Dundee Precious Metals Announces 2012 Third Quarter Results

Dundee Precious Metals Announces 2012 Third Quarter Results 
- Continued solid operating performance at Chelopech  
- Weaker metal prices relative to Q3 2011, partially offset by copper
hedging and stronger U.S. dollar  
- Capital projects progressing well with commissioning of the
underground crusher and conveyor at Chelopech and the lead circuit at
Deno Gold currently underway  
- Exploration activities at Deno, Avala, Dunav and Sabina continue to
show positive results  
- Solid financial position with $131 million in cash to support
current capital requirements 
TORONTO, ONTARIO -- (Marketwire) -- 11/07/12 --  
(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 third quarter 2012 adjusted
net earnings(1) of $18.7 million ($0.15 per share) compared to $32.4
million ($0.26 per share) for the same period in 2011. Reported third
quarter 2012 net earnings attributable to common shareholders were
$21.9 million ($0.18 per share) compared to $40.3 million ($0.32 per
share) for the same period in 2011. Adjusted net earnings in the
first nine months of 2012 were $59.4 million ($0.47 per share)
compared to $48.2 million ($0.39 per share) for the same period in
2011. Net earnings attributable to common shareholders in the first
nine months of 2012 were $39.7 million ($0.32 per share) compared to
$63.4 million ($0.51 per share) for the same period in 2011.  
The quarter over quarter decrease in adjusted net earnings was driven
by lower metal prices, higher operating and administrative expenses,
higher exploration expenses primarily related to activities at Dunav
and Avala, and the deferral of copper concentrate deliveries at Deno
Gold as a result of the lead content being higher than current
smelter's specifications. These unfavourable variances were partially
offset by a stronger U.S. dollar. Net earnings attributable to common
shareholders were also impacted by unrealized losses on copper
derivative contracts of $9.0 million (2011 - unrealized gains of
$40.2 million) and unrealized mark-to-market gains in respect of the
Company's Sabina Gold & Silver Corp. ("Sabina") special warrants of
$12.3 million (2011 - unrealized losses of $32
.2 million).  
The increase in adjusted net earnings in the first nine months of
2012 relative to the same period in 2011 was due primarily to higher
volumes of payable gold and copper in concentrate sold, higher gold
prices and a stronger U.S. dollar, partially offset by lower
by-product prices, lower volumes of concentrate smelted at NCS
resulting from short-term production curtailments, higher
administrative expenses and higher exploration expenses, primarily
related to activities at Dunav and Avala. The increase in payable
gold and copper in concentrate sold reflects Chelopech's ramp-up of
production associated with its mine expansion. Net earnings
attributable to common shareholders were also impacted by several
items, including unrealized losses on copper derivative contracts of
$16.7 million (2011 - unrealized gains of $36.4 million) and
unrealized losses related to the Company's Sabina special warrants of
$2.9 million (2011 - $26.4 million). 
"Chelopech delivered another quarter of solid operating and financial
results. The physical construction of the expansion project was
completed in early October and the commissioning of the underground
crusher and conveyor is currently underway and progressing well and
remains under budget. The installation of the lead circuit at Deno
Gold was also completed in the third quarter and commissioning is
currently underway," said Jonathan Goodman, President and CEO. "We
are pleased with the progress being made on the capital projects and
other initiatives underway at NCS and are confident that production
will be restored to normal levels in the near term. Overall, we are
well positioned to deliver a strong fourth quarter and, with $131
million in cash, are in solid financial shape." 
Adjusted EBITDA(1) in the third quarter and first nine months of 2012
was $26.5 million and $86.8 million, respectively, compared to $46.7
million and $80.5 million in the corresponding periods in 2011 driven
by the same factors affecting adjusted net earnings. 
Concentrate production for the three and nine months ended September
30, 2012 was 35,924 tonnes and 103,381 tonnes, respectively,
representing a 4% and 26% increase relative to the corresponding
periods in 2011 due primarily to higher volumes of ore mined and
processed at Chelopech as the mine production continues to ramp-up.
This was partially offset by lower concentrate production at Deno
Gold due primarily to lower volumes of ore processed. In the third
quarter of 2011, 37,033 tonnes of oxidized ore, stockpiled on surface
from past mining operations, were processed to supplement mine
