------
Gross Profit (Loss) from Mining
Operations (19.2) (3.3) (4.6) 39.9
Property Impairment Provisions (48.8) (0.2) (48.8) (0.7)
Investment and Other Income (Loss) (5.8) 8.3 23.0 39.7
Net Earnings (Loss) (80.0) (9.5) (79.2) 15.4
Basic Earnings (Loss) Per Share $ (1.03) $ (0.15) $ (1.20) $ 0.27
Diluted Earnings (Loss) Per Share $ (1.03) $ (0.15) $ (1.20) $ 0.26
Net Cash Used in Operations (10.9) (21.1) (7.0) (52.6)
Capital Expenditures (15.5) (14.4) (82.2) (110.2)
Purchase of Short-term Investments (52.7) - (52.7) -
Other Investing Activities (5.8) 48.1 55.1 105.1
Financing Activities 75.6 (1.2) 89.0 74.9
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Net Increase (Decrease) in Cash $ (9.3) $ 11.4 $ 2.2 $ 17.2
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Concentrate Produced (mt)
Chelopech 14,931 18,344 54,669 65,060
Deno Gold 2,409 2,113 11,606 8,326
Cash Cost per tonne Ore Processed
(US$/t)(1)
Chelopech $ 54.52 $ 54.73 $ 61.38 $ 46.84
Deno Gold $ 108.03 $ 121.28 $ 109.40 $ 84.30
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FOURTH QUARTER 2008 - FINANCIAL HIGHLIGHTS
- The net loss in the fourth quarter of 2008 of $80.0 million
was significantly higher than the net loss of $9.5 million in the
corresponding prior year period due to a property impairment
provision of $47.0 million to write-down the carrying value of the
Back River project and increased losses from mining operations. The
gross loss from mining operations in the fourth quarter of 2008 was
greater than the corresponding prior year period due primarily to
significantly lower selling prices for copper, zinc and silver and
unfavourable marked-to-market adjustments relating to the open
positions of provisionally priced concentrate sales partially
offset by higher deliveries of concentrates.
- The Chelopech operations reported net revenue of $10.6 million
on corresponding concentrate deliveries of 15,964 tonnes. Chelopech
cash cost per tonne of ore processed(1) in the period was
comparable to the corresponding prior year period due to the
favourable impact of a weaker Euro relative to the U.S. dollar
partially offset by higher spending on hydraulic backfill and lower
volumes of material processed.
- The Deno Gold operation reported net revenue of $5.3 million
on corresponding concentrate deliveries of 4,528 tonnes. Cash cost
per tonne of ore processed(1) at Deno Gold was 11% lower than the
corresponding prior year period due to lower administrative
expenses and mining costs partially offset by lower volumes of
material processed. An increase in payable metals in concentrate
sold as a result of improved grades and recoveries for all metals
had a positive impact on net revenue.
- Working capital requirements in the fourth quarter of 2008
decreased by $10.7 million due primarily to a decrease in
concentrate inventories and an increase in accounts payable
partially offset by a decrease in deferred revenue.
- As at December 31, 2008, DPM had cash, short-term investments
and marketable securities of $108.6 million (market value) versus
$115.2 million (market value) at the end of year 2007.
SIGNIFICANT ITEMS
- Base metal prices in the first half of 2008 were strong but
declined significantly in the second half of 2008 with copper
falling more than 60% to US$1.32 per pound and zinc falling more
than 40% to US$0.51 per pound at December 31, 2008. In the same
period, the gold price fell a modest 7% to US$865 per troy ounce,
maintaining its safe haven status. Expectations are that gold
prices will continue to rally in the face of unstable currency and
financial markets but non-ferrous metal markets will remain at low
levels pending an economic recovery.
- Notwithstanding the substantial deterioration in the financial
markets in the fourth quarter of 2008, DPM successfully completed
an equity offering that raised net proceeds of $77.2 million (gross
proceeds of $81.6 million) through the sale and issuance of
35,556,000 common shares and 20,444,500 common share purchase
warrants which give the holder the right to purchase one common
share of the Company at the price of $3.25 per share until November
20, 2015. Proceeds from the offering will be used for ongoing
operating and working capital requirements, potential strategic
arrangements, capital expenditures, including project capital for
the Chelopech mine and processing plant expansion, and general
corporate purposes.
