DPMLF - Earnings call transcript Q2 2021 | Dundee Precious Metals Inc.

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Operator

Good morning and welcome to Dundee Precious Metals Second Quarter 2021 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Jennifer Cameron, Director of Investor Relations.

You may begin.

Jennifer Cameron

Thank you and good morning. welcome Dundee to quarter Metals like call. conference would you Precious to second I

subject midpoints detailed now comparable I outlook the this have the operational been period otherwise are the result or our which and review not for references management’s that measures incorporated refer considered and to most with to note stated, Michael guidance. these and forward-looking Rae. referred call and IFRS on information provide released to established opportunity on not XXXX measures qualifications, and the unless us Please no Joining are turn of have today to additional MD&A not based yesterday, financial today’s financial business are David intended news in you are call full in consistently Kyle, under section under These judgment President, and or Please will based measures and to Development. by averages provided to financial are our measures comparable be and we is recent to our we are call. XXXX, are pertain Financial information prepared call information have close presented standardized Vice rounded. should DPM an this in meaning generally non-GAAP definitions release of CEO; second related the David referred reconciliations for similar All over calculations applied. to measures on may of to isolation call measures Chief to substitute communicated performed Officer; in measures. hope and recognized forward-looking Executive These The and during our as IFRS. to reasonable a this are of the and be IFRS quarter is material. of Dorfman, continuing company. accordance in our by the as Corporate operations during non-GAAP After References to and for purposes during measures Hume measures. President Rae, Certain had other non-GAAP call

David Rae

all morning us. Good and joining for thank Jennifer. you Thanks,

ounce. seen ounces of net excellent release free performance. $XX circulated all million at for of $XX copper. last our multiple of our of of operating pounds $XXX Record MineRP, operations As of records reporting with adjusted at our exceptional resulted cash delivered balance $XX earnings $XXX operating from flow exiting cost financial from of quarter, have build continue XX and sustaining performance we financial and an our gold million you our per in in to performance Closing of quarter we million gold million news for strength, include the results including night, approximately sale mines, quarter. financial of cash which all-in the cost brought the and Highlights a and proceeds XX,XXX production which results, of million. Strong achieving with

our of potential strength from believe portfolio. to company is mining This development week, closed announced and track an project earlier well growth production adding previously that our add responsible seen the INV a that news we our and fits also As with we acquisition as our pipeline. to you environmentally Loma release high-quality have socially core extremely the may and our to record project meaningful the this proven has Larga Metals, successfully

take we am financial continuing and our this innovative of DPM’s I developing unlock will Larga. Ecuador, to work local and to Loma and strength approach as in firm to engaging delivering forward technical record leverage first we and project. local strong to look the highest stakeholders and advance our Larga engagement forward, the reflect significant move the depth, Loma our communities commitment with standards we team stewardship solutions for we our the of As we and potential engagement, environmental track will today’s local step as joining national with from to call the

to with minimizing practices In the with to and terms of further any be government studies the explore disciplined advance continuing a prior project permitting taking Larga, engaging next development. with to while working best optimization investor commitments. process line protection Loma while international permitting secure steps, This and spend we intend to capital making local significant agreement process in communities the an to during at will Ecuadorian approach includes upfront

end a sustaining performance, be improved below mining of Chelopech. was of quarter, in grade excellent which a pounds zones Turning with to of with compared quarter operating Cost all-in cost our result to first a recoveries. increase of start with guidance an ounces XX,XXX per XXXX million continues gold and copper, Chelopech’s significant low of second higher and producing the I will as strong quarter review range. Chelopech delivered gold ounce, is performance the which $XXX XX

the to our Sharlo mine dedicated season. Brownfield continue conceptual the targets near-mine well drilling testing as extending effort Brevene life to Petrovden, to with on focus of continue exploration including in quarter, programs. several exploration summer expected Dere, was and are We license significant and over And mine prospects, the Vozdol, completion to scout the during which within the of the

off that our anticipated continue for we infill in but contract anticipation updated is license, to discovery be to in With Brownfield and work resource at We at to base moment an of exploration mine now mineral mineral year. moving signed delineation believe That exploration and support of mine within and XXXX, Chelopech. the life mineral part reserves strong where Sveta is drill commercial of into Petka. it’s drilling, the an to increase track potential planned advance is programs the record to optimize extensions the extend resource there activity the last continue and

low quarter. achieved strong its the drive at continued deliver $XXX, to during end gold in performance have impressive range. the we Ada free performance, to cash the XX,XXX also Tepe, generation of approximately in quarter, sustaining with Ada to its of cost significant highlights guidance Tepe our portfolio. producing which This potential cost an flow all-in Turning second is ounces

