Dundee Precious Metals Strong First Quarter 2005 Ada Tepe Environmental Impact Assessment Filed Chelopech Redevelopment Ahead Of Schedule.TORONTO -- (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). Dundee 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 on track to become a mid cap gold producer by 2007 as it reports the results of its operational, exploration and financial activities during the first quarter 2005. HIGHLIGHTS: - Environmental Impact Assessment for Ada Tepe filed in April 2005; - Ada Tepe Definitive Feasibility Study 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 be presented to Board of Directors for approval in May 2005; - Bulgarian Investment Agency issues Class 1 Investment Certificates for Chelopech Mine expansion and Ada Tepe construction projects; - Chelopech unit cost per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. mined continues to decline as production increases. The mine redevelopment is ahead of schedule as ore production reaches an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of 900,000 tonnes in March 2005; - A copper cathode produced during pilot plant testing of the pressure oxidization process on Chelopech concentrate is expected to meet London Metals Exchange purity standards; - Obligations of approximately US$16.5 million plus future royalty obligations arising from the acquisition of the Bulgarian mining assets settled for US$10.5 million; - Chelopech completed a US$10 million loan facility with the European Bank for Reconstruction and Development European Bank for Reconstruction and Development Bank targeted at Eastern Europe and the former Soviet Union. ; - DPM purchased an option to earn a 60% interest in the Back River Project located in Nunavut, Canada. "At DPM we are committed to deliver on the promise of becoming a mid cap gold producer by 2007 and our First Quarter 2005 results certainly indicate that with our mining activities, exploration and corporate strategy we are well on our way to meeting this goal. We appreciate the support of our shareholders during the initial transition period and I want to reassure re·as·sure tr.v. re·as·sured, re·as·sur·ing, re·as·sures 1. To restore confidence to. 2. To assure again. 3. To reinsure. them that we will continue to focus on increasing shareholder value as we consider further growth opportunities", said Jonathan Goodman Goodman was a polite term of address, used where Mister (Mr.) would be used today. Compare Goodwife. Goodman refers to:
MINING AND EXPLORATION ACTIVITIES Bulgaria During the current quarter, the Company was awarded preferential pref·er·en·tial adj. 1. Of, relating to, or giving advantage or preference: preferential treatment. 2. investment status in Bulgaria with Class 1 Investment Certificates for its Chelopech expansion and Ada Tepe construction projects by the Bulgarian Investment Agency ("BIA BIA abbr. Bureau of Indian Affairs "). The investment certificates allow the Company to acquire the lands required for the implementation of the investment projects without tender or competition and to receive individual administrative service from the BIA, thereby reducing administrative time frames. Chelopech, Bulgaria As of March 31, 2005, the development of the underground workings was ahead of target for the year as a result of the increased availability and reliability of underground equipment. The construction of a 2,300 metre metre In poetry, the rhythmic pattern of a poetic line. Various principles have been devised to organize poetic lines into rhythmic units. Quantitative verse, the metre of Classical Greek and Latin poetry, measures the length of time required to pronounce syllables, decline from surface to the underground mine workings continued to encounter problems due to poor ground conditions. The Company has ordered specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. equipment to advance the decline through the variable ground conditions and to complete the decline as planned by the end of 2005. The Company's feasibility study to evaluate direct metal production using autoclave autoclave Vessel, usually of steel, able to withstand high temperatures and pressures. The chemical industry uses various types of autoclaves in manufacturing dyes and in other chemical reactions requiring high pressures. technology is continuing with encouraging results. Copper cathode was produced at the pilot plant facility during the quarter and appears to meet the benchmark London Metals Exchange purity grade of 99.99% copper. These results provide evidence of technological proof of concept. Cost per unit of ore mined significantly decreased from US$51 per tonne in the prior quarter to US$33 per tonne in the current period and is in line with expectations resulting from maintenance work carried out in the fourth quarter of 2004. Ore mined over the three month period ended March 31, 2005 averaged over 70,000 tonnes per month compared to an average of approximately 50,000 tonnes per month mined in the