(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 2011 fourth
quarter adjusted net earnings (1) of $31.9 million ($0.25 per
share) compared to $6.7 million ($0.05 per share) for the same
period in 2010. Reported fourth quarter 2011 net earnings
attributable to common shareholders were $22.7 million ($0.18 per
share) compared to $21.5 million ($0.17 per share) for the same
period in 2010.
The quarter over quarter increase in adjusted net earnings was
driven by higher volumes of payable metals in concentrate sold,
higher volumes of concentrate smelted at NCS, and higher metal
prices partially offset by higher exploration expenses. The
increase in concentrate sales reflects increased production at
Chelopech resulting from the continued ramp-up of the mine and mill
expansion. Net earnings attributable to common shareholders were
also impacted by unrealized net losses of $9.2 million ($11.3
million pre-tax) during the quarter. These losses were comprised of
unrealized mark-to-market losses of $19.3 million (2010 - $0.1
million unrealized losses) related to copper hedges, the vast
majority of which were entered into in the second half of 2011,
partially offset by unrealized mark-to-market gains in respect of
the Company's Sabina Gold & Silver Corp. ("Sabina") special
warrants of $8.0 million (2010 - $11.1 million unrealized
gains).
For 2011, adjusted net earnings increased to $80.1 million
($0.64 per share) compared with $22.6 million ($0.19 per share) in
2010. This increase was due primarily to favourable metal prices
and higher concentrate sales partially offset by higher exploration
and general and administrative expenses. Relative to 2010, 2011
quoted prices for gold increased by 28%, copper prices increased by
17% (25% including copper hedges) and silver prices increased by
74% while concentrate sales increased by 36%. 2011 net earnings
attributable to common shareholders of $86.1 million ($0.69 per
share) compared to $22.9 million ($0.20 per share) in 2010 were
also impacted by several items, including unrealized gains on
copper hedges of $23.2 million (2010 - $0.1 million unrealized
losses), unrealized losses related to the Company's Sabina special
warrants of $22.8 million (2010 - $49.7 million unrealized gains),
and a net impairment charge of $50.6 million taken in 2010 against
the planned construction of a metals processing facility.
"2011 was a very good year for DPM from both an operating and
financial perspective. Increasing production at Chelopech and Deno
and stronger metal prices contributed to record earnings and cash
flow," said Jonathan Goodman, President and CEO. "Our projects at
Chelopech and NCS to expand and upgrade these facilities are
progressing as planned and remain on budget. We are in a strong
financial position with a consolidated cash position of $173
million and are well positioned to fund our current capital
expansion programs, exploration drilling activities and to advance
our planned Krumovgrad Gold Project, which continues to progress
through the approval process. We expect that 2012 will be an even
better year for DPM and its shareholders."
Adjusted EBITDA (1) in the fourth quarter and twelve months of
2011 was $37.0 million and $117.5 million, respectively, compared
to $15.0 million and $45.3 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 twelve months ended
December 31, 2011 was 43,151 tonnes and 125,253 tonnes,
respectively, representing a 58% and 30% increase relative to the
corresponding periods in 2010. The continued ramp-up of mine
production at Chelopech and the completion of the mine and mill
expansion at Deno Gold in the fourth quarter of 2010 contributed to
these increases although lower grades and recoveries for copper and
zinc in the second half of 2011, relative to the corresponding
period in 2010, due primarily to disruptions in equipment
availability, resulted in a decrease in concentrate production
quarter over quarter at Deno Gold.
Deliveries of concentrates for the three and twelve months ended
December 31, 2011 were 36,864 tonnes and 123,789 tonnes
representing a 58% and 36% increase, respectively, relative to the
corresponding periods in 2010 due to increased production. Relative
to the fourth quarter of 2010, 2011 fourth quarter payable gold in
concentrate sold increased by 54% and payable copper in concentrate
sold increased by 64%. Payable silver in concentrate sold decreased
by 22% and payable zinc in concentrate sold decreased by 31% due to
lower grades and recoveries for silver and zinc at Deno Gold.
Relative to 2010, 2011 payable gold in concentrate sold increased
by 37%, payable copper in concentrate sold increased by 35%,
payable zinc in concentrate sold increased by 19% and payable
silver in concentrate sold increased by 27%.
Consolidated cash cost of sales per ounce of gold sold, net of
by-product credits, in the fourth quarter of 2011, was negative
$147 compared to negative $34 in the fourth quarter of 2010. The
quarter over quarter decrease was due primarily to higher aggregate
volumes of payable metals in concentrate sold and generally
stronger metal prices. Cash cost of sales per ounce of gold sold,
net of by-product credits, in 2011, was negative $57 compared to
cash cost of $238 in 2010. The year over year decrease was due to
the same factors affecting the fourth quarter.