We data drilling continue extension year, mine Surnak the around kaya other advancing planned for efforts completed our with of and meters And on program, mapping target which We’ve support focus wide geophysical Tepe our to programs service well activities now a as been Synap, and includes prospects has XX,XXX technical been have Surnak geochemical as X,XXX assessments. the as support geological towards resource well evaluation model exploration as licenses. and internal conceptual compilation at Kuklitsa. targeting exercises. on additional in of meters shifted Drilling including the Chatal significant camp at Ada additional and regional concession surface to new order exploration completed and a

following donations Ausmelt first of It’s Turning in pandemic are a Tsumeb, and maintenance the other facility concentrate health had of per as the an second of of and medical was lower displaced the Canada quarter medical wave quarter, sites, maintenance to the cash linked the the complex ton Tsumeb’s oxygen included smelter QX Namibia and the provide to seeing more processed well-being shutdown the cases produced completion local prioritize Delta of our and support are and a the world encouraging worth in to following of facilities. continue level decline our concentrate the in variant. of medical to parts COVID seeing oxygen The use smelting increase from $XXX first which in third concentrate smelted the our increased our of in reflecting end at XX,XXX the place to than protocols, furnace supplies communities. quarter. we throughout returned before the we maintain March. the typical that approximately throughput during tons higher facilities, in we Recently, At noting for while the strict cost to of workforce all complex Tsumeb, processed significantly local and to then which

Chocolate Hill quarter on following well feasibility to other quarter the project the XXXX, Bigar the positive second Chocolate, Earlier of of the continue early to Bigar processed feasibility South, in Umka This were in year. that deposit. advance pre-feasibility exploration of adjacent stage south and the of study the regional first Drilling future programs. terms Frasen expect delineation southeast as to results next the as complete and and a drilling we targets follow of is target Rakita the of or team results located for exploration information being the the include scout preparation Hill now Coka at study, we study. license, support programs we with Plans quarter In completed our Serbia. this initiated to growth, in the which year, to

potential free well We shareholders. us that delivering and to In by also gold our significant track to evaluating generation, for our and combined continue strong communities, to closing, production pursue unique company. strong additional the the generate returns position strategy and with strong flow and skills the profile record enhance opportunities continue innovation operating overall, growth and with our value partnerships cash of local value our building have

demonstrating results to and DPM’s call Hume significant this to deploying disciplined a the for investors. on of manner. our compelling we in to comment strong portfolio for and flow the turn outlook, capital firmly XXXX continue believe free our opportunity and financial for a on fundamentals review X-year generate the value I questions. following will our potential that to We open our We are will commitment focused over a guidance represent which of now call cash

Hume Kyle

Thanks, David. everybody. morning, Good

very free quarterly production, record the had performance during we and excellent flow. cash strong cost net operational performance record and quarter, mentioned, David As generated including gold earnings

an increases $X.XX a gold $XX respectively, the realized $XXX million. XX% copper weaker Adjusted a lower million, compensation, by adjusted share-based per net U.S. $X.XX. costs and increase related increase reflect earnings million G&A up share, partially in of $XX For These quarter, representing was to and dollar. offset EBITDA X% were and or prices,

impact higher per U.S. up partially in was a million income increased and XXXX, to earnings, offset by X dollar case For the to the were of higher at adjusted share net the $X.XX taxes. $X of QX These million, million. EBITDA attributable in weaker first Tsumeb, $X.XX and metal adjusted were earnings primarily increases compared the maintenance $XX prices, months, or the $XXX

Ada XXXX, and none QX partially therefore from working XX cash represents which offset fulfillment are second flow of $XXX our prices from quarter a million for Ada the million Tepe, up forward flow and losses and the million excluded adjusted expenditures net and Free higher quarter higher with flow sustaining second for as well from gold income at changes prices, in of underlying for completed XX our mark-to-market $XXX solid to These the X and reflect shares operations unrealized compared on included line to operations copper Tepe, months, X mine adjustments perspective, $XXX and attributable which funds million, sale common by including was sales from $XX in operating plans. performance MineRP Tsumeb’s Sabina reflective a of and increases Sabina shutdown operating earnings. months, respectively were deferred continued cash the X the December and related first gold which maintenance and first was the were from as our cash XX From realized respect of compared outlays capital gain up For first prepaid $X are performance XXXX. in year-over-year losses tax in months million million, and X $XX to respectively, XXXX. to the cash the Chelopech warrants of earnings and and capital before shares,

