TORONTO, ONTARIO--(Marketwired - May 8, 2013) - Dundee Precious Metals Inc. ("DPM" or the "Company") (DPM.TO)(DPM-WTA.TO) today reported first quarter 2013 adjusted net earnings(1) of $6.6 million ($0.05 per share) compared to $31.3 million ($0.25 per share) for the same period in 2012. Reported first quarter 2013 net earnings attributable to common shareholders were $0.7 million ($0.01 per share) compared to $8.2 million ($0.07 per share) for the same period in 2012.
The quarter over quarter decrease in adjusted net earnings was due primarily to higher operating expenses and lower volumes of concentrate smelted at Tsumeb, driven by a planned outage during the quarter, which resulted in higher treatment charges for Chelopech, lower metal prices, and higher cost per tonne of concentrate sold, depreciation and taxes. These unfavourable variances were partially offset by higher volumes of payable gold and copper in concentrate sold and a stronger U.S. dollar relative to the ZAR and the Armenian dram. Net earnings attributable to common shareholders were also impacted by after-tax unrealized mark-to-market gains of $1.3 million (2012 - unrealized losses of $14.6 million) related to the Company's metal price hedges and unrealized losses of $7.2 million (2012 - $8.5 million) on the investment in Sabina Gold & Silver Corp. ("Sabina") special warrants.
"Our performance in the first quarter of 2013 reflected strong operating results from Chelopech following the completion of our mine expansion in December. Volumes at Kapan and Tsumeb were each lower due to one-off commissioning activities and, in the case of Kapan, lower grades and equipment availability," said Rick Howes, President and CEO. "I am pleased to say that most of the issues have been resolved and each operation is now returning to expected levels. We are in good shape financially with over $250 million in cash and undrawn committed bank lines, which positions us well despite the recent market volatility."
Adjusted EBITDA(1) in the first quarter was $26.5 million, compared to $40.8 million in the corresponding period in 2012, driven by the same factors affecting adjusted net earnings, with the exception of depreciation and income tax.
Concentrate production in the first quarter of 2013 totalled 37,402 tonnes compared to 36,978 tonnes in the corresponding period in 2012 due primarily to higher volumes of ore mined and processed at Chelopech following the completion of the mine and mill expansion project in the fourth quarter of 2012, partially offset by lower copper grades at Chelopech, and lower zinc grades and volumes of ore processed at Kapan.
Concentrate smelted at Tsumeb in the first quarter of 2013 of 34,493 tonnes was 18% lower than the corresponding period in 2012 due primarily to the commissioning of Project 2012 environmental improvements during February and March 2013, which was impacted by contractor issues and a number of engineering and construction related flaws identified and addressed during final commissioning. As a result, the commissioning period was extended from nine days to 28 days. January 2013 smelter performance, on the other hand, was better than expected and, despite minor residual performance issues, the new dust handling system has performed well in the second quarter. Over the balance of the year, Tsumeb's results are expected to be much stronger after the removal of the current curtailment, planned increases in volumes and scheduled increases in treatment charges. These improvements will be most evident after the annual Ausmelt furnace maintenance and commissioning of the second oxygen plant scheduled for June/July 2013.
Deliveries of concentrate in the first quarter of 2013 of 36,403 tonnes were 7% higher than the corresponding period in 2012 due primarily to higher concentrate production at Chelopech partially offset by lower zinc concentrate production at Kapan. In the first quarter of 2013, payable gold in concentrate sold was up 14% and payable copper in concentrate sold increased by 9%.
Consolidated cash cost of sales per ounce of gold sold, net of by-product credits, in the first quarter of 2013 was $267 compared to negative $112 for the first quarter of 2012. This quarter over quarter increase was due primarily to lower realized copper and silver prices and higher treatment charges.
Cash provided from operating activities, before changes in non-cash working capital, during the first quarter of 2013 was $24.3 million down $23.8 million from the corresponding prior year period due primarily to lower adjusted net earnings and lower proceeds from settlement of derivative commodity contracts.
Cash outlays for capital items in the first quarter of 2013 totalled $61.2 million compared to $25.8 million in the corresponding period in 2012 due primarily to the construction activities at Tsumeb related to the new acid plant and Project 2012, a capital program to increase capacity and improve environmental performance and operational efficiency.
As at March 31, 2013, DPM maintained its solid financial position with minimal debt, representing 10% of total capitalization, a consolidated cash position of $101.6 million and an investment portfolio valued at $52.7 million. In the first quarter of 2013, DPM refinanced $81.25 million in term loans, essentially shifting the Chelopech loans to DPM, and closed a $150 million committed long-term revolving credit facility with a small consortium of banks, including its existing lenders.
