Dundee Precious Metals Inc.
TSX : DPM
TSX : DPM.WT
TSX : DPM.WT.A

Dundee Precious Metals Inc.

November 04, 2009 19:28 ET

Dundee Precious Metals Reports Third Quarter 2009 Results

TORONTO, ONTARIO--(Marketwire - Nov. 4, 2009) -

(All monetary figures are expressed in Canadian Dollars unless otherwise stated)

Dundee Precious Metals Inc. ("DPM" or the "Company") (TSX:DPM)(TSX:DPM.WT)(TSX:DPM.WT.A) today announced its unaudited results for the third quarter ended September 30, 2009. DPM reported third quarter net earnings of $4.1 million (basic and diluted net earnings per share of $0.04). This compares with third quarter 2008 net earnings of $6.5 million (basic and diluted net earnings per share of $0.11).

"I am very pleased to report our third quarter 2009 results, noted Jonathan Goodman, President and CEO of DPM. At Chelopech, we continue to experience steady and consistent operating performance - contributing to solid financial gains. The Chelopech mine and mill expansion plans are now finalized and construction has begun with completion expected in the second quarter of 2011. Operational and productivity improvements at Deno Gold translated into positive gross profit from mining operations - a recent first for this facility."

The following table summarizes the Company's financial and operating results for the periods indicated:

$ millions, except per share amounts
Ended September 30,
 Three Months Nine Months
 2009 2008 2009 2008
Net Revenue$50.3$16.7$110.0$89.2
Cost of Sales 31.5 23.8 78.1 74.5
Gross Profit (Loss) from Mining Operations 18.8 (7.1) 31.9 14.7
Investment and Other Income (Expense) (3.7) 27.9 (3.5) 28.9
Net Earnings 4.1 6.5 1.3 0.8
         
Basic Net Earnings Per Share$0.04$0.11$0.01$0.01
Diluted Net Earnings Per Share$0.04$0.11$0.01$0.01
         
Net Cash Provided By (Used in) Operating Activities 11.7 (10.4) (3.3) 3.9
Capital Expenditures (9.8) (19.3) (25.9) (66.7)
Proceeds on Sale (Purchase) of Short-term Investments(15.1) - 14.0 -
Proceeds on Sale of Exploration Property - - 7.0 -
Other Investing Activities (1.8) 41.0 (4.2) 61.0
Financing Activities (1.0) 15.2 (3.6) 13.3
Net Increase (Decrease) in Cash$(16.0)$26.5$(16.0)$11.5
         
Concentrate Produced (mt)        
 Chelopech 20,816 13,567 56,023 39,738
 Deno Gold 2,972 4,608 6,145 9,197
Cash Cost per tonne Ore Processed (US$/t)(1)        
 Chelopech (excluding royalties)$59.31$60.69$51.98$60.39
 Deno Gold$78.31$110.75$72.43$109.62

