Dundee Precious Metals Delivers Record Quarterly Free Cash Flow Generation; Announces 2023 Second Quarter Results

TORONTO, Aug. 01, 2023 (GLOBE NEWSWIRE) -- Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or the “Company”) announced its operating and financial results for the second quarter and six months ended June 30, 2023.

Highlights
^{(Unless otherwise stated, all monetary figures in this news release are expressed in U.S. dollars.)}

• Strong metals production: Produced 76,306 ounces of gold and 7.9 million pounds of copper.
• All-in sustaining cost: Reported cost of sales per ounce of gold sold¹ of $929 and an all-in sustaining cost per ounce of gold sold² of $733.
• On track to achieve 2023 guidance: Both mining operations are on track to achieve their 2023 production and cost guidance, while Tsumeb is tracking toward the low end of its 2023 production guidance and the higher end of its cash cost per tonne guidance.
• Significant free cash flow: Generated $59.2 million of cash provided from operating activities and achieved record quarterly free cash flow of $70.5 million.²
• Solid adjusted net earnings: Reported net earnings of $61.7 million ($0.33 per share) and adjusted net earnings² of $62.2 million ($0.33 per share).
• Growing financial position: Ended the quarter with a strong balance sheet, including $542.0 million of cash, a $150.0 million undrawn revolving credit facility and no debt.
• Increasing return of capital to shareholders: Returned $48.9 million, or 36% of free cash flow, to shareholders during the first half of 2023 through dividends and share repurchases. Declared second quarter dividend of $0.04 per common share payable on October 16, 2023 to shareholders of record on September 30, 2023.
• Development projects: Continued to progress the updated feasibility study (“FS”) for Loma Larga in Ecuador, which is expected to be completed in the second half of 2023. Received technical approval for the environmental impact assessment (“EIA”) for a 69 kV power line and initiated the associated public consultation process.
• Strong results from exploration activities: Results from ongoing drilling activities at the Čoka Rakita exploration prospect in Serbia reported in July 2023 extended the deposit to the south and also confirmed and further extended the high-grade zone. With nine drill rigs currently active on-site and an additional 30,000 metres of drilling planned, DPM continues to target a maiden Mineral Resource estimate by year-end 2023.
  

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_{¹ Cost of sales per ounce of gold sold represents total cost of sales for Chelopech and Ada Tepe, divided by total payable gold in concentrate sold, while all-in sustaining cost per ounce of gold sold includes treatment and freight charges, net of by-product credits, all of which are reflected in revenue.
² All-in sustaining cost per ounce of gold sold, free cash flow, and adjusted net earnings are non-GAAP financial measures or ratios. These measures have no standardized meanings under International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures presented by other companies. Refer to the “Non-GAAP Financial Measures” section commencing on page 13 of this news release for more information, including reconciliations to IFRS measures.}

CEO Commentary

“We continued to deliver strong performance in the second quarter, including solid gold production, excellent all-in sustaining costs, and a record $70.5 million of free cash flow generation. Year-to-date, we returned 36% of our free cash flow to shareholders through our enhanced share buyback program and our sustainable quarterly dividend,” said David Rae, President and Chief Executive Officer.

“The most recent results from our ongoing drilling program at the high-quality Čoka Rakita deposit in Serbia extended the deposit to the south and also confirmed and further extended the high-grade zone. We continue to view Čoka Rakita as a promising prospect within our organic portfolio and we are aggressively drilling to grow the deposit and test other nearby targets that share the same geological environment.

“We continue to believe that DPM represents a compelling value opportunity for investors, given our strong three-year outlook for gold production, attractive all-in sustaining costs, significant free cash flow generation and exciting exploration prospects.”

Use of non-GAAP Financial Measures

Certain financial measures referred to in this news release are not measures recognized under IFRS and are referred to as non-GAAP financial measures or ratios. These measures have no standardized meanings under IFRS and may not be comparable to similar measures presented by other companies. The definitions established and calculations performed by DPM are based on management’s reasonable judgment and are consistently applied. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Non-GAAP financial measures and ratios, together with other financial measures calculated in accordance with IFRS, are considered to be important factors that assist investors in assessing the Company’s performance.

