(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 reported third quarter
2011 net earnings attributable to common shareholders of $40.3
million ($0.32 per share) compared to $35.6 million ($0.28 per
share) for the same period in 2010. Adjusted net earnings(1) in the
third quarter of 2011 were $32.4 million ($0.26 per share) compared
to $14.8 million ($0.12 per share) for the same period in 2010.
The quarter over quarter increase in adjusted net earnings was
driven by stronger metal prices and higher concentrate sales.
Higher metal pricing was led by gold and copper, which increased by
39% and 24%, respectively, compared with the third quarter of 2010.
The increase in concentrate sales reflects increased production at
Chelopech following the commissioning of the semi-autogenous
grinding ("SAG") mill in the first quarter of 2011 and at Deno Gold
following the completion of the mine and mill expansion in the
fourth quarter of 2010. Unrealized net gains of $7.9 million ($9.3
million before income taxes) added to reported net earnings
attributable to common shareholders during the quarter. These gains
were comprised of unrealized mark-to-market gains of $46.9 million
(2010 - $nil) related to copper hedges entered into earlier this
year, partially offset by unrealized mark-to-market losses in
respect of the Company's Sabina Gold & Silver Corp. ("Sabina")
special warrants of $37.6 million (2010 - $24.1 million gain).
For the first nine months of 2011, adjusted net earnings
increased to $48.2 million compared with $15.9 million in the
corresponding period in 2010. This increase was due primarily to
favourable metal prices and higher concentrate sales. Relative to
the first nine months of 2010, quoted prices for gold increased by
30%, copper increased by 29% and silver prices doubled while
concentrate sales increased by 28%. Net earnings attributable to
common shareholders of $63.4 million ($0.51 per share) compared to
$1.5 million ($0.01 per share) in the corresponding period in 2010
were also impacted by several items, including unrealized gains on
copper hedges of $42.5 million (2010 - $nil), unrealized losses
related to the Company's Sabina special warrants of $30.8 million
(2010 - $38.1 million gain), and an impairment charge of $50.6
million taken in 2010 against the planned construction of a metals
processing facility.
"We fully expect production to continue to increase over the
balance of the year and the first half of 2012 as Chelopech and NCS
finish their expansion projects" said Jonathan Goodman, the
Company's President and CEO. "This increasing production, combined
with strong metal pricing, delivered record cash flow and earnings
this quarter and further strengthened our financial position.
Today, with our operating cash flow and significant cash position,
we are well positioned to fund our current capital expansion
programs, exploration drilling activities and our planned
Krumovgrad gold project, which continues to advance through the
approval process."
Adjusted EBITDA(1) in the third quarter and first nine months of
2011 was $46.7 million and $80.5 million, respectively, compared to
$16.7 million and $29.7 million in the corresponding periods in
2010. These increases were driven by the same factors affecting
adjusted net earnings.
Concentrate production for the three and nine months ended
September 30, 2011 was 34,704 tonnes and 82,102 tonnes,
respectively, representing a 41% and 19% increase relative to the
corresponding periods in 2010. These increases reflect the ramp up
of production at Chelopech and higher Deno Gold production as a
result of the mine and mill expansion completed in the fourth
quarter of 2010. In the third quarter of 2011, Deno mine production
was lower than anticipated due to disruptions in equipment
availability and a greater proportion of ore mined coming from
development ore instead of production ore which resulted in higher
dilution and lower grades. This was partially offset by processing
higher volumes of oxidized ore through the mill but resulted in
lower recoveries.
Deliveries of concentrates for the three and nine months ended
September 30, 2011 were 38,142 tonnes and 86,925 tonnes,
respectively, representing a 47% and 28% increase relative to the
corresponding periods in 2010 due to increased production. Relative
to the third quarter of 2010, payable gold in concentrate sold
increased by 58%, payable copper in concentrate sold increased by
51% and payable silver in concentrate sold increased by 37%.
Payable zinc in concentrate sold decreased by 6% due to lower
grades and recoveries. Relative to the first nine months of 2010,
payable gold in concentrate sold increased by 31%, payable copper
in concentrate sold increased by 25%, payable zinc in concentrate
sold increased by 39% and payable silver in concentrate sold
increased by 49%.
Cash provided from operating activities before changes in
non-cash working capital during the third quarter and first nine
months of 2011 of $42.4 million and $81.3 million, respectively,
was $21.9 million and $44.9 million higher than the corresponding
periods in 2010 due primarily to stronger metal prices and higher
payable metals in concentrate sold.
Capital expenditures during the third quarter and first nine
months of 2011 of $38.6 million and $87.4 million increased by 64%
and 66%, respectively, over the corresponding periods in 2010 due
to the mine and mill expansion project at Chelopech and the
expansion and environmental capital being incurred at NCS to
increase its capacity and efficiency.
As at September 30, 2011, DPM maintained a strong financial
position with consolidated cash and cash equivalents of $159.3
million and investments valued at $81.3 million.