- In response to the slowdown in global markets, company-wide
plans have been formulated and steps have been taken to reduce,
eliminate and/or defer all non-critical expenditures and to
identify potential strategic opportunities for certain of its
exploration assets. In the fourth quarter of 2008, DPM ceased all
exploration and drilling activities on its Armenian and Serbian
properties and at its Back River project. In addition, during this
period, the Company entered into discussions surrounding strategic
opportunities for the advancement of the Back River project.
- As previously announced, an orderly shutdown to place the Deno
Gold operations on care and maintenance, pending a significant
improvement in metal prices, was completed in November 2008. In an
agreement reached on January 15, 2009 between Deno Gold and the
Republic of Armenia's ("RA") Ministry of Energy and Natural
Resources, amongst other items, it was agreed that:
(i) In accordance with the requirements of the RA Law on
Concessions, Deno Gold's Shahumyan mine license will be extended
for an additional 12 years to 2032 and the license agreement will
be extended to the full extent of the mining license,
(ii) The annual mine production schedule, as defined by the
License Agreement, will be reduced to 300,000 tonnes (subject to
automatic adjustment in the event of unusual economic hardship
including exceptionally low metal prices), and
(iii) The Centralni license will be terminated and all
contractual responsibility of Deno Gold, in its entirety, with
respect to such license would be waived with the exception of
certain very limited reclamation/re-cultivation works and the
preparation and implementation of a mine underground closure and
conservation plan, all in compliance with RA legislation.
- While operations at the Chelopech mining facilities are
continuing their normal course, steps have been taken to reduce,
eliminate and/or defer non-critical expenditures. The Chelopech
concentrate sales contract with Namibian Custom Smelters ("NCS")
was extended to 2013, giving Chelopech the right to sell up to
120,000 tonnes of concentrate per year to NCS for the years 2011,
2012 and 2013 and to reduce concentrate sales on 12 months' notice
to allow for the start-up of the metals processing facility in
Bulgaria. This arrangement provides the Company with assurances
regarding the processing of its concentrate while it finalizes its
plans for the construction and start-up of the Chelopech expansion
project. In December 2008, Chelopech signed a loan agreement with
NCS, a subsidiary of Weatherly International plc, to advance NCS up
to US$7 million of long-term debt. Proceeds from the loan will be
used by NCS for working capital purposes and improvements at NCS's
Tsumeb smelter.
- Following the approval of the Chelopech environmental impact
assessment ("EIA") by the Bulgarian Minister of Environment and
Waters in July 2008, DPM began the process of obtaining the
necessary construction and operating permits to expand the
Chelopech project to, among other things, increase mine production
capacity to two million tonnes of ore per year and the construction
of the metal processing facility.
A complete set of DPM's Consolidated Financial Statements, Notes
to the Consolidated Financial Statements and Management's
Discussion and Analysis for the year ended December 31, 2008 will
be posted on the Company's website at www.dundeeprecious.com and
will be filed on Sedar at www.sedar.com.
CONFERENCE CALL
An analyst conference call is scheduled for Friday, February 20,
2009 at 8:30 a.m. (EST) to present these results and will be
webcast live at:
http://events.onlinebroadcasting.com/dundee/022009/index.php.
The audio webcast for this conference call will be archived and
available on the Company's website at www.dundeeprecious.com.
OVERVIEW
DPM is a Canadian based, international mining company engaged in
the acquisition, exploration, development and mining of precious
metal properties. Its common shares and share purchase warrants
(symbols: DPM; DPM.WT; DPM.WT.A) are traded on the Toronto Stock
Exchange ("TSX"). DPM's business objectives are to identify,
acquire, finance, develop and operate low-cost, long-life mining
properties.
The Company's operating interests include its 100% ownership of
Chelopech Mining EAD ("Chelopech"), a gold, copper, silver
concentrates producer, owner of the Chelopech mine located
approximately 70 kilometres east of Sofia, Bulgaria, and a 95%
interest in Vatrin Investment Limited ("Vatrin"), a private entity
which holds 100% of Deno Gold Mining Company CJSC ("Deno Gold"),
its principal asset being the Kapan mine, a gold, copper, zinc,
silver concentrates producer located about 320 kilometres south
east of the capital city of Yerevan in Southern Armenia. DPM's
interests also include a 100% interest in the Krumovgrad
development stage gold property located in south eastern Bulgaria,
near the town of Krumovgrad, a 100% interest in the Back River gold
project located in Nunavut in the Canadian Arctic and three
significant exploration and exploitation concessions in one of the
larger gold-copper-silver mining regions in Serbia.