The Company uses the following non-GAAP financial measures and ratios in this news release:

For a detailed description of each of the non-GAAP financial measures and ratios used in this news release and a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the “Non-GAAP Financial Measures” section commencing on page 13 of this news release.

Key Operating and Financial Highlights

^{1) Cost of sales per tonne of ore processed represents cost of sales for Chelopech and Ada Tepe, respectively, divided by tonnes of ore processed.
2) Cash cost per ounce of gold sold, cash cost per tonne of ore processed, all-in sustaining cost per ounce of gold sold, cash cost per tonne of complex concentrate smelted, adjusted EBITDA, adjusted net earnings, adjusted basic earnings per share and free cash flow are non-GAAP financial measures or ratios. Refer to the “Non-GAAP Financial Measures” section commencing on page 13 of this news release for more information, including reconciliations to IFRS measures.
3) Cost of sales per ounce of gold sold represents total cost of sales for Chelopech and Ada Tepe, divided by total payable gold in concentrate sold.
4) Cost of sales per tonne of complex concentrate smelted represents cost of sales for Tsumeb, divided by tonnes of complex concentrate smelted.
5) Capital expenditures incurred were reported on an accrual basis and do not represent the cash outlays for the capital expenditures.
6) Sustaining capital expenditures are generally defined as expenditures that support the ongoing operation of the asset or business without any associated increase in capacity, life of assets or future earnings. This measure is used by management and investors to assess the extent of non-discretionary capital spending being incurred by the Company each period.
7) Growth capital expenditures are generally defined as capital expenditures that expand existing capacity, increase life of assets and/or increase future earnings. This measure is used by management and investors to assess the extent of discretionary capital spending being undertaken by the Company each period.}

Performance Highlights

The Company’s mining operations continued to perform well and delivered another quarter of strong production. Gold production at Chelopech increased compared to Q1 2023 as a result of higher grades, as expected per the mine plan. Ada Tepe continued to deliver strong performance, with gold production in-line with expectations. All-in sustaining cost per ounce of gold sold for the second quarter was at the low-end of the Company’s 2023 guidance range. Both mining operations are on track to achieve their 2023 production and cost guidance, while Tsumeb is tracking toward the low end of its 2023 production guidance and the higher end of its cash cost per tonne guidance.

Highlights include the following:

Chelopech, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of 2023 of 44,463 ounces and 79,721 ounces, respectively, was 10% and 12% lower than the corresponding periods in 2022 due primarily to lower gold grades and recoveries, in-line with the mine plan. Copper production in the second quarter and first half of 2023 of 7.9 million pounds and 15.1 million pounds, respectively, was 10% and 9% lower than the corresponding periods in 2022 due primarily to lower copper grades.

All-in sustaining cost per ounce of gold sold in the second quarter and first half of 2023 of $776 and $851, respectively, increased compared to $754 and $598 in the corresponding periods in 2022 due primarily to lower by-product credits, lower volumes of gold sold, higher labour cost and higher prices for direct materials, as well the timing of cash outlays for sustaining capital expenditures related to the upgrade of the tailings management facility, which was completed during the second quarter, partially offset by lower treatment and freight charges.

Ada Tepe, Bulgaria: Gold contained in concentrate produced in the second quarter and first half of 2023 of 31,843 ounces and 65,166 ounces, respectively, was 35% and 45% higher than the corresponding periods in 2022 due primarily to mining higher grade zones, in-line with the mine plan.

All-in sustaining cost per ounce of gold sold in the second quarter and first half of 2023 of $530 and $508, respectively, was 15% and 27% lower compared to the corresponding periods in 2022 due primarily to higher volumes of gold sold.

