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ANNUAL REPORT 2022
STRONG
FOUNDATION.
STRONG
FUTURE.
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).
PRODUCTION AND FINANCIAL HIGHLIGHTS
Gold Contained in
Concentrate Produced
(K oz)
Copper Contained in
Concentrate Produced
(M lbs)
Cost of Sales
(US$ per Au oz. sold)1
All-in Sustaining Cost
(US$ per Au oz. sold)1
298
310
273
36
35
31
760
819
654
657
975
885
2020
2021
2022
2020
2021
2022
2020
2021
2022
2020
2021
2022
Net Earnings Attributable
to Common Shareholders
from Continuing Operations
(US$M)
Adjusted Net Earnings
(US$M)1
Cash Provided from
Operating Activities
(US$M)
Free Cash Flow
(US$M)1
199
191
202
188
253
232
197
252
211
129
166
36
2020
2021
2022
2020
2021
2022
2020
2021
2022
2020
2021
2022
1 Cost of sales per ounce of gold sold represents Chelopech and Ada Tepe cost of sales divided by the payable gold in concentrate sold. All-in sustaining cost per ounce of gold sold; adjusted
net earnings; and free cash flow are non-GAAP 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 of the Management’s Discussion and Analysis (“MD&A”) for the
year ended December 31, 2022 commencing on page 52, contained in this report, for a detailed description and a reconciliation of each of these measures to the most directly comparable
measure under IFRS.
GLOBAL PORTFOLIO OF ASSETS
TIMOK
Gold project
Location
Serbia
Ownership
100%
Stage
Feasibility study
CORPORATE
HEAD OFFICE
Location
Toronto, Canada
ČOKA
RAKITA
Exploration
Location
Serbia
Ownership
100%
CHELOPECH
Gold-copper
mine
Location
Chelopech, Bulgaria
Ownership
100%
Stage
Producing
ADA TEPE
Gold mine
Location
Southern Bulgaria
Ownership
100%
Stage
Producing
TIERRAS
COLORADAS
Exploration
Location
Loja, Ecuador
Ownership
100%
LOMA
LARGA
Gold-copper
project
Location
Southern Ecuador
Ownership
100%
Stage
Permitting
TSUMEB
Specialty
smelter
Location
Tsumeb, Namibia
Ownership
92%
Operation
Specialty smelter
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 1
2022 PERFORMANCE
HIGHLIGHTS
2022 was another strong year for Dundee Precious Metals. We delivered solid results at our mining operations
and advanced our organic growth portfolio, all while maintaining the high standards for safety and sustainability
which are core to our culture and values.
OPERATIONAL
PERFORMANCE
FINANCIAL
PERFORMANCE
ADDING VALUE
TO OUR PORTFOLIO
STAKEHOLDER
VALUE
RETURNING
CAPITAL
$44M
in dividends & share
repurchases
27%
of free cash flow
returned to shareholders
STRONG
ESG RATINGS
91ST
PERCENTILE
in the 2022 S&P Global
Corporate Sustainability
Assessment
STRONG GOLD
PRODUCTION
273,000
OUNCES
achieved annual guidance
ROBUST
CASH FLOW
$232M
cash provided from
operating activities
$166M
free cash flow1
IMPROVED
PRODUCTION
ADA TEPE
life of mine update included
addition of 66,000 high margin
ounces to production profile
INDUSTRY-LEADING
COST PERFORMANCE
$975/OZ.
cost of sales per ounce of
gold sold1
$885/OZ.
all-in sustaining cost per
ounce of gold sold1
SOLID ADJUSTED
EARNINGS
$36M
net earnings attributable to
common shareholders from
continuing operations
$129M
adjusted net earnings1
FINANCIAL
STRENGTH
$433M
cash on the balance sheet as
at December 31, 2022
NO DEBT
HIGH GRADE
DISCOVERY
ČOKA
RAKITA
drilling defined a large
footprint & deposit remains
open in multiple directions
HIGH QUALITY
GROW ASSET
LOMA
LARGA
continued to advance
feasibility study
1 Cost of sales per ounce of gold sold represents Chelopech and Ada Tepe cost of sales divided by the payable gold in concentrate sold. All-in
sustaining cost per ounce of gold sold; free cash flow; and adjusted net earnings are non-GAAP measures or ratios. These measures have no
standardized meanings under IFRS and may not be comparable to similar measures presented by other companies. Refer to the “Non-GAAP
Financial Measures” section contained in the Company’s MD&A for the year ended December 31, 2022 commencing at page 52, which is
available contained in this report, for a detailed description and a reconciliation of each of these measures to the most directly comparable
measure under IFRS.
2 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
SOLID THREE-YEAR OUTLOOK
Our updated three-year outlook reflects the benefits of the improved life of mine plan at Ada Tepe, with annual
average production of approximately 270,000 ounces of gold and 32 million pounds of copper and an
all-in sustaining cost1,2 profile that continues to rank DPM among the lowest cost gold producers. With a solid
production profile, significant free cash flow generation and strong balance sheet, DPM is well-positioned to
continue delivering value for our stakeholders.
Strong Gold
Production Profile
Gold contained in concentrate
produced (Koz.)
Stable Copper
Production
Copper contained in concentrate
produced (Mlbs.)
Attractive
Cost Profile
All-in sustaining cost per ounce
of gold sold2
315
270
273
285
245
270
230
31
35
30
34
29
34
29
$885
$860
$700
$880
$880
$720
$720
2022
2023
2024
2025
2022
2023
2024
2025
2022
2023
2024
2025
Guidance
Outlook
Outlook
Guidance
Outlook
Outlook
Guidance
Outlook
Outlook
1 Annual average for the next three years. Guidance and three-year outlook is subject to a number of risks. Refer to the Company’s 2023
guidance and three-year outlook as disclosed on pages 20 to 23 of the MD&A for the year ended December 31, 2022, contained in this report.
2 Projections of all-in sustaining cost per ounce of gold sold is a non-GAAP ratio and is not a defined or standardized measure under IFRS.
Refer to the “Non-GAAP Financial Measures” section contained in the MD&A for the year ended December 31, 2022, contained in this
report, commencing at page 52 for a detailed description and a reconciliation to the most directly comparable measure under IFRS.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 3
STRONG
FOUNDATION.
STRONG
FUTURE.
DAVID RAE
President and CEO
During the year, we
made significant steps
towards building for
our future.
2022 LETTER TO SHAREHOLDERS
Overall, 2022 was another very strong year for Dundee Precious Metals.
We delivered solid results at our mining operations and advanced our
organic growth portfolio, all while maintaining the high standards for
safety and sustainability which are core to our culture and values.
We achieved our gold production guidance while
managing industry cost pressures and maintained
our position as one of the lowest-cost gold
producers. We generated strong free cash flow,
returned $44.1 million to shareholders through
share repurchases and our sustainable quarterly
dividend, and continued to invest in our future,
progressing the feasibility study update for Loma
Larga in Ecuador and advancing exploration
activities which led to a high-grade discovery at the
Čoka Rakita prospect in Serbia. We also continued
to deliver on our ESG priorities and seek further
opportunities to achieve our strategic objective of
generating a net positive impact from our operations.
REVIEW OF 2022 PERFORMANCE
In 2022, we delivered strong operating performance,
producing 273,109 ounces of gold and 31 million
pounds of copper at an all-in sustaining cost of $885
per gold ounce. This translated into strong financial
results, including free cash flow generation of
$166 million and adjusted net earnings of $129 million.
We ended the year in a very strong financial position,
with $433 million of cash on our balance sheet, no
debt and an undrawn $150 million revolving credit
facility. Notably, we delivered these results while
achieving an impressive health and safety record,
including over 6 million hours without a lost time injury
at our Bulgarian operations.
During the year, we made significant steps towards
building for our future. We continued to advance
the feasibility study (“FS”) update for the high-
quality Loma Larga project in Ecuador, announced
an exciting high-grade discovery at Čoka Rakita,
completed optimized life of mine (“LOM”) updates
at both Chelopech and Ada Tepe, and released
strong initial drill results from exploration at the
Tierras Coloradas prospect in Ecuador.
CHELOPECH: HIGH-QUALITY,
CORNERSTONE ASSET
Chelopech continued its track record of consistent
performance, producing 179,135 ounces of gold and
31 million pounds of copper.
We continue to focus on extending the mine life
through our in-mine and brownfield exploration
programs. In March 2023, we announced our year
end 2022 Mineral Reserve and Mineral Resource
update, along with a LOM update extending mine
life to 2031. In 2022, brownfield exploration at
Chelopech focused on an intensive drilling campaign
to support the application for a Commercial
Discovery at Sveta Petka, the exploration licence
surrounding the Chelopech mine.
Combined with our demonstrated track record
of converting Mineral Resources into Mineral
Reserves and our in-mine and growing brownfield
exploration programs, there is strong potential to
continue extending mine life at Chelopech.
4 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Extended mine life at the Chelopech
mine to 2031.
ADA TEPE: ADDING HIGH-MARGIN PRODUCTION
In 2022, Ada Tepe produced 93,974 ounces of
gold, in-line with its gold production guidance
for the year.
Since commissioning Ada Tepe in 2019, it has
continued to outperform our expectations, and we
are confident the mine will continue to generate
strong results, supported by the improved LOM
plan we announced in January 2023. Highlights
of the updated LOM plan, which is the result of an
accelerated grade control drilling program and a
strategic mine planning study include:
•
A 22% increase to LOM recovered gold ounces,
for an additional 66,000 ounces compared to the
previous LOM plan
•
A 13% increase in gold grade, and
•
A 1% increase in recovery.
The new LOM plan has resulted in an improved three-
year outlook for gold production for the Company.
Overall, the new mine plan for Ada Tepe is another
example that highlights the strength of our technical
and operations team, and their ability to maximize the
long-term value of our assets.
TSUMEB: FOCUSED ON OPERATIONAL STABILITY,
EFFICIENCIES AND COST REDUCTION
In 2022, the Tsumeb smelter processed 174,122
tonnes of complex concentrate. This was slightly
below our revised guidance for the year. However,
as we look ahead to 2023, we have a maintenance
strategy in place to address the challenges that
we encountered, and are forecasting a consistent
throughput rate over the next three years. We are
also expecting cost per tonne to decline, reflecting
our ongoing efforts to optimize efficiencies and
reduce costs.
BUILDING A STRONG FUTURE
LOW-COST FUTURE GROWTH AND EXPLORATION
POTENTIAL IN ECUADOR
In 2022, we continued to advance the Loma Larga
project in Ecuador. During the year, we received
technical approval for the Environment Impact
Assessment and approval for the tailings facility, key
permitting milestones. Drilling activities as well as
the next steps in the environment permitting process
are currently paused as we await the outcome of
an appeals process related to the decision on the
Constitutional Protective Action following a hearing
held in mid-October, which will provide clarity on the
required consultation process.
We are currently leveraging our significant operating
expertise at Chelopech to explore additional
optimization opportunities at Loma Larga, which
will be included in the updated FS. We expect to
complete the optimized FS in the second half of 2023.
We continue to see Loma Larga as a high-quality
project with the potential to generate strong
economic returns following the results of this ongoing
optimization work. As we continue to advance the
project, our approach to developing Loma Larga
will benefit from our firm commitment to the highest
standards for engagement with local communities
and environmental stewardship, in addition to our
development and operating experience to unlock the
significant potential of the project.
At the Tierras Coloradas exploration project, which
is located in the province of Loja, we completed
approximately 2,700 metres of drilling in the fourth
quarter of 2022, which confirmed the presence
of well-mineralized vein systems, with over
eight kilometres of strike length delineated. We are
planning further work in 2023 to follow-up on these
encouraging results.
We see Loma Larga as a
high-qualty project with
the potential to generate
strong economic
returns following the
results of our ongoing
optimization work.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 5
Added 66,000 high-margin ounces
to Ada Tepe’s LOM plan.
In 2022, we returned
27% of our free cash
flow back to our
shareholders.
We also continued to
deliver strong ESG
performance, ranking
in the 91st percentile
among metals and
mining companies in the
S&P Global Corporate
Sustainability
Assessment.
HIGH-GRADE DISCOVERY IN SERBIA
In early January 2023, we were excited to announce
a new high-grade discovery at the Čoka Rakita
prospect, located three kilometres southeast of the
Timok gold project in Serbia. Drilling at Čoka Rakita in
the fourth quarter of 2022 defined a large, high-grade
footprint that remains open in multiple directions, which
we believe has further exploration upside potential.
Significantly, preliminary metallurgical test work
indicates that the mineralized material is amenable to
gravity recovery and conventional flotation, producing
a clean gold concentrate with strong recoveries.
Given the potential of Čoka Rakita, our activities in
Serbia will be focused on aggressively advancing
exploration and we are therefore pausing further
work on the Timok feasibility study. We are planning
to follow-up on these exceptional drill results we
reported in January with a further 40,000 metres of
infill and extensional drilling, and are targeting an
initial Mineral Resource at Čoka Rakita by the end
of 2023.
We are excited about this new development in a region
where we have developed strong relationships within
the local communities and with the government and
where we have had a local and regional presence for
many years.
TRACK RECORD OF DISCIPLINED
CAPITAL ALLOCATION
In 2022, we generated $166 million of free cash
flow and significantly strengthened our balance
sheet, ending the year with $433 million of cash,
a $40.8 million investment portfolio, no debt and
an undrawn $150 million revolving credit facility.
We have also demonstrated a strong track record
of deploying our capital in a disciplined manner
that balances our desire to reinvest in growing and
optimizing the business with our commitment to
returning capital to our shareholders. In addition
to investing in our future growth and exploration
prospects, we have continued to pay a quarterly
dividend since 2020, and in 2022, we repurchased
approximately 2.5 million common shares under our
Normal Course Issuer Bid.
In aggregate, we returned approximately 27% of
our free cash flow back to our shareholders in 2022.
In February 2023, we announced that our Board of
Directors approved a new share buyback program
to purchase up to $100 million of our outstanding
common shares.
INDUSTRY-LEADING ESG
We are focused on generating value for all of our
stakeholders through our strong ESG performance.
ESG is fundamental to our culture and is integrated
into all levels of our organization. We have long
understood the strategic importance of maintaining
our social license and have seen first-hand how
excelling in this important area is a competitive
advantage that can unlock additional value and lead
to superior long-term returns.
During 2022, we made progress on a number
of social and environmental initiatives, including
developing our long-term commitments related to
climate change. We are always looking for ways
to reduce the impact of our operations, and we are
very proud of what we have achieved at Chelopech,
which has one of the lowest greenhouse gas emission
intensity rates among gold mines in the world.
However, we also recognize the global importance
of climate change and our responsibility to further
mitigate its impacts. We therefore announced our
greenhouse gas emissions reduction targets, including
a commitment to reduce our absolute Scope 1 and 2
emissions by 37.5% by 2035 and to achieve
Net Zero emissions by 2050, and to develop a
Scope 3 emissions target by 2025.
6 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
We are continually striving to be a leader in ESG, as
demonstrated by our positive ratings from a growing
number of ESG rating agencies. In 2022, DPM
scored in the 91st percentile for ESG performance
among companies in the metals and mining industry in
the S&P Global Corporate Sustainability Assessment,
which is recognized by investors as a high-quality
ESG rating agency. This result led to our inclusion in
the 2023 S&P Global Sustainability Yearbook, which
features companies that scored in the top 15% of
their industry. As well, we received an “A” rating from
MSCI ESG Research LLC, a leading independent
ESG rating agency.
While we are proud of being recognized for our strong
performance, we are constantly seeking opportunities
to improve and to achieve our strategic objective of
generating a net positive impact from our operations.
ADDING VALUE THROUGH
INNOVATION
We have established a strong track record of unlocking
value through innovation, including achieving
improvements in safety, lowering costs and reducing
our environmental impact. We have achieved these
successes by encouraging creative thinking and
problem solving, and we are continuously looking
for new ways to improve. We view our strength in
innovation as a competitive advantage and a valuable
skillset which supports our growth ambitions and helps
us to unlock future opportunities.
UNIQUELY POSITIONED TO DELIVER
SUPERIOR VALUE
Looking forward, our updated three-year outlook
reflects a strong production and attractive all-in
sustaining cost profile. Over the next three years, we
expect to produce an average of 270,000 gold
ounces and 32 million pounds of copper annually.
High-grade discovery at Čoka Rakita
in Serbia.
We are committed to
building on our record
of strong performance
and our unique
strengths in ESG and
innovation to generate
superior value for all of
our stakeholders.
We believe that DPM represents a compelling value
opportunity relative to our peers, given our proven
strengths and excellent future prospects, including:
•
•
•
•
•
•
•
•
Strong, consistent production from our operations
and an all-in sustaining cost that ranks us among
the lowest in the gold industry;
A robust free cash flow profile;
Financial strength and flexibility;
A record of disciplined capital allocation and
returning capital to shareholders;
Attractive development projects;
Proven exploration success, both in extending
mine life at our operations and discovering new
brownfield opportunities;
A strong technical team with a history of adding
real value through innovation;
Our strong ESG performance and constructive
relationships with our host communities and
governments
We are confident that we have laid a strong foundation
for an exciting future ahead. We are committed to
building on our record of strong performance and our
unique strengths in ESG and innovation to generate
superior value for all of our stakeholders.
I’d like to close by acknowledging the contributions
of our dedicated employees across the company
and our local stakeholders globally, all of whom
contributed to our strong results.
On behalf of our entire team, thank you for your support.
DAVID RAE
President and Chief Executive Officer
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 7
2022 Financial Review
TABLE OF CONTENTS
MANAGEMENT’S DISCUSSION AND ANALYSIS
Overview
Operating and Financial Highlights
2022 Actual Results Comparison to 2022 Guidance
Three-Year Outlook
Review of Operating Results by Segment
Development and Other Major Projects
Exploration
Review of Financial Results
Market Review
Liquidity and Capital Resources
Financial Instruments
Off Balance Sheet Arrangements
Selected Quarterly and Annual Information
Critical Accounting Estimates
Non-GAAP Financial Measures
Risks and Uncertainties
Disclosure Controls & Procedures and Internal Control Over Financial Reporting
Cautionary Note Regarding Forward Looking Statements
Cautionary Note to United States Investors Concerning Differences in reporting
of Mineral Resource Estimates
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Consolidated Statements of Earnings (Loss)
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders’ Equity
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Corporate Information
Note 2.1: Basis of Preparation
Note 2.2: Significant Accounting Policies
Note 2.3: New IFRS Amendment Adopted
Note 3: Tsumeb Impairment Charge
Note 4: Discontinued Operations
Note 5: Acquisition of INV Metals Inc. (“INV”)
Note 6: Accounts Receivable
Note 7:
Inventories
Note 8: Financial Instruments
Note 9: Exploration and Evaluation Assets
Note 10: Mine Properties
Note 11: Property, Plant and Equipment
Note 12: Intangible Assets
Note 13: Accounts Payable and Accrued Liabilities
Note 14: Debt
Note 15: Rehabilitation Provisions
10
12
14
19
20
24
29
31
34
38
40
45
47
48
48
52
59
65
65
68
69
70
77
78
79
80
81
82
82
82
82
99
100
101
102
103
103
104
109
109
110
111
111
112
113
Note 16: Other Long-Term Liabilities
Note 17: Leases
Note 18: Share-Based Compensation Plans
Note 19: Expenses by Nature
Note 20: Finance Cost
Note 21: Other Income and Expense
Note 22: Income Taxes
Note 23: Earnings per Share
Note 24: Related Party Transactions
Note 25: Supplementary Cash Flow Information
Note 26: Supplementary Shareholders’ Equity Information
Note 27: Commitments and Other Contingencies
Note 28: Financial Risk Management
Note 29: Operating Segment Information
Note 30: Subsequent Event
CORPORATE INFORMATION
114
114
115
118
119
119
119
121
121
122
122
124
124
128
132
133
MANAGEMENT’S DISCUSSION AND ANALYSIS
of Consolidated Financial Condition and Results of Operations
for the Three and Twelve Months Ended December 31, 2022
(All monetary figures are expressed in U.S. dollars unless otherwise stated)
The following is Management’s Discussion and Analysis (“MD&A”) of the consolidated financial condition
and results of operations of Dundee Precious Metals Inc. (“DPM” and, together with its consolidated
subsidiaries, collectively referred to as the “Company”) as at December 31, 2022 and for the three and
twelve months ended December 31, 2022. This MD&A should be read in conjunction with DPM’s audited
consolidated financial statements for the year ended December 31, 2022 prepared in accordance with
International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards
Board. Additional Company information, including the Company’s most recent annual information form
(“AIF”) and other continuous disclosure documents, can be accessed through the System for Electronic
Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com and the Company’s website at
www.dundeeprecious.com. To the extent applicable, updated information contained in this MD&A
supersedes older information contained in previously filed continuous disclosure documents. Capitalized
terms used in this MD&A that have not been defined have the same meanings attributed to them as in
DPM’s audited consolidated financial statements for the year ended December 31, 2022. Information
contained on the Company’s website is not incorporated by reference herein and does not form part of this
MD&A.
This MD&A contains forward looking statements that are based on certain estimates and assumptions and
involve risks and uncertainties. Actual results may vary materially from management’s expectations. See
the “Cautionary Note Regarding Forward Looking Statements” and “Risks and Uncertainties” sections later
in this MD&A for further information.
Certain financial measures referred to in this MD&A 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.
10 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
cash cost per ounce of gold sold
cash cost per tonne of ore processed
The Company uses the following non-GAAP financial measures and ratios in this MD&A:
(cid:120) mine cash cost
(cid:120)
(cid:120) mine cash cost of sales
(cid:120)
(cid:120) all-in sustaining cost
(cid:120) all-in sustaining cost per ounce of gold sold
(cid:120)
(cid:120)
(cid:120) adjusted earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”)
(cid:120) adjusted net earnings (loss)
(cid:120) adjusted basic earnings per share
(cid:120)
(cid:120)
(cid:120) average realized metal prices
cash provided from operating activities, before changes in working capital
free cash flow
smelter cash cost
cash cost per tonne of complex concentrate smelted
For a detailed description of each of the non-GAAP financial measures and ratios used in this MD&A and
a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the “Non-
GAAP Financial Measures” section commencing on page 43 of this MD&A.
The technical and scientific information in this MD&A 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 (“CIM”) – Definition Standards adopted by CIM Council on May 10, 2014 (the “CIM 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
(“QP”) as defined under NI 43-101, and who is not independent of the Company.
This MD&A has been prepared as at February 16, 2023.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 11
OVERVIEW
Our Business
DPM is a Canadian based, international gold mining company engaged in the acquisition of mineral
properties, exploration, development, mining and processing of precious metals. Its common shares
(symbol: DPM) are traded on the Toronto Stock Exchange (“TSX”).
The Company’s purpose is to unlock resources and generate value to thrive and grow together. As
illustrated in the graphic below, this overall purpose is supported by a foundation of core values, which
guide how the Company conducts its business and informs a set of complementary strategic pillars and
objectives relating to Environmental Social Governance (“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.
12 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Continuing Operations:
As at December 31, 2022, DPM’s principal subsidiaries include:
(cid:120) 100% of Dundee Precious Metals Chelopech EAD (“Chelopech”), which owns and operates a gold,
copper and silver mine located east of Sofia, Bulgaria;
(cid:120) 100% of Dundee Precious Metals Krumovgrad EAD (“Ada Tepe”), which owns and operates a gold
mine located in south eastern Bulgaria, near the town of Krumovgrad; and
(cid:120) 92% of Dundee Precious Metals Tsumeb (Proprietary) Limited (“Tsumeb”), which owns and operates
a custom smelter located in Tsumeb, Namibia.
As at December 31, 2022, DPM holds interests, directly or indirectly, in a number of exploration and
development properties located in Ecuador, Serbia and Canada including:
(cid:120) 100% of DPM Ecuador S.A. (“DPM Ecuador”), which is focused on the exploration and development of
the Loma Larga gold project located in Ecuador;
(cid:120) 100% of DPM Avala d.o.o. and Crni Vrh Resources d.o.o., which are focused on the exploration and
development of the Timok gold project and the exploration of the (cid:253)oka Rakita project in Serbia,
respectively; and
(cid:120) 6.5% of Sabina Gold and Silver Corp. (“Sabina”), which is focused on the development of the Back
River project in southwestern Nunavut, Canada.
