(All Monetary Figures Are Expressed in U.S 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 third quarter ended September 30, 2010. DPM
reported third quarter of 2010 net earnings attributable to equity
shareholders of the Company of $34.4 million (basic net earnings
per share of $0.28 and diluted net earnings per share of $0.26).
This compares with third quarter of 2009 net earnings attributable
to equity shareholders of $3.7 million (basic and diluted net
earnings per share of $0.04).
"The third quarter was another profitable one for DPM and a busy
one, with all projects moving ahead as planned," said Jonathan
Goodman, President and Chief Executive Officer. "At Chelopech, the
mine/mill expansion to double production remains on schedule and on
budget. The project is poised to start the ramp up and should
produce 1.2 to 1.3 million tonnes of ore in 2011. The Tsumeb
smelter in Namibia launched several initiatives which will result
in additional improvements to the environmental, health and safety
standards at site," he said. "Deno Gold completed its expansion at
the end of October, which had a positive impact on its record third
quarter results, and we are looking forward to starting the open
pit drilling program before winter sets in. In addition, the new
EIA, outlining the revised Krumovgrad gold project, has now been
filed with the Bulgarian government."
The following table summarizes the Company's financial and operating
results for the periods indicated:
------------------------------------------------------- --------------------
Three Months Nine Months
$ millions, except per share ------------------- -----------------
amounts
Ended September 30, 2010 2009 2010 2009
--------------------------------------------- --------- --------- ---------
Net Revenue $ 59.0 $ 45.9 $ 140.3 $ 95.4
Cost of Sales 41.6 28.7 106.3 67.3
--------------------------------------------- --------- --------- ---------
Gross Profit 17.4 17.2 34.0 28.1
--------------------------------------------- --------- --------- ---------
Investment and Other Income 25.6 0.4 38.8 0.9
Net Impairment Provisions (0.4) (3.9) (51.0) (4.1)
Exploration Expense (2.9) (1.2) (4.1) (3.5)
Administrative and Other Expenses (3.5) (4.2) (10.6) (10.8)
Net Earnings 32.9 3.7 1.1 1.6
Net Earnings Attributable to Equity
Shareholders of the Company 34.4 3.7 2.6 1.6
Basic Net Earnings per Share $ 0.28 $ 0.04 $ 0.02 $ 0.02
Diluted Net Earnings per Share $ 0.26 $ 0.04 $ 0.02 $ 0.02
Net Cash Provided by (Used in)
Operating Activities 4.7 10.7 21.5 (1.1)
Capital Expenditures (23.5) (8.9) (52.6) (22.3)
Proceeds on Sale/(Purchase) of
Short-term Investments 5.2 (14.1) 32.1 11.7
Purchase of Namibia Custom Smelters
(Pty) Ltd. - - (17.0) -
Proceeds on Sale of Exploration
Property - - - 6.2
Other Investing Activities (3.9) (1.7) (7.9) (3.7)
Financing Activities 19.3 (0.9) 77.8 (3.1)
----------------------------------------------------------------------------
Net Increase (Decrease) in Cash $ 1.8 $ (14.9) $ 53.9 $ (12.3)
----------------------------------------------------------------------------
Concentrate Produced (mt)
Chelopech 19,312 20,816 55,019 56,023
Deno Gold 5,271 2,972 13,788 6,145
NCS - concentrate processed (mt) 36,041 - 81,922 -
Cash Cost per tonne Ore Processed
($/t)(1)
Chelopech (excluding royalties) $ 46.84 $ 59.31 $ 49.95 $ 51.98
Deno Gold (excluding royalties) $ 70.50 $ 78.31 $ 67.57 $ 72.43
----------------------------------------------------------------------------
Third Quarter 2010 - Financial Highlights
-- In the third quarter of 2010, DPM reported net earnings attributable to
equity shareholders of $34.4 million or $0.28 per share compared to net
earnings attributable to equity shareholders of $3.7 million or $0.04
per share in the third quarter of 2009. The period over period increase
in net earnings attributable to equity shareholders was primarily due to
unrealized favourable mark-to-market adjustments in the Company's
holdings of Sabina Gold & Silver Corp. ("Sabina") special warrants
("Sabina Special Warrants").
-- DPM recorded a gross profit of $17.4 million in the third quarter of
2010 compared to a gross profit of $17.2 million in the corresponding
prior year period. Higher period over period metal prices were offset by
lower deliveries of concentrates and lower gold in concentrate sold.
