Dundee Precious Metals Inc.: Third Quarter Results 2004-Focus Continues on Near Term Growth; Expansion Plans Backed by Solid Financial Base.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Dundee Dundee, city (1991 pop. 172,294) and council area, E central Scotland, on the Firth of Tay. It is a port and manufacturing city. Dundee is historically known for its manufacture and processing of jute. Its marmalade is also famous. Precious Metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :DPM (Documents Per Minute) The number of paper documents that can be processed in one minute. ) ("Dundee Precious", "DPM" or "the Company") is pleased to report on the progress made to date. (All amounts have been expressed in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents except where indicated). "We are very happy with the progress achieved. We currently have over $5.00 per share in working capital and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has in addition to a property portfolio in excess of 3.9 million ounces of gold and 374,000 tonnes of copper in the measured and indicated resource category. We are finalizing our feasibility studies The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. to enable us to efficiently develop these resources. In addition, we plan to initiate an investor relations Investor relations The process by which the corporation communicates with its investors. program designed to increase awareness of Dundee Precious among the world's precious metals investment community," said Jonathan Goodman Goodman was a polite term of address, used where Mister (Mr.) would be used today. Compare Goodwife. Goodman refers to:
At Chelopech, the Company recently completed a resource model which contains 25 million tonnes of measured and indicated resources, which will support a long life mine at a targeted production rate of 1.5 million tonnes per year. A definitive feasibility study is underway to convert the operations from concentrate production to metal production. At Krumovgrad, the Ada Tepe resource statement has been completed and the feasibility study is due to be completed by the end of the first quarter of 2005. Exploration drilling, focusing on satellite deposits, has begun with a view to enhancing the ultimate mine life of the overall project. It is anticipated that the mine will produce between 130,000 and 175,000 ounces of gold per year at a very low cash cost. On September 30, 2004 the Company had cash on hand of $100 million and an investment portfolio with a market value of $155 million. The Company reported a loss of $2.7 million ($0.05 per share) for the three months and a profit of $6.6 million ($0.13 per share) for the eight months ended September 30, 2004. The loss in the current period primarily reflects a weak quarter for the mining operations at Chelopech, mainly due to poor performance of some of the underground operating equipment. New equipment has been sent underground which should be ready for service in December. During this period of lower ore production, many of the capital projects originally scheduled for next year have been advanced forward into 2004. As at quarter end, 17,477 tonnes of gold / copper concentrate were on hand or in transit; subsequently approximately 12,300 tonnes were delivered to concentrate buyers in October. Notwithstanding the lower production levels, the Company is extremely happy with the progress made at Chelopech: (1) the ramp to the mine from surface is proceeding on schedule, (2) the resource statement has been finalized See finalization. , (3) the feasibility study evaluating direct metal production is progressing as planned and expected in early 2005, and (4) the refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur of the underground mine, including the roads and workshops, has progressed. The Company believes that advancing many of the capital projects before ramping up the production rate, while resulting in weaker short term earnings, will be more advantageous in the long term. "While we did not originally plan things this way, we are seeing the benefits of completing some of our capital projects prior to the major ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale of production." said Mr. Goodman. Financial Review Dundee began consolidating the results of its mining operations April 1, 2004, the effective date for its conversion to an operating mining company, and changed its fiscal year end from January 31, to December 31.