Consolidated Operating Highlights

Production: Gold contained in concentrate produced in the second quarter and first half of 2023 of 76,306 ounces and 144,887 ounces, respectively, was 5% and 7% higher than the corresponding periods in 2022 due primarily to higher gold grades at Ada Tepe, partially offset by lower gold grades and recoveries at Chelopech, in line with mine plans for both operations.

Copper production in second quarter and first half of 2023 of 7.9 million pounds and 15.1 million pounds, respectively, was 10% and 9% lower than the corresponding periods in 2022 due primarily to lower copper grades.

Deliveries: Payable gold in concentrate sold in the second quarter and first half of 2023 of 65,065 ounces and 128,564 ounces, respectively, was 4% and 7% higher than the corresponding periods in 2022 primarily reflecting higher gold production.

Payable copper in concentrate sold in the second quarter and first half of 2023 of 6.6 million pounds and 12.9 million pounds, respectively, was 9% and 6% lower than the corresponding periods in 2022 primarily reflecting lower copper production.

Complex concentrate: Complex concentrate smelted in the second quarter and first half of 2023 of 49,483 tonnes and 99,130 tonnes, respectively, was 28,429 tonnes and 30,833 tonnes higher than the corresponding periods in 2022 due primarily to the timing of the Ausmelt furnace maintenance shutdown, which was completed during the second quarter of 2022. Complex concentrate smelted in the first half of 2023 was below expectations due to unplanned maintenance in the off-gas system. The Company is undertaking additional maintenance in the off-gas system to resolve this issue during the Ausmelt furnace maintenance, which is currently underway.

Cost measures: Cost of sales in the second quarter and first half of 2023 of $82.9 million and $170.4 million, respectively, decreased compared to $83.4 million and $176.6 million in the corresponding periods in 2022, due primarily to a stronger U.S. dollar relative to the South African Rand (“ZAR”) and lower depreciation expense as a result of the impairment charge in respect of Tsumeb taken in the third quarter of 2022, partially offset by higher local currency mine operating costs.

All-in sustaining cost per ounce of gold sold in the second quarter of 2023 of $733 was 7% lower than the corresponding period in 2022 due primarily to lower treatment and freight charges at Chelopech as a result of increased deliveries to third-party smelters and higher volumes of gold sold, partially offset by higher local currency operating expenses reflecting higher labour costs and higher prices for direct materials, and lower by-product credits as a result of lower volumes and realized prices of copper sold. All-in sustaining cost per ounce of gold sold in first half of 2023 of $802 was 8% higher than the corresponding period in 2022 due primarily to lower by-product credits as a result of lower volumes and realized prices of copper sold, higher local currency operating expenses and higher share-based compensation reflecting DPM’s strong share price performance, partially offset by lower treatment and freight charges at Chelopech and higher volumes of gold sold.

Cash cost per tonne of complex concentrate smelted in the second quarter and first half of 2023 of $343 and $368, respectively, was 65% and 42% lower than the corresponding periods in 2022 due primarily to higher volumes of complex concentrate smelted and a stronger U.S. dollar relative to the ZAR.

Capital expenditures: Capital expenditures incurred in the second quarter and first half of 2023 of $15.7 million and $29.9 million, respectively, were 45% and 31% lower than the corresponding periods in 2022 of $28.7 million and $43.7 million.

Sustaining capital expenditures incurred in the second quarter and first half of 2023 of $8.9 million and $16.6 million, respectively, were 58% and 45% lower than the corresponding periods in 2022 of $21.1 million and $30.0 million. While overall this was in-line with expectations, these decreases also reflected the timing of the Ausmelt furnace maintenance shutdown at Tsumeb.

Growth capital expenditures incurred in the second quarter and first half of 2023, primarily related to the Loma Larga gold project, were $6.8 million and $13.3 million, respectively, compared to $7.6 million and $13.7 million in the corresponding periods in 2022.

Consolidated Financial Highlights

Financial results from operations in the second quarter of 2023 reflected higher volume and prices of gold sold, lower treatment charges at Chelopech and a strong U.S. dollar relative to the ZAR, which contributed to the Company’s record quarterly free cash flow generation.