Deliveries of concentrates in the third quarter of 2010 of 26,029 tonnes
were 1,974 tonnes lower than the corresponding prior year period
deliveries of 28,003 tonnes due, in part, to a drawdown in inventory in
the third quarter of 2009. Partially offsetting the lower deliveries of
Chelopech concentrates in the third quarter of 2010 were higher
production and deliveries of concentrates from Deno Gold. Gold
recoveries at Chelopech in 2010 were adversely impacted by the
processing of high sulphur to copper grade ore (Block 151). Material
mined in 2009 contained lower sulphur to copper grade ore resulting in
higher metal recoveries and profitability.
-- In July 2010, DPM concluded its previously announced agreement with PJV
Resources Inc. and Rodeo Capital Corp. (now Avala Resources Ltd.)
("Avala") wherein it received a 50.3% direct controlling interest in
Avala and $1.6 million cash in exchange for DPM's Serbian subsidiary,
Dundee Plemeniti Metali d.o.o. The post acquisition impact
on the consolidation of Avala into DPM's financial results was a $20.9
million net increase in cash and cash equivalents. As of September 30,
2010, DPM held 50.2% of Avala common shares.
-- As at September 30, 2010, DPM had cash, cash equivalents and short-term
investments of $97.3 million, including Avala's cash and cash
equivalents of $17.4 million, compared to $75.6 million at December 31,
2009. Investments at fair value totalled $147.1 million at September 30,
2010 compared to $34.4 million at December 31, 2009.
2011 Outlook
-- For the year 2011, mine output at Chelopech is expected to range between
1.2 million and 1.3 million tonnes of ore, in line with its planned ramp
up to an annualized production rate of two million tonnes of ore. At
this level, Chelopech is expected to produce approximately 100,000
tonnes of concentrate. Following completion of its mine/mill expansion
to 600,000 tonnes of ore in 2010, Deno Gold is expected to produce
between 25,000 and 30,000 tonnes of concentrate.
-- Total capital expenditures for the year 2011 are projected to range
between $140 million and $150 million, including $62 million to complete
the mine and mill expansion at Chelopech, $20 million for environmental
and plant optimizations projects at NCS and $25 million at Deno Gold to
further enhance underground operations and advance the proposed open pit
project. Pending completion of the definitive feasibility study for the
Krumovgrad project in Bulgaria and receipt of approvals of its
environmental impact assessment, the Company also expects to move
forward with the construction of this project.
A complete set of DPM's Consolidated Financial Statements, Notes
to the Consolidated Financial Statements and Management's
Discussion and Analysis for the three months ended September 30,
2010 will be posted on the Company's website at
www.dundeeprecious.com and will be filed on Sedar at
www.sedar.com.
Conference Call
DPM will be holding an analyst call on Friday, November 5, 2010
at 8.30 a.m. (EST).
The call will be webcast live (audio only) at:
http://www.gowebcasting.com/2028.
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"), its principal asset being the
Chelopech mine, a gold, copper, silver concentrates producer,
located approximately 70 kilometres east of Sofia, Bulgaria, 100%
ownership of Namibia Custom Smelters (Pty) Ltd. ("NCS"), a copper
concentrate processing facility located in Tsumeb, Namibia, and a
95% interest in Vatrin Investment Limited, 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, and certain exploration and exploitation properties in
Serbia. The Company also presently holds a 50.2% controlling
interest in Avala Resources Ltd., a newly formed, TSX Venture
Exchange ("TSXV") listed company (TSXV: AVZ) focused on the
exploration and development of the Timok and Potoj Cuka copper and
gold projects in Serbia.
Summarized Financial Results
Net revenue
Net revenue of $59.0 million in the third quarter of 2010 was
$13.1 million higher than the corresponding prior year period net
revenue of $45.9 million due to a 28% increase in gold prices, a
24% increase in copper prices and a 14% increase in zinc prices
partially offset by lower deliveries of concentrates and lower gold
in concentrate sold. The processing of a disproportionate amount of
high sulphur to copper grade ore contributed to reduced gold grade
and recoveries in the period. Net favourable mark-to-market
adjustments and final settlements of $1.2 million, related to the
open positions of provisionally priced concentrate sales, were
recorded in the third quarter of 2010 compared to net favourable
mark-to-market adjustments and final settlements of $1.4 million in
the third quarter of 2009. Also contributing to the period over
period increase in net revenue was the inclusion of NCS's revenue
following its acquisition by DPM in March 2010.