strong in sustaining weaker all-in Turning respectively primarily cost credits to decrease cost of performance, to per cash was in and byproduct higher U.S. a the achieving by $XXX dollar for quarter first as consolidated $XXX, of and to credits X These to of $XXX copper offset and result weaker cost an XX% represented measures, allocated second XX% and quarter ounce $XX and months. deliveries. Tsumeb, to cash primarily the byproduct lower lower ton dollar U.S. deliver XXXX, a we our acid up per expenses, due the for sustaining of G&A At higher a due continue outlays partially a compared timing second cost capital expenditures.

expenditure $XX capital in up a $XX should for in X From dollar. U.S. incurred quarter For maintenance weaker grade expenditures maintenance Tepe. and the as in the drilling planned the $XXX, at XX a and the were shutdown incurred first were due were was quarter Growth the capital sustaining first months X $X first and in million, $XXX months, in quarter $XXX, $X as capital the months million to compared XX first standpoint, and in and respectively, periods corresponding periods XXXX. control to the These as of and and months – accelerated cost reflecting cost I Tsumeb expenditures Ada nature and primarily million, the during and increases the fixed of million the corresponding X to – the say, X X sorry the this QX the and correction, facility well X XXXX. impact cash compared first respectively, at the

committed to our Turning aggregate capacity well cash a million continued is strength sheet, comprised This as our resources to long-term of quarter $XXX million. of the available facility. revolving $XXX during our of financial balance $XXX position grow million with under as available

financial underlying we variability and established to cost are know, our tolerance $XX supporting million. as XXX% our Monday, the you exposures as key excludes metrics, We From of. also and investment of objective risk from portfolio, of levels. within manage now into own management metals, liquid achievement primary enter perspective, our communicated, as additional metrics a previously all hedges well of reducing financial guidance. providing of approximately have but at And we which, This the IMV valued a time-to-time, upside,

the average For collar of $XX.XX a operating forms currency floor of at of of of year, fixed costs all have a our cost the weighted structure, the average rate in XX% substantially hedged weighted $X.XX. the and sustaining copper hedged exchange zero locking price balance of in ceiling projected have we Tsumeb’s $XX.XX we exposure and using approximately cost price and exposure, a all-in by-product which part respect of

outlook, with have reflect project. are the of the remains Gold addition issued Dave capital we on mentioned, on to of X-year we which expenditures, our XXXX revised deliver exception as forward, Looking Larga to track which in Loma unchanged growth previously guidance the our

pounds ounces of strong XXX,XXX outlined XX ounce $XXX. Slide cash and and and at XX of the $XXX to is million range concentrate $XXX detailed cost of to copper, complex produce approximately in to million XX year per Our achievement guidance of performance, to for XXX,XXX on all-in are of cost sustaining to $XXX XXX,XXX XXX,XXX track the tons we with a year-to-date to on smelt gold

acquisition reflects $XX project we expect to of the Larga, and on costs With an estimated Loma to our the $X year. million to updated growth capital this million expenditure balance over million, $X of incur this million we’ve that of guidance the $XX to

section existing can Over In term, price, and to the the our share when and assets, for cash and value Larga and to assets to committed X-year be acquired covering balance represent found stakeholders. can certainly unique our guidance strong we’ve our of a continuing our development in we deliver generation, strong longer that the With a XXXX are XXXX, sheet, X-year optimize including closing, the flow current the that capabilities potential well gold our provided value project. remains our newly case made outlook, MD&A. value be you opportunity compelling we outlook Loma realize And free positioned consider unchanged we track further the also investors. our are solid record, of to and to

are return and underpinned the most and these As ensuring disciplined which of operator. we we capital we as business, regular are yesterday. grow to that the that, sustainable that by allocation the over shareholders will back the the returns I also part turn quarterly our to and call to reinvest of announced our of capital dividend, With a we value recent committed

Operator

Dalton first you. Canaccord. of question with from Baretto the Thank Your comes Instructions] [Operator line

Dalton Baretto

team. Good me. of morning, A questions couple quick David Thank from and you, operator.

in a ton it per mines. bump both decent something all, is cost if the understand trying is of there was of I’m And at how of that looks more Thank much you. will? and you much driven, to how operational, currency royalty First that like in

