Q1 2025 Dundee Precious Metals Inc Earnings Call

Speaker Change: Good day, and thank you for standing by. Welcome to the Dundee Precious Metals First Quarter 2025 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 this session, you'll need to press the star 1-1 on your telephone.

Speaker Change: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jennifer Cameron. Please go ahead.

Jennifer Cameron: 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.

Jennifer Cameron: Before we begin, I'd like to remind you that all four-looking information provided during this call is sent it to the four-looking qualification, which is detailed in our news release, and incorporated in full for the purposes of today's call.

Jennifer Cameron: Certain financial measures referred to during the call are not measures recognized under IFRS and are referred to as non-GAT measures or ratio.

Jennifer Cameron: These measures have no standardized meaning under IFRS and may not be possible 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.

Jennifer Cameron: 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. We refer to the non-GAAP financial measure section of our most recent MDNA for conciliations of these non-GAAP measures .

Jennifer Cameron: Please note that unless otherwise stated, operational and financial information communicated during this call are related to continuing operations and have generally been rounded. References to 2024 pertain to the conference period in 2024, and references to averages are based on midpoints and for outlook or guidance.

I'll now turn the call over to David Gray.

Good morning and thank you all for joining us.

Jennifer Cameron: Before we begin today's discussion, I want to take a moment to acknowledge the recent passing of Peter Giller who served as the chair of our board since 2022 and as a director for the past 16 years.

Jennifer Cameron: It's steady leadership and oversight helped guide our transformation into the responsible, growing Precious Metals producer that we are today and he will be missed by us all.

Jennifer Cameron: I'd also like to welcome Juanita Montalvo to her new role as Chair. Juanita has served on the board since 2017, and with more than 25 years of international experience in mining, she has a strong track record in the development of large-scale projects, operational and strategic decision making, and brings extensive governance expertise.

Jennifer Cameron: She assumes the role of the next fighting time for the company as we advance our organic pipeline and continue to be well positioned to deliver value to all of our stakeholders now and over the long term.

Thank you.

Jennifer Cameron: Turning now to our quarterly results, as you would have seen from our news release circulated last night, our first quarter was a solid start to the year. A result of our low cost structure and the benefit of high metal prices improving our already robust margins.

highlights from our core to include.

Jennifer Cameron: Solid production of approximately 15,000 ounce of gold and 5.9 million pounds of copper.

Jennifer Cameron: Generating strong margins of knowledge and sustaining cost of $1244 per ounce of gold sold and continued financial strength as we ended up the quarter with a consolidated cash balance of $763 million.

Jennifer Cameron: We continue to consistently deliver free cash flow, generating approximately $79 million during the quarter and further strengthen our financial capacity to fund growth.

Jennifer Cameron: At the same time, our investors are benefiting from our low-cost, high-margin gold production as we harvest free cashflow by returning excess capital to shareholders, demonstrated by the repurchase of a record 7.5 million shares during the quarter.

Jennifer Cameron: We also continue to advance our organic growth pipeline and generate strong results on our exploration activities in Serbia, which I'll touch on in a moment.

Jennifer Cameron: Looking at our operations in more detail, Charlotte Patches' performance was in line with the mine plan, producing approximately 37,000 ounces of gold and 5.9 million pounds of copper, with an all-in sustaining cost of $673 per ounce of gold sold.

Jennifer Cameron: Cash costs are $53 per ton of all processed. We're on target for the quarter. Reflecting shallow batches track record of solid efficient operations and the mine is on track to meet its 2025 guidance targets for the year.

Jennifer Cameron: We continue to prioritise in-mind and brownfield's exploration work to further extend mine life at Chalepatch, targeting an increase to over 10 years.

Jennifer Cameron: During the quarter, in mind, extentional drilling activities were focused on discovering new mineralized science, as well as infalled drilling that Charlotte knew. We're modeling for a new resource estimate as unkind.