production and to fully utilize the mill. There was no oxidized ore
processed in 2012.  
Concentrate smelted at NCS in the third quarter and first nine months
of 2012 of 45,787 tonnes and 113,533 tonnes, respectively, was 17%
and 15% lower than the corresponding periods in 2011 due primarily to
the impact of the Namibian Minister of Environment and Tourism's (the
"Minister") directive issued on April 27, 2012, to reduce production
to 50% of the smelter's operating capacity. On July 10, 2012, the
Minister's Technical Committee, with the approval of the Minister,
authorized an immediate production increase to 75% of the smelter's
operating capacity. Inspections to assess whether further increases
are warranted have now been completed and the Company expects that
the government will advise on the timing of further increases in
November 2012.  
Deliveries of concentrate in the third quarter of 2012 of 33,934
tonnes were 11% lower than the corresponding period in 2011 due
primarily to timing of shipments and lower concentrate production at
Deno Gold as a result of lower ore processed. Payable metals in
concentrate sold in the third quarter of 2012 were lower than the
corresponding period in 2011 consistent with the decrease in
concentrate deliveries. 
Deliveries of concentrate in the first nine months of 2012 of 101,687
tonnes were 17% higher than the corresponding period in 2011 due
primarily to increased concentrate production at Chelopech partially
offset by the deferral of copper concentrate deliveries at Deno Gold
as a result of the lead content being higher than current smelter's
specifications and lower production of zinc concentrate at Deno Gold.
Payable copper and gold in concentrate sold in the first nine months
of 2012 were up 22% and 26%, respectively, relative to the
corresponding period in 2011 due primarily to increased production at
Chelopech and higher gold grades.  
Consolidated cash cost of sales per ounce of gold sold, net of
by-product credits, for the third quarter of 2012 was $217 compared
to negative $115 for the third quarter of 2011. The quarter over
quarter increase was due primarily to lower by-product prices, lower
volumes of payable zinc and silver in concentrate sold and higher
treatment charges. Cash cost of sales per ounce of gold sold, net of
by-product credits, for the first nine months of 2012 was $92
compared to negative $22 during the same period in 2011. This
increase was due primarily to lower by-product prices and higher
operating expenses, partially offset by higher aggregate volumes of
payable gold and copper in concentrate sold and a stronger U.S.
dollar.  
Cash provided from o
perating activities, before changes in non-cash
working capital, during the third quarter and first nine months of
2012 of $35.3 million and $90.4 million, respectively, was $7.5
million lower and $8.6 million higher than the corresponding prior
year periods due primarily to the same factors affecting adjusted net
earnings and higher income tax payments.  
Capital expenditures in the third quarter and first nine months of
2012 were $39.0 million and $98.0 million, respectively, compared to
$38.6 million and $87.4 million in the corresponding periods in 2011.
The year-to-date increase was due primarily to increased construction
activities in connection with NCS' capital program, partially offset
by reduced construction activities at Chelopech.  
As at September 30, 2012, DPM maintained a solid financial position
with minimal debt, representing 10% of total capitalization, a
consolidated cash position of $131.1 million and an investment
portfolio valued at $93.9 million.  
Ms. Eira Thomas joined the board of directors of the Company on
September 12, 2012. Ms. Thomas has over 20 years of experience in the
mining industry and has held a number of senior positions, most
recently, as Chairman and director of Stornoway Diamond Corporation,
an organization she co-founded.  
The Company's outlook for its 2012 operating results remains
unchanged from the guidance in the MD&A issued on August 1, 2012,
although we expect to achieve the higher end of the range for
production and the lower end of the range for cost. Expected growth
capital expenditures for the year have been reduced to reflect the
deferral of certain expenditures to 2013.  
For 2012, mine output at Chelopech is expected to range between 1.7
million and 1.85 million tonnes of ore, in line with its planned
ramp-up to an annualized production rate of two million tonnes of
ore. Mine output at Deno Gold is expected to range between 500,000
and 550,000 tonnes. Based on the existing government directive,
concentrate smelted at NCS is expected to range between 145,000 and
155,000 tonnes.  
The Company's estimated metals contained in concentrate produced for
2012 is set forth in the following table:  