SUMMARIZED FINANCIAL RESULTS
Net Revenue
Revenue from the sale of concentrates of $15.9 million in the
fourth quarter of 2008 was $6.4 million or 29% lower than fourth
quarter of 2007 due to significantly lower selling prices for
copper, zinc and silver partially offset by higher deliveries of
concentrates from Deno Gold and Chelopech. The average LME cash
copper price(2) and the average LME cash zinc price(2) in the
fourth quarter of 2008 were, respectively, 46% and 55% lower than
fourth quarter of 2007 average prices resulting in a significant
decrease in revenue in the fourth quarter of 2008. In addition,
unfavourable marked-to-market adjustments of $11.3 million relating
to the open positions of provisionally priced concentrate sales
were recorded in the fourth quarter of 2008 as a result of the
decline in forward prices for copper and zinc as at December 31,
2008 relative to September 30, 2008. Unfavourable marked-to-market
adjustments of $1.8 million were recorded in the fourth quarter of
2007. Deliveries of concentrates produced at Chelopech of 15,964
tonnes in the fourth quarter of 2008 were 7% higher than fourth
quarter of 2007 deliveries of 14,873 tonne due to a drawdown of
concentrate inventories in the fourth quarter of 2008 whereas in
the fourth quarter of 2007, there was a build-up of concentrate
inventories. Deliveries of concentrates produced at Deno Gold of
4,528 tonnes in the fourth quarter of 2008 were 69% higher than
fourth quarter of 2007 deliveries of 2,678 tonnes as a result of a
drawdown of concentrate inventory. In addition, an increase in
payable metals in concentrate sold as a result of higher grades and
recoveries for all metals had a positive impact on revenue in the
period.
Revenue from the sale of concentrates of $105.0 million in the
year 2008 was $17.4 million or 14% lower than the corresponding
prior year period due to lower deliveries of concentrates produced
at Chelopech and lower selling prices for zinc and copper partially
offset by higher selling prices for gold and silver and higher
deliveries of concentrates produced at Deno Gold. The average LME
cash copper price(2) and the average LME cash zinc price(2) were,
respectively, 2% and 42% lower than prior year average prices. The
average London Bullion gold price(2) was 25% higher than prior year
average price. In addition, unfavourable marked-to-market
adjustments of $12.8 million relating to the open positions of
provisionally priced concentrate sales were recorded in the twelve
months of 2008 as a result of the decline in forward prices for
copper and zinc in the year. Favourable marked-to-market
adjustments of $6.9 million were recorded in the year 2007.
Deliveries of concentrates produced at Chelopech of 56,760 tonnes
in the year 2008 were 15% lower than the corresponding prior year
deliveries of 66,712 tonnes due primarily to lower production of
concentrates in the year 2008 as a result of lower volumes of
material processed, lower copper and silver grades and lower
recoveries for all metals. Deliveries of concentrates produced at
Deno Gold of 10,777 tonnes were 41% higher than the corresponding
prior year deliveries of 7,662 tonnes due to increased production
of concentrates in the year 2008 as a result of improved grades and
recoveries for all metals which more than compensated for the lower
volumes of material processed. In addition, an increase in payable
metals in concentrate sold as a result of improved grades and
recoveries for all metals in the twelve months of 2008 relative to
the corresponding prior year period had a positive impact on
revenue in the period.
Cost of sales
Cost of sales of $35.1 million in the fourth quarter of 2008 was
$9.5 million or 37% higher than the corresponding prior year period
due primarily to higher deliveries of concentrates.
Cost of sales of $109.6 million in the twelve months of 2008 was
$27.1 million or 33% higher than the corresponding prior year
period due primarily to higher operating costs at Chelopech and
Deno Gold.
Cash cost per tonne of ore processed(1) at Chelopech in the
fourth quarter of 2008 of US$54.52 was comparable to the fourth
quarter of 2007 cash cost per tonne of ore processed(1) of US$54.73
due to the favourable impact of a weaker Euro relative to the U.S.
dollar offset by higher spending on hydraulic backfill (which
commenced in the second quarter of 2008) and lower volumes of
material processed. Cash cost per tonne of ore processed(1) at Deno
Gold in the fourth quarter of 2008 of US$108.03 was 11% lower than
fourth quarter of 2007 cash cost per tonne of ore processed(1) of
US$121.28. Lower spending on administrative expenses and mining
costs in the fourth quarter of 2008 relative to the corresponding
prior year period more than offset the lower volumes of material
processed.