David Rae

want that? you did Hume, take to

Hume Kyle

but case sliding to power the year the Ada Tepe on Yes. with a scale royalty year for aspects: yes, increased. profitability, we around some I is expect prior royalty royalty in respect the And pricing, year-over-year, for the three of the Tepe, weaker quarter we you at may which costs, rate that would significantly and center up say, based mean, I are impact rate seeing an what higher main so know drivers because as U.S. Ada recall, or a may dollar. is would

I think X%. it it’s a was sliding end at of and there cap X.X%, is scale approximately X.X% now in at XXXX, the of and higher the

are that primary an the are three per metrics. increase those in So ton the factors causing cost

Dalton Baretto

Understood.

assume range and we to basis And at that the least? got this exchange forward of stay the rest costs royalty can assumption change, a going the rate, so on that this power per-time don’t the rate for pricing, the on year in

Hume Kyle

probably to at to costs offset elsewhere of to that higher metrics. that’s cost say. in mean, end that’s and second the think why through reduce fair the costs this look expecting be current and – I yes, we indicated given to some will be of of productivity obviously backdrop, the that are we we’ve likely I at But on otherwise. ton the year we’re and the per half those higher range stage,

is of includes that, all-in said the guidance having cost end certainly the well the of to we lower pressures, midpoint costs perhaps or copper that report, track on on achieve even which the pricing. the Now basis sustaining the those

Dalton Baretto

Synap this than I Understood. XX% distribution, quarter. And about concentrate concentrate it the out of Tsumeb. Chelopech expecting. just was a came that produced processed wouldn’t of I That’s terms amount of bit then concentrate patch’s higher the minimize looks in you of like by shallow thought

Hume Kyle

Yes.

smelters, it it. whereas did processes went in other the But we we we of this divert Tsumeb. year, to and last is year, in smelters, there do relative material last a material when between the to other quarter, And differences to you when year. And X shipped Tsumeb more divert or material have months, third-party timing smelters. send other the ships some slight So we less perspective, for did at look Chelopech it actually third-party to from Chelopech concentrate year to to definitely all Tsumeb expect when

a So, to we should decrease year-over-year relative XXXX. see

Dalton Baretto

terms gets then, XX%? on of assume to a good it. it Is Chelopech of number ongoing XX%? basis by percentage Synap? Got that it in the concentrate an sent Is to produced But what’s

Hume Kyle

good And spot a that the on history. that XX% would something on year-over-year, can based probably all market say and varied and I it depends is XX%, around number exists. has it

us strategy. is bring and additional third-party the thing wherever there So, we’re do advantage opportunities. to year divert material to predict. but an it really opportunity for XX%. elsewhere, can higher, it tended probably material, displace But to XX% of a Tsumeb range We’ve in difficult to will it’s going really taken seen vary. between, that’s But We’ve and be say, and it’s those it, to This that.

Dalton Baretto

Okay. you INV kind of question, feasibility just on first the And then a what updated study? of extent closed, that ones DBM And release Larga do anticipate plan couple feasibility study? you transactions to quick having to optimize an the to actually Loma now do

David Rae

intent Dalton. It’s environmental this the to are count opportunities require at Hi, a some some see can study. an instance. that that we be that some have studies of be for We we doing do say at with feasibility that to in standards, update may a bit we not also, that there to way upgrade And the premature optimize. to will And point. to able trade-off this

say it’s little a early. I’d So

objectives, in meaningful our utilization, type We’re gas, the make and energy is of improvements, change a the of things project. there which greenhouse to of value climate opportunity the would terms operational trade-off for some other busy studies. sustainability some thinking, We opportunity doing difference overall see

I balanced. It’s imagine, that moment. X an really going X on activity, working to to we’re at opportunities over the next the priorities months to the get So would be and

other which I didn’t you just know The opportunity here, pointing out. ask, but

opportunity in Ecuador. we’re in cost as some the the the considering mentioned our Hume well that here the There obviously is actions end course So immediate of year. of exploration projection to

Dalton Baretto

scratch you Got looking investor you it. you And the government were an where existing one you me, one terms protection of are pick off? agreement to then with up of And in for for, is are the last can there on? discussions or just work terms INV framework maybe going from starting left in

David Rae

anticipate up in the picking are well – and end are some we year. off. the where of between things been news consultation on left before We’ve government, with INV Basically, the track, we

Dalton Baretto

great. you. all Thank for That’s That’s guys. me

David Rae

Dalton. Thanks,

Operator

Your comes the next DeMarco National Bank Financial. with question from Don of line

