Dundee Precious Metals Inc.

Dundee Precious Metals Inc.

March 13, 2005 15:47 ET

Dundee Precious Metals Inc.: Year End Results-2004 Focus On Asset Growth Continues Expansion Plans Backed By Solid Financial Base


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: DUNDEE PRECIOUS METALS INC.

TSX SYMBOL: DPM

MARCH 13, 2005 - 15:47 ET

Dundee Precious Metals Inc.: Year End Results-2004
Focus On Asset Growth Continues Expansion Plans Backed
By Solid Financial Base

TORONTO, ONTARIO--(CCNMatthews - March 13, 2005) - Dundee Precious
Metals Inc. (TSX:DPM) ("Dundee Precious", "DPM" or "the Company") is
pleased to report on the progress made to date. (All amounts have been
expressed in Canadian dollars except where indicated).

"In less than a year, we have successfully converted from a precious
metals investment company to a gold mining company and have maintained a
strong financial position while building a pipeline of high impact
properties", said Jonathan Goodman, President and CEO.

"We continue to be very happy with the progress achieved during our
first eight months as a mining company. As at December 31, 2004 we had
over $4.86 per share in working capital and marketable securities, in
addition to a property portfolio with resources of over 4.0 million
ounces of gold and 374 thousand tonnes of copper in the measured and
indicated resource category in Bulgaria. Environmental Impact
Assessments are about to be filed and Definitive Feasibility Studies are
nearing completion in connection with developing the new Ada Tepe Gold
Project and converting the existing Chelopech Mine from gold / copper
concentrate to metal production. In addition, we have recently acquired
an option to earn a 60% interest in the Back River Exploration Project
in Nunavut which reported an indicated mineral resource of 1.4 million
ounces of gold and an inferred mineral resource of 0.6 million ounces of
gold last year", he added.

The Company reported a profit of $7.9 million ($0.15 per share) for the
eleven months ended December 31, 2004 compared with a profit of $44.8
million ($1.28 per share) for the twelve months ended January 31, 2004.
The Company reported a profit of $1.3 million ($0.03 per share) for the
three months ended December 31, 2004 compared with a profit of $8.4
million ($0.24 per share) in the three months ended January 31, 2004.
The profits are entirely attributable to investment income.

The Bulgarian mining operations were consolidated effective April 1,
2004 as a result of the shareholders' approval of the conversion to a
mining company. In the nine months, Chelopech incurred an operating loss
of $0.8 million on the sale of 39,100 tonnes of concentrate. The low
sales were mainly due to poor performance of the underground operating
equipment during the last six months of the year delaying the expected
ramp up in production. During this period of lower ore production, many
of the capital projects originally scheduled for 2005 were advanced
forward into 2004. New equipment was sent underground and went into
service during the months of December 2004 and January 2005.

Subsequent to year end, the Company completed and released an updated
resource statement for the Ada Tepe gold property and settled the
remaining obligations relating to the purchase of the Bulgarian assets
at a savings of over US$6.0 million.

EXPLORATION AND DEVELOPMENT

The Company is currently re-developing its gold / copper mine
(Chelopech) in Bulgaria to increase mine production capacity and to
evaluate direct metal production and has furthered development of its
advanced stage gold project (Ada Tepe). In addition, further evaluation
work is continuing on the advanced exploration project Back River
located in Nunavut.

Chelopech

During 2004, the Company advanced development to increase ore production
by starting construction of an underground decline, which is expected to
be completed by the end of 2005 and started development of the
underground workings and the conversion to long-hole open stoping.

The Company is nearing completion of a definitive feasibility study to
evaluate metal production on site using autoclave technology.

Ada Tepe

During the year, the Company finalized an initial resource determination
which was announced October 15, 2004 and subsequently updated it to a
measured and indicated resource containing 835,000 ounces of gold.

A definitive feasibility study for building and operating a gold mine is
almost completed. It is anticipated that the mine will produce between
130,000 and 175,000 ounces of gold per year at a low cash cost.
Exploration drilling has begun on satellite deposits with a view to
adding feed to the planned Ada Tepe mill and extending the life of the
project facilities.

