WEL WELCO COME T ME TO O THE THE 20 2016 16 AN ANNU NUAL - - PowerPoint PPT Presentation
WEL WELCO COME T ME TO O THE THE 20 2016 16 AN ANNU NUAL AL GENERA GENERAL L MEE MEETING TING MA MAY Y 5, 2 5, 201 016 Chelopech Mine, Bulgaria CHAIRMANS AGENDA JONATHAN GOODMAN EXECUTIVE CHAIRMAN OF THE BOARD Opening
Chelopech Mine, Bulgaria
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Jonathan Goodman, Executive Chairman Peter Gillin Rick Howes Jeremy Kinsman Murray John Peter Nixon Anthony Walsh Garth MacRae Donald Young Marie-Anne Tawil
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Chelopech Mine, Bulgaria
Chelopech Mine, Bulgaria
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Rick Howes
President & Chief Executive Officer
Hume Kyle
Executive Vice President & Chief Financial Officer
David Rae
Executive Vice President & Chief Operating Officer
John Lindsay
Senior Vice President, Projects
Paul Proulx
Senior Vice President, Corporate Services
Michael Dorfman
Senior Vice President, Corporate Development
Richard Gosse
Senior Vice President, Exploration
Lori Beak
Senior Vice President, Governance, and Corporate Secretary
Nikolay Hristov
Senior Vice President, Sustainable Business Development
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This presentation contains “forward looking information” or "forward looking statements" that involve a number of risks and uncertainties. Forward looking information and forward looking statements include, but are not limited to, statements with respect to the future prices of gold and other metals, the estimation of mineral reserves and resources, the realization of mineral estimates, the timing and amount of estimated future production and output, costs of production, capital expenditures (including sustaining capex, non-discretionary capex and discretionary capex), costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation. Often, but not always, forward looking statements can be identified by the use of words such as “plans”, “expects”, or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “does not anticipate”, or “believes”, or variations
made, and they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any other future results, performance or achievements expressed or implied by the forward looking statements. Such factors include, among others: the actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold; possible variations in ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, fluctuations in metal prices, as well as those risk factors discussed or referred to in this presentation under and in the Company’s annual information form under the heading "Risk Factors" and other documents filed from time to time with the securities regulatory authorities in all provinces and territories of Canada and available at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated
could differ materially from those anticipated in such statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements.
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(50%) 0% 50% 100% 150% Jan-16 Feb-16 Mar-16 Apr-16 109.8% 94.5% 83.3% 97.2% 74.6% 65.1%
Historical Relative Trading, Year-to-Date (1) Gold and Copper Price Trend, 2010 to Present
GDXJ GDX Tier I Tier III Tier II
1 See footnotes contained in Appendix on slide 28
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159 182 195 138- 172 2013 2014 2015 2016F
2 See footnotes contained in Appendix on slide 28
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$626 $690 2013 2014 2015 $620 159 182 195 2013 2014 2015 60 58 53 47 47 43 2010 2011 2012 2013 2014 2015
Reduced Cash Cost / tonne of
Achieved record production of gold contained in all concentrates (000’s oz) (2) Remained a low AISC per ounce
Reduction in G&A expenses of US$10.7M
$24.8M $28.5M $17.8M 2013 2014 2015
2,3,4,5 See footnotes contained in Appendix on slide 28
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26 63 140 130 44 24-28 2011 2012 2013 2014 2015 2016F
Reduction in total smelter capital expenditures (US$M)
180 159 152 198 196 215-250 2011 2012 2013 2014 2015 2016F
Smelter Production (000’s tonnes)
6 See footnotes contained in Appendix on slide 28
(6) (6)
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Potential expansion of smelter throughput up to 370,000 tpy
198 215- 250 220- 250 265- 320 370 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 196 152 320- 370
Holding Furnace
6 See footnotes contained in Appendix on slide 28
(6) (6) (6) (6) (6)
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(2) (3),(4)
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Krumovgrad mine have identified promising new targets that will be further tested in 2016
2006 2015
Ore Mined / Reserves (mt)
21.5 21.5 14.1
Total ore mined to date Ore Reserve
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Transaction Highlights
cash + US$15 million in Polymetal common shares - Subject to normal course working capital adjustments; 2% net smelter return royalty on future production
arrangements and related exploration assets and licenses in the central part of the country
reduces future capital requirements; Increases focus on core portfolio of assets
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EXPLORATION – AVALA PROPERTIES IN SERBIA
(2) (3),(4)
project (C$1 million first year commitment)
project and US$32 million by end of 2023 for 75% interest in the project
HIGHLIGHTS
Lenovac Timok Gold Project Kiseljak Cu Au Porphry
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TSX Gold Equities/Gold Bullion The ratio is two SD from trend (8) Gold Price and GDXJ Index January 2015 - April 29, 2016 (7)