Cash cost per tonne of ore processed(1) at Chelopech in the
twelve months of 2008 increased by 31% relative to the
corresponding prior year period due to expenditures associated with
cemented rockfill and hydraulic backfill in the mine (which
commenced in fourth quarter of 2007 and second quarter of 2008,
respectively), the appreciation of the Euro relative to the U.S.
dollar, higher employment expenses, higher royalties and higher
rates for diesel and power. Cash cost per tonne of ore processed(1)
at Deno Gold increased by 30% in the twelve months of 2008 compared
with the corresponding prior year period due to lower volumes of
material processed, the increase in human resources and materials
required to improve the levels of safety, communications and
general operating standards consistent with the Company's required
levels and higher prices for fuel, diesel and some reagents.
Gross profit (loss)
Chelopech recorded a gross loss from mining operations of $11.4
million in the fourth quarter of 2008 compared to a gross profit of
$4.4 million in the fourth quarter of 2007. The gross loss from
mining operations was due to significantly lower selling prices for
copper and silver and higher cost inventories flowing through the
period partially offset by higher deliveries of concentrates. The
average LME cash copper price(2) in the fourth quarter of 2008 was
46% lower than fourth quarter of 2007 average price resulting in a
gross loss in the fourth quarter of 2008. In addition, unfavourable
marked-to-market adjustments of $8.2 million on the open positions
of provisionally priced concentrate sales were recorded in the
fourth quarter of 2008 compared to unfavourable adjustments of $1.3
million in the fourth quarter of 2007.
Chelopech recorded a gross profit from mining operations of
$16.8 million in the twelve months of 2008 compared to a gross
profit from mining operations of $53.8 million in the twelve months
of 2007. The decrease in gross profit from mining operations was
primarily due to lower deliveries of concentrates and higher
production costs partially offset by higher selling prices for
gold. The average London Bullion gold price(2) was 25% higher than
prior year average price. In addition, unfavourable
marked-to-market adjustments of $8.5 million relating to the open
positions of provisionally priced concentrate sales were recorded
in the twelve months of 2008 as a result of the significant
decrease in copper prices in the year 2008. Favourable adjustments
of $7.8 million were recorded in the twelve months of 2007.
Deno Gold recorded a gross loss from mining operations of $7.8
million in the fourth quarter of 2008, which was comparable to a
gross loss from mining operations of $7.7 million recorded in the
fourth quarter of 2007. Higher deliveries of concentrates in the
fourth quarter of 2008 relative to the corresponding prior year
period and lower production costs helped mitigate the negative
impact of lower selling prices for copper and zinc. The average LME
cash copper price(2) and the average LME cash zinc price(2) in the
fourth quarter of 2008 were, respectively, 46% and 55% lower than
the fourth quarter of 2007 average prices resulting in a
significant decrease in revenue in the fourth quarter of 2008. In
addition, unfavourable marked-to-market adjustments of $3.1 million
on the open positions of provisionally priced concentrate sales
were recorded in the fourth quarter of 2008 compared to
unfavourable adjustments of $0.5 million in the fourth quarter of
2007.
Deno Gold recorded a gross loss from mining operations of $21.4
million in the twelve months of 2008 compared to a gross loss from
mining operations of $13.9 million in the twelve months of 2007.
The increased loss from mining operations was due to higher
production costs and lower selling prices for zinc partially offset
by higher deliveries of concentrates. The average LME cash zinc
price(2) was 42% lower than prior year average price. In addition,
unfavourable marked-to-market adjustments of $4.3 million on the
open positions of provisionally priced concentrate sales were
recorded in the twelve months of 2008 as a result of the
significant decrease in copper and zinc selling prices in the year
2008. Unfavourable adjustments of $0.9 million were recorded in the
twelve months of 2007.