Revenue: Revenue in the second quarter and first half of 2023 of $167.5 million and $323.4 million, respectively, was 25% and 12% higher than the corresponding periods in 2022 due primarily to lower treatment and freight charges at Chelopech as a result of increased deliveries to third-party smelters, higher volumes and realized prices of gold sold, and higher volumes of complex concentrate smelted as a result of the timing of the Ausmelt furnace maintenance shutdown. This was partially offset by lower volumes and realized prices of copper sold at Chelopech.

Net earnings: Net earnings in the second quarter of 2023 of $61.7 million ($0.33 per share) increased compared to $33.5 million ($0.18 per share) in the corresponding period in 2022, due primarily to higher revenue and higher interest income, partially offset by higher planned exploration and evaluation expenses. Net earnings in first half of 2023 of $108.3 million ($0.57 per share) increased compared to $60.3 million ($0.32 per share) in the corresponding period in 2022 due primarily to higher revenue, lower cost of sales and higher interest income, partially offset by higher planned exploration and evaluation expenses and higher share-based compensation expenses as a result of DPM’s strong share price performance. Net earnings in the second quarter and first half of 2022 also included restructuring costs related to a cost optimization initiative at Tsumeb.

Adjusted net earnings: Adjusted net earnings in the second quarter and first half of 2023 of $62.2 million ($0.33 per share) and $108.3 million ($0.57 per share), respectively, increased compared to $33.3 million ($0.17 per share) and $70.3 million ($0.37 per share) in the corresponding periods in 2022 due primarily to the same factors affecting net earnings, except for adjusting items primarily related to the Tsumeb restructuring costs in 2022.

Earnings before income taxes: Earnings before income taxes in the second quarter and first half of 2023 of $69.2 million and $118.2 million, respectively, increased compared to $40.9 million and $74.8 million in the corresponding periods in 2022, reflecting the same factors that affected net earnings, except for income taxes, which are excluded.

Adjusted EBITDA: Adjusted EBITDA in the second quarter and first half of 2023 of $86.7 million and $155.1 million, respectively, increased compared to $68.6 million and $138.1 million in the corresponding periods in 2022, reflecting the same factors that affected adjusted net earnings, except for interest, income taxes, depreciation and amortization, which are excluded from adjusted EBITDA.

Cash provided from operating activities: Cash provided from operating activities in the second quarter and first half of 2023 of $59.2 million and $130.1 million, respectively, was 18% and 14% lower than the corresponding periods in 2022, due primarily to the timing of deliveries and subsequent receipt of cash, and the timing of payments to suppliers, partially offset by higher earnings generated.

Free cash flow: Free cash flow in the second quarter and first half of 2023 of $70.5 million and $135.5 million, respectively, was $29.3 million and $45.6 million higher than the corresponding periods in 2022, due primarily to higher earnings generated and timing of cash outlays for sustaining capital expenditures. Free cash flow is calculated before changes in working capital.

Balance Sheet Strength and Financial Flexibility

The Company continues to maintain a strong financial position, with a growing cash position, no debt and a $150 million revolving credit facility which remains undrawn.

Cash and cash equivalents increased by $108.8 million to $542.0 million in the first half of 2023 due primarily to cash generated in the period, plus the cash proceeds from the disposition of B2Gold Corp (“B2Gold”) shares following its acquisition of Sabina Gold and Silver Corp (“Sabina”), partially offset by cash outlays for capital expenditures, dividends paid and shares repurchased, as well as changes in working capital.

On April 19, 2023, DPM’s 6.5% ownership interest in Sabina was exchanged for B2Gold common shares as a result of the acquisition of Sabina by B2Gold. The Company has subsequently disposed of all B2Gold common shares held for cash proceeds of $56.5 million.

Return of Capital to Shareholders

In line with its disciplined capital allocation framework, DPM continues to return excess capital to shareholders, which currently includes a sustainable quarterly dividend and periodic share repurchases under its normal course issuer bid (“NCIB”).