FINANCIAL REVIEW

Dundee Precious began consolidating the results of its mining operations
April 1, 2004, the effective date of its conversion to an operating
mining company, and changed its fiscal year end from January 31 to
December 31.



Operations Summary
Cdn$ million
---------------------------------------------------------------------
Three Months Three Months Eleven Months Twelve Months
December 31, January 31, December 31, January 31,
2004 2004 2004 2004
---------------------------------------------------------------------
Revenue from
mining
operations
Gold/copper
concentrate $ 11.4 $ - $ 26.1 $ -
Cost of sales 13.2 - 26.9 -
---------------------------------------------------------------------
Gross (loss) (1.8) - (0.8) -

Net investment
revenue 10.7 16.0 50.8 68.8
Other income 0.2 - 0.6 -
---------------------------------------------------------------------
Net revenue 9.1 16.0 50.6 68.8

Expenses (7.6) (4.1) (16.6) (10.4)
Termination fee - - (29.2) -
Income taxes (0.2) (3.5) 3.1 (13.6)
---------------------------------------------------------------------
Net Income $ 1.3 $ 8.4 $ 7.9 $ 44.8
---------------------------------------------------------------------
---------------------------------------------------------------------

Net income
per share
Basic $ 0.03 $ 0.24 $ 0.15 $ 1.28
Fully diluted $ 0.03 $ 0.24 $ 0.15 $ 1.28
---------------------------------------------------------------------


Annual Results

Net revenue of $50.6 million for the eleven month period ended December
31, 2004 resulted from the following:

(1) the financial results of the mining business for the nine month
period ending December 31, 2004 which had an operating loss of $0.8
million on the sale of 39,100 dry tonnes of gold/copper concentrate, and

(2) $50.8 million in gains on the sale of investments net of investment
write-downs of $2.2 million.

Expenses of $16.6 million included administrative expense of $6.3
million; stock compensation expense of $4.8 million and exploration
expense of $2.9 million. The $29.2 million expense relates to the cost
of terminating the investment management contract.

For the prior year ended January 31, 2004, in which the Company operated
as an investment company, investment income of $68.8 million was reduced
by administrative and management fees totaling $10.4 million and income
taxes of $13.6 million, resulting in a net income of $44.8 million or
$1.28 per share.

Fourth Quarter Results

Revenue from mining operations for the fourth quarter was $11.4 million
from the sale of 16,965 dmt of copper/gold concentrate. At December 31,
2004, 11,303 dmt of concentrate was in inventory of which 9,585 dmt was
subsequently sold in January and February 2005.

Cost of sales in the fourth quarter of 2004 was $13.2 million. The
increase in cost of sales in the fourth quarter compared to the prior
quarter of 2004 was the result of an increase in the repairs and
maintenance of underground equipment resulting in less ore mined which
contributed to an increase in unit costs of production.

Expenses of $7.6 million in the fourth quarter were comprised of
administrative expense of $2.6 million; stock based compensation expense
of $3.5 million and exploration expense of $1.4 million. The increase in
administrative costs over the prior quarter of 2004 resulted from
business development activities.



Cash Flow Summary
Cdn$ million 4th Quarter Year
---------------------------------------------------------------------
Three Months Three Months Eleven Months Twelve Months
December 31, January 31, December 31, January 31,
2004 2004 2004 2004
---------------------------------------------------------------------

Cash provided
(used) in
Operating
activities $ (3.9) $ (4.7) $ (25.6) $ (30.8)
Capital and
other
expenditures (9.8) - (25.3) -
Investment
transactions,
net (15.8) 2.6 38.3 40.3
Financing
activities (0.3) 13.6 59.2 12.8
---------------------------------------------------------------------
$(29.8) $ 11.6 $ 46.6 $22.3
---------------------------------------------------------------------
---------------------------------------------------------------------


Operating Activities

For the eleven months ended December 31, 2004, the Company's operating
cash requirement of $25.6 million, was comprised of:

- $20.7 million for working capital relating to a $10.0 million increase
in income taxes recoverable, and a $5.0 million reduction in corporate
liabilities primarily related to the prior year's outstanding
performance fees payable and administrative expenses of $6.3 million
incurred in converting to and operating as an active mining company over
the last nine months; and

- $4.9 million for the mining operations, mainly due to the required
build up of working capital.