 
----------------------------------------------------------------------------
Metals contained in                                                         
 concentrate                                                                
 produced:                   Chelopech          Deno Gold              Total
----------------------------------------------------------------------------
                                                                            
Gold (ounces)        110,000 - 120,000    22,000 - 25,000  132,000 - 145,000
Copper (million                                                             
 pounds)                   40.0 - 43.0          2.3 - 2.6        42.3 - 45.6
Zinc (million                                                               
 pounds)                             -        16.0 - 18.0        16.0 - 18.0
Silver (ounces)      190,000 - 205,000  450,000 - 510,000  640,000 - 715,000
----------------------------------------------------------------------------

 
Assuming current exchange rates, 2012 unit cash cost per tonne of ore
processed is expected to range between $46 and $50 at Chelopech and
between $68 and $73 at Deno G
old. The cash cost per tonne of
concentrate smelted at NCS is expected to range between $370 and
$390. 
For 2012, the Company's approved growth capital expenditures(1) are
expected to range between $130 million and $140 million, down from
previous guidance of $150 million to $175 million. These expenditures
relate primarily to the mine and mill expansion at Chelopech, the
plant upgrade and expansion at NCS, the development work related to
the Krumovgrad Gold Project, and exploration 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 continue to remain between $29 million and $35 million.
Further details can be found in the Company's MD&A under the section
"2012 Outlook". 
(1) Adjusted net earnings, adjusted basic earnings per share and
adjusted earnings before interest, taxes, depreciation and
amortization ("EBITDA"), and growth and sustaining capital
expenditures are not defined 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 management's discussion
and analysis for the three and nine months ended September 30, 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                                              
Ended September 30,                        Three Months       Nine Months   
                                         -----------------------------------
                                             2012    2011     2012     2011 
----------------------------------------------------------------------------
Revenue                                      99.3   112.5    281.6    250.0 
Gross profit                                 41.0    51.1    117.3     91.9 
Earnings before income taxes                 19.9    47.0     33.4     72.0 
Net earnings attributable to common                                         
 shareholders                                21.9    40.3     39.7     63.4 
Basic earnings per share                     0.18    0.32     0.32     0.51 
                                                                            
Adjusted EBITDA(1)                           26.5    46.7     86.8     80.5 
                                                                            
Adjusted net earnings(1)                     18.7    32.4     59.4     48.2 
Adjusted basic earnings per share(1)         0.15    0.26     0.47     0.39 
                                                                            
Cash flow from operations, before changes                                   
 in non-cash working capital                 35.3    42.8     90.4     81.8 
                                                                            
Concentrate produced (mt)                  35,924  34,704  103,381   82,102 
Metals in concentrate produced:                                             
    Gold (ounces)                          33,844  32,221  109,807   79,713 
    Copper ('000s pounds)                  11,865  11,140   34,287   25,866 
    Zinc ('000s pounds)                     4,714   4,692   12,545   14,455 
    Silver (ounces)                       185,772 152,865  522,356  492,949 
NCS - concentrate smelted (mt)             45,787  55,009  113,533  132,815 
                                                                            
Deliveries of concentrates (mt)            33,934  38,142  101,687   86,925 
Payable metals in concentrate sold:                                         
  Gold (ounces)                            32,134  34,125   99,033   78,592 
  Copper ('000s pounds)                    10,495  11,410   31,123   25,514 
  Zinc ('000s pounds)                       3,160   4,918   11,122   14,072 
  Silver (ounces)                         156,102 198,894  367,038  478,660 
                                                                            
Cash cost of sales per ounce of gold                                        
 sold, net of by-product credits(1)                                         
  Chelopech                                    99    (187)      (4)     (74)
  Deno Gold                                   894      85      855      114 
  Consolidated                                217    (115)      92      (22)
----------------------------------------------------------------------------
(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.                                          

 
A complete set of DPM's condensed interim unaudited consolidated
financial statements and the notes thereto, and MD&A for the three
and nine months ended September 30, 2012, are posted on the Company's
website at www.dundeeprecious.com and have been filed on Sedar at
www.sedar.com. 
An analyst conference call to discuss these results is scheduled for
Thursday, November 8, 2012, at 9:00 a.m. (E.S.T.). The call will be
webcast live (audio only) at: http://www.gowebcasting.com/3835.
Listen only telephone option at 416-695-6616 or North America Toll
Free at 1-800-766-6630. Replay 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 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 51.4% 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 un
certainties. 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