Third Quarter 2009 - Financial Highlights

  • Net earnings in the third quarter of 2009 were $4.1 million compared to net earnings of $6.5 million in the corresponding prior year period. The decrease in net earnings, period over period, was primarily due to lower investment and other income partially offset by higher gross profit from mining operations and reductions in exploration and administrative expenses. The increase in gross profit from mining operations, period over period, was primarily due to higher deliveries of concentrates produced at Chelopech and Deno Gold, lower production costs at Deno Gold and Chelopech, and a 10% increase in gold price. These positive variances were partially offset by a 24% decrease in copper price in the third quarter of 2009 relative to the corresponding prior year period. Included in the third quarter of 2008 results was a gain of $27.2 million on the sale of the Company's holdings in Eldorado Gold Corporation.
  • Chelopech recorded a gross profit from mining operations of $17.5 million in the third quarter of 2009 compared to a gross loss from mining operations of $1.5 million in the third quarter of 2008. Chelopech operations reported net revenue of $41.9 million on corresponding concentrate deliveries of 23,493 tonnes. Chelopech cash cost per tonne of ore processed1, excluding royalties, in the period was 2% lower than the corresponding prior year period due to the favourable impact of a 5% devaluation of the average Euro to U.S. foreign exchange rate, lower input cost for backfill as the slurry needed for the backfill in the period was produced on site whereas, in the third quarter of 2008, it was purchased from a third party and reduced spending on services as a result of cost savings initiatives. These positive variances were partially offset by higher maintenance costs resulting from planned maintenance on mobile equipment and the planned maintenance shutdown at the mill and higher employment expenses. Cash cost per tonne of ore processed1, including royalties, in the third quarter of 2009 of US$62.41 was 3% lower than the third quarter of 2008 cash cost per tonne of ore processed1, including royalties, of US$64.52.
  • Deno Gold recorded a gross profit from mining operations of $1.3 million in the third quarter of 2009 compared to a gross loss from mining operations of $5.6 million in the corresponding prior year period. Continued operating improvements at Deno Gold during the quarter, including reductions in headcount and external contractors and tighter inventory and cost controls, and a 23% devaluation of the Armenian dram to U.S. dollar exchange rate contributed to a 29%, period over period, reduction in cash cost per tonne of ore processed1, to US$78.31. Deliveries of concentrate in the period of 4,510 tonnes were 153% higher than the corresponding prior year period due to a drawdown of concentrate inventory. It is currently anticipated that the positive performance will continue into the future given improved operating processes and controls, particularly in the areas of mine dilution and productivity.
  • Net cash provided by operating activities was $11.7 million in the third quarter of 2009 compared to cash used in operating activities of $10.4 million in the corresponding prior year period. The increase in cash provided by operating activities was primarily due to higher gross profit from mining operations.
  • As at September 30, 2009, DPM had cash, cash equivalents and short-term investments of $74.0 million compared to $104.0 million at December 31, 2008.

Significant Items

  • A comprehensive review of the mine and mill expansion plans at Chelopech resulted in certain scope changes being made to optimize the planned investment. Such changes include the installation of an underground crushing and conveying system in lieu of a shaft upgrade to facilitate the increase in mine output to two million tonnes of ore per year. The scope changes increased total expansion capital by US$42.5 million and decreased projected unit operating cost by US$6 per tonne (US$12.0 million per year). The estimated capital cost to complete the mine and mill expansion project, including the installation of an underground crushing and conveying system but excluding capital spending required to complete the metals processing facility ("MPF"), special projects associated with on-going operations and sustaining capital, is US$102.0 million. This amount includes approximately US$19.0 million that is forecast to be spent in the year 2009. Completion of the mine and mill expansion is planned for the second quarter of 2011. Following commissioning, unit operating cost for the expanded facility is expected to decrease to approximately US$34 per tonne of ore processed.
  • In September 2009, the Bulgarian Ministry of Environment and Waters ("MoEW") issued the Integrated Pollution Prevention and Control ("IPPC") permit for the MPF to be constructed in Chelopech, Bulgaria. The IPPC and the Seveso (working with hazardous substances) permits are prerequisites for the issuance of the MPF construction permit. The application for the Seveso permit has been made. The MPF incorporates pressure oxidation, solvent extraction and electrowinning and carbon in leach cyanidation to treat the Chelopech copper/gold concentrates and produce copper cathode and gold doré.
  • Following DPM's announcement on July 31, 2009 regarding the subscription of shares of Weatherly International plc ("WTI"), the Company purchased 40.5 million ordinary shares of WTI for US$2.0 million ($2.2 million) representing approximately 9.1% of WTI issued and outstanding shares. If required by WTI on or before July 31, 2010, the Company will subscribe for up to an additional US$5.0 million worth of WTI ordinary shares based on the then prevailing market price but in no event, except in certain circumstances, less than GBP0.03 per share. The Company also completed an agreement with WTI's subsidiary, Namibia Custom Smelters (Pty) Limited ("NCS"), to extend the Chelopech concentrate purchase and sales contract to and including the year 2020.
  • In September 2009, the MoEW issued a Commercial Discovery Certificate (the "Certificate") for the Krumovgrad gold deposit to DPM's Bulgarian subsidiary, Balkan Mineral and Mining EAD. The Certificate is the final requirement for conversion of the property to a mining concession, the application for which has already been filed with the Bulgarian government.
  • The Company continues to evaluate value enhancing strategic opportunities available to it in respect of its Serbian assets. As part of a limited program undertaken during the third quarter of 2009 to delineate several key anomalies, drilling on the western margin of the Timok Magmatic Complex in Serbia has confirmed two gold discoveries with bulk tonnage potential.