Cash provided from operating activities before changes in
non-cash working capital during the fourth quarter and twelve
months of 2011 of $41.8 million and $123.6 million was $24.3
million and $69.7 million higher, respectively, than the
corresponding periods in 2010 due primarily to stronger metal
prices, higher volumes of payable metals in concentrate sold and
proceeds from settlement of copper derivative contracts.
Capital expenditures in the fourth quarter and twelve months of
2011 of $30.2 million and $117.6 million increased by 11% and 47%,
respectively, over the corresponding periods in 2010 due primarily
to increased growth capital expenditures associated with the mine
and mill expansion project at Chelopech and the upgrades being made
at NCS to improve the smelter's environmental performance,
efficiency and output.
As at December 31, 2011, DPM maintained a strong financial
position with minimal debt, representing 10% of total
capitalization, a consolidated cash position of $172.8 million and
an investment portfolio valued at $107.6 million.
In December 2011, an independent and technically competent
review team was brought in to perform a review to ensure that both
the Namibian government and the Company had properly identified the
issues in respect of concerns raised regarding the disposal and
management of arsenic in concentrate processed at NCS. The review
was completed in January 2012 and the report to the Namibian
government is expected to be issued in the near future. The Company
believes that the program of upgrades and improvements completed to
date and scheduled over the coming years properly addresses the
issues and concerns raised and that the report will support this
view.
Strong near-mine exploration results were achieved in Bulgaria
and Armenia as well as continued success in Serbia, through its
interest in Avala and Dunav, and in Nunavut, through Sabina.
At Deno Gold, the discovery of "Shahumyan East", a newly defined
mineralized domain adjacent to the Shahumyan deposit contains
potential for extensions to the existing underground operation as
well as expansion to the open pit project currently under study.
Shahumyan East is located east of the Shahumyan east fault under 60
to 150 metres of cover. The development of this area from surface
is in its infancy as its discovery was made in 2011 as part of the
160 metre by 160 metre drill out for the open pit project. The open
pit project drilling program to date continues to outline wide (10
to 35 metres) zones of economically viable mineralization over an
area of 2.5 kilometres by 1.5 kilometres while regional mapping and
geophysics results on the Kapan Exploration license returned
drill-ready targets. Conventional underground exploration at the
Shahumyan mine commenced in September 2011 with all holes to date
extending known mineralization to the 550 mining level. It has also
defined new vein sets and confirmed the existence of extensive
low-grade halos around vein sets seen in the surface drilling.
Previous Soviet era drilling (surface & underground) had only
sampled the veins and had not fully defined the mineralization of
the Shahumyan deposit. Further information can be found in a
separate press release issued by the Company today concerning Deno
Gold's open pit project drilling and underground drilling
results.
Underground drilling at Chelopech also defined extensions to
Blocks 19 and 147 and identified encouraging intercepts in
Chelopech North. Overall, the Company's increased exploration
activities are an important component of its growth strategy and
continue to show potential to add significant value to the Company
over time.
The Company also made good progress on a potential project to
economically recover the 40% to 45% of the gold contained in the
Chelopech ore mined that is currently being rejected and placed
into tailings or returned underground as paste fill. This project
has the potential to economically recover most of this gold as well
as additional silver and copper which is associated with the
rejected pyrite minerals. At the full production rate of two
million tonnes per annum of ore mined, approximately 400,000 tonnes
of pyrite concentrate can be produced containing 77,000 to 90,000
ounces of gold, 128,000 to 193,000 ounces of silver, and 4.4
million to 6.2 million pounds of copper. A conceptual study and
initial testing was completed in the third and fourth quarters of
2011, respectively. This work indicates that a pressure oxidation
(autoclave) process can be used to produce a low mass, metals rich
residue containing gold and silver, which in turn could be sold to
existing smelters or leach plants. A scoping study to determine the
optimal processing configuration and the associated capital and
operating costs is currently underway and is expected to be
completed in the second quarter of 2012.
For 2012, mine output at Chelopech is expected to range between
1.7 million and 1.85 million tonnes of ore, in line with its
planned ramp-up to an annualized production rate of two million
tonnes of ore, which remains on track. Mine output at Deno Gold is
expected to range between 550,000 and 610,000 tonnes. Concentrate
smelted at NCS is expected to range between 174,000 and 184,000
tonnes.