Discontinued Operations:
On May 3, 2021, DPM sold its 73.7% ownership interest in MineRP Holdings Inc. (“MineRP”), which owns
MineRP Holdings (Proprietary) Limited, an independent mining software vendor with operations in Canada,
South Africa, Australia and Chile (“MineRP Disposition”). As a result of the MineRP Disposition, DPM no
longer owns any shares of MineRP and the operating results and cash flows of MineRP have been
presented as discontinued operations in the audited consolidated statements of earnings (loss) and cash
flows for the year ended December 31, 2021.
All operational and financial information contained in this MD&A are related to continuing operations, unless
otherwise stated.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 13
OPERATING AND FINANCIAL HIGHLIGHTS
Gold Production and
Payable Gold Sold
(Koz)
83
74
73
63
57
63
64
57
73
66
Copper Production and
Payable Copper Sold
(Mlbs)
9
8
8
9
7
7
7
7
7
7
52
Complex
Concentrate Smelted
(Kt)
Unplanned
maintenance
/Heavy rainfall
42
Planned
Ausmelt furnace
maintenance
64
47
21
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Production
Payable Sold
Production
Payable Sold
Mine Cost of Sales1,
All-in Sustaining Cost3 and
Cash Cost3
($/oz)
1,030
1,039 990
819
757
540
684
423
852
792
611
991 1,008
809
701
Smelter Cost of Sales2
and Cash Cost3
($/t)
646
720
1,426
973
447
480
481
621
Planned Ausmelt
furnace
maintenance
443
297
Cash Provided from
Operating Activities and
Free Cash Flow3
($M)
89
79
66
73
49
41
31
49
43
33
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
All-in Sustaining Cost
Mine Cash Cost
Mine Cost of Sales
Revenue and
Cost of Sales
($M)
Smelter Cash Cost
Smelter Cost of Sales
Cash from Operating Activities
Free Cash Flow
Net Earnings (Loss) and
Adjusted Net Earnings(3)
($M)
Return of Capital
to Shareholders
($M)
1,780
1,876 1,812
1,712 1,752
166
154
134
129
153
94
93
84
89
91
52
51
37
34
33
27
33
33
25
Tsumeb
Impairment
charge
$85 million
(58)
36
12
4
8
24
8
1
7
16
9
7
7
1
6
44
8
8
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Revenue
Cost of Sales
Average Realized Gold Price ($/oz)3
Net Earnings
Adjusted Net Earnings
Share Repurchases
Dividend Distributions
Year-to-date Cumulative Total
Cost of sales per ounce of gold sold represents cost of sales for Chelopech and Ada Tepe divided by payable gold in concentrate sold. This measure is before
treatment charges, freight and by-product credits, all of which are reflected in revenue, while all-in sustaining cost and cash cost per ounce of gold sold are net
of by-product credits.
Cost of sales per tonne of complex concentrate smelted represents cost of sales for Tsumeb divided by tonnes of complex concentrate smelted. This measure
is before by-product credits while cash cost per tonne of complex concentrate smelted is net of by-product credits.
All-in sustaining cost per ounce of gold sold; cash cost per ounce of gold sold; cash cost per tonne of complex concentrate smelted; free cash flow; average
realized metal prices; and adjusted net earnings are non-GAAP financial measures or ratios. Refer to the “Non-GAAP Financial Measures” section commencing
on page 43 of this MD&A for more information, including reconciliations to IFRS measures.
14 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
The following table summarizes the Company’s selected operating and financial highlights for the three and
twelve months ended December 31, 2022 and 2021:
oz
Klbs
oz
Klbs
$/oz
$/oz
$/oz
t
$/t
$/t
$/oz
$/lb
$/sh
$/sh
$/sh
$ thousands, unless otherwise indicated
Ended December 31,
Operating Highlights
Metals contained in concentrate produced:
Gold
Copper
Payable metals in concentrate sold:
Gold
Copper
Cost of sales per ounce of gold sold
Cash cost per ounce of gold sold(1)
All-in sustaining cost per ounce of gold sold(1)
Complex concentrate smelted
Cost of sales per tonne of complex concentrate
smelted
Cash cost per tonne of complex
concentrate smelted(1)
Financial Highlights
Average realized prices:
Gold
Copper
Revenue
Cost of sales
Earnings before income taxes
Adjusted EBITDA(1)
Net earnings attributable to common
shareholders from continuing operations
Per share
Net earnings attributable to common
shareholders(2)
Per share(2)
Adjusted net earnings(1)
Per share(1)
Cash provided from operating activities
Free cash flow(1)
Dividend distribution
Share repurchases
Capital expenditures incurred:
Growth(3)
Sustaining(4)
Total capital expenditures
As at December 31,
Financial Position and Available Liquidity
Cash and cash equivalents
Investments at fair value
Available liquidity(5)
Three Months
Twelve Months
2022
2021 Change
2022
2021 Change
73,420
7,436
82,824
9,151
65,831
6,726
990
701
1,008
41,835
621
443
73,820
8,175
819
540
757
51,932
646
447
1,752
3.65
1,780
3.77
152,863 166,433
94,042
60,274
84,274
91,109
37,632
58,254
33,320
0.18
52,108
0.27
33,320
0.18
33,320
0.18
49,289
33,263
7,600
-
11,162
16,700
27,862
51,465
0.27
51,449
0.27
88,940
65,807
5,744
921
7,419
12,338
19,757
(11%)
(19%)
(11%)
(18%)
21%
30%
33%
(19%)
(4%)
(1%)
(2%)
(3%)
(8%)
(3%)
(38%)
(31%)
(36%)
(33%)
273,109
30,835
309,965
34,688
(12%)
(11%)
242,697
27,224
975
646
885
174,122
279,051
32,680
819
465
657
189,705
(13%)
(17%)
19%
39%
35%
(8%)
694
463
678
2%
480
(3%)
1,795
3.98
569,795
357,447
58,742
252,869
1,790
3.82
641,443
357,136
229,418
336,854
-%
4%
(11%)
-%
(74%)
(25%)
35,923
0.19
190,750
1.02
(81%)
(81%)
(35%)
(33%)
(35%)
(33%)
(45%)
(49%)
32%
(100%)
35,923
0.19
129,027
0.68
232,052
166,437
30,463
13,619
210,101
1.12
202,081
1.09
253,580
252,393
22,408
10,410
50%
35%
41%
32,398
58,228
90,626
17,068
52,545
69,613
(83%)
(83%)
(36%)
(38%)
(8%)
(34%)
36%
31%
90%
11%
30%
2022
2021
433,176
40,773
583,176
334,377
47,983
484,377
Increase/
(Decrease)
98,799
(7,210)
98,799
Cash cost per ounce of gold sold, 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 43 of this MD&A for more information, including reconciliations to IFRS measures.
These measures include discontinued operations for the twelve months of 2021.
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.
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.
Available liquidity is defined as cash and cash equivalents plus the available capacity under DPM’s long-term revolving credit facility (“RCF”) at the end of each
reporting period.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 15
Operating Highlights
In 2022, the Company’s mine operations, Chelopech and Ada Tepe, delivered robust gold production within
or towards the higher end of their respective annual guidance ranges for the year, while copper production
at Chelopech was 3% below the low end of the guidance range. Despite inflationary cost pressures in 2022,
the Company achieved an all-in sustaining cost per ounce of gold sold within the guidance range for the
year.
(cid:120) Gold contained in concentrate produced in the fourth quarter and twelve months of 2022 of 73,420
ounces and 273,109 ounces, respectively, was 11% and 12% lower than the corresponding periods in
2021 due primarily to mining in lower grade zones at Ada Tepe, partially offset by higher gold recoveries
at Chelopech, in line with the mine plans for both operations.
(cid:120) Payable gold in concentrate sold in the fourth quarter and twelve months of 2022 of 65,831 ounces
and 242,697 ounces, respectively, was 11% and 13% lower than the corresponding periods in 2021
primarily reflecting lower gold production.
(cid:120) Copper production in the fourth quarter and twelve months of 2022 of 7.4 million pounds and 30.8
million pounds, respectively, was 19% and 11% lower than the corresponding periods in 2021 due
primarily to lower copper grades.
(cid:120) Payable copper in concentrate sold in the fourth quarter and twelve months of 2022 of 6.7 million
pounds and 27.2 million pounds, respectively, was 18% and 17% lower than the corresponding periods
in 2021 due primarily to lower copper production.
(cid:120) All-in sustaining cost per ounce of gold sold in the fourth quarter of 2022 of $1,008 was 33% higher
than the corresponding period in 2021 due primarily to higher local currency operating expenses
reflecting the local inflationary environment, lower by-product credits as a result of lower volumes of
copper sold, and lower volumes of gold sold, partially offset by a stronger U.S. dollar. All-in sustaining
cost per ounce of gold sold in 2022 of $885 was 35% higher than 2021 due primarily to lower volumes
of gold sold, lower by-product credits, higher freight charges and higher local currency operating
expenses, partially offset by a stronger U.S. dollar.
(cid:120) Complex concentrate smelted during the fourth quarter of 2022 of 41,835 tonnes was 19% lower
than the corresponding period in 2021 due primarily to a 17-day shutdown to repair a water leak in the
off-gas system and instability in the power grid as a result of abnormally heavy rainfall in December.
Complex concentrate smelted during 2022 of 174,122 tonnes was 8% lower than 2021 due primarily to
unplanned downtime as a result of maintenance to the off-gas and baghouse systems during the year,
partially mitigated by near record-level quarterly production in the third quarter of 2022.
(cid:120) Cash cost per tonne of complex concentrate smelted in the fourth quarter and twelve months of
2022 of $443 and $463, respectively, was comparable to the corresponding periods in 2021 due
primarily to higher sulphuric acid by-product credits and lower labour costs related to the cost
optimization initiative undertaken in 2022, partially offset by lower volumes of complex concentrate
smelted and higher inflationary local currency operating expenses.
Financial Highlights
Financial results from operations in 2022 reflected lower volumes of metal sold, partially offset by a stronger
U.S. dollar.
(cid:120) Revenue during the fourth quarter and twelve months of 2022 of $152.9 million and $569.8 million,
respectively, were 8% and 11% lower than the corresponding periods in 2021 due primarily to lower
volumes of gold and copper sold.
(cid:120) Cost of sales in the fourth quarter of 2022 of $91.1 million was 3% lower than the corresponding period
in 2021 due primarily to a stronger U.S. dollar, partially offset by higher local currency mine operating
expenses in Bulgaria. Cost of sales in 2022 of $357.4 million was comparable to 2021 due primarily to
a stronger U.S. dollar largely offset by higher local currency mine operating expenses in Bulgaria and
higher depreciation.
16 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
(cid:120) Net earnings attributable to common shareholders from continuing operations in the fourth
quarter of 2022 were $33.3 million ($0.18 per share) compared to $52.1 million ($0.27 per share) in the
corresponding period in 2021, due primarily to lower volumes of metal sold. Net earnings attributable
to common shareholders from continuing operations in 2022 were $35.9 million ($0.19 per share)
compared to $190.7 million ($1.02 per share) in 2021, due primarily to an impairment charge of $85.0
million in respect of Tsumeb, as well as lower volumes of metal sold, partially offset by a stronger U.S.
dollar.
(cid:120) Adjusted net earnings in the fourth quarter and twelve months of 2022 were $33.3 million ($0.18 per
share) and $129.0 million ($0.68 per share), respectively, compared to $51.4 million ($0.27 per share)
and $202.0 million ($1.09 per share) in the corresponding periods in 2021, due primarily to the same
factors affecting net earnings attributable to common shareholders from continuing operations, with the
exception of the adjusting items primarily related to the Tsumeb impairment charge.
(cid:120) Earnings before income taxes in the fourth quarter and twelve months of 2022 were $37.6 million
and $58.7 million, respectively, compared to $60.3 million and $229.4 million in the corresponding
periods in 2021. These changes reflect the same factors that affected net earnings attributable to
common shareholders from continuing operations, except for income tax, which is excluded.
(cid:120) Adjusted EBITDA in the fourth quarter and twelve months of 2022 was $58.3 million and $252.9
million, respectively, compared to $84.3 million and $336.9 million in the corresponding periods in 2021,
reflecting the same factors that affected adjusted net earnings, except for interest, income tax,
depreciation and amortization, which are excluded from adjusted EBITDA.
(cid:120) Cash provided from operating activities in the fourth quarter and twelve months of 2022 of $49.3
million and $232.1 million, respectively, was 45% and 8% lower than the corresponding periods in 2021,
due primarily to the same factors impacting earnings before income taxes, excluding the non-cash
impairment charge in respect of Tsumeb, as well as timing of deliveries and subsequent receipt of cash.
(cid:120) Free cash flow in the fourth quarter and twelve months of 2022 of $33.3 million and $166.4 million,
respectively, was $32.5 million and $86.0 million lower than the corresponding periods in 2021, due
primarily to the same factors impacting earnings before income taxes, excluding the non-cash
impairment charge in respect of Tsumeb.
(cid:120) Return of capital to shareholders through dividends declared of $30.5 million ($0.16 per share) and
shares repurchased under the Normal Course Issuer Bid (“NCIB”) of $13.6 million (Cdn$17.6 million)
in 2022, which in aggregate represented 27% of free cash flow, reflecting strong ongoing performance
and significant free cash flow generation. The Board of Directors has approved the renewal of the NCIB,
pending TSX approval, for the purchase of up to $100 million of the Company’s common shares over
a period of twelve months commencing after the TSX approval, subject to certain internal parameters.
(cid:120) Sustaining capital expenditures incurred during the fourth quarter and twelve months of 2022 of
$16.7 million and $58.2 million, respectively, were comparable to the corresponding periods in 2021 of
$12.3 million and $52.5 million.
(cid:120) Growth capital expenditures incurred during the fourth quarter and twelve months of 2022 were $11.2
million and $32.4 million, respectively, compared to $7.4 million and $17.1 million in the corresponding
periods in 2021, due primarily to activities related to the development of the Loma Larga and Timok
gold projects.
(cid:120) Strong balance sheet as at December 31, 2022 with $433.2 million in cash, an investment portfolio of
$40.8 million, an undrawn $150.0 million RCF and no debt.
Growth, Exploration and Other Highlights
(cid:120) Ada Tepe updated life of mine plan: Updated life of mine plan resulted in an estimated increase in
recovered gold to concentrate of approximately 66,000 ounces, or an average of approximately 16,500
ounces of additional gold production per year for 2023 through 2026. The additional estimated
production has been reflected in the Company’s three-year outlook.
(cid:120) Chelopech mine life extension: Completed an updated Mineral Resource and Mineral Reserve
estimate for Chelopech in March 2022 that extended the mine life to 2030.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 17
(cid:120)
Loma Larga gold project: The timing for recommencing drilling activities and further advancing the
environmental permitting process remain subject to an appeal process currently before the Provincial
Court of Azuay. DPM has therefore taken the decision to extend the timeline for the optimization phase
of the updated feasibility study (“FS”) for Loma Larga, which is now expected to be completed in the
second half of 2023. This will allow DPM to evaluate additional optimization opportunities that have
been identified to leverage the Company’s significant operating expertise with similar deposits, in
particular Chelopech in Bulgaria. The impact of certain scope changes and inflationary cost pressures
continue to be assessed as part of the updated FS.
(cid:120) Timok gold project and (cid:253)oka Rakita: The Company is pausing further work on the Timok FS to focus
on further exploration and delineation of the new high-grade discovery at (cid:253)oka Rakita in Serbia.
Additional work is planned in 2023 to further assess (cid:253)oka Rakita’s Mineral Resource potential. DPM
intends to release additional results from drilling in the second quarter of 2023 and is targeting an initial
Mineral Resource estimate in the fourth quarter of 2023.
(cid:120) Other exploration: An initial drill program at Tierras Coloradas tested a high-grade low sulphidation
vein system, with further work planned for 2023. An advanced brownfield drill program at Chelopech
was focused on supporting a Commercial Discovery application for the Sveta Petka licence.
(cid:120) ESG: DPM scored in the 91st percentile among metals and mining companies in the 2022 S&P Global
Corporate Sustainability Assessment, and was included in The Sustainability Yearbook for the second
consecutive year.
For a more detailed discussion on the operating results of Chelopech, Ada Tepe and Tsumeb, activities
related to the growth projects and exploration, as well as the financial results, refer to the “Review of
Operating Results by Segment”, “Development and Other Major Projects”, “Exploration” and “Review of
Financial Results” sections of this MD&A.
18 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
2022 ACTUAL RESULTS IN COMPARISON TO 2022 GUIDANCE
The following table provides a comparison of the Company’s results to its 2022 original and updated
guidance:
$ millions, unless otherwise indicated
Ore processed
Cash cost per tonne of ore processed(3)
Chelopech
Ada Tepe
Metals contained in concentrate produced(4)
Gold(5)
Copper
Payable metals in concentrate sold
Gold(5)
Copper
All-in sustaining cost per ounce of gold sold(3)
Complex concentrate smelted
Cash cost per tonne of complex concentrate smelted(3)
Corporate general and administrative expenses(6)
Exploration expenses
Sustaining capital expenditures
Growth capital expenditures
Original
Consolidated
Guidance(1)
Updated
Consolidated
Guidance(2)
2022
Consolidated
Results
Kt
2,900 - 3,100
2,900 - 3,100
2,992
$/t
$/t
Koz
Mlbs
Koz
Mlbs
$/oz
Kt
$/t
48 - 53
54 - 60
250 - 290
32 - 37
220 - 255
28 - 32
750 - 890
210 - 240
380 - 460
26 - 30
16 - 19
57 - 66
31 - 49
48 - 53
54 - 60
250 - 290
32 - 37
220 - 255
28 - 32
750 - 890
185 - 200
420 - 480
26 - 30
22 - 25
57 - 66
31 - 49
50
55
273
31
243
27
885
174
463
29
24
58
32
As disclosed in the MD&A issued on February 17, 2022.
As disclosed in the MD&A issued on November 10, 2022.
Cash cost per tonne of ore processed, all-in sustaining cost per ounce of gold sold and cash cost per tonne of complex concentrate smelted are non-GAAP ratios.
Refer to the “Non-GAAP Financial Measures” section commencing on page 43 of this MD&A for more information, including reconciliations to IFRS measures
Metals contained in concentrate produced are prior to deductions associated with smelter terms.
Includes gold in pyrite concentrate produced of 59,082 ounces compared to guidance of 48,000 to 54,000 ounces and payable gold in pyrite concentrate sold of
40,828 ounces compared to guidance of 31,000 to 36,000 ounces, respectively.
Excludes mark-to-market adjustments on share-based compensation expense.
DPM achieved its 2022 gold production and delivery guidance as a result of continued strong operating
performance at Chelopech and Ada Tepe, while copper was 3% below the low end of the guidance range.
Both Chelopech and Ada Tepe achieved a cash cost per tonne of ore processed toward the lower end of
their respective guidance ranges for the year due primarily to a stronger U.S. dollar, partially offset by higher
local currency operating expenses reflecting the local inflationary environment.
All-in sustaining cost per ounce of gold sold in 2022 of $885 was at the higher end of the guidance range
of $750 to $890, due primarily to lower by-product credits as a result of lower volumes of copper sold, higher
treatment charges at Chelopech and higher local currency operating expenses, partially offset by a stronger
U.S. dollar.
At Tsumeb, unplanned downtime and additional maintenance to the off-gas and baghouse systems due to
water leaks in the first six months of 2022 resulted in a reduction in the 2022 guidance range for complex
concentrate smelted as well as an increase in the guidance range for the cash cost per tonne of concentrate
smelted during the second quarter of 2022. Total complex concentrate smelted for the year was 6% below
the low end of the updated 2022 guidance range due primarily to additional unplanned maintenance as a
result of water leaks in the off-gas system and instability in the power grid as a result of abnormally heavy
rainfall in December.
Cash cost per tonne of concentrate smelted in 2022 was towards the higher end of the updated guidance
range due primarily to the fixed cost nature of the facility and the impact of lower volumes of complex
concentrate smelted, partially offset by a stronger U.S. dollar.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 19
THREE-YEAR OUTLOOK
DPM continues to focus on increasing the profitability of its business by optimizing existing operating assets,
which are expected to maintain high levels of gold production as highlighted in the 2023 to 2025 outlook
and detailed 2023 guidance below.
2023 to 2025 Outlook
The production outlook for 2023 to 2025 is based on historical performance and experience at DPM’s
operations and in the case of its mining operations is consistent with the production schedules outlined in
the technical report for Chelopech entitled “NI 43-101 Technical Report – Mineral Resource and Reserve
Update, Chelopech Mine, Chelopech, Bulgaria” dated March 31, 2022 (the “Chelopech Technical Report”),
and the news release for Ada Tepe entitled “Dundee Precious Metals Announces Life of Mine Plan with
Additional Production and Updated Mineral Resource and Mineral Reserve Estimate for Ada Tepe” dated
January 12, 2023, both of which have been filed on SEDAR (www.sedar.com) and are posted on the
Company’s website (www.dundeeprecious.com). A technical report for the Ada Tepe mine, prepared in
accordance with NI 43-101 (the “Ada Tepe Technical Report”), will be filed within 45 days of the
aforementioned news release. For 2024 and 2025, production and cost estimates do not fully incorporate
operating performance improvements in respect of mine and smelter throughput and potential
improvements to mine grades and recoveries. The 2023 to 2025 outlook is forward looking and based on
certain estimates and assumptions which involve risks and uncertainties and is predicated on the conflict
in Ukraine and the coronavirus (“COVID-19”) pandemic having no material impact on DPM’s production
and costs. Actual results may vary materially from management’s expectations. See the “Cautionary Note
Regarding Forward Looking Statements” and “Risks and Uncertainties” sections later in this MD&A for
further information.
Highlights of the three-year outlook include:
(cid:120) Maintained strong gold production levels: Over the next three years, gold production is expected to
average approximately 270,000 ounces per year based on current mine plans.
(cid:120) Stable copper production: Copper production over the next three years is expected to average
approximately 32 million pounds per year, based on current mine plans, with higher forecasted
production in 2023 and 2024 compared to the previous outlook.
(cid:120)
Improved all-in sustaining cost: All-in sustaining cost per ounce of gold sold is expected to range
between $700 and $860 in 2023 and between $720 and $880 for 2024 and 2025, which is lower than
previously expected. This reflects the benefits of higher expected volumes of gold sold as a result of
the updated life of mine plan at Ada Tepe and higher by-product credits reflecting higher copper prices,
partially offset by a weaker U.S. dollar.
(cid:120) Consistent smelter performance: The Company is forecasting complex concentrate smelted to be
between 200,000 and 230,000 tonnes in each of the next three years, reflecting its expectation for a
consistent rate of throughput following a plan to resolve water leak issues by April 2023. Cash cost per
tonne of complex concentrate smelted is expected to trend lower over the next three-year period,
reflecting the benefit of a consistent throughput level, as well as estimated cost savings associated with
the ongoing comprehensive cost optimization initiative which commenced in 2022.
(cid:120) Sustaining capital expenditures: Sustaining capital expenditures are expected to trend lower over
the next three years, due primarily to the completion of the upgraded tailings management facility at
Chelopech and the gradual reduction in activities at Ada Tepe as the mine approaches its end of life in
2026.
20 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
The Company’s detailed guidance for 2023 is set out in the following table:
$ millions, unless otherwise indicated
Chelopech Ada Tepe Tsumeb
Kt 2,090 - 2,200
730 - 810
$/t
53 - 58
73 - 79
150 - 170
120 - 145
30 - 35
-
130 - 150
115 - 140
26 - 31
-
700 - 880
530 - 630
Ore processed
Cash cost per tonne of ore processed(1)
Metals contained in concentrate produced(2),(3)
Gold
Copper
Payable metals in concentrate sold(3)
Gold
Copper
All-in sustaining cost per ounce of gold sold(1),(4)
Complex concentrate smelted
Cash cost per tonne of complex concentrate smelted(1)
Corporate general and administrative expenses(5)
Exploration expenses(1)
Sustaining capital expenditures(1)
Growth and other capital expenditures(1),(6)
Koz
Mlbs
Koz
Mlbs
$/oz
Kt
$/t
-
-
-
-
- 200 - 230
- 340 - 410
-
-
-
-
20 - 24
10 - 13
14 - 17
2 - 3
0 - 1
2 - 3
18 - 24
Corporate
and Other
Consolidated
Guidance
-
2,820 - 3,010
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25 - 28
-
2 - 3
-
270 - 315
30 - 35
245 - 290
26 - 31
700 - 860
200 - 230
340 - 410
25 - 28
25 - 30
46 - 57
22 - 31
Based on a Euro/US$ exchange rate of 1.10, a US$/ZAR exchange rate of 17.00, a copper price of $4.00 per pound and a sulphuric acid price of $95 per tonne,
where applicable.