A complete set of DPM's Consolidated Financial Statements, Notes to the Consolidated Financial Statements and Management's Discussion and Analysis for the third quarter ended September 30, 2009 will be posted on the Company's website at www.dundeeprecious.com and will be filed on Sedar at www.sedar.com.

Conference Call

DPM will be holding an analyst call to present its Third Quarter 2009 Financial Results on Thursday, November 5, 2009 at 8.30 a.m. (EST).

The call will be webcast live (audio only) at: http://events.digitalmedia.telus.com/dundee/110509/index.php.

The audio webcast for this conference call will be archived and available on the Company's website at www.dundeeprecious.com.

Overview

DPM is a Canadian-based, international mining company engaged in the acquisition, exploration, development and mining of precious metal properties. Its common shares and share purchase warrants (symbols: DPM; DPM.WT; DPM.WT.A) are traded on the Toronto Stock Exchange ("TSX"). DPM's business objectives are to identify, acquire, finance, develop and operate low-cost, long-life mining properties.

The Company's operating interests include its 100% ownership of Chelopech Mining EAD ("Chelopech"), a gold, copper, silver concentrates producer, owner of the Chelopech mine located approximately 70 kilometres east of Sofia, Bulgaria, and a 95% interest in Vatrin Investment Limited ("Vatrin"), a private entity which holds 100% of Deno Gold Mining Company CJSC ("Deno Gold"), its principal asset being the Kapan mine, a gold, copper, zinc, silver concentrates producer located about 320 kilometres south east of the capital city of Yerevan in Southern Armenia. DPM's interests also include a 100% interest in the Krumovgrad development stage gold property located in south eastern Bulgaria, near the town of Krumovgrad, and numerous exploration properties in one of the larger gold-copper-silver mining regions in Serbia.

Summarized Financial Results

Net revenue

Net revenue from the sale of concentrates of $50.3 million in the third quarter of 2009 was $33.6 million higher than the corresponding prior year period net revenue due to a significant increase in deliveries of concentrates produced at Chelopech and Deno Gold, net favourable mark-to-market adjustments, a 10% increase in gold price and the favourable impact of a weaker Canadian to U.S. dollar exchange rate partially offset by a 24% decrease in copper price. The weakening of the Canadian dollar relative to the U.S. dollar, period over period, increased revenue by $3.9 million in the period.

Deliveries of concentrates produced at Chelopech of 23,493 tonnes in the third quarter of 2009 were 126% higher than third quarter of 2008 deliveries of 10,376 tonnes. Deliveries of concentrates produced at Deno Gold of 4,510 tonnes in the third quarter of 2009 were 153% higher than third quarter of 2008 deliveries of 1,785 tonnes. Net favourable mark-to-market adjustments and final settlements of $1.5 million, related to the open positions of provisionally priced concentrate sales, were recorded in the third quarter of 2009 compared to net unfavourable mark-to-market adjustments and final settlements of $4.4 million in the third quarter of 2008. In the third quarter of 2009, DPM recorded realized losses on its copper derivatives of $0.4 million and unrealized gains of $0.03 million. The copper derivative contracts were entered into to mitigate substantially all the copper price exposure and associated earnings volatility the Company is exposed to as a result of the time lag between the receipt of provisional sales revenue of concentrate deliveries and its specified final pricing period.

Net revenue from the sale of concentrates of $110.0 million in the first nine months of 2009 was $20.8 million or 23% higher than the corresponding prior year period due primarily to a 34% increase in deliveries, net favourable mark-to-market adjustments, the favourable impact of a weaker Canadian to U.S. dollar exchange rate and a 4% increase in gold price partially offset by a 42% decrease in copper price. The weakening of the Canadian dollar relative to the U.S. dollar, period over period, increased revenue by $13.6 million in 2009.