Don DeMarco

Thank you, operator. And good gentlemen. morning,

is growing quite balance Your bit. cash a

and potentially to cash Is that NCIBs both with you the strategies capital benefit uses higher disposition or your grow? balance revisit MineRP will or chance flow cash from allocation you dividends So there quarter. your this continues any free potential other as the

David Rae

conscious Yes, that very I our the program mean answer we NCIB But each that capital cash and we start there Clearly, with for the both discussion level. with the that I forward. allocation that, very at do look and cash But needs that Hume. fact an I’ll some Board is going balance. I’ll of our opportunity dividend use obviously, anyway, have is a to at it’s the we’re is start. meeting, and is have think that building – healthy something

Hume, point, it we did answer anticipate this at. do that released this at you for look just anything quarter, we the to that? is further but want the information on something anything dividend So we on

Hume Kyle

Yes.

setting better-than-anticipated dividend, since no of that over the driven produced last which has say just in levels our it’s to and operated the long-term outset by is cash would flow the I the from environment standpoint, we’ve we establish that doubt The long-term. the place. And a at in supplement time over actually yes, was a have dividend put that And Board. that, obviously, the think dividend that based primary there objective on free period the I something originally dividend outlook. we sustainable implemented

obviously stronger update a in on We the a financial So, basis. outlook I regular position. think we’re

the time I Board think that time, to will from revisit decision.

us the certainly, is are an have view our extent a that potentially say, So is undervalued, that existing opportunity there in I NCIB. And the opportunity supplement as shares there to that some to think, for dividend. increase you to and/or like under do buyback our we future

Don DeMarco

thank power be a with Bulgaria, in Okay, this to comment much continuing has up. and how power that back elevated? the just And your And up? or pricing power you transitory are question, expect expect prices gone you. to mentioned that on whether you it’s and situation the coming previously Can mines down you gone asked stay

David Rae

Go ahead, Hume.

Hume Kyle

I can mean, I X what say to levels would are they at stage, be are They expect aren’t And seeing X the unprecedented. remain if I last Yes. we this is, that seasonal. elevated. or guess would likely we that you look the over currently years,

the is up that of in think reflective I tax spike current carbon Europe.

lower difficult it’s return over to seen to years of just that previously that we’ve So, they tax. carbon are to the impact because levels the the say going X of last the

if consume, XXX,XXX this be which in that power probably And I’d of could stage, a prices of we’re think in that looking we’re increase change, at nothing like were XX% sustained, probably so – something the megawatt we say I at to looking hours at something it’s order power.

So probably it’s to to historical don’t when cost translate increased of things revert back the if $X million $X average. you million it,

Don DeMarco

Okay. That’s helpful.

to over to And some the in anticipate lot are question, there some your you can Ecuador? specifically couple the Ada then But the one you in a primary challenges the process? years. next permitting spending of of Larga, over of you expected Just address that leverage about pushback Tepe perhaps can talk how final not experience you at permanent shifting Loma

David Rae

around just the for numbers power, it’s .So, around in our Yes. cost XX% Tepe. X% all, of Hi, first Ada for some of Chelopech Don

You’re of trying to the change. that of impact a get sense

we We optimistic. to And saying the of terms is was In there going on a think, within here is, that able that’s X X that realistic. permitting years months. been as have something we’ve, know, to be Loma what’s get we months view with would you think Larga, XX

a willing Now coming with our at to communities the week. of Hristov next Stark-Anderson and and need broadly terms done, Quinka, to will we’re Kelly are to can path diligence what obviously, the at more understanding be in be helpful by key myself due And see do, the Sustainability the terms outcome moment, to here of going with this forward but the Nicky in we in we’ve we that the engage joined consistently to to moment, heading the communities. and more and of need VP,

So at which community mine it’s that instance, conservation of listen in that intent It’s our needs. just the that directly. Loma the know, that to we at and be to go at the key engagement a water Larga that and areas take need areas. can’t be appropriately. to with national regional and would we to going level. and We sense And It’s understand is and developed to not are concerns address for that’s there stakeholders the the levels the level ecological

the time Larga. national we talking the permitting, such and Loma So we by position about that to ahead see communities that that I’m have the will go with the to in as support a develop process that we’re that be then permits, the going accelerate a over we time the from with

Don DeMarco

Okay, great.

that experience that there experience And in some to Larga? it were so Loma is permitting there anything that, to your leverage you’ll similar ways challenges in apply Ada in Tepe,

David Rae

Yes, absolutely.