During the first half of the year, the Company returned a total of $48.9 million to shareholders, representing approximately 36% of its free cash flow generated during this period. This included the repurchase of 4,798,095 shares at an average price of $7.05 (Cdn$9.50) per share for a total value of approximately $33.7 million, and $15.2 million of dividends paid.

As at June 30, 2023, the Company had an automatic share repurchase plan in place under the NCIB with its designated broker which terminated on July 26, 2023, pursuant to which the Company repurchased an additional 1,169,923 shares in July 2023, all of which were cancelled as at August 1, 2023. As at June 30, 2023, the Company recognized a liability of $8.1 million for the amount repurchased under the plan.

Enhanced NCIB
The Company renewed its NCIB in February 2023 and is able to purchase up to 16,500,000 common shares, representing approximately 10% of the public float as at February 16, 2023, over a period of twelve months which commenced on March 1, 2023 and terminates on February 28, 2024.

The Company’s Board of Directors has authorized management to repurchase up to $100 million of the Company’s shares through the NCIB. As at August 1, 2023, the shares repurchased totalled $42.1 million. The actual timing and number of common shares that may be purchased pursuant to the NCIB will be undertaken in accordance with DPM’s capital allocation framework, having regard for such things as DPM’s financial position, business outlook and ongoing capital requirements, as well as its share price and overall market conditions.

Quarterly Dividend
On August 1, 2023, the Company’s Board of Directors declared a dividend of $0.04 per common share payable on October 16, 2023 to shareholders of record on September 30, 2023.

Development Projects Update

Loma Larga, Ecuador
DPM continues to advance the updated FS, including optimization work leveraging the Company’s significant expertise at Chelopech in Bulgaria, which shares similar geology, mining method and processing flow sheet to the Loma Larga project. The updated FS is targeted for completion in the second half of 2023.

Drilling activities, as well as the Citizens Participation Process for the project EIA, remain paused pending the outcome of the appeals process related to the decision on the Constitutional Protective Action (the “Action”) following the hearing held in mid-October 2022.³ The decision on the appeal is expected to provide clarity on the consultation process and whether an indigenous consultation could be completed in parallel, as originally planned by the Company, or would need to be completed prior to resuming the Citizens Participation Process. The expected timing for receipt of the environmental licence is subject to the outcome of the appeal process.

During the second quarter, the EIA for the 69 kV power line received technical approval, and the associated public consultation process has been initiated.

The Company continues to progress discussions with the government of Ecuador in respect of an investor protection agreement. The agreement is substantially complete and is progressing through the approvals of the various government ministries. In line with its disciplined approach to project development, DPM does not anticipate making any significant capital commitments to the project prior to the completion of the investor protection agreement and receipt of the environmental licence.

The Company maintains a constructive relationship with government institutions and other stakeholders involved with the development of the Loma Larga project.

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_{³ For further details on the Action, please see the news releases issued on February 24, 2022 and July 13, 2022, which are available on the Company’s website at www.dundeeprecious.com and have been filed on SEDAR+ at www.sedarplus.ca.}

Exploration

Čoka Rakita, Serbia
In Serbia, exploration activities focused on an accelerated drilling program at the Čoka Rakita deposit, with nine drill rigs currently in operation. In mid-July, the Company released additional assay results which extended the deposit to the south and continued to confirm and further extend the high-grade zone.

The 40,000-metre infill and extensional drill program is largely complete, including infill drilling at 60-metre by 60-metre spacing. DPM has commenced an additional 30,000-metre infill drilling program at a 30-metre by 30-metre spacing.

DPM expects to complete a maiden Mineral Resource estimate for Čoka Rakita by year-end 2023, and is progressing activities to accelerate the advancement of the project, including geotechnical drilling, metallurgical testwork and evaluation of potential portal locations for an exploration decline. The Company has also commenced scout drilling to test other camp-wide targets near Čoka Rakita and is continuing its 10,000-metre scout drill program on the Umka licence.