The Company's estimated metals contained in concentrate produced
for 2012 is set forth in the following table:
----------------------------------------------------------------------------
Metals contained in Chelopech Deno Gold Total
concentrate
produced:
----------------------------------------------------------------------------
Gold (ounces) 103,000 - 115,000 25,000 - 28,000 128,000 - 143,000
Copper (million 38.0 - 43.0 2.9 - 3.2 40.9 - 46.2
pounds)
Zinc (million pounds) - 18.0 - 20.0 18.0 - 20.0
Silver (ounces) 186,000 - 206,000 473,000 - 526,000 659,000 - 732,000
----------------------------------------------------------------------------
The estimated metals contained in concentrate produced for 2012
are in line with previously released life of mine production
numbers for Chelopech as per the NI 43-101 Technical Report for the
Chelopech Project, Bulgaria, filed on Sedar on March 25, 2011. In
the third quarter of 2012, the mine is expected to reach the full
production run rate of two million tonnes per annum following the
installation of the underground crusher and conveyor, which is
expected to be completed in July 2012.
Assuming current exchange rates, 2012 unit cash cost per tonne
of ore processed is expected to range between $46 and $50 at
Chelopech and between $59 and $65 at Deno Gold. The cash cost per
tonne of concentrate smelted at NCS is expected to range between
$325 and $345.
For 2012, the Company's approved growth capital expenditures are
expected to range between $150 million and $175 million and relate
primarily to the mine and mill expansion at Chelopech, the plant
upgrade and expansion at NCS, the development work related to the
Krumovgrad Gold Project, and exploration or development work being
done to enhance underground operations and advance the open pit
project at Deno Gold. Sustaining capital expenditures are expected
to range between $30 million and $37 million. Further details can
be found in the Company's MD&A under the section "2012
Outlook".
(1) Adjusted net earnings, adjusted basic earnings per share and
adjusted earnings before interest, taxes, depreciation and
amortization ("EBITDA"), and growth and sustaining capital
expenditures are not defined under International Financial
Reporting Standards ("IFRS"). Presenting these measures from period
to period helps management and investors evaluate earnings and cash
flow trends more readily in comparison with results from prior
periods. Refer to the "Non-IFRS Financial Measures" section of
management's discussion and analysis for the three and twelve
months ended December 31, 2011 (the "MD&A") for further
discussion of these items, including reconciliations to net
earnings attributable to common shareholders and earnings before
income taxes.
Key Financial and Operational Highlights
----------------------------------------------------------------------------
$ millions, except where noted Three Months Twelve Months
------------------- -------------------
Ended December 31, 2011 2010 2011 2010
----------------------------------------------------------------------------
Revenue 88.5 61.5 338.5 202.0
Gross profit 38.9 16.6 130.8 51.2
Earnings before income taxes 16.6 14.9 88.6 10.4
Net earnings attributable to common
shareholders 22.7 21.5 86.1 22.9
Basic earnings per share 0.18 0.17 0.69 0.20
Adjusted EBITDA (1) 37.0 15.0 117.5 45.3
Adjusted net earnings (1) 31.9 6.7 80.1 22.6
Adjusted basic earnings per share
(1) 0.25 0.05 0.64 0.19
Cash flow from operations, before
changes in working capital 41.8 17.5 123.6 53.9
Concentrate produced (mt) 43,151 27,228 125,253 96,035
Metals in concentrate produced:
Gold (ounces) 41,044 27,030 120,757 94,728
Copper ('000s pounds) 13,928 8,350 39,794 30,373
Zinc ('000s pounds) 5,130 6,380 19,585 19,089
Silver (ounces) 177,870 203,161 670,819 640,454
NCS - concentrate smelted (mt) 47,588 37,635 180,403 119,557
Deliveries of concentrates (mt) 36,864 23,346 123,789 91,157
Payable metals in concentrate sold:
Gold (ounces) 31,434 20,469 110,026 80,352
Copper ('000s pounds) 11,324 6,905 36,838 27,364
Zinc ('000s pounds) 2,826 4,114 16,898 14,252
Silver (ounces) 117,254 150,556 595,914 470,735
Cash cost of sales per ounce of
gold sold, net of by- product
credits(1)
Chelopech (190) (73) (112) 210
Deno Gold 120 34 115 311
Consolidated (147) (34) (57) 238
----------------------------------------------------------------------------
(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.
A complete set of DPM's audited consolidated financial
statements and the notes thereto, and MD&A for the year ended
December 31, 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 Friday, February 17, 2012, at 9:00 a.m. (EST). The call will be
webcast live (audio only) at: http://www.gowebcasting.com/3030.
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 6563704. 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 11.5% 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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