During the twelve month period ended January 31, 2004, the period in
which the Company operated as an investment company only, the Company
had a cash requirement of $30.8 million, the majority of which related
to taxes paid during the period.

Capital & Other Expenditures

The Company invested $25.3 million (US$19.9 million) in capital and
development from the date the Company consolidated the Bulgarian mining
projects.

Of the amount invested in capital development, US$13.6 million has been
spent on the Chelopech Mine as follows:



USD millions
------------------------------------------------------------
Establishing reserves $ 1.4
Decline 2.7
Mine development 6.5
Mill development 0.7
Autoclave Definitive Feasibility Study 0.9
Other 1.4
------------------------------------------------------------
Total $13.6
------------------------------------------------------------
------------------------------------------------------------

US$6.3 million was spent on the Ada Tepe development project over
the same period as follows:

USD millions
------------------------------------------------------------
Reserve definition drilling $ 2.8
Definitive feasibility study 1.9
Other 1.6
------------------------------------------------------------
Total $ 6.3
------------------------------------------------------------
------------------------------------------------------------


Investment Transactions

For the eleven months ended December 31, 2004, investment transactions
totaled $38.3 million and comprised of an increase in Investments of
$53.4 million, proceeds on sale of investments of $87.0 million and cash
recorded on the initial consolidation of the Bulgarian mining operations.

Financing Activities

During the current period, cash provided by Financing Activities totaled
$59.2 million, mainly due to $62.0 million received by the Company from
the exercise of warrants and the exercise of an option granted in
connection with the termination of the investment management contract.
The Company also spent $3.2 million in the purchase of its shares in the
market for cancellation.

FORWARD LOOKING STATEMENTS

This news release may contain certain information that constitutes
forward-looking statements. Forward-looking statements are frequently
characterized by words such as "plan," "expect," "project," "intend,"
"believe," "anticipate" and other similar words, or statements that
certain events or conditions "may" or "will" occur. Forward-looking
statements are based on the opinions and estimates of management at the
date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. These factors include the inherent risks involved in the
exploration and development of mineral properties, the uncertainties
involved in interpreting drilling results and other geological data,
fluctuating metal prices and other factors described above and in the
Company's most recent annual information form under the heading "Risks
Factors" which has been filed electronically by means of the Canadian
Securities Administrators' website located at www.sedar.com. The Company
disclaims any obligation to update or revise any forward-looking
statements if circumstances or management's estimates or opinions should
change. The reader is cautioned not to place undue reliance on
forward-looking statements.

Dundee Precious is a Canadian operating mining company engaged in the
acquisition, exploration, development and mining of precious metals. It
currently owns the Chelopech Mine, a producing gold/copper mine and Ada
Tepe, an advanced stage exploration property, both located in Bulgaria
and is engaged in mineral exploration activities in the region. In
addition, Dundee Precious has the option to earn a 60% interest in the
Back River gold project in Nunavut, Canada. The Company also holds a
significant and strategic portfolio of investments in the precious
metals and mineral related sector.

A complete set of DPM's consolidated financial statements and
Management's Discussion and Analysis are posted on our website at
www.dundeeprecious.com. An analyst conference call will be webcast live
at http://events.onlinebroadcasting.com/dundee/031405/index.php on
Monday, March 14 at 8:30 am.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Dundee Precious Metals Inc.
    Jonathan Goodman
    President & Chief Executive Officer
    (416) 365-2408
    jgoodman@dundeeprecious.com
    or
    Dundee Precious Metals Inc.
    Gabriela M. Sanchez
    Vice President Investor Relations
    (416) 365-2549
    gsanchez@dundeeprecious.com
    or
    Dundee Precious Metals Inc.
    Bruce Burton
    Vice President & Chief Financial Officer
    (416) 365-5143
    bburton@dundeeprecious.com