Tierras Coloradas, Ecuador
At the Tierras Coloradas licence in Ecuador, the Company expects to commence a 10,000-metre drilling program in August 2023. This program is designed to follow-up results reported during the first quarter which confirmed two well-mineralized high-grade vein systems that remain open in multiple directions. The primary focus will be to further assess the extension and geometry of the Aparecida and La Tuna vein systems and to test additional recently discovered high-grade vein and soil anomalies.

Chelopech, Bulgaria
During the second quarter of 2023, DPM continued to advance the Chelopech brownfield exploration program, with eight drill rigs currently drilling along the Brevene exploration licence and Sharlo Dere target within the mine concession. Approximately 15,600 metres of surface diamond drilling were completed, with 17 holes completed and eight holes ongoing.

Ada Tepe, Bulgaria
During the second quarter of 2023, exploration activities at the Ada Tepe camp were focused on target delineation campaigns on the Surnak and Kupel prospects within the Khan Krum mine concession, as well as the Chiirite and Lada exploration licences. This included systematic geological mapping, rock sampling, trenching, drilling and 3D modelling.

At the newly granted Krumovitsa exploration licence, permitting for 29 drill sites is ongoing, and drilling at three priority targets is planned to commence in early August 2023. The Company is planning an aggressive target delineation and scout drilling program at Krumovitsa, with 15,000 metres expected to be completed in the second half of 2023.

2023 Guidance and Three-year Outlook

With solid operating performance from the Chelopech and Ada Tepe mines in the second quarter and first half of 2023, DPM is on track to meet its 2023 guidance.

The three-year outlook previously issued in DPM’s Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2022 remains unchanged, except for the following updates to the Company’s guidance for 2023:

Selected Production, Delivery and Cost Performance versus Guidance

^{1) All-in sustaining cost per ounce of gold sold guidance for Chelopech and Ada Tepe is expected to be $700 to $880 and $530 to $630, respectively.}

Second Quarter 2023 Results Conference Call and Webcast

At 9 a.m. EDT on Wednesday, August 2, 2023, DPM will host a conference call and audio webcast to discuss the results, followed by a question-and-answer session. To participate via conference call, register in advance at the link provided below to receive the dial-in information as well as a unique PIN code to access the call.

The call registration and webcast details are as follows:

This news release and DPM’s unaudited condensed interim consolidated financial statements and MD&A for the three and six months ended June 30, 2023 are posted on the Company’s website at www.dundeeprecious.com and have been filed on SEDAR+ at www.sedarplus.ca.

Qualified Person

The technical and scientific information in this news release has been prepared in accordance with Canadian regulatory requirements set out in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators and the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral Reserves, and has been reviewed and approved by Ross Overall, B.Sc. (Applied Geology), Corporate Mineral Resource Manager of DPM, who is a Qualified Person as defined under NI 43-101, and who is not independent of the Company.

About Dundee Precious Metals

Dundee Precious Metals Inc. is a Canadian-based international gold mining company with operations and projects located in Bulgaria, Namibia, Ecuador and Serbia. The Company’s purpose is to unlock resources and generate value to thrive and grow together. This overall purpose is supported by a foundation of core values, which guides how the Company conducts its business and informs a set of complementary strategic pillars and objectives related to ESG, innovation, optimizing our existing portfolio, and growth. The Company’s resources are allocated in-line with its strategy to ensure that DPM delivers value for all of its stakeholders. DPM’s shares are traded on the Toronto Stock Exchange (symbol: DPM).

