(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$0.42) which are
exercisable for a period of 24 months from issuance, subject to acceleration
under certain circumstances.
Exploration programs at and around the Company's existing mine sites in Bulgaria
and Armenia as well as in Serbia, through its interests in Avala and Dunav, and
Nunavut, through Sabina, are progressing well and continue to show potential to
add significant value to the Company over the longer term.
(1) Adjusted earnings, adjusted basic earnings per share and adjusted earnings
before interest, taxes, depreciation and amortization ("EBITDA") are not defined
under International Financial Reporting Standards ("IFRS"). Presenting these
measures from period to period helps management and investors evaluate earnings
trends more readily in comparison with results from prior periods. Refer to the
Non-IFRS Measures section of management's discussion and analysis for the three
and nine months ended September 30, 2011 (the "MD&A") for further discussion of
these items, including reconciliations to net earnings attributable to common
shareholders.
Key Financial and Operational Highlights
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$ 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
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(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.
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