minor what come concerns broadly, Norte. Fruta here some a is appetite is with outweighs for carefully with, engage have demonstrate pride strong constructing in intent this the any success negative everybody mean communities that and in something has of the impact. backed to think instance, already to in for So or with people Ecuador mining I there quality listen best There And been groups in good people such terms value mining. about. it’s internationally engaging projects that practices that in our and And sense in can what examples that are that’s demonstrate del generated

stakeholders then best practices. traction that, as we that we’re early been sort get innovation with permitting and so mean government, we’ve go the get I next with a over as and looking was talking really after So the broadly, different did that the concern to learning Quinka made I to I be hearing about far more had long that very thing and technology from And from the – of to what do working latest last understanding positive key through as to officials well was to going that meeting of of week, as the we communities since the true the we happy hearing Saturday the of concerns, local period very, course and really here the very Tepe, difference able and good with Ada forward government as we number as and with engaging move points feel I more week. feel solutions the yes, commentary ministries that

Don DeMarco

you. for all thank Okay, me. That’s

David Rae

Thanks, Don.

Operator

comes from the Cosmos of Your question Chiu line with next CIBC.

Cosmos Chiu

David, my Chelopech, should team. X.XX terms copper. we first were as on comment Could grams maybe for be the Thanks, on per of is in grades QX I up and And X.XX% that? noticed you Hume Hi. question well expecting of remainder XXXX? Maybe that quickly, ton, just what

David Rae

Yes. Sure.

did mention there the So some that was obviously, we between sequencing two quarters.

So happened we and between that had areas QX. mine were to QX what was we sequence that set some

terms of the our at create at how in more also and the around of been getting the greater terms doing in two model efficiency looking been and we the Chelopech. in – difference work, grade total an performance. continuity is to grade for it’s the expected else can going the performance on, come to year the hence, And upgrade organization plants focusing our what sort in at quarters. some those of I’ll individual between metallurgical the each specifically this looking which So in back is and moment. has rest in consistency But mine of operating have in on

and noticed of between was this these change you together come And So, to grade quarter the a total metallurgical I not am production quarters too it, the if record sure but have change as recovery. all well. things

add if the So copper you production from and value higher concentrates both concentrates.

it’s of of part So, things it that sort now. are all those of

expected grade was that grade at moving the balance a why reason I first all second anticipate was the For a what year, of quarter, basically the because for quarter stocks you the year. that displacement would the the is and between of just between quarters. was average a there the the That see

that in are the we So, in project guidance, QX, do take to in answer anticipate the going to QX, the middle target somewhere I take mid-range. then we and the be answer range, of

you was things. sort some There end as of of can to that where comfort give minor should to So, up. sense another expect we

So, XX in our happened some meter the for stopes, grade than early then when got were with drilling. we we control into we the anticipated. what higher was by XX a And in had went areas, finding and we at ore actually spacing meter grade

QX then slightly a and So in overall in than and more than performance consistent sequencing, more recovery improved QX also QX in QX. reconciliation a positive combination

Cosmos Chiu

inflation on That’s And mean, and great. Maybe question to I that, the I days Hume. the next effort that, by new David, in mining. my word these seems be

You have touched on power costs.

the it You inflation other But night? touched pressures costs. wise or labor areas of you something of in have on power? in any keeps mining seeing the inflationary industry, some at is up Are that outside you other

David Rae

month. the at about running are at So, typically living increases, cost X%, of we

operations. with So, labor have offset the do in increases the numbers. we at around We running a that are of of number those terms people slight have efficiencies at

we other consumables, In seeing our variable terms similar, costs, inflationary are but pressures. of lesser

been constraints a snowballs costs example key has There coming COVID. production, be about but in fuel an out of – So, in we XX% and costs. affected a some of increase in chain. seen that It’s supply increase reagent XX% us terms our have not would in obviously our that with the

living steel, of XX% So, reagents. increased XX% XX% of in cost in energy, X%, terms in

Cosmos Chiu

David, – you you that cost? you factor would looking do I manage risk? how do can expect do budgets? or that how guess you to against forward, manage how that then something that that your into hedge And Okay. How Is you

David Rae

the fixed actually moment at X-year are our our in for we planning outlook XXXX our in detailed number. just So

we exactly So, are that. actually looking at

So, ways. how do we with deal we with that deal number of in a that,

obviously are affects on recovery That are and continuously are A performance, we in consumption, at So, effective the consumption. of that and water power applying we operation. the of terms came advanced mill consumables. I all not terms consistency consumption, and steel efficiency, what but back of efficiencies grind managing utilization better means optimizations energy control only technologies to looking you both in of reagent

focus be that? seeing going greater going these innovation. don’t do and detail would to stay. I how know the we on to to in looking are wanted anticipate moment you is be are and all Hume where said, this at We add moment our expect thing are those if some seeing competition things say down. there peak more of change something at anything a and But supply and in we in Hume, to at prices coming some of that might the So, we as busy I not

