Dundee Precious Metals Inc.

Q1 2023 Earnings Conference Call


spk02: All right, good day and thank you for standing by. Welcome to the Dundee Precious Metals first quarter 2023 earnings results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Cameron. Please go ahead.
spk01: Thank you, and good morning. I'm Jennifer Cameron, Director of Investor Relations, and I'd like to welcome you to our first quarter conference call. Joining us today are members of our senior management team, including David Ray, President and CEO, and Navin Dial, Chief Financial Officer. Before we begin, I'd like to remind you that all forward-looking information provided during this call It's subject to the forward-looking qualification, which is detailed in our news release and incorporated in full for purposes of today's call. Certain financial measures that we will be referring to are not measures recognized under IFRS and are referred to as non-GAAP measures or ratios. These measures have no standardized meaning under IFRS and may not be comparable to similar measures presented by other companies. The definitions established and calculations performed by DPM are based on management's reasonable judgment and are consistently applied. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Please refer to the non-GAAP financial measures section of our most recent MD&A for reconciliations of these non-GAAP measures. And please note, unless otherwise stated, operational and financial information communicated during this call are related to continuing operations and have generally been grounded References to 2022 pertain to the comparable period in 2022, and references to averages are based on midpoints of our outlook or guidance. I'll now turn the call over to David Ray.
spk00: Thanks, Jennifer. Good morning, and thank you all for joining us. As you've seen from our news release circulated last night, our first quarter was an excellent start to the year, as we delivered strong production and financial results. This morning I'll briefly review the highlights from our first quarter results and discuss why we believe DPM continues to be well positioned to deliver value to all our stakeholders now and over the long term. Highlights from our first quarter include solid production of approximately 69,000 ounces of gold and 7.2 million pounds of copper, all in sustaining costs at $872 per ounce of gold sold which continues to rank as amongst the lowest gold producers of our size, strong free cash flow generation of 65 million, and exceptional exploration results at Choco Raquita in Serbia, as well as Tierras Coloradas in Ecuador. With production at each of our operations expected to increase for the balance of a year, we're in a strong position to deliver our 2020 SWE guidance. We exited the quarter in a very strong financial position with a cash balance of $473 million, which does not include proceeds of approximately $56.5 million related to our divestment of B2 Gold shares following its acquisition of Sabina. And we continue to deploy our capital in a disciplined manner. In addition to investing in our future growth and exploration prospects, we returned approximately 24% of our free cash flow to shareholders to our sustainable quarterly dividends and enhanced share buyback program, which Navin will touch on shortly. Looking at our operations in more detail, Chalapetch continued its track record of strong performance in the first quarter, producing approximately 35,000 ounces of gold and 7.2 million pounds of copper. Gold production was in line with our expectations, while copper production was slightly lower than planned due to lower copper recoveries. We expect grades and recoveries to be high for the balance of the year in line with the plan, and Chalapetch is on track to achieve its guidance for 2023. We continue to focus on extending Chalapetch's mine life through our in-mine and brownfield exploration programs. In March, we announced our year-end mineral reserve and mineral resource update, along with a life of mine plan update that extended Chalapetch's mine life to 2031. In the first quarter, we continued to advance our brownfield exploration program, with seven rigs focused on the drilling campaign at Sveta Petka, as well as testing conceptual targets on the Breveni exploration license and testing deeper extension at the Celepec deposit. With increase in mine and brownfield exploration drilling, we believe there is strong potential to continue our track record of extending mine life at Celepec. Turning now to Adetepe, the mine delivered a near record level of production in the first quarter, producing approximately 33,000 ounces of gold. All in sustaining costs of $486 per ounce of gold sold were below the low end of its guidance range. Adetepe has consistently outperformed our expectations since commissioning in 2019, and we are confident that Adetepe will continue to deliver strong results, supported by the updated life of mine plan we announced in January. We're also continuing our exploration efforts around Adatepe, and during the first quarter, our activities were focused on target delineation for the Cernak and Kapel prospect within the mine concession, and the Karatepe prospect located within the Chirite Exploration License. At Sumed, complex concentrates melted during the quarter was approximately 50,000 tons, which was below our expectations as a result of unplanned maintenance in the off-gas system. Cash costs were $392 per tonne, which reflect our efforts during the year to optimise and increase efficiencies, primarily around the reduction of costs. That initiative will continue. We're planning to undertake additional maintenance in the off-gas system concurrently with the Osmalt furnace maintenance during the third quarter, which is expected to result in improved quarterly performance, and SUMED remains on track for its 2023 guidance. Turning to our development projects, I'll start with our activities in Serbia. In January, we announced a new high-grade discovery at the Čoka Rakita Prospekt, located

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