Investment and other income (expense)
Investment loss in the fourth quarter of 2008 totalled $5.8
million, an increase of $14.1 million compared to the fourth
quarter of 2007 investment income of $8.3 million due to lower net
realized gains from the sales of investments partially offset by
lower write-downs of investments. Net realized gains on sale of
investments were nil in the fourth quarter of 2008 compared to net
realized gains on sale of investments of $18.8 million in the
fourth quarter of 2007. Write-downs of investments totalling $6.0
million were recorded in the fourth quarter of 2008 as a result of
the decline in market value of certain securities. Write-downs of
investments totalling $13.0 million were recorded in the fourth
quarter of 2007.
Investment income in the year 2008 totalled $23.0 million, a
decrease of $16.7 million compared to the corresponding prior year
investment income of $39.7 million due to lower net realized gains
on the sales of investments partially offset by lower write-downs
of investments. Net realized gains on sale of investments totalled
$28.1 million in the twelve months ended December 31, 2008 compared
to net realized gains on sales of investments of $53.7 million in
the twelve months ended December 31, 2007. Write-downs related to
impaired investments totalled $7.5 million in the twelve months
ended December 31, 2008 compared to write-downs of $13.0 million in
the twelve months ended December 31, 2007.
Administrative expenses
Administrative and other expenses were $4.3 million and $19.9
million for the three and twelve months ended December 31, 2008,
respectively, compared to $5.7 million and $21.2 million for the
three and twelve months ended December 31, 2007, respectively.
Exploration expenses
Exploration expenses were $5.4 million and $26.8 million for the
three and twelve months ended December 31, 2008, respectively,
compared to $7.7 million and $29.2 million for the three and twelve
months ended December 31, 2007, respectively. Exploration
activities in Serbia were placed on care and maintenance in the
fourth quarter of 2008.
Income tax expense
DPM's effective tax recovery rate of 5.7% for the year 2008 was
lower than the statutory rate of 33.5% primarily due to
unrecognized tax benefits relating to operating losses and
valuation allowances against the future tax assets related to
investment and property write-downs partially offset by the
non-taxable portion of capital gains related to the sales of
investments and the benefit of profits earned in jurisdictions
having a lower tax rate.
DPM's effective tax rate of 27.7% for the year 2007 was lower
than the statutory rate of 36.12% primarily due to the benefit of
profits earned in jurisdictions having a lower tax rate and the
non-taxable portion of capital gains related to the sales of
investments. These benefits were partially offset by unrecognized
tax benefits relating to operating losses.
Cash Flow (Shortfall) and Financial Condition
The following table summarizes the Company's cash shortfall from
operating activities for the periods indicated:
----------------------------------------------------------------------------
$ thousands Three Months Twelve Months
---------------------- ---------------------
Ended December 31, 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings (loss) $ (80,042) $ (9,494) $ (79,195) $ 15,375
Non-cash charges (credits) to
earnings:
Amortization of property,
plant and equipment 4,968 3,229 16,424 12,512
Property impairment provisions 48,780 188 48,780 732
Net realized gains on sale
of investments (64) (18,811) (28,069) (53,733)
Write-downs of investments to
market value 6,009 13,022 7,532 13,022
Other (1,283) (895) (590) 4,736
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Total non-cash charges (credits)
to earnings 58,410 (3,267) 44,077 (22,731)
Decrease (increase) in non-cash
working capital 10,718 (8,340) 28,086 (45,251)
----------------------------------------------------------------------------
Net cash used in operating
activities $ (10,914) $ (21,101) $ (7,032) $ (52,607)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash used in operating activities in the fourth quarter of 2008
was $10.9 million, compared with cash used in operating activities
of $21.1 million in the fourth quarter of 2007. The decrease in
cash used in operating activities in the fourth quarter of 2008
relative to the fourth quarter of 2007 was primarily due to a
decrease in working capital requirements partially offset by the
loss from mining operations. The decrease in working capital
requirements in the fourth quarter of 2008 was primarily due to a
decrease in concentrate inventories and an increase in accounts
payable partially offset by a decrease in deferred revenue.
Cash used in operating activities in the year 2008 was $7.0
million, compared with cash used in operating activities of $52.6
million in the year 2007. The decrease in cash used in operating
activities in the twelve months of 2008 compared with the
corresponding prior year period was due to a decrease in working
capital requirements partially offset by the loss from mining
operations. The decrease in working capital requirements in the
twelve months of 2008 was primarily due to increases in accounts
payable and deferred revenue and a decrease in accounts
receivable.