Hume Kyle

period-over-period these these guess, the I in just ago. in of comparing see a numbers yes, where were year you transitory, some I when like we lower quite prices and mean, areas the of Yes. levels part are things like like at news some are high because are

So, look as the of at it a aren’t when numbers as you first over time, think. longer you stark period might

as for it banking closed necessarily being said, number mean. of sort been end on year instance, other markets. historical the don’t a nor side, like, I we power of which to there opening market, a reversion has the I this at power is anticipate of But a largely On to are up Bulgaria, access the in

So, don’t that sure. – decreases. we support we again, help just might for But to know price

do to we terms procurement. can that can look certainly through continuous closer to what contracts offset at for what our everything ways a can do do, provide cost period we that longer We time. of So, on productivity. at a entering in we find lower we can basis of just have we to over might look And into can

Cosmos Chiu

from exploration How renewed, years there X I mine Sure. replacement? here and And of life? of new here? of if focus gears back out? that Chelopech infill? me much and XX,XXX you you on MD&A, exploration then here, incremental a or you your comment also through Chelopech is in at in Tepe. were that is switching remind is certainly, there terms X here are on for jackpot increases Are a Tepe? to finding looking but you clearly, year step a How completely for from you bit that terms Ada Could in maybe look it and targeting deposit? for feet? drilling for – the looking a at step much not Could maybe Ada terms is of what looking of reading little And Are both Are is you

David Rae

Sure, alright.

with start Chelopech. me let So,

around So, out, meters Chelopech one-third two-third And that is consistent a step referred it, of infill. number. does as XX,XXX of you underground It’s drilling annually. and to is very

that’s drilling. actually than rather say out, So, it’s underground to though, it, perhaps step and extensional way the best the is

X discovery, last are at believe did, surface year, we it This move geological that’s get will planned, So to contract and XX,XXX anticipating year, meters was on I commercial not including which to we to going a Then are is you on Tepe, phase, right Petka. be if discovery reference. so we activity there Sveta doing useful a something is of bat. be Ada to have look meters the our from which we Chelopech. up XX,XXX have the the year That going which off at picking

different well of drilling for And are we the of control life So mine. a the in recovery to this on. coming also overall is as of which being found understanding in material able XXX be metallurgically material, and control year, so good as the be of put because grade The efficiency nature ready to of grade value to all the recovery. a maximizing the to together into are doing process is terms asset our which the and kilometers balance of able why drilling, program, we support the reason that mine metallurgical for have deal plant doing we maximizes of

$X So, million drilling doing of and analytical roughly that. costs. that’s direct million are it’s why $XX – And was we million $XX

I off on case in Kaya. Chatal of did think the drilling, up head. XX where top then XX,XXX And it’s drilling, kilometers XX around to that’s of terms my focused and So, in so away the doing two extensional kilometers we areas, are that’s of immediately the we last mine, year, of

that, So is the of talked all with of step about kilometers XXX outside what out. extensional I

Cosmos Chiu

in cut very quarter. very good the I I QX. Certainly, that’s much it. question, last one Great. out little Yes, ask cash free from call. got was answered a you apologize helpful. that have if of bit already And Tsumeb? during I came How And flow this then every

David Rae

take Hume, that? did you to want

Hume Kyle

free cash very no came little very, flow Like Tsumeb or the in from quarter.

Cosmos Chiu

that for is the year? the of expectation rest the And

Hume Kyle

cash is a would this I at say situation. that breakeven Yes. probably flow looking Tsumeb best, at, like year

it’s flow. low that end a million principally be Tsumeb fact year, the maybe maintenance it’s this So here. kind historically, of a range, a Certainly, manage going of have we said breakeven that to can to to due cash we free $XX at that of the to

in yes, cash if to much, Tsumeb QX and we maintenance, flow with any, took extended year. So, we that the maintenance the generate free this expecting not are

Cosmos Chiu

are Of weekend. Thanks course. I have. Hume a again, good Those David have the questions and and

David Rae

Thanks Cosmos.