Jennifer Cameron: At a tepid produced approximately 12,500 ounce of gold, with an all-in-sustaining cost of $1,340 pounds of gold sold.

Jennifer Cameron: As we guided at the beginning of the year, Adapte's production is expected to nearly double in the second half of the year compared to the first half due to cell sequencing with the I and the I and WS.

Jennifer Cameron: with higher production expected in the second half of the year at a TEPA is on track to achieve its guidance for the year.

Jennifer Cameron: We continue to focus on developing quality assets and our growth priority is advancing Cholka-Wakeed into production, which is targeted for 2028.

Jennifer Cameron: The feasibility study is advancing its plans and is expected to be completed by year end.

Jennifer Cameron: Activity plans for 2025 and supports its starting-up construction in mid-2026 include.

Completing the geotechnical and hydrogeological drilling.

Jennifer Cameron: progressing the design to the base engineering level, advancing the project execution readiness and commencing operational readiness activity, which is leveraging Choca-Rikita's regional proximity to cello patch to train and develop key personnel for operating roles.

Jennifer Cameron: In parallel, permitting activities continue to advance. We submitted the final report on mineral reserves and resources, known as the elaborative reserves, to the relevant authorities of the first quarter and continue to engage with relevant stakeholders regarding the spatial climate.

Jennifer Cameron: What makes Choker Rikida particularly exciting is the significant exploration potential within the footprint of the project, where we've made several additional discoveries including the Demetra Pots of Conphrase and Prospects, which are located only one kilometre north of Choker Rikida.

Jennifer Cameron: Our 55-kilometer drilling program focused on testing high priority targets of our Chelka-Ricuda project is advancing well with 14 drill rigs currently in operation.

Jennifer Cameron: At Demetra Potuck, with impressive drilling results, we shared at the end of February , they confirmed the presence of a large, high-grade copper gold silver scorned system, with mineralisation concentrated along both the eastern and western sides of an intrusion.

Jennifer Cameron: Based on drilling to date, mineralization has been detected over a 1km strike length up to 300 meters vertically and up to 500 meters away from the intrusion.

Jennifer Cameron: The Dural Programme continues to expand the Demetral Pots of Discovery, and we have yet to define its limits as it remains open in multiple directions and the depth.

Jennifer Cameron: We are also advancing trolling at the Chokarik either North and via Sarkar prospects and look forward to providing further updates on our progress.

Jennifer Cameron: At the Loma Largo Gold Project in Ecuador, the updated feasibility study is on track for completion in the second quarter of 2025.

Jennifer Cameron: This will update the project economics to reflect the current gold price, capital and operating cost environment, as well as demonstrate the value and optionality in our growth portfolio.

Jennifer Cameron: The Ministry of Energy and Minds has continued to advance the prior informed indigenous consultation towards completion, which is the last requirement before we apply for the environmental license.

Jennifer Cameron: Toward the end of April , we received notice that the term of the Chris Dauer Concession, the main concession of the Lomolag Gold Project, has been extended by 25 years.

Jennifer Cameron: Lamelager remains an attractive growth option in our portfolio with mineral reserves of 1.9 million ounces of gold and 18 million pounds of copper which are a clear fit with our technical and operating expertise.

Jennifer Cameron: Overall, we continue to deliver strong results and with both minds on track to achieve our guidance we are well positioned to continue our strong operating track record while also focusing on achieving key milestones for our next phase of growth.

Navin: I'll now turn the call over to Maven for a review of the financial results.

Navin: Thanks Dave. I'll be touching briefly on the financial highlights for the quarter and conclude with some commentary on our balance sheet and return of capital programs. Overall results during the quarter reflect our solid goal production and a favorable commodity price environment.

Navin: All of my remarks will focus on results from continuing operations unless otherwise noted.

Navin: Adjusted at earnings in the quarter of $55 million or $0.32 per share, increase compared to the prior year due primarily to higher revenues, as well as lower evaluation expense as a result of the capitalization of costs, beginning this year related to the Choker

Partially offset by higher Mark-to-Market adjustments to share-based compensation expenses.