On September 1, 2011, Dunav (previously Queensland Minerals
Ltd.) exercised its option agreement with DPM, wherein DPM
received, amongst other consideration, a 47.5% ownership interest
in Dunav in exchange for DPM's remaining Serbian properties, namely
its Surdulica molybdenum, Tulare copper and gold and other early
stage projects in Serbia directly held by Dundee Moly Company
d.o.o. As a result, DPM now holds 47,257,922 common shares and
36,790,009 warrants to purchase common shares of Dunav at a unit
price of $0.40 (Cdn$0.42) which are exercisable for a period of 24
months from issuance, subject to acceleration under certain
circumstances.
Exploration programs at and around the Company's existing mine
sites in Bulgaria and Armenia as well as in Serbia, through its
interests in Avala and Dunav, and Nunavut, through Sabina, are
progressing well and continue to show potential to add significant
value to the Company over the longer term.
(1) Adjusted earnings, adjusted basic earnings per share and
adjusted earnings before interest, taxes, depreciation and
amortization ("EBITDA") are not defined under International
Financial Reporting Standards ("IFRS"). Presenting these measures
from period to period helps management and investors evaluate
earnings trends more readily in comparison with results from prior
periods. Refer to the Non-IFRS Measures section of management's
discussion and analysis for the three and nine months ended
September 30, 2011 (the "MD&A") for further discussion of these
items, including reconciliations to net earnings attributable to
common shareholders.
Key Financial and Operational Highlights
----------------------------------------------------------------------------
$ millions, except where noted Three Months Nine Months
Ended September 30, 2011 2010 2011 2010
----------------------------------------------------------------------------
Revenue 112.5 59.1 250.0 140.5
Gross profit 51.7 17.8 93.7 35.0
Net earnings attributable to
common shareholders 40.3 35.6 63.4 1.5
Basic earnings per share 0.32 0.28 0.51 0.01
Adjusted EBITDA(1) 46.7 16.7 80.5 29.7
Adjusted net earnings(1) 32.4 14.8 48.2 15.9
Adjusted basic earnings per
share(1) 0.26 0.12 0.39 0.14
Cash flow from operations,
before changes in working
capital 42.4 20.5 81.3 36.4
Concentrate produced (mt) 34,704 24,583 82,102 68,807
Metals in concentrate produced:
Gold (ounces) 32,221 22,032 79,713 67,698
Copper ('000s pounds) 11,140 7,831 25,866 22,023
Zinc ('000s pounds) 4,692 4,850 14,455 12,710
Silver (ounces) 152,865 176,071 492,949 437,293
NCS - concentrate smelted (mt) 55,009 36,041 132,815 81,922
Deliveries of concentrates (mt) 38,142 26,029 86,925 67,811
Payable metals in concentrate
sold:
Gold (ounces) 34,125 21,648 78,592 59,883
Copper ('000s pounds) 11,410 7,577 25,514 20,459
Zinc ('000s pounds) 4,918 5,222 14,072 10,138
Silver (ounces) 198,894 145,019 478,660 320,179
Cash cost of sales per ounce of
gold sold, net of by-
product credits(1)
Chelopech (34) 47 (3) 292
Deno Gold 106 478 119 441
Consolidated 3 192 31 329
----------------------------------------------------------------------------
(1) Adjusted EBITDA; adjusted net earnings; adjusted basic earnings per
share; and cash cost of sales per ounce of gold sold, net of by-product
credits are not defined measures under IFRS. Refer to the MD&A for
reconciliations to IFRS measures.
DPM's third quarter reports, including its condensed interim
unaudited consolidated financial statements and MD&A for the
three and nine months ended September 30, 2011, are posted on the
Company's website at www.dundeeprecious.com and have been filed on
Sedar at www.sedar.com.
An analyst conference call to discuss these results is scheduled
for Thursday, November 3, 2011, at 9:00 a.m. (EST). The call will
be webcast live (audio only) at: http://www.gowebcasting.com/2882.
Listen only telephone option at 416-340-2218 or North America Toll
Free at 1-866-226-1793. Replay available at 905-694-9451 or North
America Toll Free at 1-800-408-3053, passcode 3547687. The audio
webcast for this conference call will be archived and available on
the Company's website at www.dundeeprecious.com.
Dundee Precious Metals Inc. is a well-financed, Canadian based,
international gold mining company engaged in the acquisition,
exploration, development, mining and processing of precious metals.
The Company's principal operating assets include the Chelopech
operation, which produces a gold, copper and silver concentrate,
located east of Sofia, Bulgaria; the Kapan operation, which
produces a gold, copper, zinc and silver concentrate, located in
southern Armenia; and the Tsumeb smelter, a concentrate processing
facility located in Namibia. DPM also holds interests in a number
of developing gold properties located in Bulgaria, Serbia, and
northern Canada, including interests held through its 51.4% owned
subsidiary, Avala Resources Ltd., its 47.7% interest in Dunav
Resources Ltd. ("Dunav") and its 11.6% interest in Sabina Gold
& Silver Corp.
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 and output, 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)
365-2408jgoodman@dundeeprecious.com Dundee Precious Metals Inc.
Hume Kyle Executive Vice President and Chief Financial Officer
(416) 365-5091hkyle@dundeeprecious.com Dundee Precious Metals Inc.
Lori Beak Senior Vice President, Investor & Regulatory Affairs
and Corporate Secretary (416) 365-5165lbeak@dundeeprecious.com
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