prior three month period ended December 31, 2004. A large proportion of Chelopech's operating costs operating costs npl → gastos mpl operacionales are fixed and it is expected that unit costs will continue to decrease as production increases. Ore production at the end of March 2005 is ahead of plan and it is expected that the mine will meet or exceed the current year's target. Cash cost per pound of copper and per ounce of gold in concentrate was higher compared to the last quarter and higher than plan due to lower grades of mined ore and lower metal recovery rates from ore to concentrate. The lower ore grades Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly were the result of being unable to access the planned areas of the ore body as well as from the continuing dilution effects of the current mining method (sub-level caving). It is expected that significant increases in grades will not be achieved until the mining method is changed to long-hole open stoping. The change in mining method is expected to start towards the end of the second quarter of 2005. Lower than planned metal recovery rates from ore to concentrate were due to higher sulphur Sulphur, city, United States Sulphur, city (1990 pop. 20,125), Calcasieu parish, SW La.; inc. 1914. It is a trade center for an area producing natural gas, oil, and timber as well as sorghum, soybeans, cattle, and crawfish. content of the ore in the area being mined. Ada Tepe, Bulgaria An Environmental Impact Assessment ("EIA (Electronic Industries Alliance, Arlington, VA, www.eia.org) A membership organization founded in 1924 as the Radio Manufacturing Association. It sets standards for consumer products and electronic components. ") of the proposed project was completed and submitted to the Bulgarian Government in April of 2005 for review and approval. Following review by the Government the EIA will be submitted to the municipal and regional authorities for review. A Definitive Feasibility Study on the construction and operation of this proposed gold mine is nearing completion and will be presented to the Board of Directors for approval in May 2005. On February 25, 2005, the Company announced its updated resource determination for the project which now stands at 835,000 ounces of gold and 440,000 ounces of silver in the measured and indicated category. Delineation drilling of nearby 'satellite' prospects has been completed (Kuklita, Surnak, Skalak, Kupel). Resource estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. is underway and is expected to be complete by early June, following which pit optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. and mining studies will be completed. Back River Project, Canada In February of 2005, the Company purchased an option to acquire up to a 60% interest in the Back River Project located in Nunavut, Northern Canada Northern Canada is the vast northernmost region of Canada variously defined by geography and politics. Definitions and usage Also referred to as the Canadian North or (locally) as the North . The Back River project hosts gold mineralization Mineralization The process by which the body uses minerals to build bone structure. Mentioned in: Rickets mineralization, n the bioprecipitation of an inorganic substance. in banded iron formation Banded iron formations (also known as banded ironstone formations or BIFs) are a distinctive type of rock often found in primordial sedimentary rocks. The structures consist of repeated thin layers of iron oxides, either magnetite or hematite, alternating with bands and greywacke Greywacke (German grauwacke, signifying a grey, earthy rock) is a variety of sandstone generally characterized by its hardness, dark color, and poorly-sorted, angular grains of quartz, feldspar, and small rock fragments set in a compact, clay-fine matrix. . The area is considered to have excellent potential to host significant gold mineralization suitable for exploitation by both open pit and underground methods. The Company has a $15 million exploration budget for this property to be 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. before August 31, 2006 to conduct further drilling to increase resources and focus on high impact targets, prioritize pri·or·i·tize v. pri·or·i·tized, pri·or·i·tiz·ing, pri·or·i·tiz·es Usage Problem v.tr. To arrange or deal with in order of importance. v.intr. additional targets and upgrade the quality of the resource controls. Approximately $11 million of exploration expenses have been incurred to date. FINANCIAL RESULTS Since DPM converted to an operating mining company on April 1, 2004, the percentage of its reported assets invested in active mining properties has increased form 14% to over 46%. The Company had cash and working capital of $63.1 million, and investments in 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 with a value of $179 million (an aggregate of $4.43 per share as at March 31, 2005) which is more than sufficient to fund current development plans, if required.
