Dundee Precious extends Chelopech mine life to 2031

Dundee Precious Metals‘ (TSX: DPM) latest reserve update for its Chelopech gold-copper mine in Bulgaria has increased the mine life by two years to 2031.

While the overall reserve base is slightly smaller due to depletion, Dundee says it added about 1.1 million tonnes to the reserves category last year, replacing about half of the 2.1 million tonnes of material it mined out.

Chelopech now hosts proven and probable reserves of 18.2 million tonnes grading 2.64 grams gold per tonne, 8.2 grams silver and 0.77% copper for 1.6 million oz. gold, 4.8 million oz. silver and 311.5 million lb. copper.

The figures are relatively in line with the 2021 figures that showed proven and probable reserves were 18.6 million tonnes grading 2.89 grams gold per tonne, 7.73 grams silver per tonne and 0.84% copper .

The overall measured and indicated resource base also dropped 6% to 16.4 million tonnes grading 2.47 grams gold per tonne, 9.29 grams silver and 0.7% copper for 276,000 oz. gold, 1.2 million oz. silver and 69 million lb. copper metal.

BMO Capital Markets mining analyst Raj Ray noted Dundee has increased its commodity price assumptions for reserves and resources to US$1,500 per oz. gold and US$3.25 per lb. copper from US$1,400 per oz. and US$2.75 per lb., respectively, with resources estimated using US$1,700 per oz. gold and US$3.75 per lb. copper. He sees them as largely in line with the bank’s own price forecasts and the company’s industry peers.

“Fundamentally, the company continues to incrementally extend mine life with a significant measured and indicated resource base and exploration upside that points to continued mine life extension,” Ray wrote in a note to clients.

“The updated life-of-mine plan sees a slight increase in total gold production, although a slight decline in copper production, relative to the previous 2022 plan. We have adjusted our model accordingly and maintain our ‘outperform’ rating and $14.00 per share target price,” said Ray.

Dundee has guided for consolidated gold output of 245,000-290,000 oz. and 26-31 million lb. copper in 2023.

Exploration focus

Dundee continues to focus on extending Chelopech’s mine life through its in-mine and growing brownfield exploration programs.

This year it plans about 44,000 metres of in-mine drilling for resource development and about 50,000 metres of brownfield exploration, including testing conceptual targets on the Brevene exploration licence, which surrounds the Sveta Petka exploration licence, as well as in the Chelopech mine concession. It also plans to test for deeper and lateral extensions of the Chelopech deposit.

Dundee also said an infill drilling program is planned at Sharlo Dere, on the mine’s eastern flank with the aim of including the prospect in future resource estimates for the Chelopech mine.

Dundee will also conduct extensional drilling to test the Target 11 and Sharlo Dere Deeps targets, both of which the company says are underexplored and demonstrate strong potential to host additional mineral resources.

Dundee also operates the Ada Tepe open-pit gold mine in Bulgaria, which reached commercial production in 2019, and the Tsumeb copper concentrate smelter in Namibia.

At $9.86 in Toronto on Friday, Dundee shares have been on a tear in recent weeks. It is up 55% since the start of the year and 29% over the 12 months, having tested $5.41 and $10.16 over the period. It has a market capitalization of $1.9 billion.