Navin: Resulting from a 46% increase in the company's share price during the quarter

Navin: Adjust the net earnings excludes a one-time levy to the 2025 Bulgarian state budget for an after-tax amount of $22 million.

Navin: Cachell provided from operating activities and pre-cachell of 55 million and 79 million respectively reflects an increase of 19 million in each case compared to the prior year due to higher

Navin: Taking a closer look at our cost metrics, all in sustaining costs of 1244 per ounce of gold sold, with 41% higher than the prior year to primarily to lower volumes of gold sold, and higher marked market adjustments for share-based compensation expenses.

Navin: Given the 46-percent increase in our share price during the quarter, March Market Adjustments to Share-Based Compensation, increase our all-assistating cost by $214 per ounce compared to an increase of only $38 per ounce in a prior year.

Navin: We are on track to meet all our all in sitting cost guidance for the year and we are closely monitoring the market dynamics outside of our control which impact cost such as metal prices and foreign exchange rates compared to our budget assumptions.

Navin: Looking at the aspects of our costs that are more within our control on a cash cost per ton basis, performance of telepatch and out-of-step A, we're in line with our expectations for the quarter.

Navin: In terms of our capital spending, the standing capital expenditures of 8 million were higher than the prior year, due primarily to higher deferred stripping costs, as a result of higher triple-grade ratios of data set being as anticipated in the mine plan for this year.

Navin: Growth capital expenditure of the 12 million were higher than the prior year due primarily to costs related to the Choker and Keta project being capitalized for the beginning of 2025 as a result of the project's advancement to the feasibility stage stage.

Navin: We continue to obtain a strong balance sheet and cash tradition, with a consolidated cash balance of $763 million, no debt, and a $150 million undrawn revolving credit facility.

Navin: With our significant financial strength and robust recovery cash flow, we're well-positioned to fund our growth opportunities and exploration prospects, while continuing to deliver peer leading returns to shareholders through our hand-shared buyback program.

Navin: Starting in the fourth quarter of last year, we ramped up our share by by significantly.

Navin: Combined with our 4 cents per share quarterly dividend, we return an aggregate of 114 percent of our free cash flow to shareholders in the first quarter.

Navin: To worth the end of March, we renewed our normal course issue of it, enabling us to repurchase up to 15 million common shares. Approximately 10% of our public bloat in line with our plans were turned up to 200 million shareholders in 2025.

Navin: We continue to deploy our capital in a disciplined manner that balances our desire to reinvest and growing and optimize your business with our commitment to returning capital to our shareholders.

Navin: We will continue to take a balanced approach to capital allocations that focuses on balance each rank, capital returns to shareholders and reinvestment in the business to sustain growth over the long term.

Navin: In closing, we continue to deliver strong performance for the mining operation and strive to maintain our track record of generating significant retaselo.

Dave: Now it's turned to fall back to base for concluding remarks.

Thanks, madam.

Speaker Change: This is another exciting year for DPM as we advance our organic growth pipeline and continue to build value and momentum. Our portfolio is generating solid consistent results and we are very well positioned as one of the lowest cost producers.

Speaker Change: We are harvesting free cashflow and delivering peer-leaving returns to shareholders through our enhanced share by that program.

Speaker Change: We're progressing the Chalka Rikki to feasibility study for an accelerated construction decision.

Speaker Change: We have substantial financial strengths to fund growth opportunities and fund exploration following our success in 2024. And we're focused on executing our strategy to deliver above average returns for shareholders as a mid-tier Precious Metals company.

Speaker Change: CPM is a clear path forward and we're very excited about our future.

Speaker Change: I'd now like to open up the call for any questions.

Thank you. Bye.

Speaker Change: Thank you. At this time, we will conduct a question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: To draw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Dundee Precious Metals

Speaker Change: Our first question comes from Don DeMarco from National Bank, the floor is yours.

