Dundee Precious Metals Reports Second Quarter 2011 Results
TORONTO, ONTARIO -- (Marketwire) -- 07/28/11 -- (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 second quarter 2011 net earnings attributable to common shareholders of $9.1 million ($0.07 per share) compared to $14.9 million ($0.12 per share) for the same period in 2010.
The quarter over quarter decrease in earnings was due primarily to lower production and increased maintenance costs at the Namibia Smelter ('NCS'), as a result of the scheduled maintenance shutdown of the Ausmelt furnace in April 2011, reduced unrealized gains related to Sabina Gold & Silver Corp. special warrants, higher exploration expenses at Avala, a weaker U.S. dollar and lower payable metals in concentrate sold due to the timing of shipments in 2010, partially offset by stronger metal prices. A concentrate shipment of 5,812 tonnes originally scheduled for March 2010 was shipped in April 2010 resulting in a decrease in concentrate inventories at Chelopech and increased deliveries in the second quarter of 2010.
For the first half of 2011, the Company reported net earnings attributable to common shareholders of $23.1 million ($0.19 per share) compared to a loss attributable to common shareholders of $34.1 million ($0.30 per share) in the corresponding period in 2010. This increase was primarily attributable to an impairment provision of $50.6 million taken in 2010 as well as stronger metal prices, higher deliveries of concentrates and higher payable metals in concentrate sold partially offset by higher general and administrative expenses, higher exploration expenses and unrealized losses on copper derivative contracts.
'We continue to make good progress on the Chelopech expansion and improving operational performance across each of our businesses,' said Jonathan Goodman, the Company's President and CEO. 'Production during the second half of the year is expected to be up significantly, in line with our annual guidance, and together with current metal prices, should generate significant cash flow.'
Concentrate production for the three and six months ended June 30, 2011 was 28,263 tonnes and 47,398 tonnes, respectively, representing a 27% and 7% increase relative to the corresponding periods in 2010 reflecting increased production at Chelopech and Deno Gold consistent with the continued ramp-up of the mine and mill expansion at Chelopech and the completion of the mine and mill expansion at Deno Gold in the fourth quarter of 2010.
Deliveries of concentrates of 25,059 tonnes in the second quarter of 2011 were 8% lower than the second quarter of 2010 due to the timing of shipments in 2010. Year to date, deliveries of concentrates of 48,783 tonnes were 17% higher than first half of 2010 driven by higher production.
Cash flow from operations, before changes in working capital, in the first half of 2011 of $38.9 million were $23.1 million higher than the corresponding period in 2010 due primarily to stronger metal prices and higher deliveries of concentrates.
Capital expenditures in the second quarter and first half of 2011 of $25.6 million and $48.8 million increased 39% and 68%, respectively, over the corresponding periods in 2010 due to the ramp-up of the mine and mill expansion project in Chelopech, the purchase and refurbishment of a used oxygen plant that will increase the efficiency of the Ausmelt furnace and spending on environmental projects and upgrades to the smelter at NCS.
Detailed designs and cost estimates in respect of the Chelopech mine and mill expansion project were completed in July 2011. The approximate cost of the project is now $176 million, $26 million higher than the preliminary estimate of $150 million previously communicated due to changes made in respect of the conveyor and crusher design and the extension of the project schedule.
On May 10, 2011, Chelopech signed a $14.5 million long-term loan agreement with Raiffeisenbank (Bulgaria) EAD. This agreement concludes a total of $81.25 million in long-term debt financing for the Chelopech mine and mill expansion.
As at June 30, 2011, the Company had substantial liquidity through its cash and cash equivalents of $138.8 million and investments valued at $181.2 million.
The exploration programs at the Company's operating mines and through its strategic investments in Serbia and Nunavut are progressing well and continue to show potential to add significant value to the Company.
With the public hearings on the Krumovgrad gold project EIA now complete, a decision by the Ministry of Environment and Waters is expected by the end of 2011, which is subject to appeal.
Key Financial and Operating Highlights
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$ millions, except where noted
Three Months Six Months
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Ended June 30, 2011 2010 2011 2010
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Revenue 69.1 60.9 137.5 81.4
Gross profit 19.4 18.4 42.0 17.2
Net earnings (loss) attributable to
common shareholders 9.1 14.9 23.1 (34.1)
Earnings (loss) per share 0.07 0.12 0.19 (0.30)
Cash flow from operations, before
changes in working capital 17.0 13.8 38.9 15.8
Concentrate produced (mt) 28,263 22,278 47,398 44,224
Metals in concentrate produced
Gold (ounces) 27,907 22,208 47,492 45,666
Copper ('000s pounds) 8,944 7,256 14,726 14,192
Zinc ('000s pounds) 5,002 3,897 9,763 7,860
Silver (ounces) 182,418 132,975 340,084 261,222
NCS - concentrate processed (mt) 39,274 45,881 77,806 45,881
Cash cost of sales per ounce of gold
sold, net of by-product credits (1)
Chelopech 91 265 21 408
Deno Gold 37 348 128 405
Cash cost per tonne ore processed (1)
Chelopech (excluding royalties) 49.06 47.04 49.97 51.55
Deno Gold (excluding royalties) 65.29 59.21 69.70 63.27
(1) Cash cost of sales per ounce of gold sold, net of by-product credits
and cash cost per tonne of ore processed are not defined measures under
International Financial Reporting Standards ('IFRS'). Refer to the
Management Discussion & Analysis for a reconciliation to IFRS cost of
sales.
DPM's second quarter reports, including its condensed interim unaudited consolidated financial statements and management's discussion and analysis for the three and six months ended June 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 Friday July 29, 2011, at 8:30 a.m. (EST). The call will be webcast live (audio only) at: http://www.gowebcasting.com/2507. Listen only telephone option at 416-695-6622 or North America Toll Free at 1-888-818-4097. 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., 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, 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) 365-2408
jgoodman@dundeeprecious.com
Dundee Precious Metals Inc.
Lori Beak, Senior Vice President,
Investor & Regulatory Affairs and Corporate Secretary
(416) 365-5165
lbeak@dundeeprecious.com
www.dundeeprecious.com