The following table summarizes the Company's investing
activities for the periods indicated:
----------------------------------------------------------------------------
$ thousands Three Months Twelve Months
---------------------- ---------------------
Ended December 31, 2008 2007 2008 2007
----------------------------------------------------------------------------
Purchase of portfolio
investments $ (3,872) $ (1,250) $ (3,872) $ (18,046)
Proceeds on sale of portfolio
investments 1,631 51,324 61,869 125,069
Purchase of additional interest
in company, net of share issue
of $2,464 - (2,199) - (2,199)
Purchase of short-term
investments (52,662) - (52,662) -
Loan advances (3,654) - (3,654) -
Capital expenditures (15,479) (14,386) (82,160) (110,209)
Other 18 273 732 273
----------------------------------------------------------------------------
Net cash provided by (used in)
investing activities $ (74,018) $ 33,762 $ (79,747) $ (5,112)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures at Chelopech in the twelve months ended
December 31, 2008 of $41.1 million were 37% lower than the
corresponding prior year period due to lower spending on
non-critical expenditures, including those related to the expansion
project, pending the approval of the EIA by the Bulgarian
government, which was received on July 30, 2008, and official
recommencement of the expansion project. Capital expenditures,
including capitalized exploration, for Deno Gold in the twelve
months ended December 31, 2008 of $26.6 million were 22% higher
than the corresponding prior year period due to increased level of
exploration activities in the first nine months of 2008 relative to
2007. Exploration activities at Deno Gold ceased in the fourth
quarter of 2008. Capitalized exploration at Deno Gold totalled
$18.4 million in the twelve months of 2008, respectively, compared
to expenditures of $14.7 million in the twelve months of 2007.
Capital expenditures at Back River totalled $12.2 million in the
twelve months ended December 31, 2008 compared to expenditures of
$21.4 million in the corresponding prior year period.
For the three and twelve months ended December 31, 2008, DPM
realized pre and after tax cash proceeds of $1.6 million and $61.9
million, respectively, on the disposition of certain shareholdings,
including the sale of its holdings in Eldorado Gold Corporation for
cash proceeds of $41 million in July 2008. By comparison, for the
three and twelve months ended December 31, 2007, DPM realized pre
and after-tax cash proceeds of $51.3 million and $125.1 million,
respectively, on the disposition of certain shareholdings.
Financing Activities
The following table summarizes the Company's financing
activities for the periods indicated:
----------------------------------------------------------------------------
$ thousands Three Months Twelve Months
---------------------- ---------------------
Ended December 31, 2008 2007 2008 2007
----------------------------------------------------------------------------
Issue of common shares on
exercise of options $ - $ 140 $ - $ 1,380
Net proceeds of equity financing 77,175 - 77,175 77,474
Redemption of deferred share
units - (112) (58) (112)
Proceeds of debt financing - - 15,821 -
Repayment of debt (1,543) (1,263) (3,972) (3,841)
----------------------------------------------------------------------------
Net cash provided by (used in)
financing activities $ 75,632 $ (1,235) $ 88,966 $ 74,901
----------------------------------------------------------------------------
----------------------------------------------------------------------------
In the fourth quarter of 2008, DPM successfully completed an
equity offering to raise net proceeds of $77.2 million (gross
proceeds of $81.6 million) through the sale and issuance of
35,556,000 common shares and 20,444,500 common share purchase
warrants which give the holder the right to purchase one common
share of the Company at the price of $3.25 per share until November
20, 2015. Proceeds from the offering will be used for ongoing
operating and working capital requirements, potential strategic
arrangements, capital expenditures, including project capital for
the Chelopech mine and processing plant expansion, and general
corporate purposes.
AVERAGE METAL PRICES
The following table, summarizing the average metal prices for
the London Bullion gold, LME copper, LME zinc and LME silver
prices, is used to illustrate the Company's average metal price
exposures based on its key reference prices for the periods
indicated.