For 2013, our mine production guidance remains unchanged from the guidance provided in the MD&A issued on February 15, 2013. Mine output at Chelopech is expected to range between 1.90 million and 2.05 million tonnes of ore, reflecting the expanded capacity of the mine and mill. Mine output at Kapan is expected to range between 550,000 and 600,000 tonnes. With the extended commissioning period in the first quarter of 2013, we have reduced the guidance on concentrate smelted at Tsumeb to a range between 185,000 and 200,000 tonnes, which reflects the existing temporary curtailment being lifted by no later than mid-year 2013.
The Company's estimated metals production for 2013 is set out in the following table:
|Metals contained in concentrate produced:||Chelopech||Kapan||Total|
|Gold (ounces)||125,000 - 143,000||25,000 - 30,000||150,000 - 173,000|
|Copper (million pounds)||43.0 - 46.0||2.5 - 3.0||45.5 - 49.0|
|Zinc (million pounds)||-||12.0 - 14.5||12.0 - 14.5|
|Silver (ounces)||182,000 - 195,000||438,000 - 528,000||620,000 - 723,000|
Assuming current exchange rates, 2013 unit cash cost per tonne of ore processed is expected to remain in a range between $42 and $46 at Chelopech and between $71 and $80 at Kapan. The cash cost per tonne of concentrate smelted at Tsumeb is expected to range between $345 and $370, up from our previous guidance of $320 to $355.
For 2013, the Company's growth capital expenditures relate primarily to the construction of an acid plant at Tsumeb, stage 1 of the Pyrite Project at Chelopech, the development work and construction activities related to the Krumovgrad Gold Project, and exploration and/or development work being undertaken to enhance underground operations and advance the open pit project at Kapan. In aggregate, these expenditures are expected to range between $210 million and $240 million, down from the previous guidance of between $240 million and $300 million reflecting our initial response to the recent decline in metal prices and delays at Krumovgrad related in part to upcoming local elections. Sustaining capital expenditures(1) are expected to range between $35 million and $45 million. Further details can be found in the Company's MD&A under the section "2013 Outlook".
The 2013 outlook provided above may not occur evenly throughout the year. The estimated metals contained in concentrate produced and volumes of concentrate smelted may vary from quarter to quarter depending on the areas being mined, the timing of concentrate deliveries and planned outages, and in the case of Tsumeb, the lifting of the existing temporary production curtailment. Also, the rate of capital expenditures may vary from quarter to quarter based on the schedule for, and execution of, each capital project and, where applicable, receipt of the necessary permits and approvals.
(1) Adjusted net earnings, adjusted basic earnings per share, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), and growth and sustaining capital expenditures are not defined measures under International Financial Reporting Standards ("IFRS"). Presenting these measures from period to period helps management and investors evaluate earnings and cash flow trends more readily in comparison with results from prior periods. Refer to the "Non-GAAP Financial Measures" section of the management's discussion and analysis for the three months ended March 31, 2013 (the "MD&A") for further discussion of these items, including reconciliations to net earnings attributable to common shareholders and earnings before income taxes.
Key Financial and Operational Highlights
|$ millions, except where noted |
Ended March 31,
|Earnings before income taxes||4.4||4.3|
|Net earnings attributable to common shareholders||0.7||8.2|
|Basic earnings per share||0.01||0.07|
|Adjusted EBITDA (1)||26.5||40.8|
|Adjusted net earnings (1)||6.6||31.3|
|Adjusted basic earnings per share (1)||0.05||0.25|
|Cash flow provided from operating activities, before changes in non-cash working capital||24.3||48.1|
|Concentrate produced (mt)||37,402||36,978|
|Metals in concentrate produced:|
|Copper ('000s pounds)||12,602||12,234|
|Zinc ('000s pounds)||3,358||4,443|
|Tsumeb - concentrate smelted (mt)||34,493||41,924|
|Deliveries of concentrates (mt)||36,403||34,169|
|Payable metals in concentrate sold: |
|Copper ('000s pounds)||11,314||10,413|
|Zinc ('000s pounds)||3,003||3,845|
|Cash cost of sales per ounce of gold sold, net of by-product credits ($) (1)||267||(112)|
(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 condensed interim unaudited consolidated financial statements, and MD&A for the three months ended March 31, 2013, are posted on the Company's website at www.dundeeprecious.com and have been filed on Sedar at www.sedar.com.
The Company will be holding a call to discuss its 2013 first quarter results on Thursday, May 9, 2013, at 9:00 a.m. (E.S.T.). Participants are invited to join the live webcast (audio only) at: http://www.gowebcasting.com/4252. Alternatively participants can access a listen only telephone option at 416-695-6616 or North America Toll Free at 1-800-766-6630. A replay of the call will be available at 905-694-9451 or North America Toll Free at 1-800-408-3053, passcode 4317707. The audio webcast for this conference call will also be archived and available on the Company's website at www.dundeeprecious.com.
Dundee Precious Metals Inc. is a 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 53.1% owned subsidiary, Avala Resources Ltd., its 45.5% interest in Dunav Resources Ltd. ("Dunav") and its 10.7% 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.