$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-… 05-…
Copper Price January 2015 – April 29, 2016 (7)
January 2015 January 2016 April 2016
Total Global Copper Inventories (9)
7,8,9 See footnotes contained in Appendix on slide 28
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1.09 1.31 1.81 2.03 2.05 2.04 2.0-2.25 2010 2011 2012 2013 2014 2015 2016F
Chelopech Ore Mined (mt)
Increased production tonnage at Chelopech
138-172 170 189 240 297 2016F 2017F 2018F 2019F 2020F
Increased gold production in 2018 (000’s ounces)
(6) (6) (6) (6) (6) (6)
6 See footnotes contained in Appendix on slide 28
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High Return Project (10)
LOM 8 years Production start date Q3 2018 Annual gold production 85,700 oz Capital cost to complete US$164M Total cash cost per oz AuEq $389 Average annual EBITDA $64.9M
10 See footnotes contained in Appendix on slide 28
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Process Plant Integrated Mine Waste Facility
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198 196 215- 250 320- 370 120 180 159 152 370 312 341 420 479 394 409 305- 400 390 325 290 280 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F Third Party con supplied to smelter (000s) Chelopech concentrat e supplied to smelter (000s) Cash cost per tonne of concentrate smelted (net of by product credits) 220- 250 265- 320 Anticipated future capacity
3,6 See footnotes contained in Appendix on slide 28
(6) (6) (6) (6) (6) (3)
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2016 Adjusted EBITDA Generation (3,12) 2016 Asset Diversification (11)
Smelter 37% Gold 42% Copper 20% Ag 1% Tsumeb 33% Chelopech 67%
2016 Revenue Diversification (13)
Bulgaria 52% Namibia 45% Canada 3% 626 690 915 740 646 516
2013 2014 2015 2016F 2017F 2018F 2019F 2020F
620 800- 950
All-in Sustaining Cost (US$/oz) (3,6,13) Capital Expenditures (US$M) (3,6) Smelter Cash cost (US$/t) (3,6)
2013 2014 2015 2016F 2017F 2018F 2019F 2020F
216
Sustaining CAPEX Non-discretionary Growth CAPEX Discretionary Growth CAPEX
184 87 49-59 137 24 390 325 290 280
2013 2014 2015 2016F 2017F 2018F 2019F 2020F
27 151 305- 400 409 394 479
Forecast sustaining CAPEX Forecast Discretionary Growth CAPEX
Smelter 37% Gold 48% Copper 14%
2019 Revenue Diversification
Ag 1%
3,6,11,12,13 See footnotes contained in Appendix on slide 28
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COMMITTED TO MAINTAINING A STRONG BALANCE SHEET
0.94 1.12 1.67 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2013 2014 2015 180 201 187 50 100 150 200 250 300 2013 2014 2015
Net Debt / EBITDA (x) Net Debt / Capitalization (% at end of period) Total Available Liquidity (US$M at end of period)
(15)
Net Debt (US$M)
(14)
35 121 120 50 100 150 2013 2014 2015 4 15 16 0.0 5.0 10.0 15.0 20.0 2013 2014 2015
(14)
14,15 See footnotes contained in Appendix on slide 28
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PRUDENT FINANCING STRATEGY TO SUPPORT GROWTH
$176M in Available Liquidity
Maintain top down financing strategy
arrangements, where appropriate
Preserve solid financial position
Selectively hedge exposures to manage risk
Net Debt / Capitalization (16) (% at end of period) Debt / EBITDA (16,17) (x)
16,17 See footnotes contained in Appendix on slide 28
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Q2 Ramp-up of new copper converters Q4 Expansion study to 370,000 tpy concentrate smelted
Smelter
Q2 Updated economics
Krumovgrad
Q3 Project start Q2 Construction permit Q3 First production
Chelopech
Expansion study to 2.5 mtpy
Q3 BOD approval Q2 Financing plan Q2 Expansion study Detailed Engineering Q3 Ausmelt Cooling Upgrade Expansion Implementation Construction Production Ramp to 2.2Mt/a Evaluation of Mining and Milling intensity constraints Resource Development above 390 level targeted at increasing reserves Expansion Implementation
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DPM – COMMITTED TO PEOPLE, COMMUNITY, MINING
A progressive gold mining company that unlocks and delivers superior value through innovation and strong partnerships with stakeholders
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1. Source: RBC; Capital IQ as at April 29,2016 2. Comprised of all metals contained in concentrate, including pyrite concentrate 3. A non-GAAP measure. Refer to the “non-GAAP Financial Measures” section of the Full Year 2015 MD&A for reconciliations to IFRS 4. AISC per ounce of gold represents cost of sales at Chelopech less depreciation, amortization and other non-cash items plus treatment charges, penalties, transportation and other selling costs, sustaining capital expenditures, rehabilitation related to accretion expenses and an allocated portion of the Company’s G&A expenses less by-product revenues in respect of copper and silver including realized gains on copper derivative contracts divided by the payable gold in copper concentrate sold 5. Excludes metals in pyrite concentrate and where applicable, the treatment charges, transportation and other selling costs related to the sale of pyrite concentrate which is reported separately 6. Forecast/guidance information is subject to a number of risks. 2016F is based on guidance issued February 9, 2016 and 2017 to 2020 forecast data is based on the completion of several growth projects within currently contemplated time frames. See “Forward Looking Statements” on slide 6 7. Source: KITCO, The World Bank 8. Source: Standard and Poors London Bullion Market Association, Dundee Economics. February 2016 9. Source: Bloomberg with commentary from Scotia Mining Sales 10. Based on 2015 Krumovgrad Technical Report. To be updated Q2 2016. 