----------------------------------------------------------------------------
US$, Average Three Months Twelve Months
---------------------- ---------------------
Ended December 31, 2008 2007 2008 2007
----------------------------------------------------------------------------
London Bullion gold ($/oz) $ 796 $ 788 $ 872 $ 697
LME cash copper ($/lb) 1.77 3.26 3.16 3.23
LME cash zinc ($/lb) 0.54 1.19 0.85 1.47
LME spot silver ($/oz) $ 10.20 $ 14.22 $ 15.02 $ 13.39
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NON-GAAP FINANCIAL MEASURES
We have referred to cash cost per tonne of ore processed because
we understand that certain investors use this information to assess
the Company's performance and also determine the Company's ability
to generate cash flow for investing activities. This measurement
captures all of the important components of the Company's
production and related costs. In addition, management utilizes this
metric as an important management tool to monitor cost performance
of the Company's operations. This measurement has no standardized
meaning under Canadian GAAP and is therefore unlikely to be
comparable to similar measures presented by other companies. This
measurement is intended to provide additional information and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with Canadian
GAAP.
The following table provides, for the periods indicated, a
reconciliation between the Company's cash cost measure and Canadian
GAAP cost of sales:
----------------------------------------------------------------------------
$ thousands, unless otherwise indicated
For the year ended December 31, 2008 Chelopech Deno Gold Total
----------------------------------------------------------------------------
Ore processed (mt) 900,563 269,033
Cost of sales (Cdn$) $ 71,426 $ 38,194 $ 109,620
Cost of sales (US$) $ 67,423 $ 36,319 $ 103,742
Deduct:
Amortization (9,811) (2,560)
Reclamation costs and other (2,155) (1,108)
Care and maintenance costs - (1,732)
Change in concentrate inventory (178) (1,485)
----------------------------------------------------------------------------
Total cash cost of production (US$) $ 55,279 $ 29,434
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash cost per tonne of ore processed (US$) $ 61.38 $ 109.40
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ thousands, unless otherwise indicated
For the year ended December 31, 2007 Chelopech Deno Gold Total
----------------------------------------------------------------------------
Ore processed (mt) 913,440 323,371
Cost of sales (Cdn$) $ 52,588 $ 29,900 $ 82,488
Cost of sales (US$) $ 47,944 $ 27,363 $ 75,307
Add/(Deduct):
Amortization (6,912) (1,612)
Reclamation costs and other (709) (170)
Change in concentrate inventory 2,459 1,678
----------------------------------------------------------------------------
Total cash cost of production (US$) $ 42,782 $ 27,259
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash cost per tonne of ore processed (US$) $ 46.84 $ 84.30
----------------------------------------------------------------------------
(1) A reconciliation of the Company's cash cost per tonne ore
processed to cost of sales under Canadian GAAP for the years 2008
and 2007 is shown in the table entitled "Non-GAAP Financial
Measures."
(2) Refer to the average metal prices section for the Company's
key reference prices.
To view the Financial Statements, please visit the following
link:
http://media3.marketwire.com/docs/dpmfinq4.pdf
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" that
involve a number of risks and uncertainties. Forward-looking
statements include, but are not limited to, statements with respect
to the future price of gold, copper, zinc and silver the estimation
of mineral reserves and resources, the realization of mineral
estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, costs and timing of the
development of new deposits, success of exploration activities,
permitting time lines, currency fluctuations, requirements for
additional capital, government regulation of mining operations,
environmental risks, unanticipated reclamation expenses, title
disputes or claims, limitations on insurance coverage and timing
and possible outcome of pending litigation. Often, but not always,
forward-looking statements can be identified by the use of words
such as "plans", "expects", or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could\", "would", "might" or "will" be
taken, occur or be achieved. Forward-looking statements are based
on the opinions and estimates of management 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.
Such factors include, among others: the actual results of
current exploration activities; actual results of current
reclamation activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined;
future prices of gold, copper, zinc and silver; possible variations
in ore grade or recovery rates; failure of plant, equipment or
processes to operate as anticipated; 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, fluctuations in metal
prices, as well as those risk factors discussed or referred to in
Management's Discussion and Analysis under the heading "Risks and
Uncertainties" and other documents filed from time to time with the
securities regulatory authorities in all provinces and territories
of Canada and available at www.sedar.com. 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 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.
Contacts: Dundee Precious Metals Inc. Jonathan Goodman President
and Chief Executive Officer (416) 365-2408 Email:
jgoodman@dundeeprecious.com Dundee Precious Metals Inc. Stephanie
Anderson Executive Vice President and Chief Financial Officer (416)
365-2852 Email: sanderson@dundeeprecious.com Dundee Precious Metals
Inc. Lori Beak Vice President, Investor Relations and Corporate
Secretary (416) 365-5165 Email: lbeak@dundeeprecious.com Website:
www.dundeeprecious.com
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