Deliveries of concentrates produced at Chelopech of 57,751 tonnes in the first nine months of 2009 were 42% higher than the corresponding prior year period deliveries of 40,796 tonnes due to increased production in 2009. Deliveries of concentrates produced at Deno Gold of 5,415 tonnes in the first nine months of 2009 were 13% lower than the corresponding prior year period deliveries of 6,249 tonnes. Deno Gold was on care and maintenance in the first quarter of 2009. Net favourable mark-to-market adjustments and final settlements of $7.4 million, related to the open positions of provisionally priced concentrate sales, were recorded in the first nine months of 2009 compared to net unfavourable mark-to-market adjustments and final settlements of $3.1 million recorded in the corresponding prior year period. In the first nine months of 2009, DPM recorded realized losses on its copper derivatives of $4.5 million and unrealized gains of $0.03 million.

The average London Bullion gold price2 in the third quarter of 2009 of US$960 per ounce was 10% higher than the third quarter of 2008 average price of US$869 per ounce. The average London Metal Exchange ("LME") cash copper price(2) in the third quarter of 2009 of US$2.66 per pound was 24% lower than the third quarter of 2008 average price of US$3.48 per pound. The average LME cash zinc price2 in the third quarter of 2009 of US$0.80 per pound was comparable to the third quarter of 2008 average price of US$0.80 per pound.

The average London Bullion gold price2 in the first nine months of 2009 of US$930 per ounce was 4% higher than the corresponding prior year period average price of US$898 per ounce. The average LME cash copper price2 in the first nine months of 2009 of US$2.11 per pound was 42% lower than the corresponding prior year period average price of US$3.62 per pound. The average LME cash zinc price2 in the first nine months of 2009 of US$0.67 per pound was 30% lower than the first nine months of 2008 average price of US$0.96 per pound.

Cost of sales

Cost of sales of $31.5 million in the third quarter of 2009 was $7.7 million or 32% higher than the corresponding prior year period due to a significant increase in deliveries and the unfavourable impact of a weaker Canadian dollar to U.S. dollar exchange rate partially offset by lower production costs at Deno Gold and Chelopech. Deliveries of concentrates produced at Chelopech and Deno Gold totalled 28,003 tonnes compared to 12,161 tonnes in the corresponding prior year period. A weaker Canadian dollar to U.S. dollar exchange rate in the third quarter of 2009, compared to the corresponding prior year period, increased cost of sales by $2.7 million in the period.

Cost of sales of $78.1 million in the first nine months of 2009 was $3.6 million or 5% higher than the corresponding prior year period due primarily to higher deliveries of concentrates produced at Chelopech and the unfavourable impact of a weaker Canadian to U.S. dollar exchange rate partially offset by lower production costs at Chelopech and Deno Gold. A weaker Canadian dollar to U.S. dollar exchange rate in the first nine months of 2009, compared to the corresponding prior year period, increased cost of sales by $9.4 million in 2009.

Cash cost per tonne of ore processed1, excluding royalties, at Chelopech in the third quarter of 2009 of US$59.31 was 2% lower than the corresponding prior year period cash cost per tonne of ore processed1, excluding royalties, of US$60.69 due to the favourable impact of a 5% devaluation of the average Euro to U.S. foreign exchange rate, lower input cost for backfill as the slurry needed for the backfill in the period was produced on site whereas, in the third quarter of 2008, it was purchased from a third party and reduced spending on services as a result of cost savings initiatives. These positive variances were partially offset by higher maintenance costs resulting from planned maintenance on mobile equipment and the planned maintenance shutdown at the mill and higher employment expenses. Cash cost per tonne of ore processed1, including royalties, in the third quarter of 2009 of US$62.41 was 3% lower than third quarter of 2008 cash cost per tonne of ore processed1, including royalties, of US$64.52.

Cash cost per tonne of ore processed1, excluding royalties, at Chelopech in the first nine months of 2009 of US$51.98 was 14% lower than the corresponding prior year period cash cost per tonne of ore processed1, excluding royalties, of US$60.39 due to the favourable impact of a weaker Euro relative to the U.S. dollar, higher volumes of material processed and reduced spending on services partially offset by higher spending on backfill due to higher volumes of backfill placed in stopes. Cash cost per tonne of ore processed1, including royalties, in the first nine months of 2009 of US$57.56 was 10% lower than first nine months of 2008 cash cost per tonne of ore processed1, including royalties, of US$63.88.

Cash cost per tonne of ore processed1 at Deno Gold in the third quarter and first nine months of 2009 of US$78.31 and US$72.43 were, respectively, 29% and 34% lower than the corresponding prior year periods due to the favourable impact of a weaker Armenian dram relative to the U.S. dollar, improved operating performance, tighter inventory and cost controls and reductions in headcount and external contractors.