Don Demarco: Thank you, Operator, and good morning, David and team. Congratulations on another strong free cash

First question is...

What is the broader?

Don Demarco: Conceptual Plan for Development in Serbia I mean we've got Cocoa Orquitas on a well-defined path but given what you know about Demetru, Pawlok and phrase and if these prove out with these potentially be processed in a separate facility that is you might have a pair of minds and plants on these licenses. Thank you.

Don Demarco: Yes, thanks, Tom. The base thinking is that the Choker Requeue to Processing Facility that's part of our current feasibility study and progress is to have a dedicated facility to the Choker Requeue to Deposit.

Don Demarco: and Demetra Pottock would have a separate facility. That's the base assumption. Now, you set that. There's lots of overlap between these two assets, so they could well be fired by side, but they're essentially going to be different, different flow sheets and different facilities. So there will be some synergies, but the idea is to keep these two separate.

Okay.

Speaker Change: Thank you. And so, then not focusing on Coca-Cola Cheap Rikita. Production started for 2028 and at this stage, what do you think are the risks to achieving this timeline? You mentioned permitting, is there any permitting risks or what are the other risks that could put pressure on this timeline?

Speaker Change: We've obviously detailed pretty clearly down to a granular level, exactly what we have to do and for comfortable with what's happened to achieve our timelines which put us into a position that we complete permitting and get a construction decision by mid-2026.

Speaker Change: which would lead to first production in the 2028. So we continue to watch this very carefully but as I say at this point we're still comfortable with that timeline is entirely achievable.

Speaker Change: Okay, good to hear. And then finally, we have the Loma Larga FF that's pending in Q2.

Speaker Change: Would you be looking at the economics in this FS to determine a go forward, re-evaluate the project at this point? And if so, if it's favorable, what would the next steps be?

Speaker Change: So just to be clear what we've done is recognized that we had a gap between the feasibility studies that we came in with from INB and what we subsequently published one year later, which was just a replication of that.

Speaker Change: that information. And we felt the need, despite having updated the reserves and resources to provide something that took into account the differences that have happened on both capital and operating costs.

Speaker Change: and also the metal price environment. But what we have not done is we've not gone back and reassess the cut-off grade and what that means in terms of the reserves and resources. So what will happen is that the piece of work that's completing in this quarter will just have capital, index, metal price adjustments.

Speaker Change: What will be necessary after that is then to look out with the information from drilling, Geo-toe chirology, condomation. We'll then take that and we'll reassess that all of the assumptions for earthworks, civils and other considerations are in fact correct.

Speaker Change: We're assuming they are highly likely the other need to confirm that.

Speaker Change: and then what we'll do is we'll recalculate the cutoff grade, redo the research and resources, and then update the feasibility study, which I would anticipate to be largely the same as it is now in the facilities and infrastructure and operation. But there's two different activities. The first one will really give...

Speaker Change: More of an update, absent changing the reserves and resources of where we stand today with the current capital operating costs and metal price environment.

Speaker Change: Okay great and so with that when would you expect to have all the information you need in order to make a go for a decision on this project.

Speaker Change: That's a great question, obviously what we're doing at the moment is we're watching the advance of all of the things that are required to get us to a stage.

Speaker Change: where we can advance the project. The steps that we're looking to complete are the constitutional court items of which the fourth element is in progress at the moment and we would

Speaker Change: will be looking forward to that completing in the relative linear future, presumably after the new government is in place, which is only towards the end of May.

Speaker Change: So it's a piece of work. Once that is completed, we then make the application for the environmental permits, the EIA. We've already done all the work on that so that should be, it's not something that's a lengthy process as we see it at the moment.

Speaker Change: Then what would happen is we would then go back and we would initiate the drilling. There's probably at least six months of drilling and then you have to do the update to the feasibility study so you're looking at something that's probably 9 to 12 months out from the point of which we clear.