Metals contained in concentrate produced are prior to deductions associated with smelter terms.
Gold produced includes gold in pyrite concentrate produced of 45,000 to 51,000 ounces and payable gold sold includes payable gold in pyrite concentrate sold
of 30,000 to 37,000 ounces.
Allocated general and administrative expenses are reflected in consolidated all-in sustaining cost per ounce of gold sold; however are not reflected in the all-in
sustaining cost per ounce of gold sold for Chelopech and Ada Tepe, which is a change from the presentation in the Company’s historical MD&A given that the
nature of such expenses is more reflective of the Company’s consolidated all-in sustaining cost and not pertaining to the individual operations of the Company.
Excludes share-based compensation expense of approximately $3 million, before mark-to-market adjustments from movements in the Company’s share price,
given the volatile nature of this expense. This is a change from the historical approach to the Company's detailed guidance on corporate general and administrative
expenses.
Growth and other capital expenditures in Corporate and Other include the estimated running cost for the Loma Larga gold project of $10 million to $14 million
and for the Timok gold project of $1 million to $2 million (as detailed below), as well as a capitalized lease related to electric mobile equipment of $7 million to
$8 million as part of the Company’s ESG initiatives.
Certain key cost measures in the Company’s detailed guidance for 2023 are sensitive to market
assumptions, including copper price and foreign exchange rates. The following table demonstrates the
effect of a 10% change in these market assumptions on consolidated all-in sustaining cost and the smelter
cash cost provided in the 2023 guidance.
Copper
Euro/US$
US$/ZAR
2023 assumptions
$4.00/lb
1.10
17.00
Hypothetical
change
All-in
sustaining cost
($/oz)
+/- 10%
+/- 10%
+/- 10%
+/- $44/oz
+/- $92/oz
N/A
Smelter
cash cost
($/t)
N/A
N/A
- $24/t /+ $40/t(1)
1) As at December 31, 2022, approximately 86% of projected Namibian dollar operating expenses for 2023 have been hedged with option contracts providing a
weighted average floor rate of 15.69 and a weighted average ceiling rate of 17.69.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 21
The Company’s three-year outlook is set out in the following table:
$ millions, unless otherwise indicated
Gold contained in concentrate produced(1),(2)
Chelopech
Ada Tepe
Total
Copper contained in concentrate produced(1)
Chelopech
All-in sustaining cost per ounce of gold sold(3)
Complex concentrate smelted
Cash cost per tonne of complex concentrate smelted(3)
Sustaining capital expenditures(3)
Koz
Koz
Koz
Mlbs
$/oz
Kt
$/t
Chelopech
Ada Tepe
Tsumeb
Corporate digital initiatives(4)
Consolidated
2022
Results
2023
Guidance
2024
Outlook
2025
Outlook
179
94
273
31
885
174
463
23
10
19
6
58
150 - 170
120 - 145
270 - 315
30 - 35
700 - 860
200 - 230
340 - 410
20 - 24
10 - 13
14 - 17
2 - 3
46 - 57
160 - 180
85 - 105
245 - 285
29 - 34
720 - 880
200 - 230
310 - 360
14 - 18
10 - 12
10 - 13
2 - 3
36 - 46
160 - 185
70 - 85
230 - 270
29 - 34
720 - 880
200 - 230
300 - 350
12 - 15
8 - 10
14 - 17
2 - 3
36 - 45
Metals contained in concentrate produced are prior to deductions associated with smelter terms.
Gold produced includes gold in pyrite concentrate produced of 45,000 to 51,000 ounces for 2023, and 48,000 to 54,000 ounces in each of 2024 and 2025.
Based on, where applicable, a Euro/US$ exchange rate of 1.10, a US$/ZAR exchange rate of 17.00, and a copper price of $4.00 per pound for all years, as well
as a sulphuric acid price of $95 per tonne in 2023, $94 per tonne in 2024 and $86 per tonne in 2025.
While corporate sustaining capital expenditures are primarily related to digital initiatives for all years, 2022 results also included the capitalized lease and leasehold
improvements related to the new head office lease.
The estimated metals contained in concentrate produced, payable metals in concentrate sold and volumes
of complex concentrate smelted detailed in the Company’s 2023 guidance and three-year outlook are not
expected to occur evenly throughout the period and are forecasted to vary from quarter to quarter
depending on mine sequencing, the timing of concentrate deliveries and planned outages, including furnace
maintenance shutdowns at Tsumeb. The rate of capital expenditures is also expected to vary from quarter
to quarter based on the schedule for, and execution of, each capital project.
Additional detail on the Company’s three-year outlook is set out below:
Chelopech
Gold and copper contained in concentrate produced are expected to be consistent with production
schedules and expected grades outlined in the most recently issued technical report. Gold contained in
concentrate produced remains unchanged from the previous outlook for 2023 and 2024, with the outlook
for 2025 relatively consistent with 2024 production levels. The outlook for copper contained in concentrate
produced in 2023 and 2024 has been revised from the previous outlook of between 32 and 39 million
pounds for 2023 and between 30 and 35 million pounds for 2024.
Cash cost per tonne of ore processed is expected to be higher in 2023 as compared to 2022, primarily
reflecting a stronger Euro relative to the U.S. dollar and the local inflationary environment.
Sustaining capital expenditures in 2023 are expected to be in line with 2022 results, reflecting additional
costs related to the upgrade of Chelopech’s tailings management facility which is expected to be completed
in 2023. Sustaining capital expenditures are expected to trend lower in 2024 and decline even further in
2025. Growth capital expenditures related to resource development drilling and margin improvement
projects are expected to be between $2 million and $3 million in 2023, relatively consistent year over year.
Ada Tepe
Gold contained in concentrate produced in 2023 and 2024 is expected to be higher than the previously
issued outlook range of 115,000 to 140,000 ounces in 2023, and 69,000 to 83,000 ounces in 2024,
reflecting the updated life of mine plan announced in January 2023, which included an increase of
approximately 66,000 ounces of total gold recovered to concentrate for 2023 through 2026.
Cash cost per tonne of ore processed is expected to be higher in 2023 as compared to 2022, primarily
reflecting lower volumes of ore processed, higher royalty payments due to higher contained ounces mined,
a stronger Euro relative to the U.S. dollar and the local inflationary environment.
22 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Sustaining capital expenditures are expected to be higher than the previous outlook range of between $9
million and $10 million in each of 2023 and 2024, as a result of increased costs related to Ada Tepe’s
integrated waste management facility, before reducing to a range of $8 million to $10 million in 2025.
Tsumeb
Complex concentrate smelted is expected to stabilize at the range of 200,000 and 230,000 tonnes annually
for the next three years, following a plan to resolve water leak issues to the off-gas system by April 2023.
Over 90% of concentrate feed is currently contracted through to the end of 2023, with the remaining feed
in 2023 and additional feed thereafter expected to be contracted in the normal course.
Sustaining capital expenditures are expected to be between $14 million and $17 million for each of 2023
and 2025, and between $10 million and $13 million in 2024, reflecting the timing of scheduled maintenance
shutdowns based on an expected 18-month operating cycle for the Ausmelt furnace.
Loma Larga gold project
Growth capital expenditures for 2023 associated with the Loma Larga gold project are expected to be
between $10 million and $14 million, covering the estimated running costs for the year, which mainly include
general and administrative expenses, and costs related to certain permitting, social and environmental
related activities.
Upon achieving certain milestones for the project, the Company will increase its guidance for growth capital
expenditures, reflecting additional funding to resume drilling and further advance permitting. The amount
and timing of the spend in respect of this additional funding is dependant on the timing of achieving the
respective milestones in the year.
See the “Development and Other Major Projects – Loma Larga Gold Project” section contained in this
MD&A for further details.
Timok gold project
The Company is pausing work on the Timok FS to focus on further exploration at (cid:253)oka Rakita and as a
result, growth capital expenditures are expected to be significantly reduced in 2023 to a range of $1 million
to $2 million.
See the “Development and Other Major Projects – Timok Gold Project” section contained in this MD&A for
further details.
Exploration expenses
Expenditures related to exploration in 2023 are expected to be between $25 million and $30 million due
primarily to higher expected drilling activities following the positive discovery of a high-grade deposit at
(cid:253)oka Rakita in Serbia, and an advanced brownfield drill program at Chelopech focusing on the Sveta Petka
Commercial Discovery application process as well as additional drilling at Sharlo Dere.
See the “Exploration” section contained in this MD&A for further details.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 23
REVIEW OF OPERATING RESULTS BY SEGMENT
Review of Chelopech Results
$ thousands, unless otherwise indicated
Ended December 31,
Operating Highlights
Ore mined
Ore processed
Head grades:
Gold
Copper
Recoveries:
Gold in gold-copper concentrate
Gold in pyrite concentrate
Gold combined recoveries
Copper
Gold-copper concentrate produced
Pyrite concentrate produced
Metals contained in concentrate produced:
Gold in gold-copper concentrate
Gold in pyrite concentrate
Total gold production
Copper
Cost of sales per tonne of ore processed
Cash cost per tonne of ore processed
Gold-copper concentrate delivered
Pyrite concentrate delivered
Payable metals in concentrate sold(1):
Gold in gold-copper concentrate
Gold in pyrite concentrate
Total payable gold
Payable copper
Cost of sales per ounce of gold sold
Cash cost per ounce of gold sold
All-in sustaining cost per ounce of gold sold
Capital expenditures incurred:
Growth
Sustaining
Total capital expenditures
t
t
g/t
%
%
%
%
%
t
t
oz
oz
oz
Klbs
$/t
$/t
t
t
oz
oz
oz
Klbs
$/oz
$/oz
$/oz
Three Months
Twelve Months
2022
2021 Change
2022
2021 Change
556,108
553,088
569,789
561,986
(2%)
(2%)
2,130,611
2,138,792
2,206,826
2,199,155
3.22
0.74
3.47
0.91
(7%)
(19%)
3.28
0.80
3.29
0.88
52.4
26.9
79.3
82.9
36,048
68,716
29,968
15,371
45,339
7,436
71
51
37,848
67,740
28,795
10,408
39,203
6,726
1,006
862
1,253
721
10,375
11,096
52.9
25.4
78.3
80.8
29,034
70,900
33,149
15,901
49,050
9,151
60
54
26,994
79,788
29,207
11,331
40,538
8,175
826
635
833
(1%)
6%
1%
3%
24%
(3%)
(10%)
(3%)
(8%)
(19%)
18%
(6%)
40%
(15%)
(1%)
(8%)
(3%)
(18%)
22%
36%
50%
992
4,019
5,011
(27%)
158%
121%
53.3
26.2
79.5
82.2
123,046
267,642
120,053
59,082
179,135
30,835
63
50
124,061
266,702
110,752
40,828
151,580
27,224
884
712
957
3,064
23,863
26,927
50.0
26.0
76.0
81.3
109,915
269,084
116,433
60,568
177,001
34,688
59
47
112,342
267,569
111,550
37,747
149,297
32,680
862
543
722
3,381
19,186
22,567
(3%)
(3%)
(-%)
(9%)
7%
1%
5%
1%
12%
(1%)
3%
(2%)
1%
(11%)
7%
6%
10%
(-%)
(1%)
8%
2%
(17%)
3%
31%
33%
(9%)
24%
19%
Represents payable metals in gold-copper and pyrite concentrate sold based on provisional invoices.
Metals production
Relative to the fourth quarter of 2021, gold contained in gold-copper concentrate produced in the fourth
quarter of 2022 decreased by 10% to 29,968 ounces due primarily to lower gold grades. Gold contained in
pyrite concentrate produced decreased by 3% to 15,371 ounces due primarily to lower gold grades, partially
offset by higher gold recoveries. During the fourth quarter of 2022, Chelopech produced low copper
concentrate grade gold-copper concentrate for deliveries to third party smelters, which resulted in higher
volumes of concentrate produced and improved copper and combined gold recoveries during the quarter,
as compared to the fourth quarter of 2021, when all Chelopech gold-copper concentrates were delivered
to Tsumeb.
Relative to 2021, gold contained in gold-copper concentrate produced in 2022 increased by 3% to 120,053
ounces due primarily to higher gold recoveries from process efficiency improvement initiatives targeting
improved recoveries. Gold contained in pyrite concentrate produced in 2022 of 59,082 ounces was
comparable to 2021.
Copper production during the fourth quarter and twelve months of 2022 of 7.4 million pounds and 30.8
million pounds was 19% and 11% lower than the corresponding periods in 2021 due primarily to lower
copper grades, in line with the mine plan.
24 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Metals sold
In the fourth quarter of 2022, payable gold in gold-copper concentrate sold decreased slightly to 28,795
ounces due primarily to lower gold production, partially offset by the timing of shipments. Payable copper
in the fourth quarter of 2022 decreased by 18% to 6.7 million pounds, consistent with lower copper
production, relative to the corresponding period in 2021. Payable gold in pyrite concentrate sold in the fourth
quarter of 2022 of 10,408 ounces was 8% lower than the corresponding period in 2021 due primarily to the
timing of shipments.
In 2022, payable gold in gold-copper concentrate sold of 110,752 ounces was comparable to 2021. Payable
copper in 2022 decreased by 17% to 27.2 million pounds, consistent with lower copper production relative
to 2021. Payable gold in pyrite concentrate sold in 2022 of 40,828 ounces was 8% higher than 2021 due
primarily to higher payable gold percentage terms that were generally offset by higher treatment charges
and other deductions.
Inventory
Gold-copper concentrate inventory totalled 1,841 tonnes as at December 31, 2022, down from 2,856 tonnes
as at December 31, 2021. Pyrite concentrate inventory totalled 14,241 tonnes as at December 31, 2022,
up from 13,301 tonnes as at December 31, 2021. These changes in inventory were due primarily to the
timing of deliveries.
Cash cost measures
Cash cost per tonne of ore processed in the fourth quarter of 2022 of $51 was 6% lower than the
corresponding period in 2021 due primarily to a stronger U.S. dollar, partially offset by inflationary pressures
on local currency operating expenses and lower volumes of ore processed. Cash cost per tonne of ore
processed in 2022 of $50 was 6% higher than 2021 due primarily to higher local currency operating
expenses and lower volumes of ore processed, partially offset by a stronger U.S. dollar.
Cash cost per ounce of gold sold in the fourth quarter of 2022 of $862 was 36% higher than the
corresponding period in 2021 due primarily to higher local currency operating expenses, lower by-product
credits as a result of lower volumes of copper sold and higher freight charges, partially offset by a stronger
U.S. dollar and lower treatment charges. Cash cost per ounce of gold sold in 2022 of $712 was 31% higher
than 2021 due primarily to lower by-product credits, higher freight charges and higher local currency
operating expenses, partially offset by a stronger U.S. dollar.
All-in sustaining cost per ounce of gold sold in the fourth quarter of 2022 was $1,253 compared to $833 in
the corresponding period in 2021 due primarily to higher local currency operating expenses, lower by-
product credits, higher cash outlays for sustaining capital expenditures and higher freight charges, partially
offset by a stronger U.S. dollar and lower treatment charges. All-in sustaining cost per ounce of gold sold
in 2022 was $957 compared to $722 in 2021 due primarily to lower by-product credits, higher freight
charges, higher local currency operating expenses and higher cash outlays for sustaining capital
expenditures, partially offset by a stronger U.S. dollar.
Capital expenditures
Capital expenditures during the fourth quarter and twelve months of 2022 of $11.1 million and $26.9 million,
respectively, were $6.1 million and $4.3 million higher than the corresponding periods in 2021 due primarily
to the timing of expenditures.
Mineral Reserve and Mineral Resource update
On March 31, 2022, the Company announced a mine life extension to 2030, an optimized life of mine plan
and updated Mineral Resource and Mineral Reserve estimates for the Chelopech mine. The updated
Mineral Reserve Estimates for Chelopech, effective as of December 31, 2021, consists of 5.8 million tonnes
Proven Mineral Reserves grading 2.72 g/t of gold, 0.85% copper and 6.8 g/t of silver, for 0.51 million ounces
of gold, 108.9 million pounds of copper and 1.27 million ounces of silver. Probable Mineral Reserves were
13.6 million tonnes grading 2.72 g/t of gold, 0.78% copper and 7.9 g/t of silver, for 1.19 million ounces of
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 25
gold, 233 million pounds of copper and 3.45 million ounces of silver. Total Proven and Probable Mineral
Reserves were 19.3 million tonnes grading 2.72 g/t of gold, 0.80% copper and 7.6 g/t of silver, for 1.70
million ounces of gold, 341.9 million pounds of copper and 4.72 million ounces of silver.
Compared to the year-end 2020 Mineral Reserve Estimates, Chelopech successfully added 3.0 million
tonnes to Mineral Reserves, which more than offset 2021 production depletion of 2.2 million tonnes for a
net addition of 0.8 million tonnes, extending the life of mine to 2030. The updated life of mine plan added
approximately 286,000 ounces of gold production and 47 million pounds of copper production between
2022 and 2030, relative to the previous mine plan, reflecting higher metallurgical recoveries and improved
commercial terms.
Current Mineral Resources, effective as of December 31, 2021 and exclusive of Mineral Reserves,
consisted of 7.0 million tonnes in the Measured Mineral Resources grading 2.95 g/t of gold, 0.96% copper
and 9.30 g/t of silver, for 0.665 million ounces of gold, 148 million pounds of copper and 2.098 million
ounces of silver. Indicated Mineral Resources were 6.8 million tonnes grading 2.73 g/t of gold, 0.82%
copper and 11.88 g/t of silver, for 0.593 million ounces of gold, 122 million pounds of copper and 2.581
million ounces of silver. Total Measured and Indicated Mineral Resources were 13.8 million tonnes grading
2.84 g/t of gold, 0.89% copper and 10.56 g/t of silver, for 1.258 million ounces of gold, 270 million pounds
of copper and 4.679 million ounces of silver.
Inferred Mineral Resources were 2.9 million tonnes grading 2.36 g/t of gold, 0.82% copper and 9.20 g/t of
silver, for 0.223 million ounces of gold, 53 million pounds of copper and 0.869 million ounces of silver. The
Mineral Resource demonstrates the potential to extend the mine life, if such Mineral Resources are
converted to Mineral Reserves.
See the Company’s press release dated March 31, 2022 entitled “Dundee Precious Metals Announces
Mine Life Extension and Update to Mineral Resource and Mineral Reserve Estimates for Chelopech” for
additional information, including key assumptions and parameters relating to the foregoing Mineral
Resource and Mineral Reserve Estimates, as well as the Chelopech Technical Report, which have been
posted on the Company’s website at www.dundeeprecious.com and have been filed on SEDAR at
www.sedar.com.
Review of Ada Tepe Results
$ thousands, unless otherwise indicated
Ended December 31,
Operating Highlights
Ore mined
Stripping ratio (waste/ore)
Ore processed
Gold head grade
Gold recoveries(1)
Gold concentrate produced
Gold contained in concentrate produced
Cost of sales per tonne of ore processed
Cash cost per tonne of ore processed
Gold concentrate delivered
Payable gold in concentrate sold(2)
Cost of sales per ounce of gold sold
Cash cost per ounce of gold sold
All-in sustaining cost per ounce of gold sold
Sustaining capital expenditures incurred
Three Months
Twelve Months
2022
2021 Change
2022
2021 Change
t
t
g/t
%
t
oz
$/t
$/t
t
oz
$/oz
$/oz
$/oz
194,285
3.31
206,153
5.04
84.2
1,716
28,081
125
58
1,655
26,628
965
464
648
2,077
210,223
2.92
219,325
5.75
83.4
1,870
33,774
123
60
1,930
33,282
811
425
665
4,973
(8%)
13%
(6%)
(12%)
1%
(8%)
(17%)
2%
(3%)
(14%)
(20%)
19%
9%
(3%)
(58%)
733,691
3.44
852,990
4.06
84.4
5,577
93,974
120
55
5,509
91,117
1,128
537
765
9,830
992,850
2.22
865,587
5.75
83.1
7,267
132,964
115
52
7,329
129,754
769
375
583
18,378
(26%)
55%
(1%)
(29%)
2%
(23%)
(29%)
4%
6%
(25%)
(30%)
47%
43%
31%
(47%)
Recoveries are after the flotation circuit but before filtration.
Represents payable metals in gold concentrate sold based on provisional invoices.
Gold production
Gold contained in concentrate produced in the fourth quarter and twelve months of 2022 of 28,081 ounces
and 93,974 ounces, respectively, was 17% and 29% lower than the corresponding periods in 2021 due
primarily to mining in lower grade zones, in line with the mine plan. Ada Tepe, however, delivered its highest
26 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
quarterly production in the fourth quarter of 2022, following the completion of a pushback in the third quarter.
Gold grades increased as planned and the operation is well positioned for higher grades in 2023, as per
the mine plan.
Gold sold
Payable gold in concentrate sold in the fourth quarter and twelve months of 2022 of 26,628 ounces and
91,117 ounces, respectively, was 20% and 30% lower than the corresponding periods in 2021, consistent
with lower production.
Inventory
Gold concentrate inventory totalled 97 tonnes as at December 31, 2022, up from 29 tonnes as at December
31, 2021, due primarily to the timing of deliveries.
Cash cost measures
Cash cost per tonne of ore processed in the fourth quarter of 2022 of $58 was 3% lower than the
corresponding period in 2021 due primarily to a stronger U.S. dollar, partially offset by lower volumes of
gold sold and higher royalties. Cash cost per tonne of ore processed in 2022 of $55 was 6% higher than
2021 due primarily to higher local currency operating expenses, partially offset by lower royalties and a
stronger U.S. dollar.
Cash cost per ounce of gold sold in the fourth quarter and twelve months of 2022 of $464 and $537,
respectively, was 9% and 43% higher than the corresponding periods in 2021 due primarily to lower
volumes of gold sold and higher local currency operating expenses, partially offset by a stronger U.S. dollar.
All-in sustaining cost per ounce of gold sold in the fourth quarter of 2022 was $648 compared to $665 in
the corresponding period in 2021 due primarily to lower cash outlays for sustaining capital expenditures
and a stronger U.S. dollar, partially offset by lower volumes of gold sold. All-in sustaining cost per ounce of
gold sold in 2022 was $765 compared to $583 in 2021 due primarily to lower volumes of gold sold and
higher local currency operating expenses, partially offset by lower cash outlays for sustaining capital.
Capital expenditures
Capital expenditures during the fourth quarter and twelve months of 2022 of $2.0 million and $9.8 million,
respectively, were 58% and 47% lower than the corresponding periods in 2021 due primarily to the
completion of the accelerated grade control drilling program and the timing of expenditures on other
projects.
Mineral Reserve and Mineral Resource update
On January 12, 2023, the Company announced an updated life of mine plan and Mineral Reserve and
Mineral Resource estimate for the Ada Tepe mine. The updated Mineral Resource and Mineral Reserve
estimate for Ada Tepe, effective December 31, 2022, reflects the results of 290 kilometres of grade control
drilling completed since the previous 2020 update. Effectively all of the Mineral Resource estimate has now
been converted to the Measured category. The updated Proven and Probable Mineral Reserve comprises
of 2.49 Mt with an average grade of 5.19 g/t of gold and 3.13 g/t of silver for 415,000 contained gold ounces
and 250,000 contained silver ounces.
Based on the final pit design, a strategic mine planning study was conducted to optimize net present value
of mine cash flows, balanced against other considerations including mine production, process plant
throughput rates, stockpiling capacity, and mine life. The updated life of mine plan maintains production
through 2026 and reflects an increase of approximately 66,000 ounces of total gold recovered with a higher
life of mine gold grade of 5.19 g/t, relative to the same period in the previous 2020 life of mine plan.
See the Company’s press release entitled “Dundee Precious Metals Announces Life of Mine Plan with
Additional Production and Updated Mineral Resource and Mineral Reserve Estimate for Ada Tepe” dated
January 12, 2023, which has been filed on SEDAR (www.sedar.com) and is posted on the Company’s
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 27
website (www.dundeeprecious.com) for additional information, including key assumptions and parameters
relating to the foregoing Mineral Resource and Mineral Reserve Estimates. The Ada Tepe Technical Report
prepared in accordance with NI 43-101 will be filed within 45 days of the aforementioned news release.
