(All monetary figures are expressed in U.S. dollars unless
otherwise stated)
Dundee Precious Metals announces strong first quarter
results
-- Strong operating performance at Chelopech and favourable market prices
delivered solid results
-- Expansion project at Chelopech is progressing well and remains on track
-- Exploration drilling continues to produce favourable results
-- Solid financial position with $168.9 million in cash
Dundee Precious Metals Inc. ("DPM" or the "Company")
(TSX:DPM)(TSX:DPM.WT)(TSX:DPM.WT.A) today reported 2012 first
quarter adjusted net earnings(1) of $31.3 million ($0.25 per share)
compared to $9.8 million ($0.08 per share) for the same period in
2011. Reported 2012 first quarter net earnings attributable to
common shareholders were $8.2 million ($0.07 per share) compared to
$14.0 million ($0.11 per share) for the same period in 2011.
The quarter over quarter increase in adjusted net earnings was
driven primarily by higher concentrate sales, higher volumes of
payable metals in concentrate sold, higher gold market prices and a
lower cash cost per tonne at Chelopech. These favourable variances
were partially offset by lower copper market prices, and higher
administrative and exploration expenses. Relative to the
corresponding period in 2011, average market prices for gold in the
first quarter of 2012 increased by 22% while average market prices
for copper decreased by 14%. Unrealized net losses of $23.1 million
($26.0 million before income taxes) reduced net earnings
attributable to common shareholders in the first quarter of 2012.
These losses were comprised of unrealized mark-to-market losses of
$16.3 million (Q1 2011 - $4.7 million losses) related to commodity
price hedges and unrealized mark-to-market losses in respect of the
Company's Sabina Gold & Silver Corp. ("Sabina") special
warrants of $9.7 million (Q1 2011 - $4.5 million gains).
"We delivered another quarter of strong results as we benefitted
from increased concentrate and metals production at Chelopech" said
Jonathan Goodman, the Company's President and CEO. "Despite lower
production and sales in the quarter, we still expect that Deno Gold
will meet its 2012 targets. Our expansion project at Chelopech is
progressing well and remains on track to be completed in the third
quarter. We are also making good progress on our planned Krumovgrad
gold project as well as our exploration programs at Deno Gold,
Avala and Dunav."
Adjusted EBITDA(1) for the first quarter of 2012 was $40.8
million compared to $19.2 million in the corresponding period in
2011. This increase was driven by the same factors affecting
adjusted net earnings.
Concentrate production for the first quarter of 2012 was 36,978
tonnes, representing a 93% increase relative to the corresponding
period in 2011. This increase reflects the ramp up of production at
Chelopech. In the first quarter of 2011, ore processed at Chelopech
was negatively impacted by the planned commissioning of the
semi-autogenous grinding mill and the upgraded flotation system.
Concentrate smelted at NCS in the first quarter of 2012 of 41,924
tonnes was 9% higher than the corresponding period in 2011 due
primarily to improved performance of the Ausmelt furnace.
Deliveries of concentrate in the first quarter of 2012 totalled
34,169 tonnes, representing a 44% increase relative to the
corresponding period in 2011 due to increased concentrate
production at Chelopech partially offset by the delay of a copper
shipment at Deno Gold. Relative to the first quarter of 2011,
payable gold in concentrate sold increased by 56% in the first
quarter of 2012, payable copper in concentrate sold increased by
55%, payable zinc in concentrate sold decreased by 24% and payable
silver in concentrate sold decreased by 15%. The increases in
payable gold and copper in concentrate sold were due primarily to
higher production, grades and recoveries at Chelopech.
Cash provided from operating activities, before changes in
non-cash working capital, during the first quarter of 2012 of $48.1
million was $26.2 million higher than the corresponding period in
2011 due primarily to higher volumes of payable metals in
concentrate sold and higher gold market prices.
Capital expenditures during the first quarter of 2012 of $25.8
million increased by 11% relative to the corresponding period in
2011 due primarily to increased construction activities in
connection with NCS' capital program to increase capacity and
improve environmental performance and operational efficiency.
