TORONTO, ONTARIO--(Marketwired - July 31, 2013) - Dundee Precious Metals Inc. ("DPM" or the "Company") (DPM.TO)(DPM-WTA.TO) today reported second quarter 2013 net earnings attributable to common shareholders of $15.9 million ($0.12 per share) compared to $9.6 million ($0.08 per share) for the same period in 2012. Net earnings attributable to common shareholders in the first six months of 2013 were $16.6 million ($0.13 per share) compared to $17.8 million ($0.14 per share) for the same period in 2012.
"Our second quarter performance continued to reflect solid operating results from Chelopech following the completion of our mine expansion in December. Kapan's operating performance improved significantly, with higher grades, increased equipment availability and improved operating performance in the period. Tsumeb also performed well in the second quarter and the annual maintenance shutdown of the Ausmelt, which started on July 1, is now complete," said Rick Howes, President and CEO. "Despite weaker metal prices in 2013, which have negatively impacted our earnings and cash flow, we remain a low cost producer, in good shape financially, with sufficient cash resources to meet all of our operating and non-discretionary capital requirements."
Net earnings attributable to common shareholders for the second quarter and first six months of 2013 included realized and unrealized gains and losses on DPM's equity settled warrants, copper derivative contracts related to future copper production, and unrealized losses on Sabina special warrants, which in aggregate amounted to net unrealized after-tax gains of $12.3 million (2012 - $0.2 million) and $6.4 million (2012 - unrealized after-tax losses of $23.0 million), respectively. Excluding these items, DPM reported an adjusted net earnings in the second quarter of 2013 of $3.6 million ($0.03 per share) compared to $9.4 million ($0.08 per share) in the corresponding period in 2012. In the first six months of 2013, adjusted net earnings were $10.2 million ($0.08 per share) compared to $40.7 million ($0.33 per share) in the corresponding period in 2012. The year over year declines were driven primarily by lower metal prices, including final settlements and mark-to-market losses on a portion of unhedged provisionally priced sales, and higher depreciation, treatment charges and operating costs, partially offset by higher volumes of payable metals sold, reduced exploration costs and a stronger U.S. dollar.
Adjusted EBITDA(1) in the second quarter and first six months of 2013 was $20.8 million and $47.3 million, respectively, compared to $19.5 million and $60.3 million in the corresponding periods in 2012, driven by the same factors affecting net earnings attributable to common shareholders, with the notable exceptions of depreciation, realized and unrealized gains and losses on DPM's equity settled warrants, copper derivative contracts related to future production, and Sabina special warrants, each of which are excluded from adjusted EBITDA.
Concentrate production in the second quarter and first six months of 2013 totalled 35,925 tonnes and 73,327 tonnes, respectively, compared to 30,479 tonnes and 67,457 tonnes in the corresponding periods in 2012 due primarily to higher production at Chelopech following the completion of its expansion project in the fourth quarter of 2012 and higher production at Kapan, as a result of improved grades and operating performance, partially offset by lower copper grades at Chelopech.
Concentrate smelted at Tsumeb in the second quarter and first six months of 2013 of 46,393 tonnes and 80,886 tonnes was 80% and 19%, respectively, higher than the corresponding periods in 2012 due primarily to the annual maintenance shutdown of the Ausmelt furnace occurring in July of this year compared to May/June in 2012. Concentrate smelted in the first six months of 2013 was negatively impacted by the commissioning of environmental and operational efficiency improvements related to Project 2012, which partially offset the favourable impact related to the timing of the annual maintenance shutdown.
Concentrate sales in the second quarter and first six months of 2013 of 35,211 tonnes and 71,614 tonnes were up 5% and 6%, respectively, over the corresponding periods in 2012 due primarily to higher production at Chelopech and Kapan. Relative to the second quarter of 2012, second quarter 2013 payable gold sold increased by 14% to 38,125 ounces, payable copper sold increased by 2% to 10.5 million pounds, payable silver sold increased by 45% to 139,568 ounces and payable zinc sold increased by 16% to 4.8 million pounds. For the first six months of 2013, payable gold sold increased by 14% to 76,398 ounces, payable copper sold increased by 6% to 21.8 million pounds, payable silver sold increased by 17% to 246,287 ounces and payable zinc sold decreased by 2% to 7.8 million pounds, compared to the first six months of 2012.
Consolidated cash cost of sales per ounce of gold sold, net of by-product credits, in the second quarter and first six months of 2013 was $340 and $303, respectively, compared to $173 and $30 for the corresponding periods in 2012. These increases were due primarily to lower realized copper and silver prices and higher treatment charges, partially offset by higher volumes of payable metals.
Cash provided from operating activities during the second quarter and first six months of 2013 was $11.5 million and $43.5 million, respectively, compared to cash used in operating activities of $12.0 million and cash provided from operating activities of $13.2 million in the corresponding periods in 2012. Cash provided from operating activities, before changes in non-cash working capital(1), during the second quarter and first six months of 2013 was $8.9 million and $33.2 million up $1.9 million and down $21.9 million, respectively, from the corresponding prior year period due primarily to lower metal prices, partially offset by higher volumes of payable metals sold and reduced exploration activities.