Review of Tsumeb Results
$ thousands, unless otherwise indicated
Ended December 31,
Operating Highlights
Complex concentrate smelted:
Chelopech
Third parties
Total
Cost of sales per tonne of complex
concentrate smelted
Cash cost per tonne of complex
concentrate smelted
Sulphuric acid:
Production
Deliveries
Capital expenditures incurred:
Growth
Sustaining
Total capital expenditures
Production and sulphuric acid deliveries
Three Months
Twelve Months
2022
2021 Change
2022
2021 Change
t
t
t
$/t
$/t
t
t
10,532
31,303
41,835
9,862
42,070
51,932
7%
(26%)
(19%)
62,368
111,754
174,122
50,569
139,136
189,705
23%
(20%)
(8%)
621
443
646
(4%)
447
(1%)
694
463
678
2%
480
(4%)
45,717
59,943
56,586
57,516
(19%)
4%
198,386
203,912
201,483
202,054
(2%)
1%
-
3,848
3,848
526
2,354
2,880
(100%)
63%
34%
963
18,797
19,760
629
12,975
13,604
53%
45%
45%
Complex concentrate smelted during the fourth quarter of 2022 of 41,835 tonnes was 19% lower than the
corresponding period in 2021 due primarily to a 17-day shutdown to repair a water leak in the off-gas system
and instability in the power grid as a result of abnormally heavy rainfall in December 2022.
Complex concentrate smelted during 2022 of 174,122 tonnes was 8% lower than 2021 due primarily to
unplanned downtime as a result of maintenance to the off-gas and baghouse systems during the year and
instability in the power grid as a result of abnormally heavy rainfall in December, partially mitigated by near
record-level quarterly production in the third quarter of 2022.
Sulphuric acid production during the fourth quarter of 2022 of 45,717 tonnes was 19% lower than the
corresponding period in 2021 reflecting lower volumes of complex concentrate smelted.
Sulphuric acid production during 2022 of 198,386 tonnes was comparable to 2021 as lower volumes of
complex concentrate smelted was mostly offset by higher sulphur content in the complex concentrate
smelted.
Sulphuric acid deliveries during the fourth quarter of 2022 of 59,943 tonnes were 4% higher than the
corresponding period in 2021 reflecting the timing of deliveries. Sulphuric acid deliveries during 2022 of
203,912 tonnes were comparable to 2021.
Cash cost per tonne of complex concentrate smelted
Cash cost per tonne of complex concentrate smelted in the fourth quarter and twelve months of 2022 of
$443 and $463, respectively, was comparable to the corresponding periods in 2021 due primarily to higher
sulphuric acid by-product credits and lower labour costs related to the cost optimization initiative undertaken
in 2022, partially offset by lower volumes of complex concentrate smelted and higher inflationary local
currency operating expenses.
Capital expenditures
Capital expenditures during the fourth quarter and twelve months of 2022 were $3.9 million and $19.8
million, respectively, compared to $2.9 million and $13.6 million in the corresponding periods in 2021 due
primarily to the additional off-gas and baghouse system maintenance performed in 2022, as well as the
timing of other expenditures.
28 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
DEVELOPMENT AND OTHER MAJOR PROJECTS
Loma Larga Gold Project
In the third quarter of 2021, DPM completed the acquisition of the high-quality, advanced stage Loma Larga
gold project in the Azuay province of Ecuador. Loma Larga is expected to produce a pyrite gold concentrate
that can be sold to various copper and gold smelting operations, as well as a small quantity of complex
concentrate, which DPM could process at its Tsumeb smelter or sell on the market.
A FS completed by the previous owner in April 2020, which is currently being updated by DPM, outlined a
12-year life of mine plan with estimated annual mine production of approximately 200,000 gold ounces in
concentrate in the first five years. Life of mine production is estimated to be approximately 170,000 gold
ounces per year.
For more information, including key assumptions, risks and parameters relating to the FS, refer to the
Technical Report entitled “NI 43-101 Feasibility Study Technical Report, Loma Larga Project, Azuay
Province, Ecuador” dated April 8, 2020 and re-issued by DPM on November 29, 2021, which has been
posted on the Company’s website at www.dundeeprecious.com and has been filed on SEDAR at
www.sedar.com.
A 15,800 metre drilling program to support various studies complementary to the Loma Larga FS
optimization, consisting of hydrogeological, geotechnical, metallurgical, condemnation and extension
drilling, commenced in the first quarter of 2022. A total of 658 metres of condemnation drilling was
completed prior to DPM temporarily pausing drilling activities at the end of February as a result of the
Constitutional Protection Action (the “Action”) filed in February 2022 against the Ministry of Environment,
Water and Ecological Transition (“MAATE”), and the suspension of the environmental permit required for
exploration and technical drilling by the court.
On July 20, 2022, the written decision on the Action by the Judicial Labour Unit of Cuenca upheld the
validity of the environmental permits for exploration, confirmed that the MAATE did not violate rights relating
to the protection of water and nature in granting the permits, and reaffirmed the Company’s legal rights in
the mining concessions. The court also found that the Company will be required to include the local
indigenous populations in its consultation process prior to proceeding to the exploitation phase, which DPM
had already planned as part of its development of the project, reflecting the Company’s commitment to the
highest standards of stakeholder engagement and in line with International Finance Corporation practices.
The decision of the first instance court was appealed by all parties, including (i) by the Company and the
government parties on the requirement for indigenous consultation and whether, if required, it must precede
the remaining requirements for the environmental licence, including the Citizen Participation Process, and
(ii) by the plaintiffs on the finding by the first instance court that the grant of permits did not violate the rights
of nature and the other alleged violations. The appeal was heard by the Provincial Court of Azuay on
October 14, 2022 and a decision is pending. The Company continues to believe that the claims made by
the plaintiffs are without merit, however, drilling activities at Loma Larga remain paused pending that
decision.
For further details on the Action, please see press release entitled “Dundee Precious Metals Provides
Update on Drilling Activities at Loma Larga” issued on February 24, 2022, which has been posted on the
Company’s website at www.dundeeprecious.com and has been filed on SEDAR at www.sedar.com.
In parallel, the Company has continued to progress permitting activities, and received the certificate of
technical viability for the filtered tailings storage facility at the end of June 2022, a key milestone for the
project’s development. As previously reported, in April 2022, the Company received the technical approval
of the Environmental Impact Assessment (“EIA”) study, which was submitted to MAATE by the previous
owner prior to its acquisition by DPM. The MAATE has appointed facilitators to carry out the Citizen
Participation Process, which remains paused pending the resolution of the Action. Once these activities
resume, DPM and its EIA consultant will support the Citizen Participation Process, assess all comments
received and make the necessary updates to the EIA in order to assist the MAATE in providing its final
approval of the EIA and issuing the environmental licence. The expected timing for receipt of the
environmental licence is subject to the outcome of the appeal process.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 29
Given the delays in timing for recommencing drilling activities and further advancing the environmental
permitting process, the Company has taken the decision to extend the optimization phase of the updated
FS, which is now expected to be completed in the second half of 2023. This will allow DPM time to evaluate
additional optimization opportunities that have been identified to leverage the Company’s significant
operating expertise with similar deposits, in particular Chelopech in Bulgaria, which shares similar geology,
mining method and processing flow sheet to the Loma Larga project; and to potentially incorporate the
results of the drilling program supporting the updated FS optimization once DPM is able to recommence
those activities.
Prior to the acquisition, DPM had determined that the initial capital estimate for the project, prepared by the
previous owner in April 2020, was low. Since then, the Company has incorporated certain scope changes
to the project as part of the updated FS work, to enhance project execution and meet DPM’s operating
standards. DPM has also seen inflationary pressures consistent with general industry trends. Combined,
these factors are expected to result in a significant increase to the estimated initial capital and operating
costs for the project. This may impact the economics and other parameters, including Mineral Resource
and Mineral Reserve estimates, which are being assessed as the additional work required for the updated
FS progresses. DPM views Loma Larga as a high-quality advanced stage project with the potential to
generate strong economic returns following the results of the ongoing optimization work.
The Company has progressed discussions with the government of Ecuador in respect of an investor
protection agreement, which is targeted to be complete by the end of the first quarter of 2023. In-line with
its disciplined approach to project development, the Company does not anticipate making any significant
capital commitments for the project prior to the completion of the investment protection agreement and
receipt of the environmental licence.
DPM maintains a constructive relationship with government institutions and other stakeholders involved
with the development of the project. After the announcement of the local election results, the DPM team
welcomed the newly elected leaders and plans to engage with them in a proactive manner to build support
for the project.
Timok Gold Project
The Timok gold project is a sediment hosted gold deposit located in the central-eastern region of the
Republic of Serbia.
In February 2021, the Company announced the results of a pre-feasibility study and commenced a FS. As
announced in January 2023, given the potential of the new high-grade discovery at the (cid:253)oka Rakita
prospect, the Company will now focus on further exploration at (cid:253)oka Rakita in 2023 and, as a result, will
pause further work on the Timok FS.
As previously reported, the Timok gold project has a Probable Mineral Reserve estimate of 662,000 ounces
of gold contained within 19.2 million tonnes at a grade of 1.07 g/t and an additional Indicated Mineral
Resource estimate of 1.3 million ounces of gold contained within 32.3 million tonnes at a grade of 1.27 g/t.
The above Mineral Reserve and Mineral Resource do not incorporate any drilling at (cid:253)oka Rakita, which will
be assessed as a separate high-grade deposit.
The three-year retention of mineral rights for the Timok gold project was received during the third quarter
of 2021. Other permitting activities for the project continued during the fourth quarter of 2022, including the
certification of reserves and spatial planning, with the objective of securing the mining rights for the project
during the retention period. The Company plans to pause the submission of the application for the certificate
of reserves and any activities associated with the spatial planning public hearings.
For additional details, including key assumptions, risks and parameters relating to the pre-feasibility study,
refer to the news release entitled “Dundee Precious Metals Announces Positive Pre-Feasibility Study and
Encouraging New Exploration Results for the Timok Gold Project in Serbia” dated February 23, 2021 and
the Technical Report entitled “NI 43-101 Technical Report, Timok Project, Pre-Feasibility Study, Žagubica,
the Company’s website at
Serbia” effective March 30, 2021, which have been posted on
www.dundeeprecious.com and have been filed on SEDAR at www.sedar.com.
30 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Tsumeb Rotary Holding Furnace
As part of the Company’s strategy to optimize the inherent value of the Tsumeb smelter operation, an
assessment was completed in respect of the installation of a rotary holding furnace which has the potential
to increase the smelter’s throughput up to approximately 370,000 tonnes, increase metal recoveries and
generate significant additional value, given the high fixed-cost nature of the smelter. The estimated upfront
capital cost was estimated to be between $47 million and $55 million. To date, the Company has been
unable to secure additional long-term supply of suitable complex concentrate on acceptable terms that
would support the expansion. While the Company will continue to assess opportunities that could support
this expansion, the current focus of the smelter is on optimizing its operating performance and cost structure
to support economically processing increasing amounts of new third party feed to replace Chelopech
concentrate, which by 2024 is expected to be processed entirely at third party smelters.
EXPLORATION
Chelopech Mine
In 2022, the Company continued to advance in-mine exploration activities aimed at resource development,
drilling a total of approximately 45,000 metres, of which approximately 34,000 metres were extensional
drilling designed to explore for new mineralization along interpreted geological trends and to test potential
exploration targets.
During 2022, extensional diamond drilling in the Chelopech mine was concentrated on testing several
potential targets:
(cid:120) Structurally controlled zones of pyrite rich, high-sulphidation mineralization located on the northern flank
of Chelopech. A total of approximately 11,700 metres were drilled in 2022.
(cid:120) Quartz-Barite-Gold-Sulphide (“QBGS”) zone located in the southeastern section of the mine. This zone
is characterized by relatively narrow, structurally controlled QBGS mineralization, hosted within a halo
of pervasive sericitic alteration. During 2022, a total of approximately 4,800 metres of underground
drilling was undertaken toward this target.
(cid:120) The infilling of the existing drilling grid to test potential areas above existing ore bodies mainly in the
northwestern part of the mine.
(cid:120) The evaluation of the deeper potential of the hydrothermal system as well as to collect samples for
metallurgical purposes.
The 2023 Mineral Resource development strategy for Chelopech will be focused on the following:
(cid:120) Extensional drilling to continue testing the conceptual targets in the northeastern part of the deposit.
(cid:120) Testing structurally controlled zones of pyrite rich, high-sulphidation mineralization located on the
northern flank of Chelopech.
(cid:120) Drilling the upper levels of the Western part of the deposit in the gap between Blocks 103, 150 and 153.
The Company has budgeted between $5 million and $6 million on exploration activities at the Chelopech
mine in 2023.
Chelopech Brownfield Exploration
During 2022, a total of approximately 67,500 metres of surface exploration diamond drilling was completed,
which comprised of ninety-two completed and six ongoing holes with up to ten operating drill rigs. The
brownfield exploration program at Chelopech was focused on an intensive drilling campaign to support a
Commercial Discovery application for the Sveta Petka exploration licence, which is now close to completion.
Sveta Petka EL.
An intensive delineation and infill drilling campaign was completed on the Sveta Petka exploration licence,
focused on Wedge, West Shaft, Krasta and Petrovden prospects. The final Geology Report and
Commercial Discovery Application is scheduled for submission to the Bulgarian authorities during the first
quarter of 2023. After Sveta Petka is registered as a Commercial Discovery, which is expected by the end
of 2023, the Company intends to apply for concession rights in 2024.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 31
Sharlo Dere
The prospect is located at the north-eastern flank of the Chelopech mine concession. A total of
approximately 16,400 metres of surface exploration drilling at an approximately 100 metre grid spacing was
conducted, which confirmed Bulgarian state drilling results from the late 1970s and locally extended
mineralization. Results demonstrated reasonable levels of continuity and reinforced the validity of the
exhalative style high-sulphidation mineralization model. Geological modelling and early-stage resource re-
evaluation are underway.
Exploration drilling will continue in 2023 with approximately 50,000 metres planned, aiming to test
conceptual targets on the Brevene exploration licence as well as in the Chelopech mine concession which
includes follow-up on the Sharlo Dere prospect and other targets, including testing for deeper extensions
of the Chelopech deposit.
The Company has budgeted a total of $5 million to $6 million for Chelopech brownfield exploration activities
in 2023.
Ada Tepe Brownfield Exploration
In 2022, exploration activities focused on a Mineral Resource extension drilling program at Ada Tepe and
other satellites in the Khan Krum mine concession area, as well as target delineation campaigns on the
Chiirite and Dalbokata Reka exploration licences. Approximately 9,400 metres were drilled over 47 holes
during the year.
Khan Krum Concession Area
A dedicated drilling program to test for potential extensions of mineralization to the north and to test for
conceptual feeder structures at depth was implemented with 17 holes consisting of approximately 2,700
metres. Results of extensional drilling to the north of the deposit returned a series of narrow intervals of
mineralization above the mine cut-off, which may represent incremental extensions of Upper Zone vein
swarms. The Company is assessing if follow-up infill RC drilling is required in this area.
Chiirite Exploration Licence
On the Chiirite exploration licence, the drilling program at the Golden Creek and Chernichino prospects
was completed in 2022 with a total of approximately 3,400 metres drilled during the year from 11 drill holes.
The program generated encouraging results from drill hole ZDDD004 on Chernichino target, which returned
10 metres at 1.98 g/t of gold and 1.21 g/t of silver. This intercept will be followed up in 2023 and pending
permitting, drilling will also focus on the area to the south at Kara Tepe, where a prospective structurally
controlled granite hosted target and a separate skarn/carbonate replacement gold target was delineated in
2022 by combined IP pole-dipole electrical survey, ground radiometry survey and mapping.
In 2023, DPM will be employing a focused approach to evaluate undercover targets within the Krumovgrad
camp. Targeting methodologies will be driven by integration and re-interpretation of existing data, which
will be assisted by machine learning, additional geophysical methods and spectral satellite image
processing, followed by approximately 11,000 metres of drilling. Drilling is initially planned to focus on the
Chiirite licence area, while the Company finalizes permitting for the Krumovitsa licence, which is expected
in the third quarter of 2023. Subject to the timing of permits, there is potential to increase drilling activities
to approximately 26,000 metres.
The Company has budgeted a total of $2 million to $3 million for Ada Tepe brownfield exploration activities
in 2023.
Serbia Exploration
In Serbia, exploration activities during 2022 have been focused on target delineation work and limited scout
drilling at Umka, Zdrelo and other early-stage exploration licences. At the (cid:253)oka Rakita prospect, drilling
resumed in the fourth quarter of 2022 following receipt of a newly granted exploration licence with
approximately 8,700 metres completed by the end of 2022. Drilling defined a large high-grade footprint that
32 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
remains open in multiple directions. Results to date are very encouraging, and the Company plans to follow
up on these results with approximately 40,000 metres of infill, extensional and target delineation drilling that
is planned at (cid:253)oka Rakita in 2023. The primary focus of drilling is to further assess the overall deposit
geometry, grade continuity and Mineral Resource potential. DPM intends to release additional results from
drilling in the second quarter and is targeting an initial Mineral Resource estimate for (cid:253)oka Rakita in the
fourth quarter of 2023.
Additionally, approximately 10,000 metres of drilling is planned at the adjacent Umka exploration licence,
which is located to the south of (cid:253)oka Rakita and shares a similar geological environment. This work is
intended to follow up on ground gravity surveys completed in 2022 and will involve integration of all other
available data to delineate additional undercover high-grade skarn targets.
The Company has budgeted a total of $12 million to $13 million for Serbian exploration activities in 2023,
mainly focused on the (cid:253)oka Rakita prospect.
For further details on the drilling program at (cid:253)oka Rakita, please see press release entitled “Dundee
Precious Metals Announces Discovery of Significant High-Grade Deposit at (cid:253)oka Rakita; Results Include
Drill Intercept of 40 metres at 63.6 g/t Au and 0.11% Cu”, issued on January 16, 2023, which has been
posted on the Company’s website at www.dundeeprecious.com and has been filed on SEDAR at
www.sedar.com.
Ecuador Exploration
Loma Larga Concessions
On the Loma Larga concessions, a drilling program of approximately 15,800 metres to support various
studies complementary to the Loma Larga FS optimization, consisting of hydrogeological, geotechnical,
metallurgical, condemnation and extension drilling, was commenced in the first quarter of 2022. A total of
approximately 650 metres of condemnation drilling was completed prior to DPM temporarily pausing drilling
activities at the end of February 2022 as a result of the Action filed against the MAATE by certain non-
government organizations and local agencies. Drilling activities remain paused, pending the resolution of
the court process (see the “Development and Other Major Projects – Loma Larga Gold Project” section
contained in this MD&A for further details).
In 2023, the drilling program is expected to be restarted, pending the outcome of the appeals process.
Tierras Coloradas Concessions
In 2022, the Company completed a diamond drilling program of approximately 2,700 metres and assay
results are being reviewed. The drill program tested the low sulphidation epithermal vein system which was
previously identified in 2020. The change in status of the Tierras Coloradas project from early to advanced
stage exploration is in progress, and all regulatory authorizations required from the different Ecuadorian
authorities are expected to be received by early 2024.
During the transition period of the phase change, a drill program will be proposed to test the best targets
identified from work completed in 2022. Additional drilling is planned to delineate the shape, size, and
extents of the main veins system. Furthermore, additional untested portions of the veins and soil-
geochemistry anomalies will be subject to follow-up drilling. Detailed surface mapping in conjunction with
soil and rock chip-channel sampling will continue, in order to determine the surface footprint and identify
additional targets.
The Company has budgeted between $1 million and $2 million for exploration activities at Tierras Coloradas
in 2023.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 33
REVIEW OF FINANCIAL RESULTS
$ thousands, unless otherwise indicated
Ended December 31,
Revenue
Cost of sales
General and administrative expenses(1)
Corporate social responsibility expenses
Exploration and evaluation expenses
Impairment charge
Finance costs
Other income and expense
Earnings before income taxes
Income tax expense
Net earnings attributable to common
shareholders from continuing operations
Per share
Net earnings attributable to common
shareholders
Per share
Adjusted EBITDA
Adjusted net earnings
Per share
Three Months
Twelve Months
2022
152,863 166,433
94,042
3,753
2,967
4,369
-
1,380
(352)
60,274
8,169
91,109
10,506
3,503
8,382
-
1,555
176
37,632
4,312
2021 Change
(8%)
(3%)
180%
18% (cid:3)
92%
-%
13%
(150%)
(38%)
(47%)
2022
569,795
357,447
28,800
6,240
24,230
85,000
6,325
3,011
58,742
22,819
2021 Change
(11%)
-%
59%
29% (cid:3)
35%
100%
14%
(64%)
(74%)
(41%)
641,443
357,136
18,161
4,838
18,006
-
5,549
8,335
229,418
38,689
$/sh
$/sh
$/sh
33,320
0.18
52,108
0.27
(36%)
(33%)
35,923
0.19
190,750
1.02
(81%)
(81%)
33,320
0.18
58,254
33,320
0.18
51,465
0.27
84,274
51,449
0.27
(35%)
(33%)
(31%)
(35%)
(33%)
35,923
0.19
252,869
129,027
0.68
210,101
1.12
336,854
202,081
1.09
(83%)
(83%)
(25%)
(36%)
(38%)
Includes changes in share-based compensation expense primarily related to movements in DPM’s share price, which had a $2.7 million unfavourable impact
(2021 – a $2.3 million favourable impact) and a $3.6 million unfavourable impact (2021 – a $4.5 million favourable impact) in the fourth quarter and twelve months
of 2022, respectively.
Revenue
Revenue during the fourth quarter and twelve months of 2022 of $152.9 million and $569.8 million,
respectively, was 8% and 11% lower than the corresponding periods in 2021 due primarily to lower volumes
of gold and copper sold.
The following table summarizes revenue by segment:
$ thousands
Ended December 31,
Chelopech(1)
Ada Tepe(1)
Tsumeb
Total revenue
Three Months
Twelve Months
2022
66,361
46,607
39,895
152,863
2021
73,486
59,373
33,574
166,433
Change
(10%)
(22%)
19%
(8%)
2022
271,648
161,842
136,305
569,795
2021 Change
(7%)
(29%)
14%
(11%)
292,779
229,314
119,350
641,443
Includes the value of payable metals sold, deductions for treatment charges, penalties, transportation and other selling costs, and final settlements to reflect any
physical and cost adjustments on provisionally priced sales.
At Chelopech, revenue during the fourth quarter of 2022 of $66.4 million was 10% lower than the
corresponding period in 2021 due primarily to lower volumes of metal sold and lower realized gold and
copper prices, partially offset by lower treatment charges. Revenue during 2022 of $271.7 million was 7%
lower than 2021 due primarily to lower volumes of copper sold and higher freight charges, partially offset
by higher realized copper prices and lower treatment charges.
At Ada Tepe, revenue during the fourth quarter and twelve months of 2022 of $46.6 million and $161.8
million, respectively, was 22% and 29% lower than the corresponding periods in 2021 due primarily to lower
volumes of gold sold.
At Tsumeb, revenue during the fourth quarter and twelve months of 2022 of $39.9 million and $136.3 million,
respectively, was 19% and 14% higher than the corresponding periods in 2021 due primarily to higher
estimated metal recoveries and higher sulphuric acid prices and toll rates, partially offset by lower volumes
of complex concentrate smelted.
34 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Cost of sales
Cost of sales in the fourth quarter of 2022 of $91.1 million was 3% lower than the corresponding period in
2021 due primarily to a stronger U.S. dollar, partially offset by higher local currency mine operating
expenses in Bulgaria. Cost of sales in 2022 of $357.4 million was comparable to 2021 due primarily to a
stronger U.S. dollar largely offset by higher local currency mine operating expenses in Bulgaria and higher
depreciation.
General and administrative expenses
General and administrative expenses in the fourth quarter and twelve months of 2022 were $10.5 million
and $28.8 million, respectively, compared to $3.8 million and $18.2 million in the corresponding periods in
2021, due primarily to variations in the Company’s share-based compensation expense as a result of
changes in DPM’s share price, higher costs related to corporate digital and innovation initiatives and higher
employee costs.
Exploration and evaluation expenses
Exploration and evaluation expenses in the fourth quarter and twelve months of 2022 were $8.4 million and
$24.2 million, respectively, compared to $4.4 million and $18.0 million in the corresponding periods in 2021
due primarily to higher drilling volumes at Chelopech related to the Sveta Petka Commercial Discovery
process, as well as additional drilling at Sharlo Dere.
For a more detailed discussion on the Company’s exploration activities, refer to the “Exploration” section of
this MD&A.
