Dundee Precious Metals Announces 2012 Fourth Quarter and Annual Results and 2013 Guidance
- Fourth quarter performance in line with expectations, contributing to record 2012 adjusted earnings
- Increased annual production achieved with strong operating performance from Chelopech
- Capital projects progressing well - expansion at Chelopech successfully completed in December 2012; NCS' new gas handling systems on track to be commissioned in February 2013; and installation of lead circuit at Deno Gold completed in January 2013 with commissioning underway
- Delivered lower mining cash costs from increased volumes and stronger U.S. dollar; NCS smelting costs impacted by temporary curtailment but expected to trend lower
- Exploration activities at Deno Gold, Avala, Dunav and Sabina continue to produce encouraging results
- Beginning 2013 in strong financial position with $122 million in cash and a newly established undrawn $150 million long-term revolving credit facility
TORONTO, ONTARIO -- (Marketwire) -- 02/15/13 -- (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.A) today reported fourth quarter 2012 adjusted net earnings (1) of $21.5 million ($0.17 per share) compared to $31.9 million ($0.25 per share) for the same period in 2011. Reported fourth quarter 2012 net earnings attributable to common shareholders were $14.7 million ($0.12 per share) compared to $22.7 million ($0.18 per share) for the same period in 2011. Adjusted net earnings in the year 2012 were $80.9 million ($0.65 per share) compared to $80.1 million ($0.64 per share) for the same period in 2011. Net earnings attributable to common shareholders in the year 2012 were $54.4 million ($0.43 per share) compared to $86.1 million ($0.69 per share) for the same period in 2011.
The quarter over quarter decrease in adjusted net earnings was driven primarily by higher taxes, a higher cost per tonne of concentrate produced at Deno Gold and higher depreciation, operating and administrative expenses. These unfavourable variances were partially offset by higher volumes of payable gold and silver sold and a stronger U.S. dollar. Net earnings attributable to common shareholders were also impacted by after-tax unrealized mark-to-market losses related to the Company's metal price hedges and investment in Sabina Gold & Silver Corp. ("Sabina") special warrants of $6.9 million (2011 - unrealized losses of $9.2 million). For 2012, the increase in adjusted net earnings was due primarily to higher volumes of payable gold and copper sold, a stronger U.S. dollar and higher gold prices, partially offset by lower copper prices, lower volumes smelted at NCS, a higher cost per tonne of concentrate produced at Deno Gold, higher depreciation, administrative and exploration expenses and higher taxes. Net earnings attributable to common shareholders were also impacted by after-tax unrealized mark-to-market losses related to metal price hedges and the Sabina special warrants of $26.5 million (2011 - unrealized gains of $0.8 million).
"Our performance in 2012 was underpinned by strong operating and financial results from Chelopech where we completed our mine expansion in December, on time and under budget, and delivered record production. The capital projects to address Deno Gold's lead content and NCS' fugitive emissions are nearing completion with each operation expected to be in position to return to normal operating levels in the first half of 2013," said Jonathan Goodman, President and CEO. "We are in very good shape financially, ending the year with $122 million in cash and anticipating continued strong cash flow generation in 2013. Further, we have access to a new undrawn $150 million revolving credit facility, positioning the Company with maximum flexibility to fund further growth in 2013."
Adjusted EBITDA (1) in the fourth quarter and twelve months of 2012 was $37.7 million and $124.6 million, respectively, compared to $37.0 million and $117.5 million in the corresponding periods in 2011, driven by the same factors affecting adjusted net earnings, with the exception of depreciation and income tax.
Concentrate production in the fourth quarter of 2012 of 32,428 tonnes was 25% lower than the corresponding period in 2011 due primarily to lower copper grades at Chelopech and lower volumes of ore processed at Deno Gold. Concentrate production in 2012 of 135,809 tonnes was 8% higher than 2011 due primarily to higher volumes of ore mined and processed at Chelopech, partially offset by lower volumes of ore processed at Deno Gold and lower copper grades at Chelopech. In the fourth quarter and twelve months of 2011, 19,967 tonnes and 60,083 tonnes of oxidized ore, stockpiled on surface from past mining operations, were processed at Deno Gold to supplement mine production and to fully utilize the mill. There was no oxidized ore processed in 2012.
Concentrate smelted at NCS in the fourth quarter of 2012 of 45,823 tonnes was comparable to the corresponding prior year period. Concentrate smelted in 2012 of 159,356 tonnes was 12% lower than the corresponding period in 2011 due primarily to the impact of the Namibian Minister of Environment and Tourism's directives to limit production to 50% and 75% of the smelter's operating capacity during the second quarter of 2012 and the balance of 2012, respectively. The new gas cleaning systems were completed in January 2013 and tie-ins and commissioning will be conducted during the first quarter of 2013. Thereafter, testing will be performed to ensure that the modifications are producing a decrease in emissions before approval is granted to lift the existing curtailment.
Deliveries of concentrate in the fourth quarter of 2012 of 35,261 tonnes were 4% lower than the corresponding period in 2011 due primarily to lower concentrate production at Chelopech. This was partially offset by an inventory drawdown of copper concentrate produced at Deno Gold as deliveries that had been delayed in the first nine months of 2012 as a result of the high lead content in copper concentrate were sold in the fourth quarter of 2012. In the fourth quarter of 2012, payable gold in concentrate sold was up 14% and payable copper in concentrate sold decreased by 3%. Deliveries of concentrate in 2012 of 136,948 tonnes were 11% higher than 2011 due primarily to increased concentrate production at Chelopech, partially offset by lower copper and zinc concentrate production at Deno Gold. Payable copper and gold in concentrate sold in 2012 were up 14% and 23%, respectively, relative to 2011 due primarily to increased production at Chelopech.