Deliveries of concentrates produced at Chelopech of 19,595
tonnes in the third quarter of 2010 were 17% lower than third
quarter of 2009 deliveries of 23,493 tonnes due, in part, to a
drawdown of concentrate inventory in the third quarter of 2009.
Deliveries of concentrates produced at Deno Gold of 6,434 tonnes
in the third quarter of 2010 were 43% higher than third quarter of
2009 deliveries of 4,510 tonnes due to a relative increase in
production.
Net revenue of $140.3 million in the first nine months of 2010
was $44.9 million higher than the corresponding prior year period
net revenue of $95.4 million due primarily to a 26% increase in
gold prices, a 54% increase in copper prices, a 43% increase in
zinc prices and higher deliveries of concentrates partially offset
by lower gold in concentrate sold. Net unfavourable mark-to-market
adjustments and final settlements of $2.8 million, related to the
open positions of provisionally priced concentrate sales, were
recorded in the first nine months of 2010 compared to net
favourable mark-to-market adjustments and final settlements of $6.1
million in the first nine months of 2009. In the first nine months
of 2010, DPM recorded net losses on its copper derivatives of $0.1
million, compared to net losses on copper derivatives of $3.8
million in the first nine months of 2009. Also contributing to the
period over period increase in net revenue was the inclusion of
NCS's revenue following its acquisition by DPM in March 2010.
Deliveries of concentrates produced at Chelopech of 55,178
tonnes in the first nine months of 2010 were 4% lower than the
corresponding prior year period deliveries of 57,751 tonnes.
Deliveries of concentrates produced at Deno Gold of 12,633
tonnes in the first nine months of 2010 were 133% higher than the
corresponding prior year period deliveries of 5,415 tonnes as Deno
Gold was on care and maintenance in the first quarter of 2009. In
addition, concentrate production in 2010 was higher than 2009 due
to increased ore mined, which resulted in increased concentrate
deliveries.
The average London Bullion gold price(2) in the third quarter of
2010 of $1,227 per ounce was 28% higher than the third quarter of
2009 average price of $960 per ounce. The average London Metal
Exchange ("LME") cash copper price(2) in the third quarter of 2010
of $3.29 per pound was 24% higher than the third quarter of 2009
average price of $2.66 per pound. The average LME cash zinc
price(2) in the third quarter of 2010 of $0.91 per pound was 14%
higher than the third quarter of 2009 average price of $0.80 per
pound.
The average London Bullion gold price(2) in the first nine
months of 2010 of $1,176 per ounce was 26% higher than the
corresponding prior year period average price of $930 per ounce.
The average LME cash copper price(2) in the first nine months of
2010 of $3.25 per pound was 54% higher than the corresponding prior
year period average price of $2.11 per pound. The average LME cash
zinc price(2) in the first nine months of 2010 of $0.96 per pound
was 43% higher than the corresponding prior year period average
price of $0.67 per pound.
Cost of sales
Cost of sales of $41.6 million and $106.3 million in the third
quarter and first nine months of 2010 were $12.9 million and $39.0
million higher than the corresponding prior year periods cost of
sales of $28.7 million and $67.3 million, respectively, due
primarily to the inclusion of expenses related to the processing of
concentrates at NCS.
Cash cost per tonne of ore processed(1), excluding royalties, at
Chelopech in the third quarter of 2010 of $46.84 was 21% lower than
the corresponding prior year period cash cost per tonne of ore
processed(1), excluding royalties, of $59.31 due to higher volume
of ore mined and processed, the favourable impact of a 10%
depreciation of the Euro relative to the U.S. dollar period over
period and lower cement usage in backfill activities partially
offset by higher consumption of power and diesel, increased prices
for diesel, higher employment expenses and increased spending on
supplies. Cash cost per tonne of ore processed(1), including
royalties, at Chelopech in the third quarter of 2010 of $51.39 was
18% lower than third quarter of 2009 cash cost per tonne of ore
processed(1), including royalties, of $62.41.
Cash cost per tonne of ore processed(1), excluding royalties, at
Deno Gold in the third quarter of 2010 of $70.50 was 10% lower than
the corresponding prior year period cash cost per tonne of ore
processed(1), excluding royalties, of $78.31 due to higher volume
of material processed partially offset by higher maintenance costs
and higher vein drive development costs to access additional
working spaces. Cash cost per tonne of ore processed(1), including
royalties, at Deno Gold in the third quarter of 2010 was $74.17.