Gross profit (loss)

Chelopech recorded a gross profit from mining operations of $17.5 million in the third quarter of 2009 compared to a gross loss from mining operations of $1.5 million in the third quarter of 2008. The increase in gross profit from mining operations, period over period, of $19.0 million was due to a 126% increase in deliveries of concentrates, higher gold and copper contained in concentrate produced due to higher metal grades and recovery rates, lower production costs and a 10% increase in gold price partially offset by a 24% decrease in copper price. Net favourable mark-to-market adjustments and final settlements of $0.6 million, related to the open positions of provisionally priced concentrate sales, were recorded in the third quarter of 2009 compared to net unfavourable mark-to-market adjustments and final settlements of $2.9 million in the third quarter of 2008. Net losses of $0.4 million related to the copper derivatives were recorded in the third quarter of 2009.

Chelopech recorded a gross profit from mining operations of $36.7 million in the first nine months of 2009 compared to a gross profit from mining operations of $28.1 million in the corresponding prior year period. The increase in gross profit from mining operations, period over period, of $8.6 million was due to a 42% increase in deliveries, higher gold and copper contained in concentrate produced due to higher metal grades and recovery rates, lower production costs and a 4% increase in gold price partially offset by a 42% decrease in copper price. Net favourable mark-to-market adjustments and final settlements of $6.9 million, related to the open positions of provisionally priced concentrate sales, were recorded in the first nine months of 2009 compared to net unfavourable mark-to-market adjustments and final settlements of $1.7 million in the first nine months of 2008. Offsetting the net favourable mark-to-market adjustments and final settlements recorded in the first nine months of 2009 were net losses related to the copper derivatives of $4.5 million.

Deno Gold recorded a gross profit from mining operations of $1.3 million in the third quarter of 2009 compared to a gross loss from mining operations of $5.6 million in the corresponding prior year period due to a 153% increase in deliveries and lower production costs. Net favourable mark-to-market adjustments and final settlements of $0.9 million, related to the open positions of provisionally priced concentrate sales, were recorded in the third quarter of 2009 compared to net unfavourable mark-to-market adjustments and final settlements of $1.5 million in the third quarter of 2008.

Deno Gold recorded a gross loss from mining operations of $4.7 million in the first nine months of 2009 compared to a gross loss from mining operations of $13.5 million in the first nine months of 2008. The operations were on care and maintenance in the first quarter of 2009. Net favourable mark-to-market adjustments and final settlements of $0.5 million, related to the open positions of provisionally priced concentrate sales, were recorded in the first nine months of 2009 compared to net unfavourable adjustments and final settlements of $1.4 million in the corresponding prior year period.

Investment and other income (expense)

Investment and other expense were $3.7 million and $3.5 million in the third quarter and first nine months of 2009, respectively, compared to investment and other income of $27.9 million and $28.9 million in the corresponding prior year periods. Scope changes following a comprehensive review of the Chelopech mine and mill expansion project resulted in a write-down of fixed assets of $4.1 million (US$3.5 million) in the third quarter of 2009. Included in the third quarter of 2008 results was a gain of $27.2 million on the sale of the Company's holdings in Eldorado Gold Corporation.

Administrative and other expenses

Administrative and other expenses were $4.6 million and $12.6 million in the third quarter and first nine months of 2009, respectively, compared to $5.5 million and $15.5 million in the corresponding prior year periods. The decrease in both periods was primarily due to lower employment costs and associated expenses and lower spending on outside services as a result of the cost savings initiatives introduced in the first quarter of 2009 partially offset by a provision for royalties and other taxes.

Exploration expense

Exploration expense was $1.3 million and $4.1 million in the third quarter and first nine months of 2009 compared to $7.5 million and $21.5 million in the corresponding prior year periods, respectively, due to a decrease in the level of exploration activities in Serbia following the suspension of activities in the fourth quarter of 2008.