As at March 31, 2012, DPM maintained a strong financial position
with consolidated cash and cash equivalents of $168.9 million and
investments valued at $79.6 million.
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 in Nunavut, through its interest
in Sabina, are progressing well and continue to show potential to
add significant value to the Company over the longer term.
On April 30, 2012, the Namibian Minister of Environment and
Tourism ("Minister") issued a letter to the Company relating to the
operation of its Tsumeb smelter owned by NCS. "We are currently
assessing the implications of the Minister's directives and are not
able to provide definitive guidance at this time" said Jonathan
Goodman. "We are committed to completing the operational
improvements we identified when we acquired NCS and to working with
the Government to ensure the right steps are being taken to avoid
any unnecessary impacts." NCS is currently planning to advance the
30 day maintenance on the Ausmelt furnace to mid-May and is
evaluating its ability to advance the fugitive portion of Project
2012, currently scheduled to be completed by the end of the year.
In the event NCS production is curtailed by 50%, the Company
currently estimates the cost will be in the region of $2 million
per month. The Company is endeavoring to minimize the impacts on
NCS and its employees, however, temporary lay-offs may be
unavoidable. At this time, the Company does not expect Chelopech
production to be impacted and is working with NCS' customers and
suppliers to help mitigate the impact of the curtailment extending
to the end of the year. The Company remains optimistic that NCS'
production can be restored before year end and will provide further
updates when available.
(1) Adjusted earnings, adjusted basic earnings per share and
adjusted earnings before interest, taxes, depreciation and
amortization ("EBITDA") are not defined under generally accepted
accounting principles ("GAAP"). 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-GAAP Measures section of management's discussion
and analysis for the three months ended March 31, 2012 (the
"MD&A") for further discussion of these items, including
reconciliations to applicable International Financial Reporting
Standards ("IFRS") measures.
Key Financial and Operational Highlights
----------------------------------------------------------------------------
$ millions, except where otherwise noted Three Months
---------------------
Ended March 31, 2012 2011
----------------------------------------------------------------------------
Revenue 100.0 68.4
Gross profit 48.2 22.0
Earnings before income taxes 4.3 15.7
Net earnings attributable to common shareholders 8.2 14.0
Basic earnings per share ($) 0.07 0.11
Adjusted EBITDA(1) 40.8 19.2
Adjusted net earnings(1) 31.3 9.8
Adjusted basic earnings per share ($)(1) 0.25 0.08
Cash provided from operating activities, before changes
in working capital 48.1 21.9
Copper and zinc concentrates produced (mt) 36,978 19,135
Metals in concentrate produced:
Gold (ounces) 41,910 19,585
Copper ('000s pounds) 12,234 5,782
Zinc ('000s pounds) 4,443 4,761
Silver (ounces) 187,526 157,666
NCS - concentrate smelted (mt) 41,924 38,532
Deliveries of concentrate (mt) 34,169 23,724
Payable metals in concentrate sold:
Gold (ounces) 33,585 21,582
Copper ('000s pounds) 10,413 6,724
Zinc ('000s pounds) 3,845 5,031
Silver (ounces) 114,399 135,136
Cash cost of sales per ounce of gold sold, net of by-
product credits ($)(1)
Chelopech (213) (54)
Deno Gold 703 247
Consolidated (110) 34
----------------------------------------------------------------------------
(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 non-GAAP measures. Refer to the MD&A for reconciliations to
applicable IFRS measures.
DPM's first quarter reports, including its condensed interim
unaudited consolidated financial statements and MD&A for the
three months ended March 31, 2012, 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 review these results is scheduled
for Wednesday, May 9, 2012 at 9:00 a.m. (E.S.T). The call will be
webcast live, audio only, at: http://www.gowebcasting.com/3302.
Listen only dial-in numbers are 416-340-8061 or North American Toll
Free at 1-866-225-0198. 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 47.3% 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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