Deno Gold did not pay a profit based royalty in the third quarter
of 2009.
Cash cost per tonne of ore processed(1), excluding royalties, at
Chelopech in the first nine months of 2010 of $49.95 was 4% lower
than the corresponding prior year period cash cost per tonne of ore
processed(1), excluding royalties, of $51.98 due primarily to
higher volume of ore mined and processed, lower cement usage in
backfill activities and the favourable impact of a weaker Euro
relative to the U.S. dollar, period over period, partially offset
by increased prices for and consumption of power and fuels, higher
employment expenses and higher spending on supplies and services.
Cash cost per tonne of ore processed(1), including royalties, at
Chelopech in the first nine months of 2010 of $54.43 was 5% lower
than the corresponding prior year period cash cost per tonne of ore
processed(1), including royalties, of $57.56.
Cash cost per tonne of ore processed(1), excluding royalties, at
Deno Gold in the first nine months of 2010 of $67.57 was 7% lower
than the corresponding prior year period cash cost per tonne of ore
processed(1), excluding royalties, of $72.43. Cash cost per tonne
of ore processed(1), including royalties, at Deno Gold in the first
nine months of 2010 was $70.52.
Gross profit
The following table shows the breakdown of gross profit (loss) by location:
----------------------------------------------------------------------------
Three Months Nine Months
-----------------------------------------
$ thousands
Ended September 30, 2010 2009 2010 2009
----------------------------------------------------------------------------
Chelopech $ 13,619 $ 15,999 $ 26,770 $ 31,896
Deno Gold 4,811 1,218 6,693 (3,753)
NCS (1,058) - 550 -
----------------------------------------------------------------------------
Total gross profit $ 17,372 $ 17,217 $ 34,013 $ 28,143
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Chelopech recorded a gross profit of $13.6 million in the third
quarter of 2010 compared to a gross profit of $16.0 million in the
third quarter of 2009. The period over period decrease in gross
profit was due to lower gold in concentrate sold, resulting from
lower recoveries and grades, and lower deliveries of concentrates
partially offset by a 28% increase in gold prices and a 24%
increase in copper prices.
Chelopech recorded a gross profit of $26.8 million in the first
nine months of 2010 compared to a gross profit of $31.9 million in
the first nine months of 2009. The period over period decrease in
gross profit was due to lower gold in concentrate sold, resulting
from lower recoveries and grades in 2010, and unfavourable
mark-to-market adjustments and final settlements partially offset
by a 26% increase in gold prices and a 54% increase in copper
prices. Net unfavourable mark-to-market adjustments and final
settlements of $2.5 million, related to the open positions of
provisionally priced concentrate sales, were recorded in the first
nine months of 2010 compared to net favourable mark-to-market
adjustments and final settlements of $5.6 million in the first nine
months of 2009. There were nil gains or losses on copper
derivatives in the first nine months of 2010 whereas, in the
corresponding prior year period, net losses on copper derivatives
totalled $3.8 million.
Deno Gold recorded a gross profit of $4.8 million in the third
quarter of 2010 compared to a gross profit of $1.2 million in the
corresponding prior year period due primarily to higher deliveries
of concentrates and higher metal prices. Deliveries of concentrates
in the third quarter of 2010 totalled 6,434 tonnes compared to
4,510 tonnes in the third quarter of 2009.
Deno Gold recorded a gross profit of $6.7 million in the first
nine months of 2010 compared to a gross loss of $3.8 million in the
corresponding prior year period as Deno Gold was on care and
maintenance in the first quarter of 2009.
NCS recorded a gross loss of $1.1 million in the third quarter
of 2010. Concentrates processed in the quarter totalled 36,041
tonnes. Production was negatively impacted by the planned
maintenance shutdown of the reverberatory furnace for re-bricking
and by the Ausmelt being off-line for unplanned partial
re-bricking. Downstream processing issues have also contributed to
the lower than expected production in the period and to the
build-up of in-circuit material.
Investment and other income
Investment and other income were $25.6 million and $38.8 million
in the third quarter and first nine months of 2010, respectively,
compared to investment and other income of $0.4 million and $0.9
million in the corresponding prior year periods. Included in the
third quarter and first nine months of 2010 were unrealized
favourable mark-to-market adjustments related to Sabina Special
Warrants, which are held for trading, of $24.1 million and $38.1
million, respectively.
