DPM First Quarter 2012 Financial Results
TORONTO, ONTARIO -- (Marketwire) -- 05/08/12 -- (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 $2 million per month. The Company is endeavoring to minimize the impacts on NCS and its employees, however, temporary lay-offs may be unavoidable. At this time, the Company does not expect Chelopech production to be impacted and is working with NCS' customers and suppliers to help mitigate the impact of the curtailment extending to the end of the year. The Company remains optimistic that NCS' production can be restored before year end and will provide further updates when available.
(1) Adjusted earnings, adjusted basic earnings per share and adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") are not defined under generally accepted accounting principles ("GAAP"). Presenting these measures from period to period helps management and investors evaluate earnings trends more readily in comparison with results from prior periods. Refer to the Non-GAAP Measures section of management's discussion and analysis for the three months ended March 31, 2012 (the "MD&A") for further discussion of these items, including reconciliations to applicable International Financial Reporting Standards ("IFRS") measures.
Key Financial and Operational Highlights
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$ millions, except where otherwise noted Three Months
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Ended March 31, 2012 2011
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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
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(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) 365-2408
jgoodman@dundeeprecious.com
Dundee Precious Metals Inc.
Hume Kyle
Executive Vice President and Chief Financial Officer
(416) 365-5091
hkyle@dundeeprecious.com
Dundee Precious Metals Inc.
Lori Beak
Senior Vice President, Investor & Regulatory Affairs
and Corporate Secretary
(416) 365-5165
lbeak@dundeeprecious.com