Speaker Change: So this is going to be something that's timing after Choker with teacher in terms of a construction decision is why I would say right now, but this next course is six months are going to be really important in terms of the timeline for that.

Speaker Change: Okay, great. Okay. Well, thank you for that and look forward to these reporting milestones this year. That's all for me. Good luck with Q2 and the rest of the year. Thank you.

Speaker Change: Thank you for your question. One moment please, and again as a reminder to ask a question question, press star 1-1 on your telephone. One moment please.

Dundee Precious Metals

Speaker Change: Our next question comes from Jeremy Hoi of Canacord, Dundee Precious Metals, Dundee Precious Metals.

Jeremy Hoy: Thanks for taking the question. It's just one quick one for me today.

Speaker Change: Yes, advanced Chokarokita, pretty rapidly from discovery through to initial resource and a PEA.

Speaker Change: You're also aggressively drilling these new prospects, Dimitru Podak and Frasin. Do you have a high level timeline in mind for when we might see a resource and the later technical studies for these prospects?

Speaker Change: It's a little early for that Jeremy, but what I would say is that we're looking to do what we can sort of by the end of the year. There's an ability to take an estimate.

Speaker Change: on what Demetri Pottoff can phrase in his likely defeat in terms of its overall skills. So, somewhat similar to what we did in January of 2023 with the Choker Wikita.

Speaker Change: So, but if you consider that Chokowiki was 250 to 450 meters underground. If you have a look at Demetra Potsock here, we're talking about something that's 900 meters to, you know, 1.1 kilometers, 1.2 kilometers underground, let's say.

Speaker Change: So it actually takes longer to get there and do the work that you can then use to make these estimates. And then, of course, you have to look at the nature of the material and what does that mean in terms of federal spacing. So all of these things come into an ability for us.

Speaker Change: to actually make that estimate on time. So at this point we're excited to be finding what we are we're looking to do something which by the end of the year should give us some sense of scale and then that will allow us to start thinking about timelines.

Speaker Change: Okay, great. Well, we'll look forward to seeing those exploration results. Thanks for taking my question and I'll step back in the cube.

Nice job.

Thank you.

Thank you for your questions.

Speaker Change: At this time, I am now showing no further questions. Thank you for your participation in today's conference. I see one more. Oh, there's one more. All right. One moment please. I prepare the queue.

[inaudible]

Birkett Berhe: Our next question comes from Berkett Berhie from Beacon Securities, the four George.

Birkett Berhe: A. David, congratulations again for another strong pre-cash floor quarter.

Speaker Change: My question relates to your TCRCs and I do not know how much you can comment on this, but

Speaker Change: I was trying to figure out if you're benefiting from the low TCRC environment at the moment, but looking at your numbers, at least relative to last year.

Speaker Change: In the last few quarters, I do not see an appreciable difference. Am I reading this wrong or is that a better CCRC environment for you guys at the moment?

Speaker Change: I'm Eric Ediths and Evan. What we did at the beginning, essentially at the end of last year, we had essentially taken the benefit of the...

Speaker Change: Historically, Lowe's, T.C.'s and R.C.'s, and we have essentially locked in...

Speaker Change: A number of our contracts related to that over the course of this year. What we're seeing right now is a TC market that for clean contracts rate that continues to decline. And, as you know, our cost rate at Telepatch is a bit more complex.

Speaker Change: So, but I think, you know, what you can infer from this is that we are benefiting from the historically recent historic loads of PCs. What I would also comment as well is that

What we're also seeing is freight costs significantly lower than...

Speaker Change: We have seen in the recent past, and we've been able to take advantage of that as well, locking in our seed rate costs for the balance of the year. So you should see overall, you know, unbalanced, year-rear TCs that are perhaps the same, and then lower freight costs for the balance of the year.

Perfect Carks.

Thank you for your question.

At this time, I'm now showing no further questions.

Speaker Change: This concludes our call. Thank you for your participation in today's conference.

You may now disconnect.