Income tax expense
In the third quarter of 2010, DPM had an effective tax recovery
rate of 3% due primarily to the reversal of the Canadian tax
valuation allowance and lower rates on foreign earnings. The
valuation allowance was reversed since it is more likely than not
that DPM will be able to recognize the Canadian future tax assets
against future Canadian taxable income.
In the first nine months of 2010, the tax recovery rate of 132%
was due primarily to the reversal of the Canadian tax valuation
allowance and the non-taxable portion of unrealized gains on
warrants and rights partially offset by an unrecognized tax benefit
relating to foreign losses.
Operating cash flow (shortfall)
The following table summarizes the Company's cash flow (shortfall) from
operating activities for the periods indicated:
----------------------------------------------------------------------------
Three Months Nine Months
$ thousands --------------------------------------
Ended September 30, 2010 2009 2010 2009
----------------------------------------------------------------------------
Net earnings for the period $ 32,858 $ 3,713 $ 1,053 $ 1,596
Non-cash charges (credits) to
earnings:
Amortization of property, plant
and equipment 6,416 4,429 16,360 12,176
Unrealized gains on financial
instrument investments (24,585) - (38,628) -
Property impairment provisions 328 3,893 54,391 4,141
Other 4,149 (395) 2,085 (1,140)
----------------------------------------------------------------------------
Total non-cash charges (credits)
to earnings (13,692) 7,927 34,208 15,177
----------------------------------------------------------------------------
Net cash provided by operating
activities before changes in
non-cash working capital 19,166 11,640 35,261 16,773
Increase in non-cash working
capital (14,480) (909) (13,793) (17,865)
----------------------------------------------------------------------------
Net cash provided by (used in)
operating activities $ 4,686 $ 10,731 $ 21,468 $ (1,092)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash provided by operating activities in the third quarter of
2010 was $4.7 million compared with cash provided by operating
activities of $10.7 million in the third quarter of 2009. The
increase in working capital requirements in the third quarter of
2010 of $14.5 million was primarily due to the funding of DPM
Assurance (Barbados) Inc., a Qualifying Insurance Company
established to provide reinsurance coverage for surety risks
originating from DPM's affiliates.
Cash provided by operating activities in the first nine months
of 2010 was $21.5 million compared with cash used in operating
activities of $1.1 million in the corresponding prior year period.
The increase in cash provided by operating activities was due
primarily to an increase in gross profit.
The following table summarizes the Company's investing activities for the
periods indicated:
----------------------------------------------------------------------------
Three Months Nine Months
$ thousands --------------------------------------------
Ended September 30, 2010 2009 2010 2009
----------------------------------------------------------------------------
Proceeds on sale of exploration
property $ - $ - $ - $ 6,211
Proceeds on sale of investments
at fair value - 282 593 2,155
Proceeds on sale/(purchase) of
short-term investments 5,209 (14,109) 32,137 11,710
Loan advances - - (3,000) (4,000)
Purchases of investments at fair
value (3,961) (1,976) (5,627) (1,976)
Acquisition of NCS, net of cash
acquired of $1,013 - - (16,987) -
Capital expenditures (23,524) (8,924) (52,614) (22,355)
Other 106 27 106 138
----------------------------------------------------------------------------
Net cash used in investing
activities $ (22,170) $ (24,700) $ (45,392) $ (8,117)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures at Chelopech in the third quarter and first
nine months of 2010 of $12.4 million and $29.9 million were,
respectively, 58% and 68% higher than the corresponding prior year
periods due to the ramp-up of the mine and mill expansion project
in 2010. Capital expenditures at Deno Gold in the third quarter and
first nine months of 2010 were, respectively, $5.4 million and
$14.6 million compared to $1.1 million and $4.2 million in the
corresponding prior year periods. The significant increase in 2010
relative to 2009 was due primarily to the mine and mill expansion
and land acquisition.
On March 24, 2010, the Company completed the acquisition of NCS
from Weatherly International plc ("WTI") through the purchase of
100% of the shares of NCS. The cash consideration provided to WTI
by DPM was $17.0 million, net of cash acquired of $1.0 million.
Prior to its acquisition of NCS in March 2010, DPM advanced $3.0
million to NCS in accordance with the binding letter of intent
signed in January 2010 with WTI for the purchase of NCS.
In June 2009, DPM completed the sale of its Back River
exploration project in Nunavut to Sabina for a cash payment of $6.2
million (Cdn $7.0 million), 17 million Sabina common shares and 10
million Sabina Special Warrants.