For further information, please contact:

Cautionary Note Regarding Forward Looking Statements

This news release contains “forward looking statements” or “forward looking information” (collectively, “Forward Looking Statements”) that involve a number of risks and uncertainties. Forward Looking Statements are statements that are not historical facts and are generally, but not always, identified by the use of forward looking terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “guidance”, “outlook”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or that state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions. The Forward Looking Statements in this news release relate to, among other things: expected cash flows; the price of gold, copper, silver and sulphuric acid; toll rates, metals exposure and stockpile interest deductions at Tsumeb; estimated capital costs, all-in sustaining costs, operating costs and other financial metrics, including those set out in the outlook and guidance provided by the Company; currency fluctuations; the processing of Chelopech concentrate; results of economic studies; expected milestones; timing and success of exploration activities, including at the Čoka Rakita target; the timing of the completion and results of an updated feasibility study for the Loma Larga project; the timing and possible outcome of pending litigation or legal proceedings, including the timing of the legal proceedings related to the Action and resumption of drilling activities at Loma Larga; development of the Loma Larga gold project, including expected production, successful negotiations of an investment protection agreement and exploitation agreement and granting of environmental and construction permits in a timely manner; success of permitting activities; permitting timelines; success of investments, including potential acquisitions; government regulation of mining and smelting operations; the timing and amount of dividends; the timing and number of common shares of the Company that may be purchased pursuant to the NCIB.

Forward Looking Statements are based on certain key assumptions and the opinions and estimates of management and Qualified Person (in the case of technical and scientific information), 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. In addition to factors already discussed in this news release, such factors include, among others: fluctuations in metal and sulphuric acid prices, toll rates and foreign exchange rates; risks arising from the current inflationary environment and the impact on operating costs and other financial metrics, including risks of recession and risk that the power subsidy in Bulgaria may be discontinued; continuation or escalation of the conflict in Ukraine, including the continued exemption from the Council of Europe’s sanctions in favour of Bulgaria with respect to the import of Russian oil and economic sanctions against Russia and Russian persons, or against other countries or persons, which may impact supply chains; risks relating to the Company’s business generally and the impact of global pandemics, including COVID-19, resulting in changes to the Company’s supply chain, product shortages, delivery and shipping issues; regulatory changes, including changes impacting the complex concentrate market; inability of Tsumeb to secure complex copper concentrate on terms that are economic; possible variations in ore grade and recovery rates; inherent uncertainties in respect of conclusions of economic evaluations, economic studies and mine plans, including the Loma Larga FS; uncertainties with respect to timing of the updated Loma Larga FS; changes in project parameters, including schedule and budget, as plans continue to be refined; uncertainties with respect to realizing the anticipated benefits from the Loma Larga gold project; uncertainties with respect to actual results of current exploration activities; uncertainties and risks inherent to developing and commissioning new mines into production, which may be subject to unforeseen delays; uncertainties inherent with conducting business in foreign jurisdictions where corruption, civil unrest, political instability and uncertainties with the rule of law may impact the Company’s activities; limitations on insurance coverage; 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; actual results of current and planned reclamation activities; opposition by social and non-governmental organizations to mining projects and smelting operations; unanticipated title disputes; claims or litigation; failure to achieve certain cost savings or the potential benefits of any upgrades and/or expansion; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; cyber-attacks and other cybersecurity risks; there being no assurance that the Company will purchase additional common shares of the Company under the NCIB; risks related to the implementation, cost and realization of benefits from digital initiatives as well as those risk factors discussed or referred to in the Company’s annual MD&A and annual information form for the year ended December 31, 2022, the MD&A, and other documents filed from time to time with the securities regulatory authorities in all provinces and territories of Canada and available on SEDAR+ at www.sedarplus.ca.

The reader has been cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. 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. The Company’s Forward Looking Statements reflect current expectations regarding future events and speak only as of the date hereof. Other than as it may be required by law, 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.

Non-GAAP Financial Measures

Certain financial measures referred to in this news release are not measures recognized under IFRS and are referred to as non-GAAP financial measures or ratios. These measures have no standardized meanings under IFRS and may not be comparable to similar measures presented by other companies. The definitions established and calculations performed by DPM are based on management’s reasonable judgment and are consistently applied. These measures are used by management and investors to assist with assessing the Company’s performance, including its ability to generate sufficient cash flow to meet its return objectives and support its investing activities and debt service obligations. In addition, the Human Capital and Compensation Committee of the Board of Directors uses certain of these measures, together with other measures, to set incentive compensation goals and assess performance. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Non-GAAP financial measures and ratios, together with other financial measures calculated in accordance with IFRS, are considered to be important factors that assist investors in assessing the Company’s performance.