Operations Summary
Cdn$ million
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Three Three Eight Nine
Months Months Months Months
September October September October
30, 2004 31, 2003 30, 2004 31, 2003
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Revenue from mining operations
Gold/copper concentrate $ 4.7 $ - $ 14.7 $ -
Cost of sales 5.0 - 13.7 -
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Gross profit (loss) (0.3) - 1.0 -
Net investment revenue $ 0.5 $ 15.0 $ 40.3 $ 52.8
Other income 0.3 - 0.3 -
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Net revenue 0.5 15.0 41.6 52.8
Expenses (4.0) (3.5) (9.1) (6.2)
Termination fee - - (29.2) -
Income taxes 0.8 (2.4) 3.3 (10.2)
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Net Income $ (2.7) $ 9.1 $ 6.6 $ 36.4
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Net income (loss per share)
Basic $ (0.05) $ 0.26 $ 0.13 $ 1.06
Fully diluted $ (0.05) $ 0.26 $ 0.13 $ 1.06
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Quarterly Results The results for the quarter reflect: (1) revenue of $4.7 million on the sale of 7,355 dry tonnes of gold/copper concentrate. Cost of sales aggregated $4.0 million and mine site administration was $1.0 million, (2) investment income of $0.5 million, principally from the gains realized on sales of a minor portion of the investment portfolio, and (3) corporate administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. of $1.3 million, grass roots grass roots pl.n. (used with a sing. or pl. verb) 1. People or society at a local level rather than at the center of major political activity. Often used with the. 2. The groundwork or source of something. exploration expense of $1.3 million, the non-cash cost related to stock options previously granted of $0.6 million and other costs of $0.8 million. The financial results for the comparable quarter ended October 31, 2003 reflect the activities of an investment company only. The net income was attributable to realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. on the disposition of investments aggregating $15.0 million, reduced by administrative expenses and management and performance fees of $3.5 million less a provision for income taxes of $2.4 million. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results The Company earned $6.6 million or $0.13 per share in the eight month period ended September 30, 2004. The profit was attributable to the following: (1) gross profit generated by the mining business of $1.0 million. During the six month period ended September 30, 2004, during which the mining results were included, the Company realized $14.7 million on the sale of 22,142 dry tonnes of gold/copper concentrate. The total cost of sales, including mine site administration and depreciation, was $13.7 million for a gross margin of 6.8%, (2) investment income of $40.3 million offset by the cost of terminating the investment management contract of $29.2 million, and (3) administrative costs of $3.7 million, grass roots exploration expense of $1.4 million, stock option expense of $1.3 million and other costs of $2.7 million. For the comparative nine month period ended October 31, 2003, in which the Company operated as an investment company only, investment income of $52.8 million was reduced by administrative and management fees totaling $6.2 million and income taxes of $10.2 million, resulting in net income of $36.4 million or $1.06 per share.
Cash Flow Summary
Cdn$ million
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Three Three Eight Nine
Months Months Months Months
September October September October
30, 2004 31, 2003 30, 2004 31, 2003
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Cash provided (used) in
Operating activities $ (5.2) $ (4.1) $ (21.6) $ (26.1)
Capital & other expenditure (8.1) - (15.5) -
Investment transactions, net 0.3 (5.0) 54.1 37.6
Financing activities (3.2) (5.3) 59.5 (0.8)
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$ (16.2) $(14.4) $ 76.5 $ 10.7
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Quarterly Results The $16.2 million expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. during the quarter reflects the following major items: (1) an increase in concentrate inventory of $3.8 million, (2) expenditures of $8.1 million on mine development, equipment and resource evaluation work, and (3) an issuer bid to purchase shares of the Company for cancellation, at a cost of $3.3 million. For the comparative three month period ended October 31, 2003, the Company spent $5.0 million on net investment purchases, received $3.5 million from the issuance of common shares and reduced long term-debt by $8.8 million. Year-to-date Results The Company had $76.5 million in cash flow during the eight month period ended September 30, 2004. The primary sources and uses of cash were as follows: (1) $49.3 million received from net investment transactions, (2) $15.5 million spent on mine improvement, development, purchase of equipment and resource evaluation work, and (3) $58.7 million received from the net issuance of common shares. For the comparative nine month period ended October 31, 2004, the Company had net investment sales of $37.6 million. FORWARD LOOKING STATEMENTS This news release may contain certain information that constitutes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Forward-looking statements are frequently characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. 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 ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. data, fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. 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 Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Securities Administrators' website located at www.sedar.com. The Company disclaims any obligation to update or revise any forward-looking statements if circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements. Dundee Precious Metals Inc. is an 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, a gold exploration property, both located in Bulgaria. The Company is engaging in mineral exploration activities in the region and holds a significant portfolio of investments in the precious metals and mineral related sector. For a complete set of DPM's interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial please refer to our website at www.dundeeprecious.com. Dundee Precious Metals Inc. (TSX:DPM) |
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