In the first nine months of 2009, DPM advanced $4.0 million to
NCS in accordance with the agreement DPM signed with NCS in
December 2008 to advance up to $7.0 million of loans to NCS.
Financing Activities
The following table summarizes the Company's financing activities for the
periods indicated:
----------------------------------------------------------------------------
Three Months Nine Months
$ thousands ---------------------------------------
Ended September 30, 2010 2009 2010 2009
----------------------------------------------------------------------------
Net proceeds of equity financing $ - $ - $ 61,981 $ -
Proceeds on sale of interest in
Dundee Plemeniti Metali d.o.o.
(net of cash acquired of
$1,123) 20,866 - 20,866 -
Repayment of leases (988) (389) (2,704) (734)
Repayment of debt (562) (563) (2,375) (2,376)
Other 9 - 60 -
----------------------------------------------------------------------------
Net cash provided by (used in)
financing activities $ 19,325 $ (952) $ 77,828 $ (3,110)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average Metal Prices
The following table, summarizing the average metal prices for
the London Bullion Market Association ("LBMA") gold, LME copper
Grade A, LME special high grade ("SHG") zinc and LBMA silver
prices, is used to illustrate the Company's average metal price
exposures based on its key reference prices for the periods
indicated.
----------------------------------------------------------------------------
Three Months Nine Months
Average -----------------------------------
Ended September 30, 2010 2009 2010 2009
----------------------------------------------------------------------------
London Bullion gold ($/oz) $ 1,227 $ 960 $ 1,176 $ 930
LME settlement copper ($/lb) 3.29 2.66 3.25 2.11
LME settlement SHG zinc ($/lb) 0.91 0.80 0.96 0.67
LBMA spot silver ($/oz) $ 18.96 $ 14.70 $ 18.07 $ 13.68
----------------------------------------------------------------------------
Non-GAAP Financial Measures
Reference is made to cash cost per tonne of ore processed
because it is understood 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, which is a non-GAAP measure, 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 of
the Company's cash cost measure and Canadian GAAP cost of sales:
----------------------------------------------------------------------------
$ thousands, unless otherwise indicated
For the quarter ended
September 30, 2010 Chelopech Deno Gold Other Total
-------------------------------------------- ---------- --------------------
Ore processed (mt) 254,671 110,908
Cost of sales $ 16,473 $ 10,871 $ 14,253 $ 41,597
Add/(deduct):
Amortization (3,242) (1,103)
Reclamation costs and other (340) (138)
Change in concentrate inventory 197 (1,404)
----------------------------------------------------------------------------
Total cash cost of production $ 13,088 $ 8,226
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash cost per tonne of ore
processed, including royalties $ 51.39 $ 74.17
Cash cost per tonne of ore
processed, excluding royalties $ 46.84 $ 70.50
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ thousands, unless otherwise indicated
For the quarter ended September 30, 2009 Chelopech Deno Gold Total
----------------------------------------------------------------------------
Ore processed (mt) 239,803 66,466
Cost of sales $ 21,898 $ 6,829 $ 28,727
Deduct:
Amortization and other (3,007) (705)
Reclamation costs and other (444) (241)
Change in concentrate inventory (2,742) (548)
Foreign exchange (739) (130)
----------------------------------------------------------------------------
Total cash cost of production $ 14,966 $ 5,205
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash cost per tonne of ore processed,
including royalties $ 62.41 $ N/A
Cash cost per tonne of ore processed,
excluding royalties $ 59.31 $ 78.31
----------------------------------------------------------------------------
1. Cash cost per tonne ore processed is a non-GAAP measure. A reconciliation
of the Company's cash cost per tonne ore processed to cost of sales
under Canadian GAAP for the third quarters of 2010 and 2009 is shown
in the table entitled "Non-GAAP Financial Measures."
2. Refer to the Average Metal Prices section for the average metal prices
used to illustrate the Company's average metal price exposure based on
its key reference prices.
To view the Financial Statements, please click the following
link:
http://media3.marketwire.com/docs/DPM114balancesheet.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. Unless required by securities laws,
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
jgoodman@dundeeprecious.com Dundee Precious Metals Inc. Stephanie
Anderson Executive Vice President and Chief Financial Officer (416)
365-2852 sanderson@dundeeprecious.com Dundee Precious Metals Inc.
Lori Beak Vice President, Investor Relations and Corporate
Secretary (416) 365-5165 lbeak@dundeeprecious.com
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