11. Estimated to end of 2016 12. Adjusted EBITDA represents earnings before income tax plus depreciation and amortization, finance costs, losses/gains on impairment provisions and reversals, unrealized losses/gains on derivative contracts and investments at fair value, realized and unrealized losses/gains on equity settled warrants, minus interest income 13. From continuing operations 14. Net Debt, represents term debt and drawn amount under revolving credit facility, less cash 15. Undrawn portion of RCF and cash 16. 2018 and 2020 information is indicative, and reflects the completion of several growth projects within currently contemplated time frames, at current market prices without additional financing and is subject to a number of risks. See “Forward Looking Statements” on slide 6 and footnotes on slide 28 17. Calculated in accordance with bank covenants Without limitation to the foregoing, the following outlines certain specific forward looking statements contained in this presentation and provides certain material assumptions used to develop such forward looking statements and material risk factors that could cause actual results to differ materially from the forward looking statements (which are provided without limitation to the additional general risk factors discussed herein and in the Full Year 2015 MD&A). Sustaining CAPEX, Non-Discretionary CAPEX and Discretionary CAPEX: assumes foreign exchange rates remain at or around current levels, and all capital projects proceed as planned and at a cost that is consistent with the budget established for each project. Subject to a number of risks, the more significant of which are: technical challenges; delays related to securing necessary approvals, equipment deliveries, equipment performance, and the speed with which work is performed; availability of qualified labour; and changes in project parameters, timing and decision to proceed with projects and/or any components there of and estimated costs, including foreign exchange impacts. Gold and Copper Production: projected levels of metal production assumes grades and recoveries are consistent with current estimates of Mineral Resources and Mineral Reserves and DPM’s current expectations and timing of potential expansion at Kapan and construction start-up of Krumovgrad project and decision to proceed with projects and/or any components there of; and ore mined/milled is consistent with planned levels. Subject to a number of risks, the more significant of which are: lower than anticipated ore grades, recovery rates and ore mined/milled. Smelted Concentrate: assumes no significant disruption in equipment availability or concentrate supply. Subject to a number of risks, the more significant of which are: unanticipated operational issues; timing and decision to proceed with expansion projects, including the holding furnace, and/or any components there of; unanticipated issues related to the commissioning and operation of the acid plant and converters and any further expansion components including a holding furnace; lower than anticipated equipment availability; and disruptions to or changes in the supply of concentrate. Technical Information related to slide 20 – Updated Krumovgrad Project Economics The Mineral Resource and Mineral Reserve estimates and other scientific and technical information which supports this presentation was prepared by CSA Global (UK) Ltd. (“CSA”), in accordance with Canadian regulatory requirements set out in National Instrument 43-101 Standards of Disclosure for Mineral Projects, and were reviewed and approved by, as relates to Mineral Resources, Galen White, BSc (Hons) FAusIMM FGS, Director and Principal Consultant of CSA, and Julian Bennett, BSc ARSM FIMMM CEng, as relates to Mineral Reserves. Both Galen White and Julian Bennett are independent Qualified Persons (“QP”), as defined under NI 43-101. The NI 43-101 technical report (the “Krumovgrad Technical Report”) entitled “NI 43-101 Technical Report, Ada Tepe Deposit, Krumovgrad Project, Bulgaria” dated March 21, 2014, in respect
Director, Technical Services, both of DPM, who are QPs and not independent of the Company, have reviewed and approved the contents of this presentation. The Mineral Resource and Mineral Reserve estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential development of such Mineral Resources. See the Krumovgrad Technical Report for more information with respect to the key assumptions, parameters, methods and risks of determination associated with the foregoing Mineral Resource estimates. Cautionary note to U.S. Investors concerning estimates of Mineral Resources. These estimates have been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. The terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in NI 43-101 and recognized by Canadian securities laws but are not defined terms under the U.S. Securities and Exchange Commission (“SEC”) Guide 7 (“SEC Guide 7”) or recognized under U.S. securities laws. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be upgraded to mineral reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever by upgraded to a higher category. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies. U.S. investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Accordingly, these mineral resource estimates and related information may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder, including SEC Guide 7.
Chelopech Mine, Bulgaria
Corporate Head Office: One Adelaide Street East, Suite 500 Toronto, Ontario M5C 2V9 T: 416 365-5191 Investor Relations T: 416 365-2549 jreid@dundeeprecious.com TSX: DPM – Common Shares www.dundeeprecious.com