Tsumeb Impairment charge
During the year ended December 31, 2022, the carrying value of Tsumeb exceeded its estimated
recoverable amount resulting in an impairment charge of $85.0 million being recognized in the audited
consolidated statements of earnings (loss), of which $84.3 million related to property, plant, and equipment
and $0.7 million related to intangible assets. This charge was primarily attributable to lower forecast toll
revenue as a result of an expected reduction in higher arsenic bearing third party concentrate feed being
received by the smelter, commencing in 2024, concurrent with when the smelter is not expected to be
processing any Chelopech concentrate. While the processing of Chelopech concentrate at other third party
smelters is expected to generate additional overall value for the Company, it will be realized through lower
treatment charges and higher margins at Chelopech rather than higher tolling rates and higher margins at
Tsumeb.
Finance costs
Finance costs are comprised of interest and other deemed financing costs in respect of the Company’s
debt facilities, lease obligations and rehabilitation provisions.
Finance costs in the fourth quarter and twelve months of 2022 were $1.5 million and $6.3 million,
respectively, compared to $1.4 million and $5.5 million in the corresponding periods in 2021.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 35
Other income and expense
The following table summarizes items making up other income and expense:
$ thousands
Ended December 31,
Net (gains) losses on Sabina special warrants(1)
Net (gains) losses on other warrants(1)
Tsumeb restructuring costs(2)
Net foreign exchange losses(3)
Interest income
Other, net
Total other income and expense
Three Months
2022
-
190
-
2,858
(3,673)
801
176
2021
(654)
(5)
-
218
(254)
343
(352)
Twelve Months
2022
2,369
46
5,735
681
(6,554)
734
3,011
2021
6,289
23
-
1,628
(632)
1,027
8,335
Refer to the “Financial Instruments” section of this MD&A for more details.
Represents costs related to a comprehensive initiative directed at optimizing the cost structure of the smelter.
Primarily related to the revaluation of foreign denominated monetary assets and liabilities.
Income tax expense
The effective tax rate of the Company can vary significantly from one period to the next based on a number
of factors. For the three and twelve months ended December 31, 2022 and 2021, the Company’s effective
tax rate was impacted primarily by the Company’s overall earnings, mix of foreign earnings or losses, which
are subject to lower tax rates in certain jurisdictions, and changes in unrecognized tax benefits relating to
corporate operating, exploration and evaluation costs, as well as unrealized gains or losses on the
Company’s publicly traded securities recognized in other comprehensive income (loss). For the twelve
months ended December 31, 2022, the Company’s effective tax rate was also impacted by unrecognized
tax benefits in respect of the Tsumeb impairment charge.
$ thousands, unless otherwise indicated
Ended December 31,
Earnings before income taxes
Combined Canadian federal and provincial statutory income tax
Three Months
2022
37,632
2021
60,274
Twelve Months
2022
58,742
2021
229,418
rates
Expected income tax expense
Lower rates on foreign earnings
Changes in unrecognized tax benefits
Non-taxable portion of capital (gains) losses
Non-deductible share-based compensation expense
Other, net
Income tax expense
Effective income tax rates
26.5%
9,973
(985)
(2,914)
(2,458)
74
622
4,312
11.5%
26.5%
15,973
(10,332)
2,477
583
74
(606)
8,169
13.6%
26.5%
15,567
(26,593)
30,867
2,223
296
459
22,819
38.8%
26.5%
60,796
(41,163)
14,842
3,346
279
589
38,689
16.9%
In December 2020, the Namibian Ministry of Finance announced that tax incentives under the Export
Processing Zones (“EPZ”) Act would no longer be granted, effective December 31, 2020, and that
companies with EPZ status, such as Tsumeb, would continue to benefit from these incentives up to
December 31, 2025. The Ministry also announced that the EPZ regime will be replaced by a new regime
known as the Sustainable Special Economic Zone (“SSEZ”). On January 18, 2023, the Ministry of Trade
and Industrialisation stated that they have completed the draft bill on SSEZ, which has been submitted to
Namibian Cabinet for approval. Thereafter the bill will be circulated to stakeholders for inputs before it is
presented to Parliament for enactment.
Net earnings attributable to common shareholders from continuing operations
Net earnings attributable to common shareholders from continuing operations in the fourth quarter of 2022
were $33.3 million ($0.18 per share) compared to $52.1 million ($0.27 per share) in the corresponding
period in 2021. This decrease was due primarily to lower volumes of metal sold and lower volumes of
complex concentrate smelted, partially offset by a stronger U.S. dollar.
Net earnings attributable to common shareholders from continuing operations in 2022 were $35.9 million
($0.19 per share) compared to $190.7 million ($1.02 per share) in 2021. This decrease was due primarily
to the $85.0 million Tsumeb impairment charge, lower volumes of metal sold, higher local currency mine
36 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
operating expenses, higher freight charges at Chelopech and lower volumes of complex concentrate
smelted, partially offset by a stronger U.S. dollar, higher toll rates and sulphuric acid prices, higher
estimated metal recoveries at Tsumeb and higher realized metal prices.
Adjusted net earnings
The following table summarizes the key drivers affecting the changes in adjusted net earnings:
$ millions
Ended December 31,
Adjusted net earnings – 2021
Lower volumes of metal sold
Higher operating expenses
Higher freight charges
Lower smelter volumes
Stronger U.S. dollar
Higher toll rates and sulphuric acid prices
Higher estimated metal recoveries
Higher (lower) realized metal prices
Income taxes and other
Adjusted net earnings – 2022
Three
Months
51.4
(20.5)
(2.3)
(0.4)
(6.0)
7.7
1.1
3.8
(2.5)
1.0
33.3
Twelve
Months
202.0
(86.9)
(14.3)
(10.9)
(9.4)
20.0
12.4
10.7
5.0
0.4
129.0
Adjusted net earnings in the fourth quarter and twelve months of 2022 were $33.3 million ($0.18 per share)
and $129.0 million ($0.68 per share), respectively, compared to $51.4 million ($0.27 per share) and $202.0
million ($1.09 per share) in the corresponding periods in 2021. These decreases were due primarily to the
same factors affecting net earnings attributable to common shareholders from continuing operations, with
the exception of the adjusting items primarily related to the Tsumeb impairment charge.
For more details on these adjustments, refer to the “Non-GAAP Financial Measures” section commencing
on page 43 of this MD&A.
Earnings before income taxes
Earnings before income taxes in the fourth quarter and twelve months of 2022 were $37.6 million and $58.7
million, respectively, compared to $60.3 million and $229.4 million in the corresponding periods in 2021.
These changes reflect the same factors that affected net earnings attributable to common shareholders
from continuing operations, except for income tax, which is excluded.
Adjusted EBITDA
Adjusted EBITDA in the fourth quarter and twelve months of 2022 was $58.3 million and $252.9 million,
respectively, compared to $84.3 million and $336.9 million in the corresponding periods in 2021, reflecting
the same factors that affected adjusted net earnings, except for interest, income tax, depreciation and
amortization, which are excluded from adjusted EBITDA.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 37
MARKET REVIEW
Commodity prices
Commodity prices are the principal determinants of the Company’s results of operations and financial
condition.
The following table summarizes the average trading prices for gold and copper based on the London Bullion
Market Association (“LBMA”) for gold and the London Metal Exchange (“LME”) for copper (Grade A) for the
three and twelve months ended December 31, 2022 and 2021 and highlights the overall year over year
change in commodity prices:
Metal Prices (Market Average)
Ended December 31,
LBMA gold
LME settlement copper
Three Months
2022
1,729
3.63
2021 Change
(4%)
1,795
(18%)
4.40
Twelve Months
2022
1,800
4.00
2021 Change
1,800
4.22
- %
(5%)
$/oz
$/lb
The Company’s average realized gold price for the fourth quarter and twelve months of 2022 of $1,752 per
ounce and $1,795 per ounce, respectively, was 2% lower than and comparable to the corresponding
periods in 2021, reflecting year over year changes in market prices. The average realized copper price for
the fourth quarter and twelve months of 2022 of $3.65 per pound and $3.98 per pound, respectively, was
3% lower and 4% higher than the corresponding periods in 2021. These changes in realized copper prices
deviated from the year over year changes in market prices as a result of DPM hedging substantially all of
payable copper sold during 2021 at an average price of $3.72 per pound.
The price of gold is subject to volatile price movements over short periods of time and is affected by
numerous industry and macro-economic factors that are beyond our control including, but not limited to,
the supply of and demand for gold, interest rates (and interest rates expectations), inflation rates (and
inflation expectations), currency movements and the relative strength of the U.S. dollar, economic data and
market volatility, as well as central bank reserves and investor behaviors. These diverse sources of impacts
can counterbalance one another and provide gold with its uniquely stable performance at times, with gold’s
resilience in 2022 as a good example. The average gold price in 2022 was comparable to 2021,
representing a stable and uncorrelated performance of gold amid market turbulence, a strong U.S. dollar
and an unprecedented rise in inflation and interest rates in the year.
Overall, our view is that the demand for gold, the amount of gold in the central bank reserves, the value of
the U.S. dollar, and the desire to hold gold as a hedge against inflation and currency devaluation, all help
drive the price of gold in the near-term.
The price of copper is largely influenced by the health of the global economy. This is due to its widespread
applications in all sectors of the economy, such as power generation and transmission, construction,
transportation, factory equipment and electronics. Following strong copper prices in 2021 due to anticipated
higher demand from increased manufacturing activity and a rebound in economic growth, low levels of
global copper stockpiles and constrained mine supply, copper prices continued to rise and reached an all-
time high in the first quarter of 2022 due to a widening supply and demand gap.
In the long run, the supply and demand fundamentals are supportive for copper prices, with the expectation
of China’s recovery from the COVID-19 pandemic and the rising demand for copper in the green energy
transition.
The Company regularly enters into cash settled commodity swap contracts to swap future contracted
monthly average metal prices for fixed metal prices in order to reduce the price exposure associated with
the time lag between the provisional and final determination of its gold and copper concentrate sales (“QP
Hedges”). In addition, the Company periodically enters into cash settled commodity swap and option
contracts to reduce its price exposure on future sales associated with projected payable copper production
(“Production Hedges”) given the higher volatility in copper prices. The Company sells and hedges gold and
copper metal contained in concentrates produced at prices that are effectively determined by reference to
the traded prices on major commodity exchanges, including the LME and the LBMA. The Company
currently has no hedges in place for its expected payable copper to be sold in 2023.
38 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Foreign exchange rates
As an entity reporting in U.S. dollars with operations in several countries, fluctuations in foreign exchange
rates between the U.S. dollar and the Bulgarian lev, which is pegged to the Euro, the Namibian dollar, which
is pegged to the South African rand (“ZAR”) on a 1:1 basis, and the Canadian dollar (“Cdn$”) can also
impact the Company’s results of operations and financial condition.
The following table sets out the average foreign exchange rates for the principal currencies impacting the
Company and highlights the overall year over year strengthening of the U.S. dollar relative to these
currencies.
Foreign Exchange Rates
(Market Average)
Ended December 31,
US$/Cdn$
Euro/US$
US$/ZAR
Three Months
Twelve Months
2022
1.3580
1.0211
17.6117
2021
1.2597
1.1437
15.4203
Change
8%
11%
14%
2022
1.3017
1.0541
16.3531
2021
1.2535
1.1833
14.7756
Change
4%
11%
11%
In 2022, the U.S. dollar strengthened against almost every currency around the world. The weakness seen
in late 2022 could continue into early 2023 largely driven by the expectations of the end of the Federal
Reserve’s aggressive interest rates hiking cycle and the potential peak or near-peak of global inflation, as
well as the growing fear of a global recession. However, the higher yields available in the United States
combined with a stronger growth outlook than most other markets may support a steady U.S. dollar in 2023.
Fluctuations in these exchange rates increase the volatility of the Company’s cost measures reported in
U.S. dollars. The Company periodically undertakes to purchase, in advance, a portion of its foreign
denominated cash flow requirements on a spot or forward basis to reduce this exposure. The Company
also enters into foreign exchange option contracts in order to reduce the foreign exchange exposure
associated with projected operating expenses and capital expenditures denominated in foreign currencies.
In 2022, approximately 89% of Namibian dollar operating expenses for 2022 were hedged with option
contracts providing, on a US$/ZAR basis, a weighted average floor rate of 15.12 and a weighted average
ceiling rate of 17.03. In addition, approximately 86% and 14% of projected Namibian dollar operating
expenses for 2023 and 2024, respectively, have been hedged with option contracts providing a weighted
average floor rate of 15.69 for 2023 and 16.55 for 2024, and a weighted average ceiling rate of 17.69 for
2023 and 19.35 for 2024. The Company currently has no Euro or Canadian dollar hedges in place.
Energy costs
Energy costs are the single largest cost to the Company’s producing mines other than labour costs,
representing approximately 15% of its total mine cash cost at an average annual consumption rate of
approximately 165,000 megawatt hours (“MWh”). The fluctuation in energy costs can also impact the
Company’s key cost measures and results of operations.
In 2022, global economic activity experienced a broad-based and sharper-than-expected slowdown, with
inflation higher than seen in several decades. Russia’s invasion of Ukraine and the lingering COVID-19
pandemic heavily distorted global energy supply chains. Despite gas prices retreating from the highs in late
2022, the cost of energy for Europe remains multiple times that of North America.
The Company’s Chelopech and Ada Tepe mines are located in Bulgaria, Eastern Europe. As Bulgaria is a
net exporter of power, Chelopech and Ada Tepe are not currently reliant on Russia for their power needs.
In addition, the Company’s exposures to the rising prices for energy were mitigated by the Bulgarian
government power subsidies starting from October 2021 and through to the end of 2023. The power
subsidies were applicable to both residential and commercial business operations to mitigate the surge in
electricity prices. In 2022, the Company paid an average of Bulgarian lev 269 per MWh ($147 per MWh),
net of the government power subsidy, which was based on progressive measures enacted through the year
with set price thresholds per MWh. On November 8, 2022, the Bulgarian government extended the existing
compensation program to mitigate the effects of high electricity costs for businesses until the end of 2023,
under which Chelopech and Ada Tepe are expected to pay Bulgarian lev 200 per MWh (approximately
$110 per MWh) on a net basis.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 39
Fuel costs
Fuel costs are also a significant cost element to the Company through direct purchases of fuel and diesel
related to operation of mobile fleet and furnaces, or indirectly through transportation costs as well as costs
for other direct materials including grinding media, reagents and certain spare parts which rely on fuel as
an input cost. In aggregate, approximately 25% to 30% of the Company’s mine and smelter cash costs are
directly or indirectly impacted by fuel costs. Fuel costs are affected directly by the crude oil prices, and
therefore, fluctuations in the crude oil prices can also impact the Company’s key cost measures and results
of operations.
Crude oil prices typically fluctuate based on seasonal demand and supply and global political and economic
events. The main benchmark for fuel prices is Brent Crude, which gained approximately 10% in 2022, after
jumping 50% in 2021. Russia and China are expected to be the key countries shaping the oil price forecast
in 2023, as the oil prices are expected to be driven by the balance between the tightening Russian supply
and China’s demand growth.
Bulgaria imports oil from Russia which is refined by a Bulgarian entity ultimately controlled by a Russian oil
company that is a designated entity under Canadian and U.S. sanctions and subject to sectoral sanctions
in the European Union (“EU”). The Bulgarian subsidiaries of DPM procure fuel from this refinery from
Bulgarian suppliers. In the event that existing sanctions are not eliminated and the exemption from the
Council of Europe’s sanctions in favour of Bulgaria with respect to the import of Russian oil is not extended
or other sanctions otherwise prevent Bulgaria from importing Russian oil or prevent the Company from
otherwise procuring fuel refined in Bulgaria, the costs of procuring fuel for the Company’s operations in
Bulgaria may be significantly increased. For a detailed discussion related to the conflict in Ukraine and its
impact to DPM, please see the “Risks and Uncertainties” section later in this MD&A.
The Company does not have any oil hedges in place.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2022, the Company held cash of $433.2 million, investments valued at $40.8 million
primarily related to its 6.5% interest in Sabina, and $150.0 million of undrawn capacity under its RCF.
The Company’s liquidity is impacted by several factors which include, but are not limited to, gold, copper
and sulphuric acid market prices, production levels, capital expenditures, operating cash costs, interest
rates and foreign exchange rates. These factors are monitored by the Company on a regular basis.
As at December 31, 2022, the Company’s cash resources and available capital under its RCF continue to
provide sufficient liquidity and capital resources to meet its current operating and capital expenditure
requirements, all contractual commitments, as well as a number of margin improvement and growth-related
expenditures. The Company may, from time to time, raise additional capital or amend its RCF to ensure it
maintains its financial strength and has sufficient liquidity to support the funding requirements associated
with one or more of its growth capital projects and the overall needs of the business.
As part of the Company’s assessment of the potential implications associated with the conflict in Ukraine
and the COVID-19 pandemic, the Company assessed its financial resources as at December 31, 2022 and
concluded that it has sufficient available cash resources to manage the potential impacts that could
reasonably be expected to arise.
Capital Allocation
As part of its strategy, the Company adheres to a disciplined capital allocation framework that is based on
three fundamental considerations – balance sheet strength, reinvestment in the business, and the return of
excess capital to shareholders. Maintaining a strong balance sheet includes ensuring adequate liquidity,
managing within prudent financial metrics, and building a strong cash position to support accretive growth.
Reinvestment in the business includes investing in its operating assets to sustain and optimize
performance; investing in resource development to extend the life of its mines and to identify new gold
resources; further advancing existing resources towards production; as well as investing in new projects to
grow beyond its existing asset base. Returning capital to shareholders includes dividends, and under
40 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
certain circumstances, opportunistic share repurchases. These alternatives are not mutually exclusive, nor
are they exhaustive, and are assessed in a balanced manner with a view to maximizing total shareholder
returns over the long-term.
Declaration of dividend
In 2022, the Company declared a quarterly dividend of $0.04 (2021 – $0.03) per common share to its
shareholders of record resulting in total dividend distributions of $30.5 million (2021 – $22.4 million)
recognized against its retained earnings in the audited consolidated statements of changes in shareholders’
equity. The Company paid an aggregate of $28.6 million (2021 – $22.1 million) of dividends which were
included in cash used in financing activities in the audited consolidated statements of cash flows for the
year ended December 31, 2022 and recognized a dividend payable of $7.6 million (December 31, 2021 –
$5.7 million) in accounts payable and accrued liabilities in the audited consolidated statements of financial
position as at December 31, 2022.
On February 16, 2023, the Company declared a dividend of $0.04 per common share payable on April 17,
2023 to shareholders of record on March 31, 2023.
The Company’s dividend has been set at a level that is considered to be sustainable based on the
Company’s free cash flow outlook and is expected to allow the Company to build additional balance sheet
strength to support the estimated capital funding associated with its projects, including Loma Larga, (cid:253)oka
Rakita and other growth opportunities, which represent a key element of DPM’s strategy. The declaration,
amount and timing of any future dividend are at the sole discretion of the Board of Directors and will be
assessed based on the Company’s capital allocation framework, having regard for the Company’s financial
position, overall market conditions, and its outlook for sustainable free cash flow, capital requirements, and
other factors considered relevant by the Board of Directors.
Share repurchases under the NCIB
The Company renewed its NCIB on March 1, 2022, which permitted the repurchase of up to 9,000,000
common shares representing approximately 5% of the total outstanding common shares as at February 17,
2022, over a period of twelve months commencing March 1, 2022 and terminating on February 28, 2023.
In accordance with TSX rules, the Company is not permitted to acquire on any given trading day more than
182,760 common shares, representing 25% of the average daily volume of common shares for the six
months ended January 31, 2022. The price that the Company pays for common shares in open market
transactions is the market price at the time of purchase and any common shares purchased under the NCIB
are cancelled.
In 2022, the Company purchased a total of 2,471,500 (2021 – 1,723,800) shares, all of which were
cancelled as at December 31, 2022. The Company also cancelled an additional 29,600 shares in 2022 that
were purchased in 2021, resulting in a total of 2,501,100 (2021 – 1,694,200) shares being cancelled during
the twelve months ended December 31, 2022. The total cost of these purchases was $13.6 million (2021 –
$10.4 million) at an average price of $5.51 (Cdn$7.14) (2021 – $6.02 (Cdn$7.64)) per share, of which $7.5
million (2021 – $5.3 million) was recognized as a reduction in share capital, $nil (2021 – $5.1 million) as a
reduction in contributed surplus and $6.1 million (2021 – $nil) as a reduction in retained earnings in the
audited consolidated statements of changes in shareholders’ equity for the year ended December 31, 2022.
The payments for these share repurchases were included in cash used in financing activities in the audited
consolidated statements of cash flows for the year ended December 31, 2022 and 2021.
The Board of Directors has approved the renewal of the NCIB (the “New Bid”), however, the renewal is
subject to acceptance by the TSX. If accepted, the New Bid will be made in accordance with the applicable
rules and policies of the TSX and applicable Canadian securities laws. Pursuant to the New Bid, it is
expected that the Company will be able to purchase up to 16,500,000 common shares, representing
approximately 10% of the public float as of February 16, 2023, over a period of twelve months commencing
after the TSX approval. The New Bid will also allow the Company to implement an Issuer Repurchase
Agreement and automatic share repurchase plan with its designated broker in order to facilitate the
purchase of its shares.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 41
Assuming the full number of shares are repurchased under this New Bid, and at the Company’s current
share price, this represents an authorized return of capital of up to $100 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.
A copy of the TSX Form 12 for the NCIB can be obtained, without charge, by contacting the Company at
info@dundeeprecious.com.
Cash Flow
The following table summarizes the Company’s cash flow activities:
$ thousands
Ended December 31,
Cash provided from operating activities, before
changes in working capital(1)
Changes in working capital
Cash provided from operating activities
Cash provided from (used in) investing activities
Cash used in financing activities
Increase in cash and cash equivalents
Cash at beginning of period
Cash and cash equivalents at end of period
Three Months
Twelve Months
2022
2021 Change
2022
2021 Change
80,063
52,353
8,877
(3,064)
88,940
49,289
33,058
(26,103)
(9,604)
(8,022)
13,582 113,976
419,594 220,401
433,176 334,377
(35%)
(135%)
(45%)
(179%)
20%
(88%)
90%
30%
227,195
4,857
232,052
(85,809)
(47,444)
98,799
334,377
433,176
(26%)
309,049
109%
(55,469)
253,580
(8%)
(32,073) 168%
29%
(36,662)
(47%)
184,845
124%
149,532
30%
334,377
Cash provided from operating activities, before changes in working capital, is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures”
section commencing on page 43 of this MD&A for more information, including reconciliations to IFRS measures.
The primary factors impacting period over period cash flows are summarized below.
Operating activities
Cash provided from operating activities in the fourth quarter of 2022 of $49.3 million was 45% lower than
the corresponding period in 2021 due primarily to lower volumes of metal sold and lower volumes of
complex concentrate smelted, partially offset by a stronger U.S. dollar, as well as an unfavourable period
over period change in working capital primarily related to timing of deliveries and subsequent receipt of
cash, partially offset by timing of supplier payments.
Cash provided from operating activities in 2022 of $232.1 million was 8% lower than 2021 due primarily to
lower volumes of metal sold, higher local currency mine operating expenses and higher freight charges at
Chelopech, partially offset by a stronger U.S. dollar, and higher realized metal and sulphuric acid prices, as
well as a favourable period over period change in working capital primarily related to timing of deliveries
and subsequent receipt of cash.
Free cash flow in the fourth quarter and twelve months of 2022 of $33.3 million and $166.4 million,
respectively, was $32.5 million and $86.0 million lower than the corresponding periods in 2021, due
primarily to the same factors impacting cash provided from operating activities, except for the impact of
changes in working capital, which is excluded from free cash flow.
Investing activities
Cash used in investing activities in the fourth quarter of 2022 was $26.1 million compared to cash provided
from investing activities of $33.1 million in the corresponding period in 2021. Cash used in investing activities
in 2022 was $85.8 million compared to $32.1 million in 2021.
42 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
The following table provides a summary of the Company’s cash outlays for capital expenditures:
$ thousands
Ended December 31,
Chelopech
Tsumeb
Ada Tepe
Corporate & Other
Total cash capital expenditures
Three Months
Twelve Months
2022
10,600
5,040
1,840
8,618
26,098
2021
5,149
2,373
5,235
5,128
17,885
Change
106%
112%
(65%)
68%
46%
2022
23,349
18,852
10,193
32,920
85,314
2021 Change
24%
20%
(42%)
173%
33%
18,891
15,660
17,538
12,059
64,148
Cash outlays for capital expenditures in the fourth quarter and twelve months of 2022 of $26.1 million and
$85.3 million, respectively, are in line with capital expenditures incurred (refer to segment results for further
details) adjusted for timing of payments related to sustaining capital expenditures as well as increased cash
outlays for growth capital expenditures related to the Loma Larga gold project.