Operator

RBC [Operator comes the next with line question Instructions] Markets. from of Your Wayne Lam Capital

Wayne Lam

kind Good on up of morning. Yes, Thanks guys. questions. following just the other

more you of terms in that that this one-off Just at and inflation? kind had labor are Just maybe ongoing outlined cost detail was higher could some wondering, wondering you operations if incentives those quarter? of the guys if both on provide more type seen payments or

David Rae

Go Hume. ahead,

Hume Kyle

addition order which course I terms just that escalation sort to we Dave’s in the seeing is, magnitude of comment, am are in X%. in this of of guessing in normal rates, that are of labor

through a that that LTIP came other payouts allocated in that through year the cost XXXX a was higher is I in to thing higher result as think the there were came down the site. of

budgeted last than previously a So and year, higher strong very payouts year, expected for.

through So, LTIP year-over-year the impact that came higher operations that a on basis. were payments basis, a – year year-over-year the on

continued hope up those continue well perform but of the current I we So, goes have factor. they and maintain it, to to predict. that really that mean, and aspect transitory, I other it’s not? levels I you at share grow, payments hope our would been or can’t Are that price

Wayne Lam

out a then payments on out annually, And and quarterly is on are paid basis? accrued that, those paid just Okay. it or

Hume Kyle

the overall an those accrue quarterly accrue we them basis impacts. until don’t quite mark-to-market be to quarterly. and actually they volatile. they are corporate basis, on Like known, We the down can we sites on relates a allocate as to But it

know until exactly the end. out or to And what paid so going be accrue to you what’s don’t really

a mark-to-market the step, on the allocated realize we down gets actually component when So, quarter. in

of that would mark-to-market favorable QX through be operations, the year unfavorable. that, it it’s every and So, can or flow

Wayne Lam

And Tsumeb, in to at kind an in of costs guys the you the that maybe the wave kind cash just back Thanks. the and in the of perfect. third uptick then year? half also of similar terms should place Okay, we in of anticipate there are operations, putting other measures

David Rae

No, I don’t think that’s assume. fair to

So, is it’s showing decreasing. that the already uptick signs

was wave. down looks first it into pretty rapidly, of people desired Namibia. South like the this masks, and from this We things may And new in and it saw So, been so open, effect. being Africa the relatively country seems short. to closed happened had between wear have And What have forcing effectively then centers were in the Schools were thing. shutdown, closed type that major to the fairly travel were on.

what changed haven’t itself. the we We at do site

of and an than have impact on of control efficiency the thing. a hygiene maintained higher distance edges terms it’s and in sort of this the on impact costs, watching And We type the level of more in of of essentially, in operation. around the

tracing have for got activity. in somebody of contract positive. of So just suddenly, a And team then they that and them in It’s It’s a week, following that’s in take been, the isolation. very to people say seriously. contact are have number instance, on particular that working not you them with a you we has

may going of So, much the more of a little get management. that and around. It’s of things of those to too to get on of makes people It to things issue. things really you It’s thought sort operation translate later. something sort have sort little little difficult to doesn’t it’s that done a more cost bit more a require just into the fringe We bit were going other you swap done. – around bring more in one

Wayne Lam

perfect. that’s guys. Okay, helpful. Yes, Thanks

David Rae

Thank you. Thanks Wayne.

Operator

follow-up from is Canaccord. a the of Baretto next Dalton Your question with question line

Dalton Baretto

my for Just question taking me and thanks one follow-up. quick for

to the any halfway there the production through year? is of next Now out year, are being that thought we given cost hedge

David Rae

Hume. ahead, Go

Hume Kyle

Yes. of those I on basis we exposures. consider. our is one would a that say of we by-product regularly at all exposures look Copper

hedge. is put So no, yes, balance, I to this additional at on not we stage, hedge. on it. But inclined no we to are considering There think are plan formal

of half As second I said – we our have all earlier, we production. hedged are substantially

have for all-in we to hedges. us at see looking on that business, levels our stage, our very additional the I we in outlook this change any put have sustaining around probably put we and something at And think would that out. the tracking costs for to significant

hedge So, at put an there is additional no need to on time. for this us

Dalton Baretto

for comments. Thanks the

Operator

for there questions closing And the no call over are further Cameron And at like time. turn this remarks. would to to I Jennifer now

Jennifer Cameron

Well, thank you, everyone, for joining today. us

If forward you look have we updated. and any out, to you to feel further questions, free keeping please reach

Operator

Ladies concludes your participation, day. wonderful gentlemen, a have and and this conference. today’s Thank you for

presenters please All disconnect. all may hold the You line.

Dundee Precious Metals (DPMLF) 1 Aug 212021 Q2 Earnings call transcript