Cash Cost and All-in Sustaining Cost Measures

Mine cash cost; smelter cash cost; mine cash cost of sales; and all-in sustaining cost are non-GAAP financial measures. Cash cost per tonne of ore processed; cash cost per ounce of gold sold; all-in sustaining cost per ounce of gold sold; and cash cost per tonne of complex concentrate smelted are non-GAAP ratios. These measures capture the important components of the Company’s production and related costs. Management and investors utilize these metrics as an important tool to monitor cost performance at the Company’s operations. In addition, the Human Capital and Compensation Committee of the Board of Directors uses certain of these measures, together with other measures, to set incentive compensation goals and assess performance.

The following tables provide a reconciliation of the Company’s cash cost per tonne of ore processed and cash cost per tonne of complex concentrate smelted to its cost of sales:

^{1) Represents a by-product credit for Tsumeb.
2) Cash costs are reported in U.S. dollars, although the majority of costs incurred are denominated in non-U.S. dollars, and consist of all production related expenses including mining, processing, services, royalties and general and administrative.
3) Represents cost of sales and mine cash cost, respectively, divided by tonnes of ore processed.
4) Represents cost of sales and smelter cash cost, respectively, divided by tonnes of complex concentrate smelted.
5) For the three months ended June 30, 2022, the Bulgarian government subsidy for electricity of $3.4 million was reclassified from other income and expense to cost of sales to conform with current year presentation.}

^{1) Represents a by-product credit for Tsumeb.
2) Cash costs are reported in U.S. dollars, although the majority of costs incurred are denominated in non-U.S. dollars, and consist of all production related expenses including mining, processing, services, royalties and general and administrative.
3) Represents cost of sales and mine cash cost, respectively, divided by tonnes of ore processed.
4) Represents cost of sales and smelter cash cost, respectively, divided by tonnes of complex concentrate smelted.
5) For the six months ended June 30, 2022, the Bulgarian government subsidy for electricity of $7.5 million was reclassified from other income and expense to cost of sales to conform with current year presentation.
6) Relates to inventory write-down to net realizable value, reflecting market price movement, included in cost of sales in the condensed interim consolidated statements of earnings (loss).}

The following table provides, for the periods indicated, a reconciliation of the Company’s cash cost per ounce of gold sold and all-in sustaining cost per ounce of gold sold to its cost of sales:

^{1) Included in cost of sales were share-based compensation expenses of $0.1 million (2022 - $0.1 million) for the three months ended June 30, 2023.
2) Represents revenue deductions for treatment charges, refining charges, penalties, freight and final settlements to adjust for any differences relative to the provisional invoice.
3) Represents copper and silver revenue.
4) Included in cost of sales and finance cost in the condensed interim consolidated statements of earnings (loss).
5) Represents an allocated portion of DPM’s general and administrative expenses, including a share-based compensation reversal of $0.3 million (2022 – expense of $0.01 million) for the three months ended June 30, 2023, based on Chelopech’s and Ada Tepe’s proportion of total revenue. Allocated general and administrative expenses are reflected in consolidated all-in sustaining cost per ounce of gold sold and are not reflected in the cost measures for Chelopech and Ada Tepe.
6) Included in cash used in investing activities and financing activities, respectively, in the condensed interim consolidated statements of cash flows.
7) Includes payable gold in pyrite concentrate sold in the second quarter of 2023 of 8,454 ounces (2022 – 12,088 ounces).
8) Represents cost of sales, mine cash cost of sales and all-in sustaining cost, respectively, divided by payable gold in concentrate sold.
9) For the three months ended June 30, 2022, the Bulgarian government subsidy for electricity of $3.4 million was reclassified from other income and expense to cost of sales to conform with current year presentation.}