Profits surge at Dundee Precious Metals (May 30, 2011)

With increased production and higher realized metals prices, Dundee Precious Metals (DPM-T) has managed to turn things around from where they were this time last year.

DPM reported first quarter net earnings of US$14 million, or US11¢ per share, compared with last year’s first-quarter loss of US$49 million, or US48¢ per share.

The uptick in earnings was built on the back of stronger revenues which came in at US$68.4 million – US$47.9 million higher than revenues a year ago. That large increase came mostly from a 64% increase in deliveries of concentrates, a 25% increase in gold prices, a 34% increase in copper prices and an 87% increase in silver prices.

These were complemented by lower production costs at the company’s flagship mine, Chelopech, in Bulgaria.

But it was a Bulgarian court decision to revoke an environmental impact assessment on a metal processing facility in Chelopech that most affected first quarter losses in 2010. That ruling led DPM to an impairment charge of US$50.6 million.

As for production in the first quarter, the company says a total of 23,724 tonnes of concentrate was sold. This tonnage contained 21,582 oz. gold, 6.7 million lbs. copper, 5 million lbs. zinc and 135,136 oz. silver. All of these numbers represent significant increases over last year’s tallies.

With better operational results, DPM’s balance sheet and statement of cash flows also look rosier. The company currently has cash and equivalents of US$136.4 million – US$48.4 million of that comes from its 51% interest in Avala Resources (AVZ-V). DPM spun its Serbian gold assets out into Avala early last year.

“DPM continues to be well-funded as we progress with the Chelopech and the smelter expansions, and the Deno open-pit exploration program, which will lead to increased overall profitability for all our stakeholders,” said DPM’s president and chief executive Jonathan Goodman in a statement.

Cash costs per tonne at Chelopech for the first quarter came in at US$51.43. This figure is 8% lower than last year. The decrease came courtesy of higher volumes mined, lower spending on materials and maintenance, and lower spending on backfill.

The Chelopech mine sits roughly 70 km east of Sofia, Bulgaria’s capital city.

In stark contrast to last year’s bad news from the government regarding Chelopech, 2011 saw the approval of a 30-year concession to develop the Khan Krum deposit in Krumovgrad, in southeastern Bulgaria.

DPM’s story is not entirely a Bulgarian one. The company also owns Namibia Custom Smelters, a copper concentrate processing facility in Tsumeb, Namibia, and the Kapan gold, copper, zinc and silver concentrate mine, 32 km southeast of Yerevan, the capital city of Armenia.