Foreign exchange

Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the period end exchange rates, whereas non-monetary assets and liabilities and related expenses denominated in foreign currencies are translated at the exchange rate in effect at the transaction date. Income and expense items are translated at the exchange rate in effect on the date of the transaction. Exchange gains and losses resulting from the translation of these amounts are included in the consolidated statement of earnings. In the third quarter and first nine months of 2009, DPM recorded foreign exchange losses of $1.5 million and $4.5 million, respectively, compared with foreign exchange losses of $0.9 million and $1.6 million in the corresponding prior year periods.

Income tax expense

DPM's effective tax rate of 27% for the third quarter of 2009 was lower than the statutory rate of 33.0% due primarily to an increase in the benefit of profits earned in jurisdictions having a lower tax rate.

DPM's effective tax rate of 48% for the first nine months of 2009 was higher than the statutory rate of 33.0% due primarily to an increase in the valuation allowance on investments and property and the unrecognized tax benefit relating to foreign losses partially offset by the benefit of profits earned in jurisdictions having a lower tax rate and the reversal of the flow-through shares liability of $6.0 million, which was recognized as a recovery following the sale of the Back River project.

Operating cash flow (shortfall)

The following table summarizes the Company's cash flow (shortfall) from operating activities for the periods indicated:

$ thousands
Ended September 30,
 Three Months  Nine Months
20092008 20092008
Net earnings$4,101$6,537 $1,317$847
Non-cash charges (credits) to earnings:         
 Amortization of property, plant and equipment 4,858 4,314  14,175 11,456
 Net gains on sale of investments (207) (27,509)  (160) (28,005)
 Impairment of property, plant and equipment 4,211 62  4,520 75
 Write-downs of investments to market value - 572  1,130 1,523
 Other (268) 696  (2,283) 618
Total non-cash charges (credits) to earnings 8,594 (21,865)  17,382 (14,333)
Decrease (increase) in non-cash working capital (1,025) 4,887  (21,959) 17,368
Net cash provided by (used in) operating activities$11,670$(10,441) $(3,260)$3,882

Cash provided by operating activities in the third quarter of 2009 was $11.7 million compared with cash used in operating activities of $10.4 million in the third quarter of 2008. The increase in cash provided by operating activities in the third quarter of 2009, relative to the corresponding prior year period, was primarily due to higher gross profit from mining operations.

Cash used in operating activities in the first nine months of 2009 was $3.3 million compared with cash provided by operating activities of $3.9 million in the first nine months of 2008. The increase in cash used in operating activities in the first nine months of 2009, relative to the corresponding prior year period, was primarily due to an increase in working capital requirements partially offset by higher gross profit from mining operations. The non-cash working capital requirements of $22.0 million in the first nine months of 2009 was primarily due to a decrease in accounts payable, a decrease in deferred revenue and an increase in accounts receivable.

The following table summarizes the Company's investing activities for the periods indicated:

$ thousands
Ended September 30,
 Three Months  Nine Months
 2009 2008  2009 2008
Proceeds on sale of exploration property$-$- $7,000$-
Proceeds on sale of investments at fair value 308 41,047  2,612 60,238
Proceeds on sale (purchase) of short-term investments(15,101) -  14,036 -
Loan advances - -  (4,887) -
Purchases of investments at fair value (2,152) -  (2,152) -
Capital expenditures (9,766) (19,321)  (25,934) (66,681)
Proceeds on sale of property, plant and equipment 30 5  167 714
Net cash provided by (used in) investing activities$(26,681)$21,731 $(9,158)$(5,729)

Capital expenditures at Chelopech in the third quarter and first nine months of 2009 of $8.6 million and $20.6 million were, respectively, 5% and 38% lower than the corresponding prior year periods. The decrease in spending in the nine months ended September 2009, relative to the corresponding prior year period, was due to a reduction in non-critical expenditures, including those related to the expansion project. Capital expenditures at Deno Gold in the third quarter and first nine months of 2009 of $1.2 million and $5.0 million were, respectively, 82% and 75% lower than the corresponding prior year periods due primarily to the suspension of exploration activities in the fourth quarter of 2008.

In August 2009, DPM purchased 40.5 million ordinary shares of WTI for US$2.0 million ($2.2 million), which by agreement, was advanced by WTI to its subsidiary, NCS, to cover the costs of certain capital improvements being made to its Tsumeb copper smelter and for working capital purposes.
In 2009, DPM advanced $4.9 million (US$4.0 million) to NCS, a subsidiary of WTI, as per the agreement DPM signed with NCS in December 2008 to advance up to US$7.0 million of loans to NCS. The total commitment of US$7.0 million had been advanced as at June 30, 2009.