Consolidated cash cost of sales per ounce of gold sold, net of by-product credits, in the fourth quarter of 2012 was $193 compared to negative $151 for the fourth quarter of 2011. The quarter over quarter increase was due primarily to lower realized copper prices, higher treatment charges and a higher cash cost per tonne of ore processed at Deno Gold. Cash cost of sales per ounce of gold sold, net of by-product credits, in 2012 was $117 compared to negative $63 during the same period in 2011. This increase was due primarily to higher treatment charges, a higher cash cost per tonne of ore processed at Deno Gold and lower by-product prices, partially offset by higher volumes of payable metals sold.
Cash provided from operating activities, before changes in non-cash working capital, during the fourth quarter and twelve months of 2012 was $30.7 million and $121.1 million, respectively, down $11.1 million and $2.5 million from the corresponding prior year periods due primarily to the same factors affecting adjusted net earnings and higher income tax payments.
Capital expenditures in the fourth quarter and twelve months of 2012 were $51.0 million and $149.0 million, respectively, compared to $30.2 million and $117.6 million in the corresponding periods in 2011. These increases were due primarily to increased construction activities in connection with NCS' capital program, partially offset by reduced construction activities at Chelopech with the completion of its expansion.
As at December 31, 2012, DPM maintained a solid financial position with minimal debt, representing 10% of total capitalization, a consolidated cash position of $121.5 million and an investment portfolio valued at $75.6 million. In February 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, 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 Deno Gold is expected to range between 550,000 and 600,000 tonnes. Concentrate smelted at NCS is expected to range between 195,000 and 215,000 tonnes, provided the existing temporary curtailment is lifted by no later than mid-year 2013.
The Company's estimated metals production for 2013 is set out in the
following table:
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Metals contained in
concentrate produced: Chelopech Deno Gold Total
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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
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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 Deno Gold. The cash cost per tonne of concentrate smelted at NCS is expected to range between $320 and $355.
For 2013, the Company's approved growth capital expenditures(1) are expected to range between $240 million and $300 million. These expenditures relate primarily to the construction of an acid plant and electric furnace at NCS, stage 1 of the Pyrite Project at Chelopech, the development 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 Deno Gold. Sustaining capital expenditures(1) are expected to range between $35 million and $45 million. Further details can be found in the Company's MD&A under the section "2013 Outlook".
The 2013 outlook provided above may not occur evenly through the year. The estimated metals contained in concentrate produced and volumes of concentrate smelted may vary from quarter to quarter depending on the areas being mined, the timing of concentrate deliveries and planned outages, and in the case of NCS, the lifting of the existing temporary curtailment. Also, the rate of capital expenditures may vary from quarter to quarter based on the schedule for and execution of each capital project, and, where applicable, receipt of the necessary permits and approvals.
(1) Adjusted net earnings, adjusted basic earnings per share, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), and growth and sustaining capital expenditures are not defined measures under International Financial Reporting Standards ("IFRS"). Presenting these measures from period to period helps management and investors evaluate earnings and cash flow trends more readily in comparison with results from prior periods. Refer to the "Non-GAAP Financial Measures" section of the management's discussion and analysis for the year ended December 31, 2012 (the "MD&A") for further discussion of these items, including reconciliations to net earnings attributable to common shareholders and earnings before income taxes.
Key Financial and Operational Highlights
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$ millions, except where noted Three Months Twelve Months
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Ended December 31, 2012 2011 2012 2011
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Revenue 103.1 88.5 384.7 338.5
Gross profit 39.2 39.1 157.0 131.8
Earnings before income taxes 16.2 16.6 49.7 88.6
Net earnings attributable to common
shareholders 14.7 22.7 54.4 86.1
Basic earnings per share 0.12 0.18 0.43 0.69
Adjusted EBITDA (1) 37.7 37.0 124.6 117.5
Adjusted net earnings (1) 21.5 31.9 80.9 80.1
Adjusted basic earnings per share (1) 0.17 0.25 0.65 0.64
Cash flow provided from operating
activities, before changes in non-cash
working capital 30.7 41.8 121.1 123.6
Concentrate produced (mt) 32,428 43,151 135,809 125,253
Metals in concentrate produced:
Gold (ounces) 32,667 41,044 142,474 120,757
Copper ('000s pounds) 10,884 13,928 45,171 39,794
Zinc ('000s pounds) 2,880 5,130 15,425 19,585
Silver (ounces) 143,501 177,870 665,857 670,819
NCS - concentrate smelted (mt) 45,823 47,588 159,356 180,403
Deliveries of concentrates (mt) 35,261 36,864 136,948 123,789
Payable metals in concentrate sold:
Gold (ounces) 35,815 31,434 134,848 110,026
Copper ('000s pounds) 10,981 11,324 42,104 36,838
Zinc ('000s pounds) 3,082 2,826 14,204 16,898
Silver (ounces) 180,155 117,254 547,193 595,914
Cash cost of sales per ounce of gold sold,
net of by-product credits ($) (1) 193 (151) 117 (63)
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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 not defined measures under IFRS. Refer to the MD&A for
reconciliations to IFRS measures.
DPM's annual audited consolidated financial statements, and MD&A for the fourth quarter and year ended December 31, 2012, 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 2012 fourth quarter and annual results on Friday, February 15, 2013, at 9:00 a.m. (E.S.T.). Participants are invited to join the live webcast (audio only) at: http://www.gowebcasting.com/4130. 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 Deno Gold 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 47.3% 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.
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