Cash outlays for capital expenditures in the second quarter and first six months of 2013 totalled $40.6 million and $101.8 million, respectively, compared to $33.2 million and $59.0 million in the corresponding periods in 2012 due primarily to the construction of a new acid plant at Tsumeb.
As at June 30, 2013, DPM maintained a solid financial position with minimal debt, representing 9% of total capitalization, a consolidated cash position, including short-term investments, of $99.3 million, an investment portfolio valued at $25.1 million, and a $150 million undrawn long-term revolving credit facility.
The Company's outlook for its 2013 operating results and capital expenditures remains unchanged from the guidance provided in the Company's MD&A issued on May 8, 2013, with the exception of zinc and silver contained in concentrate produced which were increased to reflect production results achieved in the first six months of 2013. It is currently expected that concentrate smelted at Tsumeb in 2013 will be at the lower end of the range provided in the Company's MD&A issued on May 8, 2013, which was between 185,000 and 200,000 tonnes.
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)||-||16.5 - 18.5||16.5 - 18.5|
|Silver (ounces)||210,000 - 230,000||490,000 - 520,000||700,000 - 750,000|
Assuming current exchange rates, 2013 unit cash cost per tonne of ore processed is expected to 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.
For 2013, the Company's growth capital initiatives continue to be focused on the construction of an acid plant at Tsumeb, stage 1 of the Pyrite Project at Chelopech, securing the remaining permits and completing detailed engineering related to the Krumovgrad Gold Project, and exploration and/or development work to enhance underground operations and advance a potential expansion at Kapan. In aggregate, these expenditures are expected to range between $210 million and $240 million, which is consistent with the previous guidance provided. 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".
DPM has sufficient cash resources to fund all of its non-discretionary capital projects through to completion. The Company's other growth projects, such as the electric holding furnace at Tsumeb and the second phase of the pyrite project at Chelopech, are discretionary in nature and are expected to be staged over time commencing in some cases in 2014. The selection and staging of each project will be based on its expected return, market conditions and having sufficient cash resources to fully fund the project. With the delays being experienced in obtaining the remaining Krumovgrad permits, at this stage we do not anticipate ramping up capital spending on this project any sooner than the second half of 2014.
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. The production outlook for Tsumeb assumes that the existing temporary curtailment is lifted during the third quarter of 2013. 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, the receipt of necessary permits and approvals.
(1) Adjusted net earnings, adjusted basic earnings per share, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash from operating activities, before changes in non-cash working capital, 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 six months ended June 30, 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||Three Months||Six Months|
|Ended June 30,||2013||2012||2013||2012|
|Gross profit (1)||16.4||28.1||40.6||76.5|
|Earnings before income taxes||16.7||9.1||21.1||13.5|
|Net earnings attributable to common shareholders||15.9||9.6||16.6||17.8|
|Basic earnings per share||0.12||0.08||0.13||0.14|
|Adjusted EBITDA (2)||20.8||19.5||47.3||60.3|
|Adjusted net earnings (2)||3.6||9.4||10.2||40.7|
|Adjusted basic earnings per share (2)||0.03||0.08||0.08||0.33|
|Cash provided from (used in) operating activities||11.5||(12.0||)||43.5||13.2|
|Cash provided from operating activities, before changes in non-cash working capital (2)||8.9||7.0||33.2||55.1|
|Concentrate produced (mt)||35,925||30,479||73,327||67,457|
|Metals in concentrate produced:|
|Copper ('000s pounds)||11,431||10,188||24,033||22,422|
|Zinc ('000s pounds)||5,844||3,388||9,202||7,831|
|Tsumeb - concentrate smelted (mt)||46,393||25,822||80,886||67,746|
|Deliveries of concentrates (mt)||35,211||33,584||71,614||67,753|
|Payable metals in concentrate sold:|
|Copper ('000s pounds)||10,465||10,215||21,779||20,628|
|Zinc ('000s pounds)||4,794||4,117||7,797||7,962|
|Cash cost of sales per ounce of gold sold, net of by-product credits ($) (2)||340||173||303||30|
|(1)||Gross profit is regarded as an additional GAAP measure and is presented in the Company's condensed interim consolidated statements of earnings. Gross profit represents revenue less cost of sales and is one of several measures used by management and investors to assess the underlying operating profitability of a business.|
|(2)||Adjusted EBITDA; adjusted net earnings; adjusted basic earnings per share; cash flow provided from operating activities, before changes in non-cash working capital; 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 and six months ended June 30, 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 second quarter results on Thursday, August 1, 2013, at 9:00 a.m. (E.S.T.). Participants are invited to join the live webcast (audio only) at: http://www.gowebcasting.com/4430. Alternatively participants can access a listen only telephone option at 416-695-6622 or North America Toll Free at 1-800-769-8320. 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 custom 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 9.9% 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 such 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, reclamation expenses, the potential or anticipated outcome of title disputes or claims 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 that 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, uncertainties inherent with conducting business in foreign jurisdictions where corruption, civil unrest, political instability and uncertainties with the rule of law may impact the Company's activities; fluctuations in metal prices; unanticipated title disputes; claims or litigation; limitation on insurance coverage; as well as those risk factors discussed or referred to in the Company's MD&A under the heading "Risks and Uncertainties" and other documents (including without limitation the Company's 2012 AIF) filed from time to time with the securities regulatory authorities in all provinces and territories of Canada and available on SEDAR 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.