Financing Activities

The following table summarizes the Company's financing activities for the periods indicated:

$ thousands
Ended September 30,
 Three Months  Nine Months
 2009 2008  2009 2008
Redemption of deferred share units$-$- $-$(58)
Repayment of leases (430) -  (846) -
Proceeds of debt financing - 15,821  - 15,821
Repayment of debt (609) (595)  (2,729) (2,429)
Net cash provided by (used in) financing activities$(1,039)$15,226 $(3,575)$13,334

Average Metal Prices

The following table, summarizing the average metal prices for the London Bullion Market Association ("LBM") gold, LME copper Grade A, LME special high grade ("SHG") zinc and LBM silver prices, is used to illustrate the Company's average metal price exposures based on its key reference prices for the periods indicated.

US$ Average
Ended September 30,
 Three Months Nine Months
 2009 2008 2009 2008
London Bullion gold ($/oz)$960$869$930$898
LME settlement copper ($/lb) 2.66 3.48 2.11 3.62
LME settlement SHG zinc ($/lb) 0.80 0.80 0.67 0.96
LBM spot silver ($/oz)$14.70$15.03$13.68$16.63

Non-GAAP Financial Measures

We have referred to cash cost per tonne of ore processed because we understand that certain investors use this information to assess the Company's performance and also determine the Company's ability to generate cash flow for investing activities. This measurement captures all of the important components of the Company's production and related costs. In addition, management utilizes this metric as an important management tool to monitor cost performance of the Company's operations. This measurement has no standardized meaning under Canadian GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. This measurement is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP.

The following table provides, for the periods indicated, a reconciliation of the Company's cash cost measure and Canadian GAAP cost of sales:

$ thousands, unless otherwise indicated
For the quarter ended September 30, 2009
   ChelopechDeno Gold        Total
Ore processed (mt) 239,803 66,466  
       
Cost of sales (Cdn$)$24,015$7,488$31,503
Cost of sales (US$)$21,159$6,699$27,858
Add (deduct):      
 Amortization (3,007) (705)  
 Reclamation costs and other (444) (241)  
 Change in concentrate inventory (2,742) (548)  
Total cash cost of production (US$)$14,966$5,205  
       
Cash cost per tonne of ore processed (US$), including royalties$        62.41$        78.31  
Cash cost per tonne of ore processed (US$), excluding royalties$        59.31$        78.31  
$ thousands, unless otherwise indicated
For the quarter ended September 30, 2008
ChelopechDeno Gold                        Total
Ore processed (mt) 238,820 78,191  
       
Cost of sales (Cdn$)$16,674$7,155$      23,829
Cost of sales (US$)$15,853$6,889$      22,742
Add/(Deduct):      
 Amortization and other (3,283) (977)  
 Change in concentrate inventory 2,837 2,748  
Total cash cost of production (US$)$15,407$8,660  
       
Cash cost per tonne of ore processed (US$), including royalties$        64.52$      110.75  
Cash cost per tonne of ore processed (US$), excluding royalties$        60.69$      110.75  
  1. A reconciliation of the Company's cash cost per tonne ore processed to cost of sales under Canadian GAAP for the third quarters of 2009 and 2008 is shown in the table entitled "Non-GAAP Financial Measures."
  2. Refer to the quarterly information section for the average metal prices used to illustrate the Company's average metal price exposure based on its key reference prices.

To view the Financial Statements, please click the following link: http://media3.marketwire.com/docs/dpm1104.pdf

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.

Contact Information

  • Dundee Precious Metals Inc.
    Jonathan Goodman
    President and Chief Executive Officer
    (416) 365-2408
    jgoodman@dundeeprecious.com
    or
    Dundee Precious Metals Inc.
    Stephanie Anderson
    Executive Vice President and Chief Financial Officer
    (416) 365-2852
    sanderson@dundeeprecious.com
    or
    Dundee Precious Metals Inc.
    Lori Beak
    Vice President, Investor Relations and Corporate Secretary
    (416) 365-5165
    lbeak@dundeeprecious.com