Other factors impacting investing activities period over period are summarized below:
(cid:120) Total cash proceeds of $45.2 million from the MineRP Disposition, partially offset by the increase in
restricted cash of $3.5 million in 2021; and
(cid:120) Purchase of publicly traded securities in 2022 of $0.5 million compared to $8.3 million in 2021.
Financing activities
Cash used in financing activities in the fourth quarter and twelve months of 2022 was $9.6 million and $47.4
million, respectively, compared to $8.0 million and $36.7 million in the corresponding periods in 2021, due
primarily to an increase in dividend distribution to $0.04 per share in 2022 compared to $0.03 in 2021.
Financial Position
$ thousands
As at December 31,
Cash
Accounts receivable, inventories and other current assets
Investments at fair value
Non-current assets, excluding investments at fair value
Total assets
Current liabilities
Non-current liabilities
Equity attributable to common shareholders
2022
433,176
177,745
40,773
505,560
1,157,254
96,885
67,275
993,094
2021
334,377
179,416
47,983
606,634
1,168,410
85,799
78,198
1,004,413
Increase/
(Decrease)
98,799
(1,671)
(7,210)
(101,074)
(11,156)
11,086
(10,923)
(11,319)
Cash increased by $98.8 million to $433.2 million during 2022 due primarily to earnings generated in the
period as well as a favourable period over period change in working capital primarily related to timing of
deliveries and subsequent receipt of cash, partially offset by cash outlays for capital expenditures, dividend
payments and share repurchases. Accounts receivable, inventories and other current assets decreased by
$1.7 million to $177.7 million due primarily to the timing of deliveries and subsequent receipt of cash.
Investments at fair value decreased by $7.2 million to $40.8 million due primarily to the decrease in Sabina’s
share price. Non-current assets, excluding investments at fair value, decreased by $101.1 million to $505.6
million due primarily to the Tsumeb impairment charge, and depreciation and depletion, partially offset by
capital expenditures.
Current liabilities increased by $11.1 million to $96.9 million during 2022 due primarily to an increase in
accounts payable and accrued liabilities as a result of the timing of payments to suppliers and an increase
in the current portion of rehabilitation provisions. Non-current liabilities decreased by $10.9 million to $67.3
million due primarily to a decrease in rehabilitation provisions as a result of a stronger U.S. dollar and higher
discount rates, partially offset by a higher inflation rate, as well as a decrease in share-based compensation
liabilities as a result of the decrease in DPM’s share price. Equity attributable to common shareholders
decreased by $11.3 million to $993.1 million due primarily to the Tsumeb impairment charge, a decrease
in accumulated other comprehensive income related to unrealized losses on publicly traded securities,
dividends declared and shares repurchased, partially offset by adjusted net earnings for the year.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 43
Contractual Obligations, Commitments and Other Contingencies
The Company had the following minimum contractual obligations and commitments as at December 31,
2022:
$ thousands
Lease obligations
Capital commitments
Purchase commitments
Other obligations
Total contractual obligations and commitments
Tsumeb secondary materials
up to 1 year
5,416
17,348
21,077
127
43,968
1 – 5 years
9,854
-
95
1,567
11,516
Over 5 years
1,403
-
-
486
1,889
Total
16,673
17,348
21,172
2,180
57,373
As at December 31, 2022, Tsumeb had approximately $36.8 million (December 31, 2021 – $73.8 million)
of recoverable third party in-process secondary materials, which it is obligated to process and return,
generally in the form of blister, to IXM S.A. (“IXM”) pursuant to a tolling agreement.
In April 2021, the Company and IXM agreed to amend the existing tolling agreement to provide for, among
other things: i) targeted declining excess secondary material balances, above which excess secondary
material would be required to be purchased by the Company; ii) the elimination of all excess secondary
material by March 31, 2023; iii) an increase in the defined level of normal secondary material; and iv) an
extension of the tolling agreement by three years to December 31, 2026.
As at December 31, 2022, the value of excess secondary materials, as defined in the tolling agreement,
was approximately $3.3 million, which was below the targeted excess secondary material balance under
the tolling agreement.
Debt and Available Credit Facilities
As at December 31, 2022, the Company had no debt.
The Company has a number of credit facilities that can be accessed by DPM or its subsidiaries, including
DPM’s committed revolving credit facility of $150.0 million with a consortium of four banks that matures in
July 2026. Pursuant to an accordion feature, this facility can be increased to $250.0 million, subject to
certain conditions. As at December 31, 2022, DPM was in compliance with all financial covenants and $nil
was drawn under the RCF.
Chelopech and Ada Tepe have a $21.0 million multi-purpose credit facility that matures on November 30,
2023 and as at December 31, 2022, $17.3 million had been utilized in the form of letters of credit and letters
of guarantee, primarily in respect of concession contracts with the Bulgarian Ministry of Energy.
Chelopech and Ada Tepe also have a Euro 21.0 million ($22.5 million) credit facility to support mine closure
and rehabilitation obligations in respect of concession contracts with the Bulgarian Ministry of Energy which
had been fully utilized as at December 31, 2022.
Ada Tepe also has a $10.3 million multi-purpose credit facility that matures on November 30, 2023 and as
at December 31, 2022, only $0.2 million had been utilized in the form of letters of credit and letters of
guarantee, primarily in respect of exploration contracts with the Bulgarian Ministry of Energy.
Outstanding Share Data
DPM’s common shares are traded on the TSX under the symbol DPM. As at February 16, 2023,
190,278,309 common shares were issued and outstanding.
DPM also has 2,386,676 stock options outstanding as at February 16, 2022 with exercise prices ranging
from Cdn$3.28 to Cdn$8.50 per share (weighted average exercise price – Cdn$5.77 per share).
44 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Other Contingencies
The Company is involved in legal proceedings, from time to time, arising in the ordinary course of its
business. Other than the Action filed against the MAATE by certain non-government organizations and
local agencies at Loma Larga (see the “Development and Other Major Projects – Loma Larga Gold Project”
section contained in this MD&A for details), there are no ongoing legal proceedings that are expected to
result in a material liability or have a material adverse effect on the Company’s future business, operations
or financial condition.
FINANCIAL INSTRUMENTS
As at December 31, 2022, the Company had the following financial instruments measured at fair market
value:
$ thousands
As at December 31,
Consolidated statements of financial position
Investments at fair value
Other current assets
Accounts payable and accrued liabilities
Financial assets
Publicly traded securities
Sabina special warrants
Other Warrants
Commodity swap contracts
Foreign exchange forward contracts
Financial liabilities
Commodity swap contracts
Foreign exchange option contracts
Foreign exchange forward contracts
2022
2021
40,554
-
219
149
531
3,259
1,787
318
42,167
5,795
21
21
-
1,946
1,489
-
The fair value gains or losses on each of these financial instruments have been summarized in the table
below:
$ thousands
Ended December 31,
Consolidated statements of
earnings (loss)
Revenue
Cost of Sales
Other income and expense
Consolidated statements of
comprehensive income
(loss)
Other comprehensive
income (loss)
Gains (losses) on financial
instruments
QP Hedges
Production Hedges
Foreign exchange option contracts
Sabina special warrants
Other warrants
Foreign exchange forward contracts
Gains (losses) on financial
instruments, net of income taxes
Production hedges
Foreign exchange option contracts
Publicly traded securities
Three Months
2022
2021
Twelve Months
2022
2021
(7,523)
-
872
-
190
-
(6,379)
(4,634)
(503)
(654)
(5)
-
6,732
-
1,140
2,369
46
-
(3,548)
(15,740)
(6,525)
6,289
23
-
-
4,252
8,984
(2,571)
(1,955)
(749)
-
(1,440)
(5,292)
(14,227)
(1,329)
(37,593)
For a more detailed description of the accounting policies and the nature of the gains or losses on these
financial instruments, see note 8, Financial Instruments, to the audited consolidated financial statements
for the year ended December 31, 2022.
Investments at Fair Value
As at December 31, 2022, the Company’s investments at fair value were $40.8 million (December 31, 2021
– $48.0 million), the vast majority of which related to the value of its investment in Sabina common shares
and special warrants. In September 2022, 5,000,000 Series B special warrants were exercised in return for
5,000,000 common shares by DPM following a positive production decision with respect to the Back River
project. As at December 31, 2022, DPM held 36,050,566 common shares of Sabina, representing a 6.5%
ownership interest in Sabina with a fair market value of $35.4 million (Cdn$47.9 million).
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 45
On February 13, 2023, B2Gold Corp (“B2Gold”) and Sabina announced that the parties have entered into
a definitive agreement pursuant to which B2Gold has agreed to acquire all of the issued and outstanding
shares of Sabrina through issuing 0.3867 of a common share of B2Gold for each Sabina common share,
representing a consideration of Cdn$1.87 per Sabina share on a fully-diluted basis based on the closing
price of B2Gold on the TSX as at February 10, 2023. As a result, DPM’s ownership interest in Sabina would
be valued at $49.8 million (Cdn$67.4 million) based on Cdn$1.87 per Sabina share under this transaction.
This transaction is subject to Sabina shareholders’ approval, as well as normal course regulatory approvals
and the satisfaction of customary closing conditions.
Commodity Swap Contracts
The Company is subject to price risk associated with fluctuations in the market prices for metals. The
Company regularly enters into QP Hedges to reduce the price exposure associated with the time lag
between the provisional and final determination of its concentrate sales. In addition, the Company
periodically enters into Production Hedges to reduce the price exposure associated with projected payable
copper production.
The Company designates the spot component of commodity swap contracts in respect of Production
Hedges as cash flow hedges and the spot component of commodity swap contracts in respect of QP
Hedges as fair value hedges.
The fair value gain or loss on commodity swap contracts is calculated based on the corresponding LME
forward copper prices and New York Commodity Exchange forward gold prices, as applicable. As at
December 31, 2022, the impact of a 5% increase or decrease in metal prices impacting the Company’s
accounts receivable on provisionally priced sales (the hedged item) and outstanding commodity swap
contracts (the hedging instrument), with all other variables held constant, would decrease or increase
earnings before income taxes by $0.6 million (2021 – $2.0 million) and would decrease or increase equity
by $0.6 million (2021 – $2.0 million).
Foreign Exchange Option Contracts
The Company’s foreign currency exposures arise primarily from a significant portion of its operating and
capital costs being denominated in currencies other than the U.S. dollar, the Company’s functional
currency. The Company enters into foreign exchange option contracts in order to reduce the foreign
exchange exposure associated with projected operating expenses and capital expenditures denominated
in foreign currencies. Foreign exchange option contracts are entered into, to provide price protection below
a specified “floor” rate and participation up to a specified “ceiling” rate. The option contracts entered into
are comprised of a series of call options and put options (which when combined create a price “collar”) that
are structured so as to provide for a zero upfront cash cost.
The Company designates the intrinsic value of foreign exchange option contracts as cash flow hedges. The
time value component of foreign exchange option contracts is treated as a separate cost of hedging.
The fair value gain or loss on foreign exchange option contracts was calculated based on foreign exchange
forward rates quoted in the market. As at December 31, 2022, approximately 86% of the Company’s 2023
projected Namibian dollar operating expenses, which is linked to the ZAR, have been hedged. A 5%
appreciation of the U.S. dollar relative to the ZAR on the Company’s outstanding foreign exchange option
contracts, with all other variables held constant, would decrease equity by $0.8 million (2021 – $1.9 million).
The effect of a 5% depreciation of the U.S. dollar relative to the ZAR on the Company’s outstanding foreign
exchange option contracts, with all other variables held constant, would have no impact on equity.
The Company is also exposed to credit and liquidity risks in the event of non-performance by counterparties
in connection with its commodity swap contracts and foreign exchange option contracts. These risks, which
are monitored on a regular basis, are mitigated, in part, by entering into transactions with financially sound
counterparties and, where possible, ensuring contracts are governed by legally enforceable master
agreements.
46 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
OFF BALANCE SHEET ARRANGEMENTS
The Company has not entered into any off-balance sheet arrangements.
SELECTED QUARTERLY AND ANNUAL INFORMATION
Selected financial results for the last eight quarters, which have been prepared in accordance with IFRS,
are shown in the table below:
$ millions
except per share amounts
Revenue
Net earnings (loss)
Net earnings (loss) attributable to:
(cid:120) Continuing operations
(cid:120) Discontinued operations
(cid:120) Non-controlling interests
Basic earnings (loss) per share:
(cid:120) Continuing operations
(cid:120) Discontinued operations
Diluted earnings (loss) per share:
(cid:120) Continuing operations
(cid:120) Discontinued operations
Adjusted net earnings
Adjusted basic earnings per share
Cash from operating activities
Q4
152.9
33.3
2022
Q3
Q1
Q2
128.6 134.5 153.8
26.8
33.5
(57.7)
2021
Q4
166.4
51.5
Q3
162.3
50.4
Q2
174.7
88.1
Q1
138.0
19.8
33.3
(57.7)
33.5
26.8
52.1
50.4
-
-
0.18
0.18
-
0.17
0.17
-
33.3
0.18
49.3
-
-
-
-
(0.30)
0.18
(0.30)
0.18
-
-
(0.30)
0.17
(0.30)
0.17
-
-
25.3
0.13
31.5
33.3
0.17
72.5
-
-
0.14
0.14
-
0.14
0.14
-
37.0
0.19
78.8
(0.6)
-
0.27
0.27
-
0.27
0.27
-
51.4
0.27
88.9
-
-
0.27
0.27
-
0.26
0.26
-
52.5
0.28
41.2
67.5
20.7
(0.1)
0.48
0.37
0.11
0.48
0.37
0.11
67.1
0.37
75.8
20.7
(0.7)
(0.2)
0.11
0.11
-
0.11
0.11
-
31.0
0.17
47.7
The variations in the Company’s quarterly results were driven largely by fluctuations in gold and copper
grades and recoveries, timing of metal deliveries, volumes of complex concentrate smelted, gold, copper
and sulphuric acid prices, foreign exchange rates, smelter toll rates, smelter metal recoveries, depreciation,
gains and losses related to Sabina special warrants, gains and losses on commodity swap contracts related
to hedging the Company’s metal price exposures, realized gains or losses on foreign exchange option
contracts related to hedging the Company’s foreign denominated operating expenditures, the MineRP
Disposition, restructuring costs and impairment charge.
The following table summarizes the quarterly average realized prices for gold and copper and highlights
the quarter over quarter variability:
Average Realized Metal Prices
LBMA gold
LME settlement copper
2022
Q3
Q4
Q2
Q1
Q4
Q3
Q2
Q1
2021
$/oz
$/lb
1,752
1,712 1,812 1,876
1,780
1,800
1,803
1,779
3.65
3.53
4.42
4.58
3.77
3.72
3.99
3.76
Other key items impacting the Company’s quarter over quarter results include:
(cid:120) Lower volumes of complex concentrate smelted at Tsumeb in Q1 2021, Q2 2022 and Q4 2022 as a
result of planned maintenance and additional unplanned downtime due primarily to water leaks to the
off-gas system;
(cid:120) MineRP Disposition in Q2 2021;
(cid:120) Tsumeb restructuring cost in Q1 2022; and
(cid:120) Tsumeb impairment charge in Q3 2022.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 47
The following is a summary of selected annual information for the Company’s last three fiscal years:
$ thousands, unless otherwise indicated
As at December 31,
Revenue from continuing operations
Impairment charge
Net earnings attributable to common shareholders from continuing
operations
Net earnings (loss) attributable to common shareholders from discontinued
operations
Net earnings
Adjusted net earnings from continuing operations
Basic earnings per share from continuing operations
Basic earnings (loss) per share from discontinued operations
Basic earnings per share
Diluted earnings per share
Dividend declared per share
Adjusted net earnings per share from continuing operations
Total assets
Non-current liabilities
2022
569,795
85,000
2021
641,443
-
2020
609,558
-
35,923
190,750
199,074
-
35,923
129,027
19,351
209,824
202,081
(3,072)
194,863
188,415
0.19
-
0.19
0.19
0.16
0.68
1.02
0.10
1.12
1.12
0.12
1.09
1.10
(0.02)
1.08
1.07
0.09
1.04
1,157,254
67,275
1,168,410
78,198
974,860
84,500
The following table summarizes the annual average realized prices for gold and copper and highlights the
year over year variability:
Average Realized Metal Prices
Ended December 31,
LBMA gold
LME settlement copper
$/oz
$/lb
2022
1,795
3.98
2021
1,790
3.82
2020
1,709
2.74
Other key items impacting the Company’s financial results over the period from 2020 to 2022 include:
(cid:120)
(cid:120) Declining gold grades at Chelopech in 2022 relative to 2021 and 2020 due to mining in lower grade
Improved combined gold recoveries at Chelopech in 2022 relative to 2021 and 2020;
zones, in line with its mine plan;
(cid:120) Lower volumes of complex concentrate smelted at Tsumeb in 2022 relative to 2021 and 2020 as a
result of planned maintenance and operational issues in 2022;
(cid:120) A stronger U.S. dollar in 2022 and 2020 relative to a weaker U.S. dollar in 2021 compared to the local
currencies in which the Company’s operating costs are denominated;
(cid:120) Acquisition of INV accounted for as an asset acquisition in 2021;
(cid:120) The MineRP Disposition in 2021;
(cid:120) Growth capital expenditures for the Timok and Loma Larga gold projects incurred in 2022 and 2021;
(cid:120) Dividend distribution of $30.5 million in 2022 compared to $22.4 million in 2021 and $16.3 million in
2020;
(cid:120) Purchased 2,471,500 common shares under the NCIB for a total cost of $13.6 million in 2022 and
1,723,800 common shares under the NCIB for a total cost of $10.4 million in 2021; and
(cid:120) An impairment charge of $85.0 million at Tsumeb in 2022.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company’s consolidated financial statements in accordance with IFRS requires
management to make judgments, estimates and assumptions that affect the amounts of assets, liabilities
and contingent liabilities on the date of the consolidated financial statements and the amounts of revenues
and expenses during the periods reported. Estimates and assumptions are evaluated and are based on
management’s experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. However, actual outcomes can differ from these estimates.
The significant areas of estimation and uncertainty considered by management in preparing the
consolidated financial statements include, but are not limited to:
48 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Mineral exploration and evaluation expenditures
Exploration and evaluation activities involve the search for Mineral Resources and Mineral Reserves, the
assessment of technical and operational feasibility and the determination of an identified Mineral Resource
or Mineral Reserve’s commercial viability.
The application of the Company’s accounting policy for exploration and evaluation expenditures requires
judgment in determining whether it is probable that future economic benefits will be generated from the
exploitation of an exploration and evaluation asset when activities have not yet reached a stage where a
reasonable assessment of the existence of Mineral Reserves can be determined. The estimation of Mineral
Resources is a complex process and requires significant assumptions and estimates regarding economic
and geological data and these assumptions and estimates impact the decision to either expense or
capitalize exploration and evaluation expenditures. Management is required to make certain estimates and
assumptions about future events and circumstances in order to determine if an economically viable
extraction operation can be established. Any revision to any of these assumptions and estimates could
result in the impairment of the capitalized exploration and evaluation costs. If new information becomes
available after expenditures have been capitalized that the recovery of these expenditures is no longer
probable, the expenditures capitalized are written down to the recoverable amount and charged to net
earnings (loss) in the period the new information becomes available.
Mine properties
Commencement of commercial production
All expenditures undertaken in the development, construction, installation and/or completion of mine
production facilities are capitalized and initially classified as “Mines under construction”. Upon the
commencement of commercial production, all related assets included in “Mines under construction” are
reclassified to “Mine Properties – Producing mines” or “Property, plant and equipment”.
Determination of commencement of commercial production is a complex process and requires significant
assumptions and estimates. The commencement of commercial production is defined as the date when the
mine is capable of operating in the manner intended by management. The Company considers primarily
the following factors, among others, when determining the commencement of commercial production:
(cid:120) All major capital expenditures to achieve a consistent level of production and desired capacity have
been incurred;
(cid:120) A reasonable period of testing of the mine plant and equipment has been completed;
(cid:120) A predetermined percentage of design capacity of the mine and mill has been reached; and
(cid:120) Required production levels, grades and recoveries have been achieved.
Mineral Resource and Mineral Reserve estimates
The estimation of Mineral Resources and Mineral Reserves, as defined under NI 43-101 is a complex
process and requires significant assumptions and estimates. The Company prepares its Mineral Resource
and Mineral Reserve estimates based on information related to the geological data on the size, depth and
shape of the orebody which is compiled by appropriately qualified persons. Mineral Resource and Mineral
Reserve estimates are based upon factors such as metal prices, capital requirements, production costs,
foreign exchange rates, geotechnical and geological assumptions and judgments made in estimating the
size and grade of the orebody. Mineral Resource and Mineral Reserve estimates, together with forecast
production, determine the life of mine estimates and therefore changes in the Mineral Resource or Mineral
Reserve estimates may impact the carrying value of exploration and evaluation assets, mine properties,
property, plant and equipment, depletion and depreciation charges, rehabilitation provisions and deferred
income tax assets.
Impairment of non-financial assets
At each reporting date, the carrying values of mine properties, intangible assets and property, plant and
equipment are assessed for impairment if indicators of potential impairment or reversal of previously
recognized impairment exist. If any such indication exists, an estimate of the asset’s recoverable amount
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 49
is calculated. The recoverable amount is determined as the higher of the fair value less costs of disposal
(“FVLCD”) and its value in use based on discounted cash flows. This is determined on an asset-by-asset
basis, unless the asset does not generate cash flows that are largely independent of those from other
assets or groups of assets. If this is the case, individual assets are grouped together into a Cash Generating
Unit (“CGU”) for impairment purposes. Such CGUs represent the lowest level for which there are separately
identifiable cash inflows that are largely independent of the cash flows from other assets or groups of assets.
Management has assessed the Company’s CGUs as being an individual operating site.
The assessment of impairment is based on a number of external and internal factors, some of which are
outside of the Company’s control, and requires the use of estimates and assumptions related to these
factors for each CGU. External factors include market considerations ranging from overall economic activity
and the supply of and demand for the materials used in and products produced by the Company to changes
in commodity prices, toll rates, discount rates, foreign exchange rates and regulatory requirements. Internal
factors include considerations such as production volume, ability to convert resources into reserves, capital
and operating expenditures, and future development and expansion plans.
These significant estimates and assumptions, some of which may be subjective, require that management
make decisions based on the best available information at each reporting period. It is possible that the
actual recoverable amount could be significantly different than those estimates. A significant decline in the
asset’s market value, reductions in metal price forecasts, increases in estimated future costs of production,
increases in estimated future capital costs, reductions in the amount of recoverable reserves, resources
and exploration potential, and/or adverse market conditions can result in a write-down of the carrying
amounts of the Company’s assets. Judgment is also required when considering whether significant
changes in any of these items indicate a previous impairment may have reversed.
During the year ended December 31, 2022, the Company recognized an impairment charge in respect of
Tsumeb of $85.0 million. Tsumeb’s recoverable amount of $40.0 million was determined using FVLCD,
which was calculated based on projected future cash flows utilizing the latest information available and
management’s estimates including throughput ranging from 230,000 tonnes to 350,000 tonnes, toll rates
and volumes based on historical terms received and the Company’s knowledge of the complex concentrate
market, lower operating costs, sustaining capital expenditures in line with current levels, and the foreign
exchange rate between the U.S. dollar and the ZAR of 17.05. These projected cash flows were prepared
in current dollars and discounted using a real discount rate of 10.79%, representing the estimated weighted
average real cost of capital. This rate was estimated based on the Capital Asset Pricing Model where the
costs of equity and debt were based on, among other things, estimated interest rates, market returns on
equity, share volatility, leverage and risks specific to the mining sector and Tsumeb.
The projected cash flows and FVLCD for Tsumeb can be affected by any one or more changes in the
estimates used. Changes in third party toll rates, operating costs, foreign exchange rates and volumes of
concentrate smelted have the greatest impact on value, where a 5% change in any one of above
assumptions would each change the FVLCD by approximately $30 million to $35 million as at December
31, 2022. In addition, if Tsumeb does not achieve forecasted operating levels and future cost savings in
respect of its initiative to optimize the cost structure of the smelter, there could be a further impairment
charge.
Rehabilitation provisions
Mining, processing, development and exploration activities are subject to various laws and regulations
governing the protection of the environment. The Company recognizes a liability for its rehabilitation
obligations in the period when a legal and/or constructive obligation is identified. The liability is measured
at the present value of the estimated costs required to rehabilitate operating locations based on the risk-
free nominal discount rates that are specific to the countries in which the operations are located.