Operations Summary
Cdn$ million
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Three Months Two Months
March 31, 2005 March 31, 2004
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Revenue from mining operations
Gold/copper concentrate $ 11.7 $ -
Cost of sales 11.8 -
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Gross (loss) (0.1) -
Net investment revenue 0.8 25.2
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Net revenue 0.7 25.2
Expenses (2.3) (0.8)
Income taxes (0.1) (4.4)
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Net Income (loss) $ (1.5) $ 20.0
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Net income (loss) per share
Basic $ (0.06) $ 0.46
Fully diluted $ (0.06) $ 0.45
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Quarterly Results The Company reported a net loss of $1.5 million or $0.06 per share for the first quarter of 2005. The Chelopech mine broke even as it continued to expand its production capacity. The 2005 results include investment income of $0.8 million, after recording a provision of $1.6 million for a decline in the value of certain investments. Administrative, exploration and other expenses aggregated $2.3 million in the current quarter. In the comparative two month period ended March 31, 2004, DPM reported as a closed-end investment company closed-end investment company: see mutual fund. . Net income of $20 million or $0.46 per share was entirely derived from investment activities in the precious metals sector.
Cash Flow Summary
Cdn$ million
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Three Months Two Months
March 31, 2005 March 31, 2004
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Cash provided (used) in
Operating activities $ (2.1) $ (28.5)
Property, plant and equipment (24.6) -
Investment transactions, net 0.3 15.3
Financing activities (4.7) 43.7
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$(31.1) $ 30.5
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Operating Activities For the three months ended March 31, 2005, the Company's operating cash requirement of $2.1 million was comprised of: - $0.5 million cash requirement for the mining, exploration and development segment as a result of supplies inventory acquired as part of the Back River option acquisition; - $1.6 million cash requirement related to corporate administration costs incurred. During the two month period ended March 31, 2004, the period in which the Company operated as an investment company only, the Company generated net cash of $30.5 million primarily from investing and financing activities. Capital & Other Expenditures During the three month period ended March 31, 2005, the Company invested $24.6 million in property plant and equipment. $9.6 million in relation to the acquisition and exploration activities on the Back River exploration project located in Nunavut; $7.8 million related to the settlement of a contingent liability Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. related to the prior purchase of the Bulgarian mining assets which was capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. to the Ada Tepe Gold property; $6.9 million in capital and development on the Bulgarian mining assets and $0.3 million for corporate activities. The Company invested $6.9 million (US$5.6 million) in capital and development in relation to the Bulgarian mining projects in the three month period ended March 31, 2005 and US$35.6 million from the date the Company acquired the Bulgarian mining operations. Of the amount invested in capital development, US$4.0 million was spent during the period and US$25.2 million has been spent from the date of acquisition of the Bulgarian mining assets on the Chelopech Mine as follows:
US$ millions
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Current Period Project from date
of acquisition
Establishing reserves $ 0.2 $ 2.3
Decline 0.5 4.7
Mine development 1.0 12.4
Mill development 0.1 0.9
Autoclave Definitive Feasibility Study 2.0 2.9
Other 0.2 2.0
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Total $ 4.0 $25.2
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US$1.6 million was spent on the Ada Tepe development project over
the same period as follows:
US$ millions
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Current Period Project from date
of acquisition
Reserve definition drilling $ 0.2 $ 4.3
Definitive feasibility study 0.7 2.6
Other 0.7 3.5
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Total $ 1.6 $ 10.4
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Financing Activities During the first quarter of 2005, the Company repaid the US$4.0 million note payable which was assumed as part of the acquisition of the Bulgarian mining assets. Subsequent to quarter end, the Company completed a US$10.0 million financing with the European Bank for Reconstruction and Development. Of the US$10.0 million loan proceeds, US$3.0 million will be used for environmental purposes and the remainder is to be used towards the Chelopech mine redevelopment. The loan bears interest at Libor plus 1.9% and is repayable in eight semi-annual installments commencing in June 2007. 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 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 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 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 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 are posted on our website at www.dundeeprecious.com. An analyst conference call will be webcast live at phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=69218&eventID =1058205 on Friday, May 6 at 8:00 a.m. Dundee Precious Metals Inc. (TSX:DPM) |
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