The nature of these restoration and rehabilitation activities includes: i) dismantling and removing structures;
ii) rehabilitating mines and tailing dams; iii) dismantling operating facilities; iv) closure of plant and waste
sites; and v) restoration, reclamation and re-vegetation of affected areas.
Significant estimates and assumptions are made by management in determining the nature and costs
associated with the rehabilitation liability. The estimates and assumptions required include estimates of the
50 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
timing, extent and costs of rehabilitation activities, technology changes, regulatory changes, and changes
in the discount and inflation rates. These uncertainties may result in future expenditures being different from
the amounts currently provided.
Changes in the underlying assumptions used to estimate the rehabilitation liability as well as changes to
environmental laws and regulations could cause material changes in the expected cost and expected future
settlement value.
At as December 31, 2022, the undiscounted future cost for estimated mine closure and rehabilitation costs
before inflation was estimated to be $83.4 million. The carrying value of the estimated mine closure and
rehabilitation cost was $50.9 million at December 31, 2022 and $51.6 million at December 31, 2021.
Revenue recognition related to toll smelting arrangements
Revenue from processing concentrate is recognized when concentrate has been smelted and is based on
the toll rate specified in the toll agreement, which can vary based on the composition of the concentrate
processed and prevailing market conditions at the time the agreement was entered. Revenue from
processing concentrate is adjusted for any over or under recoveries of metals delivered relative to
contracted rates under the tolling agreement between Tsumeb and IXM. These adjustments represent
metal exposure and are calculated by comparing (i) the copper, gold and silver content in the concentrate
received and processed by Tsumeb multiplied by the percentage accountable in the IXM contract to (ii) the
accountable copper, gold and silver in the blister delivered to IXM and in the in-circuit material still being
processed by Tsumeb.
Many aspects of the metal exposure are subject to estimation, including the amount of metal contained in
concentrate received, in-circuit material and blister delivered where final assays have not been completed.
These significant estimates are based on the Company’s process knowledge, joint surveys with IXM and
multiple assay results, the final results of which could differ from initial estimates.
As at December 31, 2022, the Company’s accounts receivable included a metal recovery of $15.5 million
(December 31, 2021 – $2.2 million) related to estimated metal exposure at Tsumeb.
Deferred income taxes
Deferred income tax is provided using the balance sheet method on temporary differences on the reporting
date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes. Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred
income tax assets are recognized for all deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses, to the extent that it is probable that taxable income will be generated in
future periods to utilize these deductible temporary differences.
Judgment is required in determining whether deferred income tax assets are recognized on the
consolidated statements of financial position. Deferred income tax assets, including those arising from
unutilized tax losses, require management to assess the likelihood that the Company will generate future
taxable income in order to utilize the deferred income tax assets. Estimates of future taxable income are
based on forecasted cash flows from operations or other activities and the application of existing tax laws
in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the net deferred income tax assets recorded on the reporting
date could be impacted.
Additionally, future changes in tax laws in the jurisdictions in which the Company operates could impact tax
deductions in future periods and the value of its deferred income tax assets and liabilities.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 51
NON-GAAP FINANCIAL MEASURES
Certain financial measures referred to in this MD&A 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.
Non-GAAP 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.
52 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
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:
$ thousands, unless otherwise indicated
For the three months ended December 31, 2022
Ore processed
Complex concentrate smelted
Cost of sales
Add/(deduct):
Depreciation and amortization
Change in concentrate inventory
Sulphuric acid revenue(1)
Mine cash cost / Smelter cash cost(2)
Cost of sales per tonne of ore processed(3)
Cash cost per tonne of ore processed(3)
Cost of sales per tonne of complex concentrate
smelted(4)
Cash cost per tonne of complex concentrate smelted(4)
$ thousands, unless otherwise indicated
For the three months ended December 31, 2021
Ore processed
Complex concentrate smelted
Cost of sales
Add/(deduct):
Depreciation and amortization
Change in concentrate inventory
Other non-cash expenses
Sulphuric acid revenue(1)
Mine cash cost / Smelter cash cost(2)
Cost of sales per tonne of ore processed(3)
Cash cost per tonne of ore processed(3)
Cost of sales per tonne of complex concentrate
smelted(4)
Cash cost per tonne of complex concentrate smelted(4)
t
t
$/t
$/t
$/t
$/t
t
t
$/t
$/t
$/t
$/t
Chelopech
553,088
-
39,438
Ada Tepe
206,153
-
25,703
Tsumeb
-
41,835
25,968
Total
91,109
(7,456)
(3,985)
-
27,997
71
51
-
-
(13,948)
193
-
11,948
125
58
(800)
-
(6,625)
18,543
-
-
-
-
621
443
Chelopech
561,986
-
33,474
Ada Tepe
219,325
-
27,004
Tsumeb
-
51,932
33,564
Total
94,042
(5,766)
2,289
155
-
30,152
60
54
-
-
(13,604)
(253)
72
-
13,219
123
60
-
-
(3,736)
-
-
(6,614)
23,214
-
-
646
447
Represents a by-product credit for Tsumeb.
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.
Represents cost of sales and mine cash cost, respectively, divided by tonnes of ore processed.
Represents cost of sales and smelter cash cost, respectively, divided by tonnes of complex concentrate smelted.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 53
$ thousands, unless otherwise indicated
For the twelve months ended December 31, 2022
Ore processed
Complex concentrate smelted
Cost of sales
Add/(deduct):
Depreciation and amortization
Change in concentrate inventory
Sulphuric acid revenue(1)
Mine cash cost / Smelter cash cost(2)
Cost of sales per tonne of ore processed(3)
Cash cost per tonne of ore processed(3)
Cost of sales per tonne of complex concentrate
smelted(4)
Cash cost per tonne of complex concentrate smelted(4)
$ thousands, unless otherwise indicated
For the twelve months ended December 31, 2021
Ore processed
Complex concentrate smelted
Cost of sales
Add/(deduct):
Depreciation and amortization
Other non-cash expenses(5)
Change in concentrate inventory
Sulphuric acid revenue(1)
Mine cash cost / Smelter cash cost(2)
Cost of sales per tonne of ore processed(3)
Cash cost per tonne of ore processed(3)
Cost of sales per tonne of complex concentrate
smelted(4)
Cash cost per tonne of complex concentrate smelted(4)
t
t
$/t
$/t
$/t
t
t
$/t
$/t
$/t
$/t
Chelopech
2,138,792
-
133,929
Ada Tepe
852,990
-
102,739
Tsumeb
-
174,122
120,779
Total
357,447
(26,132)
(1,671)
-
106,126
63
50
(55,984)
181
-
46,936
120
55
(17,023)
-
(23,052)
80,704
-
-
-
-
-
-
694
463
Chelopech
2,199,155
-
128,726
Ada Tepe
865,587
-
99,748
Tsumeb
-
189,705
128,662
Total
357,136
(22,063)
155
(3,196)
-
103,622
59
47
-
-
(54,405)
72
(247)
-
45,168
115
52
(18,202)
(652)
-
(18,840)
90,968
-
-
-
-
678
480
Represents a by-product credit for Tsumeb.
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.
Represents cost of sales and mine cash cost, respectively, divided by tonnes of ore processed.
Represents cost of sales and smelter cash cost, respectively, divided by tonnes of complex concentrate smelted.
Relates to inventory write-down to net realizable value, reflecting market price movement, included in cost of sales in the audited consolidated statements of
earnings (loss).
54 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
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:
$ thousands, unless otherwise indicated
For the three months ended December 31, 2022
Cost of sales
Add/(deduct):
Depreciation and amortization
Treatment charges, transportation and other related
selling costs(1)
By-product credits(2)
Mine cash cost of sales
Rehabilitation related accretion and depreciation expenses(3)
General and administrative expenses(4)
Cash outlays for sustaining capital(5)
Cash outlays for leases(5)
All-in sustaining cost
Payable gold in concentrate sold(6)
Cost of sales per ounce of gold sold(7)
Cash cost per ounce of gold sold(7)
All-in sustaining cost per ounce of gold sold(7)
$ thousands, unless otherwise indicated
For the three months ended December 31, 2021
Cost of sales
Add/(deduct):
Depreciation and amortization
Other non-cash expenses
Treatment charges, transportation and other related
selling costs(1)
By-product credits(2)
Mine cash cost of sales
Rehabilitation related accretion expenses(3)
General and administrative expenses(4)
Cash outlays for sustaining capital(5)
Cash outlays for leases(5)
All-in sustaining cost
Payable gold in concentrate sold(6)
Cost of sales per ounce of gold sold(7)
Cash cost per ounce of gold sold(7)
All-in sustaining cost per ounce of gold sold(7)
oz
$/oz
$/oz
$/oz
oz
$/oz
$/oz
$/oz
Chelopech
39,438
Ada Tepe
25,703
Total
65,141
(7,456)
(13,948)
(21,404)
26,529
(24,717)
33,794
264
4,943
9,879
251
49,131
39,203
1,006
862
1,253
864
(260)
12,359
295
2,469
1,840
280
17,243
26,628
965
464
648
27,393
(24,977)
46,153
559
7,412
11,719
531
66,374
65,831
990
701
1,008
Chelopech
33,474
Ada Tepe
27,004
Total
60,478
(5,766)
155
29,571
(31,703)
25,731
70
3,568
4,158
237
33,764
40,538
826
635
833
(13,604)
72
(19,370)
227
964
(285)
14,151
32
2,361
5,235
347
22,126
33,282
811
425
665
30,535
(31,988)
39,882
102
5,929
9,393
584
55,890
73,820
819
540
757
Represents revenue deductions for treatment charges, refining charges, penalties, freight and final settlements to adjust for any differences relative to the
provisional invoice.
Represents copper and silver revenue.
Included in cost of sales and finance cost in the audited consolidated statements of earnings (loss).
Represents an allocated portion of DPM’s general and administrative expenses, including share-based compensation expense, based on Chelopech’s and Ada
Tepe’s proportion of total revenue.
Included in cash used in investing activities and financing activities, respectively, in the audited consolidated statements of cash flows.
Includes payable gold in pyrite concentrate sold in the fourth quarter of 2022 of 10,408 ounces (2021 – 11,331 ounces).
Represents cost of sales, mine cash cost of sales and all-in sustaining cost, respectively, divided by payable gold in concentrate sold.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 55
$ thousands, unless otherwise indicated
For the twelve months ended December 31, 2022
Cost of sales
Add/(deduct):
Depreciation and amortization
Treatment charges, transportation and other related
selling costs(1)
By-product credits(2)
Mine cash cost of sales
Rehabilitation related accretion and depreciation expenses(3)
General and administrative expenses(4)
Cash outlays for sustaining capital(5)
Cash outlays for leases(5)
All-in sustaining cost
Payable gold in concentrate sold(6)
Cost of sales per ounce of gold sold(7)
Cash cost per ounce of gold sold(7)
All-in sustaining cost per ounce of gold sold(7)
$ thousands, unless otherwise indicated
For the twelve months ended December 31, 2021
Cost of sales
Add/(deduct):
Depreciation and amortization
Other non-cash expenses
Treatment charges, transportation and other related
selling costs(1)
By-product credits(2)
Mine cash cost of sales
Rehabilitation related accretion expenses(3)
General and administrative expenses(4)
Cash outlays for sustaining capital(5)
Cash outlays for leases(5)
All-in sustaining cost
Payable gold in concentrate sold(6)
Cost of sales per ounce of gold sold(7)
Cash cost per ounce of gold sold(7)
All-in sustaining cost per ounce of gold sold(7)
oz
$/oz
$/oz
$/oz
oz
$/oz
$/oz
$/oz
Chelopech
133,929
Ada Tepe
102,739
Total
236,668
(26,132)
(55,984)
(82,116)
111,016
(110,959)
107,854
1,020
14,888
20,285
959
145,006
151,580
884
712
957
2,943
(793)
48,905
1,353
8,052
10,193
1,185
69,688
91,117
1,128
537
765
113,959
(111,752)
156,759
2,373
22,940
30,478
2,144
214,694
242,697
975
646
885
Chelopech
128,726
Ada Tepe
99,748
Total
228,474
(22,063)
155
102,901
(128,636)
81,083
256
10,019
15,511
936
107,805
149,297
862
543
722
(54,405)
72
4,310
(1,038)
48,687
125
7,847
17,469
1,466
75,594
129,754
769
375
583
(76,468)
227
107,211
(129,674)
129,770
381
17,866
32,980
2,402
183,399
279,051
819
465
657
Represents revenue deductions for treatment charges, refining charges, penalties, freight and final settlements to adjust for any differences relative to the
provisional invoice.
Represents copper and silver revenue.
Included in cost of sales and finance cost in the audited consolidated statements of earnings (loss).
Represents an allocated portion of DPM’s general and administrative expenses, including share-based compensation expense, based on Chelopech’s and Ada
Tepe’s proportion of total revenue.
Included in cash used in investing activities and financing activities, respectively, in the audited consolidated statements of cash flows.
Includes payable gold in pyrite concentrate sold in 2022 of 40,828 ounces (2021 – 37,747 ounces).
Represents cost of sales, mine cash cost of sales and all-in sustaining cost, respectively, divided by payable gold in concentrate sold.
Adjusted net earnings and adjusted basic earnings per share
Adjusted net earnings is a non-GAAP financial measure and adjusted basic earnings per share is a non-
GAAP ratio used by management and investors to measure the underlying operating performance of the
Company. Presenting these measures from period to period helps management and investors evaluate
earnings trends more readily in comparison with results from prior periods.
impairment charges or reversals thereof;
Adjusted net earnings are defined as net earnings attributable to common shareholders, adjusted to exclude
specific items that are significant, but not reflective of the underlying operations of the Company, including:
(cid:120)
(cid:120) unrealized and realized gains or losses related to investments carried at fair value;
(cid:120)
(cid:120) non-recurring or unusual income or expenses that are either not related to the Company’s operating
significant tax adjustments not related to current period earnings; and
segments or unlikely to occur on a regular basis.
56 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
The following table provides a reconciliation of adjusted net earnings to net earnings attributable to common
shareholders from continuing operations:
$ thousands
Ended December 31,
Net earnings attributable to common shareholders from
continuing operations
Add/(deduct):
Impairment charge
Net (gains) loss on Sabina special warrants, net of
income taxes of $nil
Tsumeb restructuring costs
Deferred income tax expense not related to current
period earnings(1)
Adjusted net earnings
Basic earnings per share
Adjusted basic earnings per share
Three Months
2022
2021
Twelve Months
2022
2021
33,320
52,108
35,923
190,750
-
-
-
-
33,320
0.18
0.18
-
85,000
(659)
-
-
51,449
0.27
0.27
2,369
5,735
-
129,027
0.19
0.68
-
6,312
-
5,019
202,081
1.02
1.09
Represents changes in unrecognized tax benefits included in net earnings related to unrealized gains (losses) on publicly traded securities, which, together with
the related deferred income tax expense (recovery), were recognized in other comprehensive income (loss).
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure used by management and investors to measure the
underlying operating performance of the Company’s operating segments. Presenting these measures from
period to period helps management and investors evaluate earnings trends more readily in comparison
with results from prior periods. In addition, the Human Capital and Compensation Committee of the Board
of Directors uses adjusted EBITDA, together with other measures, to set incentive compensation goals and
assess performance.
Adjusted EBITDA excludes the following from earnings before income taxes:
(cid:120) depreciation and amortization;
(cid:120)
(cid:120)
(cid:120)
(cid:120) unrealized and realized gains or losses related to investments carried at fair value; and
(cid:120) non-recurring or unusual income or expenses that are either not related to the Company’s operating
interest income;
finance cost;
impairment charges or reversals thereof;
segments or unlikely to occur on a regular basis.
The following table provides a reconciliation of adjusted EBITDA to earnings before income taxes:
$ thousands
Ended December 31,
Earnings before income taxes
Add/(deduct):
Impairment charge
Depreciation and amortization
Tsumeb restructuring costs
Finance costs
Interest income
Net (gains) losses on Sabina special warrants
Adjusted EBITDA
Three Months
2022
37,632
2021
60,274
Twelve Months
2022
58,742
2021
229,418
-
22,740
-
1,555
(3,673)
-
58,254
-
23,533
-
1,380
(254)
(659)
84,274
85,000
101,252
5,735
6,325
(6,554)
2,369
252,869
-
96,207
-
5,549
(632)
6,312
336,854
Cash provided from operating activities, before changes in working capital
Cash provided from operating activities, before changes in working capital, is a non-GAAP financial
measure defined as cash provided from operating activities excluding changes in working capital as set out
in the Company’s consolidated statements of cash flows. This measure is used by the Company and
investors to measure the cash flow generated by the Company’s operating segments prior to any changes
in working capital, which at times can distort performance.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 57
Free cash flow
Free cash flow is a non-GAAP financial measure defined as cash provided from operating activities, before
changes in working capital which includes changes in share-based compensation liabilities, less cash
outlays for sustaining capital, mandatory principal repayments and interest payments related to debt and
leases. This measure is used by the Company and investors to measure the cash flow available to fund
growth capital expenditures, dividends and share repurchases.
The following table provides a reconciliation of cash provided from operating activities, before changes in
working capital and free cash flow to cash provided from operating activities:
$ thousands
Ended December 31,
Cash provided from operating activities
Add:
Changes in working capital
Cash provided from operating activities, before changes in
working capital
Cash outlays for sustaining capital(1)
Principal repayments related to leases
Interest payments(1)
Free cash flow
Three Months
2022
49,289
2021
88,940
Twelve Months
2022
232,052
2021
253,580
3,064
(8,877)
(4,857)
55,469
52,353
(17,160)
(1,207)
(723)
33,263
80,063
(12,724)
(1,165)
(367)
65,807
227,195
(53,823)
(4,620)
(2,315)
166,437
309,049
(49,758)
(4,455)
(2,443)
252,393
Included in cash used in investing and financing activities, respectively, in the audited consolidated statements of cash flows.
Average realized metal prices
Average realized gold and copper prices are non-GAAP ratios used by management and investors to
highlight the price actually realized by the Company relative to the average market price, which can differ
due to the timing of sales, hedging and other factors.
Average realized gold and copper prices represent the average per unit price recognized in the Company’s
consolidated statements of earnings (loss) prior to any deductions for treatment charges, refining charges,
penalties, freight and final settlements to adjust for any differences relative to the provisional invoice.
The following table provides a reconciliation of the Company’s average realized gold and copper prices to
its revenue:
$ thousands, unless otherwise indicated
Ended December 31,
Total revenue
Add/(deduct):
Tsumeb revenue
Treatment charges and other deductions(1)
Silver revenue
Revenue from gold and copper
Revenue from gold
Payable gold in concentrate sold
Average realized gold price per ounce
Revenue from copper
Payable copper in concentrate sold
Average realized copper price per pound
Three Months
2022
152,863
2021
166,433
Twelve Months
2022
569,795
2021
641,443
(39,895)
27,393
(446)
139,915
115,341
65,831
1,752
24,574
6,726
3.65
(33,574)
30,535
(1,127)
162,267
131,407
73,820
1,780
30,860
8,175
3.77
(136,305)
113,959
(3,319)
544,130
435,657
242,697
1,795
108,473
27,224
3.98
(119,350)
107,211
(4,831)
624,473
499,630
279,051
1,790
124,843
32,680
3.82
oz
$/oz
Klbs
$/lb
Represents revenue deductions for treatment charges, refining charges, penalties, freight and final settlements to adjust for any differences relative to the
provisional invoice.
58 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
RISKS AND UNCERTAINTIES
The operating results and financial condition of the Company are subject to a number of inherent risks and
include the acquisition, exploration,
uncertainties associated with its business activities, which
development, financing, construction, commissioning and operation of its mine, mill and concentrate
processing facilities. The operating results and financial condition are also subject to numerous external
factors, which include economic, social, geopolitical, including military conflicts, environmental, regulatory,
health, legal, tax and market risks impacting, among other things, precious metals and copper prices,
sulphuric acid prices, toll rates, foreign exchange rates, inflation, the availability and cost of capital to fund
the capital requirements of the business and the supply chain related to the business, uncertainty of
production and cost estimates and the potential for unexpected costs and expenses, and changes in
general economic conditions or conditions in the financial markets. Each of these risks could have a
material adverse impact on the Company’s future business, results of operations and financial condition,
and could cause actual results to differ materially from those described in any Forward Looking Statements
contained in this MD&A. The Company endeavours to manage these risks and uncertainties in a balanced
manner with a view to mitigating risk while maximizing total shareholder returns. The Company continually
strives to identify and to effectively manage the risks of each of its business units. This includes developing
appropriate risk management strategies, policies, processes and systems. There can be no assurance that
the Company has been or will be successful in identifying all risks or that any risk-mitigating strategies
adopted to reduce or eliminate risk will be successful.
The following subsections describe some of the more significant business risks and uncertainties affecting
the Company. These risks, along with other potential risks not specifically discussed in this MD&A, should
be considered when evaluating the Company and its three-year outlook along with the more comprehensive
discussion of risks contained in the “Risk Factors” section of our most recent Annual Information Form.
Additional risks not identified below may affect the Company.
Metal Prices
The fluctuation in the price of a metal sold by the Company can significantly impact revenues as well as all-
in sustaining cost per ounce of gold and other cost measures that are reported net of by-product credits.
Accordingly, the prices of gold and copper are major factors influencing the Company’s business, results
of operations and financial condition, and, in turn, the price for its common shares.
Metal prices can fluctuate widely and are affected by numerous factors beyond the Company’s control,
including overall global market conditions; the sale or purchase of gold and silver by various central banks,
financial institutions and Exchange Traded Funds; interest rates; foreign exchange rates; inflation or
deflation; global and regional supply and demand; and the political and economic conditions of major gold,
silver and copper producing and consuming countries throughout the world. If gold and/or copper prices
were to decline significantly from current levels, there can be no assurance that cash flow from operations,
together with cash on hand and available credit under the Company’s RCF, will be sufficient to meet the
Company’s operating and capital requirements, including its contractual commitments and mandatory debt
repayments, and the Company could be forced to discontinue production, reassess the feasibility of a
particular project, and/or could lose its interest in, or be forced to sell, some of its properties. In addition, a
significant commodity price decline could result in significant reductions in Mineral Reserve and Mineral
Resource estimates, which could have a material adverse impact on the value of one or more of the
Company’s cash generating units and result in an impairment of the carrying value of certain assets,
including exploration and evaluation assets, mine properties, and property, plant and equipment.
In accordance with established risk management policies approved by our Board of Directors, the Company
enters into QP Hedges to reduce the metal price exposure associated with the time lag between the
provisional and final determination of concentrate sales. The Company also selectively enters into
Production Hedges to reduce its price exposure on future sales and in respect of certain cost measures
that are impacted by variability in by-product metal credits. These Production Hedges are entered primarily
to provide price protection below a specified “floor” price and, to reduce the upfront cost of these contracts,
are typically accompanied by option contracts that provide price participation up to a specified “ceiling”
price. The Company sells and hedges gold and copper metal contained in concentrates produced at prices
that are effectively determined by reference to the traded prices on major commodity exchanges, including
the LME and the LBMA.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 59
Conflict in Ukraine
On February 24, 2022, Russia launched an invasion of Ukraine which, as of the date hereof, is still ongoing.
Given the role each country plays around global energy and agricultural trade, the international community’s
imposition of a variety of sanctions on Russia, and the withdrawal of foreign products and services to
Russia, this invasion is putting further strains on the global supply chain and adding additional pricing
pressure above and beyond what previously was attributable to COVID-19.
The Company’s Chelopech and Ada Tepe mines are located in Bulgaria, Eastern Europe. Bulgaria does
not share a border with either Russia or Ukraine and is part of the North Atlantic Treaty Organization and
the EU. The main sources of Bulgaria’s electric energy are nuclear and coal facilities, which together
comprise approximately 80% of Bulgaria’s total energy generation. Although Russia has halted natural gas
deliveries to Bulgaria, approximately 5% of Bulgaria’s total energy supply is generated from natural gas and
DPM has not experienced and does not anticipate any disruption of power supply to its mines as a result.
In June 2022, the Council of Europe adopted sanctions that, among other things, prohibit the purchase,
import or transfer of crude oil and certain petroleum products from Russia to the EU. A temporary exemption
is available for those EU member states that, due to their geographic situation, suffer from a specific
dependence on Russian supplies and have no viable alternative options. Bulgaria has secured this
exemption until end of 2024. As a result, the impact of the conflict in Ukraine on the Company has been
limited to date to increased costs for energy, fuel and other direct materials.
Further escalation of the conflict, including an outbreak of and/or expansion of hostilities into other countries
or regions within Europe could have a material adverse effect on the Company’s operations due to, among
other factors, disruption in the Company’s supply chain, increased input costs, and increased risk (or
perception of increased risk) in the profile of the Company’s operations in Eastern Europe. In addition,
Bulgaria imports oil from Russia which is refined by a Bulgarian entity ultimately controlled by a Russian oil
company that is a designated entity under Canadian and U.S. sanctions and subject to sectoral sanctions
in the EU. The Bulgarian subsidiaries of DPM procure fuel from this refinery from Bulgarian suppliers. In
the event that existing sanctions are not eliminated and the exemption from the Council of Europe’s
sanctions in favour of Bulgaria with respect to the import of Russian oil is not extended or other sanctions
otherwise prevent Bulgaria from importing Russian oil or prevent the Company from otherwise procuring
fuel refined in Bulgaria, the costs of procuring fuel for the Company’s operations in Bulgaria may be
significantly increased. The Company continues to monitor this evolving situation and will proactively
manage the situation, although there is no assurance that the Company’s operations will not be adversely
affected by current geopolitical tensions and/or associated government sanctions.
Inflation and Global Economic Conditions
As a consequence of the COVID-19 pandemic, the war in Ukraine and other events, the global economy
has faced significant instability marked by increased inflation and supply chain issues. Global economic
conditions could further deteriorate, and the economy may contract and enter into a recession. Additionally,
future economic shocks may be precipitated by a number of causes, including a rise in the price of oil,
geopolitical instability, natural disasters and outbreaks of medical endemic or pandemic issues. Any sudden
or rapid destabilization of global economic conditions could impact the Company’s ability to obtain equity
or debt financing in the future on terms favorable to the Company. Additionally, any such occurrence could
cause decreases in asset values that are deemed to be other than temporary, which may result in
impairment charges. Further, in such an event, the Company’s operations and financial condition could be
adversely impacted.
In addition to potentially affecting the price of gold, copper and silver, general inflationary pressures may
also affect labor, commodity and other input costs, which could have a material adverse effect on the
Company’s financial condition, results of operations and capital expenditures for the development of its
projects. Over the course of 2022, global inflationary pressures increased driven by supply chain
disruptions. Global energy costs have also increased significantly following the invasion of Ukraine by
Russia in February 2022. The Company has been impacted by these inflationary pressures in the form of
higher costs for key inputs required for its operations, most notably higher energy costs. The Company has
made assumptions around the expected costs of these key inputs, and the Company’s actual costs in an
inflationary environment may differ materially from those assumptions. These inflationary impacts may be
felt directly through purchases of diesel and fuel, as well as through higher transportation costs, and
indirectly through higher costs of products which rely on energy as an input cost.
60 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Smelter Toll Rates, Sulphuric Acid Prices, Metal Recoveries and Feed
The availability of sufficient volumes of high value complex concentrate, at suitable toll rates, is critical to
the ongoing viability and profitability of the Tsumeb smelter, given the fixed cost nature of the operation. To
facilitate the procurement of complex concentrates, the Company entered into an agreement with IXM that
currently matures on December 31, 2026. There is no assurance that this agreement will be renewed with
IXM upon its expiry.
Under this agreement, the Company typically secures complex concentrate volumes at specified toll rates
covering the next 12-24 months. As at December 31, 2022, the Company has contracted high value
complex concentrate covering over 90% of its expected concentrate requirements through to the end of
2023. There can be no assurance that such concentrate will be available to the smelter in the future or that
the parties will agree on contracted toll rates that will be sufficient to generate an adequate return. From
time to time the Company may increase the amount of third party concentrate and reduce the amount of
Chelopech concentrate processed at Tsumeb. To the extent the volume of complex concentrate from
Chelopech is reduced at Tsumeb, it can affect the profitability of the Tsumeb smelter. Failure to find
sufficient quantities of suitable high value complex concentrate to be processed at acceptable toll rates
could have a material adverse impact on the Company’s business, financial condition and results of
operations.
Under the agreement with IXM, Tsumeb must return specified quantities of copper, gold and silver, and
maintain specified maximum levels of in-process metal. Metal over and under recoveries at the smelter are
subject to smelter processing capabilities, contracted terms, and various estimates, including the quantities
of metal contained in concentrate received, material in-process and blister delivered. These estimates are
based on the Company’s process knowledge and multiple assay results. Actual metal deliveries could differ
materially from initial estimates and could have a material adverse impact on the Company’s business,
financial condition and results of operations as any over or under recovery of metals is recorded in revenue.
In the event that in-process metals at the smelter exceed specified maximum contractual levels, Tsumeb
may be required to purchase such excess in-process metal. IXM may agree to waive such purchase
requirement, and has done so in 2021 and 2022, when in-process metal exceeded maximum contractual
levels.
Tsumeb produces sulphuric acid as a by-product of the smelting operation. Historically, the vast majority of
this sulphuric acid has been sold to customers in Namibia, with the balance exported to other countries in
Africa. The revenue from sulphuric acid sales makes up approximately 15% to 20% of Tsumeb’s revenue
and changes in the market price of and demand for sulphuric acid can have a material impact on Tsumeb’s
financial results. As at December 31, 2022, approximately 85% of Tsumeb’s forecast sulphuric acid
production over the next three years is expected to be sold domestically under a reference price contract
which includes floor and ceiling prices. The remainder of Tsumeb’s sulphuric acid production is expected
to be sold at market terms under spot or longer-term agreements. An inability to sell or deliver sufficient
acid production whereby Tsumeb’s sulphuric acid storage capacity is exceeded would result in a reduction
of smelter operating levels up to and including a full stoppage.
Foreign Exchange
By virtue of its international operations, the Company incurs costs and expenses in a number of foreign
currencies. The revenue from its mining and smelting operations received by the Company is denominated
in U.S. dollars since the prices of the metals that it produces are referenced in U.S. dollars, while the
majority of operating and capital expenditures of its mining and smelter operations are denominated in
Bulgarian lev, which is pegged to the Euro, the Namibian dollar, which is tied to the ZAR, and the Canadian
dollar. Fluctuations in these foreign exchange rates give rise to foreign exchange exposures, either
favourable or unfavourable, which could have a material impact on the Company’s business, financial
condition and results of operations. Fluctuations in the U.S. dollar relative to certain currencies can also
have an impact on commodity prices quoted in U.S. dollars, such that a stronger U.S. dollar tends to have
a negative impact on U.S. quoted prices while a weaker U.S. dollar tends to have a favourable impact. As
a result, this relationship is considered in conjunction with the Company’s risk assessment.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 61
From time to time, the Company enters into foreign exchange option contracts in order to reduce the foreign
exchange exposures associated with projected operating expenses and capital expenditures denominated
in foreign currencies.
Operations
Mining operations and related processing and infrastructure facilities are subject to a number of risks,
including risks related specifically to the mining and metals industry. Such risks include, without limitation,
environmental hazards, industrial accidents, disruptions in the supply of critical materials and supplies,
disruptions due to pandemic conditions, delays in obtaining work visas or other authorizations, labour
disputes, changes in laws, technical difficulties or failures, equipment failure, failure of retaining dams
around tailings disposal areas which may result in environmental pollution and consequent liability, unusual
and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions
involved in the drilling and removal of material. Such risks could result in damage to, or destruction of,
mines and other processing facilities, damage to life or property, environmental damage, delays in mining
and processing, delays in scheduled maintenance, losses and possible legal liability. Any prolonged
downtime or shutdowns at the Company’s mining and processing facilities could have a material adverse
impact on the Company’s business, financial condition and results of operations.
Success of the Company’s operations also depends on adequate public infrastructure. Reliable roads,
bridges, power sources and water supplies are important determinants which affect capital and operating
costs. Natural events, such as seismic events and severe climatic conditions, as well as sabotage,
government or other interference in the maintenance or provision of such infrastructure could have a
material adverse impact on the Company’s business, financial condition and results of operations.
Mineral Resources and Mineral Reserves
The Mineral Resources and Mineral Reserves disclosed by the Company are estimates and no assurance
can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery
will be realized. There are numerous uncertainties inherent in estimating Mineral Resources and Mineral
Reserves, including many factors beyond the Company’s control. Such estimation is a subjective process
and the accuracy of any estimate is a function of the quantity and quality of available data and of the
assumptions made and judgments used in engineering and geological interpretation. Short-term operating
factors, such as the need for orderly development of the ore bodies or the processing of new or different
ore grades, may cause the mining operation to be unprofitable in any particular accounting period. In
addition, there can be no assurance that gold, silver or copper recoveries in small scale laboratory tests will
be duplicated in larger scale tests under on-site conditions or during production.
Fluctuations in gold, silver and copper prices, results of drilling, change in cut-off grades, metallurgical
testing, production and the evaluation of mine plans subsequent to the date of any estimates may require
revision of such Mineral Resource and Mineral Reserve estimates. The volume and grade of Mineral
Reserves mined and processed, and the recovery rates achieved may not be the same as currently
anticipated. Any material reduction in the estimated Mineral Resources and Mineral Reserves could have
a material adverse impact on the Company’s business, financial condition and results of operations. A
significant decrease in the Mineral Resource and Mineral Reserve estimates could have a material adverse
impact on the carrying value of exploration and evaluation assets, mine properties, property, plant and
equipment, depletion and depreciation charges, and estimated mine closure and rehabilitation costs, and
could result in an impairment of the carrying value.
Need for Mineral Reserves
As mines have limited lives based on Proven and Probable Mineral Reserves, the Company must
continually develop, replace and expand its Mineral Reserves and Mineral Resources as its mines produce
gold, copper and silver concentrates. The Company’s ability to maintain or increase its annual production
of gold, copper and silver and its aggregate Mineral Reserves will be significantly dependent on its ability
to expand its Mineral Resource base both at its existing mines and new mines it intends to bring into
production in the future.
62 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Exploration
Exploration is speculative and involves many risks that even a combination of careful evaluation, experience
and knowledge utilized by the Company may not eliminate. Once a site with mineralization is discovered,
it may take several years from the initial phases of drilling until production is possible. Substantial
expenditures are normally required to locate and establish Mineral Reserves and to permit and construct
mining and processing facilities. While the discovery of mineralization may result in substantial rewards if
an orebody is proven, few properties that are explored are ultimately developed into producing mines.
Financing, Interest Rate and Liquidity
The Company relies on the cash flows generated from its mining and smelting operations, including
provisional payments received from its customers, cash on hand, available credit under its RCF, and its
ability to raise debt and equity from the capital markets to fund its operating, investment and liquidity needs.
The cyclical nature of the Company’s businesses, general economic conditions and the volatility of capital
markets are such that conditions could change dramatically, affecting the Company’s cash flow generating
capability, its ability to maintain, or draw upon, its RCF or the existing terms under its concentrate sales or
toll agreements, as well as its liquidity, cost of capital and its ability to access additional capital, which could
have a material adverse impact on the Company’s earnings and cash flows and, in turn, could affect total
shareholder returns. To reduce these risks, the Company: (i) prepares regular cash flow forecasts to
monitor its capital requirements, available liquidity and compliance with its debt covenants; (ii) strives to
maintain a prudent capital structure that is comprised primarily of equity financing and a long-term
committed RCF; and (iii) targets a minimum level of liquidity comprised of surplus cash balances and/or
available committed lines of credit to avoid being placed into a situation where it is required to raise
additional capital at times when the costs or terms would be regarded as unfavourable.
The Company’s exposure to the risk of changes in market interest rates relates primarily to the interest
earned on the Company’s cash and cash equivalent and short-term investments, as well as potential
interest paid on future drawdowns under its RCF, which is based on a floating reference rate.
Furthermore, there can be no assurance that the Company’s operations will be profitable or that the
Company will be able to raise capital on terms that it considers reasonable. Adverse commodity market,
general economic conditions and adverse capital market conditions could result in a delay or the indefinite
postponement of development or construction projects and could have a material adverse impact on the
Company’s business, financial condition, results of operations and share price.
Environmental, Health and Safety
Mining and smelting operations, including exploration, development and production of mineral deposits and
disposal of tailings and hazardous materials, generally involve a high degree of risk and are subject to
conditions and events beyond the Company’s control. The Company’s operations are subject to all of the
hazards and risks normally encountered in the mining and smelting sectors including: adverse
environmental conditions; industrial and environmental accidents; metallurgical and other processing
problems; unusual or unexpected rock formations; ground or slope failures; structural cave-ins or slides;
flooding or fires; seismic activity; rock bursts; equipment failures; failures to contain hazardous materials
(including arsenic) within the designated areas; and periodic interruptions due to weather conditions; as
well as intentional acts by individuals or groups who intend to harm or disrupt the Company’s operations.
These risks could result in the destruction of mines or processing facilities, the failure of tailings
management facilities and damage to infrastructure, causing partial or complete shutdowns, personal injury
or death, environmental or other damage to the Company’s properties or the properties of others, monetary
losses and potential legal liability. Although the Company conducts extensive maintenance and monitoring
and incurs significant costs to maintain its operations, equipment and infrastructure, including tailings
management facilities, unanticipated failures or damage may occur that could cause injuries, production
loss or environmental pollution resulting in significant legal and/or economic liability.
The Company’s mining and smelting operations are subject to extensive environmental, health and safety
regulations in the various jurisdictions in which it operates. These regulations address, among other things,
emissions; air and water quality standards; land use; rehabilitation and reclamation; and safety and work
environment standards, including human rights. They also set forth limitations on the generation,
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 63
transportation, storage and disposal of various wastes, including hazardous wastes. Environmental, health
and safety legislation continues to evolve and, while the Company takes active steps to monitor this
legislation, it could result in stricter standards and enforcement, increased capital and operating costs and
burdens to achieve compliance, increased fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of responsibility for companies
and their officers, directors and employees. Amendments to current laws and regulations governing the
Company’s mining, processing, development and exploration activities, or more stringent implementation
thereof, could have a material adverse impact on the Company’s business, financial condition and results
of operations, and cause increases in exploration expenses, capital expenditures, production costs or future
rehabilitation costs or reduction in levels of production at producing properties or require abandonment or
delays in development of new mining properties and/or expansion of existing properties.
Environmental hazards may exist on the properties in which the Company holds interests, which are
unknown to the Company at present, and which have been caused by previous or existing owners or
operators of the properties. The Company may also acquire properties with known or undiscovered
environmental risk. Any indemnifications by the previous owners or others may not be adequate to pay all
the fines, penalties and costs incurred related to such properties. Some of the Company’s properties have
also been used for mining, processing, smelting and related operations for many years before the Company
acquired them and were acquired “as is” or with assumed environmental liabilities from previous owners or
operators. The Company has been required to address contamination at its properties in the past and may
need to do so in the future, either for existing environmental conditions or for leaks, discharges or
contamination that may arise from its ongoing operations or other contingencies. The cost of addressing
environmental conditions or risks, and liabilities associated with environmental damage may be significant,
and could have a material adverse impact on the Company’s business, financial condition and results of
operations. Production at the Company’s mines and processing facilities involves the use of various
chemicals, including certain chemicals that are designated as hazardous substances. Contamination from
hazardous substances, either at the Company’s own properties or other locations for which it may be
responsible, may subject the Company to liability for the investigation or remediation of contamination, as
well as for claims seeking to recover costs for related property damage, personal injury or damage to natural
resources. The occurrence of any of these events could have a material adverse impact on the Company’s
business, financial condition and results of operations.
In 2016, the Company completed a major multi-year capital program at its smelter in Namibia directed at
modernizing the environmental equipment being utilized and debottlenecking its processing capacity. This
included the completion of a sulphuric acid plant, which has reduced the plant’s SO2 emissions. The
Company is committed to making further improvements to the health, safety and environmental
performance of the smelter and is continuously assessing the scope of any capital expenditures required
to support these further improvements. The Company’s environmental and occupational health and safety
performance will be subject to continued monitoring by the Namibian authorities and deviation from
expected environmental and occupational health and safety outcomes could have a material adverse
impact on the Company’s future production, business, financial condition and results of operations.
COVID-19
In March 2020, the World Health Organization classified the COVID-19 epidemic as a worldwide pandemic
and governments across the globe undertook extensive measures to combat the spread of this virus. To
date, as a result of the proactive actions being taken within the regions in which we operate and by
personnel at each of our sites, the Company has not experienced any material disruptions to its operations
as a result of COVID-19 and all operations are currently operating at full capacity.
The Company continues to closely assess and monitor the COVID-19 situation in the jurisdictions in which
it operates. At present, there do not appear to be any imminent COVID-19 related circumstances that are
expected to disrupt the Company’s operations, however, recognizing that the situation remains dynamic,
the Company is not able to reliably estimate the likelihood, timing, duration, severity and scope of this
pandemic and the potential impact it could have on the Company’s operating and financial results. There
is no assurance that the pandemic will not have a material adverse impact on the future results of the
Company.
64 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management, under the supervision of the Chief Executive Officer (“CEO”) and the Chief
Financial Officer (“CFO”), has designed disclosure controls and procedures (“DC&P”) and internal control
over financial reporting (“ICFR”), as defined in NI 52-109, based on the Internal Control – Integrated
Framework (2013) developed by COSO (Committee of Sponsoring Organizations of the Treadway
Commission).
The CEO and CFO evaluated or caused to be evaluated under their supervision the design and operating
effectiveness of the DC&P and ICFR as defined by NI 52-109 as at December 31, 2022. Based on this
evaluation, the CEO and CFO concluded that the Company's DC&P and ICFR were designed and operating
effectively as at December 31, 2022.
NI 52-109 also requires Canadian public companies to disclose in their MD&A any change in ICFR that has
materially affected, or is reasonably likely to materially affect, ICFR. No material changes were made to the
ICFR in the year ended December 31, 2022. Only reasonable, rather than absolute, assurance that
misstatements are prevented or detected on a timely basis by ICFR can be provided due to the inherent
limitations of the ICFR system. Such limitations also apply to the effectiveness of ICFR as it is also possible
that controls may become inadequate because of changes in conditions or deterioration in compliance with
policies and procedures.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements and other information included in this MD&A and our other disclosure documents
constitute “forward looking information” or “forward looking statements” within the meaning of applicable
securities legislation, which we refer to collectively hereinafter as “Forward Looking Statements”.
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 MD&A relate to, among other things: expected cash flows; the
price of gold, copper, silver and sulphuric acid; toll rates, metal exposure and stockpile interest deductions
at Tsumeb; the estimation of Mineral Reserves and Mineral Resources and the realization of such mineral
estimates; estimated capital costs, all-in sustaining cost, operating costs and other financial metrics,
including those set out in the outlook and guidance provided by the Company; currency fluctuations; the
impact of any impairment charges; Tsumeb’s ability to continue to benefit from the EPZ and expected new
SSEZ regime in Namibia; the processing of Chelopech concentrate; timing of further optimization work at
Tsumeb; potential benefits of any upgrades and/or expansion, including the potential rotary holding furnace
installation at the Tsumeb smelter; DPM’s strategy, plans, targets and goals in respect of environmental,
social and governance issues, including climate change, greenhouse gas emissions reduction targets,
tailings management facilities and human rights initiatives; results of economic studies; expected
milestones; timing and success of exploration activities, including at the (cid:253)oka Rakita target; the timing of
the completion and results of an updated FS for the Loma Larga gold 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; expectations with respect to the potential to
incorporate additional existing Mineral Resources into the Timok mine plan by processing the sulphide
portion of the ore body; 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; requirements for additional capital;
measures the Company is undertaking in response to the COVID-19 outbreak, including its impacts on the
Company’s global supply chains, the level of and duration of reductions or curtailments in operating levels
at any of the Company’s operations or in its exploration and development activities; government regulation
of mining and smelting operations; environmental risks; reclamation expenses; potential or anticipated
outcome of title disputes or claims; benefits of digital initiatives; the timing and amount of dividends; the
timing and number of common shares of the Company that may be purchased pursuant to the NCIB; and
the timing and expected benefit of the recently announced acquisition by B2Gold of Sabina.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 65
Forward Looking Statements are based on certain key assumptions and the opinions and estimates of
management and QP (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 document, 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
the 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
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, closure and/or failure of plant, equipment or processes to operate
as anticipated, employees and contractors becoming infected, low vaccination rates, lost work hours and
labour force shortages; 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 development of 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, including the potential rotary holding furnace installation at the
Tsumeb smelter; 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 timing, completion and expected benefit of the acquisition by B2Gold of Sabina; risks related to the
implementation, cost and realization of benefits from digital initiatives; uncertainties with respect to realizing
the targeted MineRP earn-outs as well as those risk factors discussed or referred to in any other documents
(including without limitation the Company’s most recent AIF) filed from time to time with the securities
regulatory authorities in all provinces and territories of Canada and available on SEDAR at www.sedar.com.
This list is not exhaustive of the factors that may affect any of the Company’s Forward Looking Statements.
The Forward Looking Statements are based on what the Company’s management considers to be
reasonable assumptions, beliefs, expectations and opinions based on the information currently available to
it. Without limitation to the foregoing, the following section outlines certain specific Forward Looking
Statements contained in the “Three-Year Outlook” section of this MD&A, unless otherwise noted, 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):
Ore processed: assumes Chelopech and Ada Tepe mines perform at planned levels. Subject to a number
of risks, the more significant of which is failure of plant, equipment or processes to operate as anticipated.
Cash cost per tonne of ore processed: assumes Chelopech and Ada Tepe ore mined/milled are in line with
the guidance provided; foreign exchange rates remain at or around current levels; and operating expenses
at Chelopech and Ada Tepe are at planned levels. Subject to a number of risks, the more significant of
which are: lower than anticipated ore mined/milled; a weaker U.S. dollar relative to the Euro; and
unexpected increases in labour and other operating costs.
Metals contained in concentrate produced: assumes grades and recoveries are consistent with
current estimates of Mineral Resources and Mineral Reserves and DPM’s current expectations;
and ore
66 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
mined/milled is consistent with guidance. Subject to a number of risks, the more significant of which are:
lower than anticipated ore grades, recovery rates and ore mined/milled.
All-in sustaining cost: assumes that metals contained in concentrate produced and cash cost per tonne of
ore processed at Chelopech and Ada Tepe are each in line with the guidance provided; copper and silver
prices remain at or around current levels; the timing, destination and commercial terms in respect of
concentrate deliveries are consistent with DPM’s current expectations; payable metals in concentrate sold
are consistent with the guidance provided; and general and administrative expenses, sustaining capital
expenditures and leases are consistent with the guidance provided. Subject to a number of risks, the more
significant of which are: lower than anticipated metals contained in concentrate produced; concentrate
deliveries and metal prices; a higher than anticipated cash cost per tonne of ore processed; and higher
than anticipated sustaining capital expenditures, leases and general and administrative expenses.
Complex concentrate smelted at Tsumeb: assumes no significant disruption in equipment availability,
planned maintenance activities or concentrate supply. Subject to a number of risks, the more significant of
which are: unanticipated operational issues; delays in maintenance activities; lower than anticipated
equipment availability; and disruptions to or changes in the supply of complex concentrate, including
changes in the proportion of third party and Chelopech feed.
Cash cost per tonne of complex concentrate smelted: assumes complex concentrate smelted is consistent
with the guidance provided; no delays in planned maintenance activities; sulphuric acid prices are at or
around current levels; sulphuric acid production and operating expenses are at planned levels; and foreign
exchange rates remain at or around current levels. Subject to a number of risks, the more significant of
which are: lower than anticipated complex concentrate smelted and sulphuric acid production;; lower than
anticipated sulphuric acid prices; strengthening of the ZAR relative to the U.S. dollar; and higher than
anticipated operating and transportation costs due to a variety of factors, including higher than anticipated
inflation, labour and other operating costs.
Sustaining and growth capital expenditures: 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 permits and approvals, equipment deliveries, equipment
performance, and the speed with which work is performed; availability of qualified labour; and changes in
project parameters and estimated costs, including foreign exchange impacts.
Liquidity (see comments contained in “Liquidity and Capital Resources” section): assumes the operating
and cost performance are consistent with current expectations; metal and sulphuric acid prices, and foreign
exchange rates remain at or around current levels; concentrate and sulphuric acid sales agreements, and
smelter toll terms are consistent with current terms and/or forecast levels; progress of capital projects is
consistent with current expectations; and DPM’s RCF remains in place. Subject to a number of risks, the
more significant of which are: lower than anticipated metals production at Chelopech and Ada Tepe,
complex concentrate throughput and sulphuric acid production at Tsumeb, concentrate deliveries and metal
prices; lower than anticipated reductions in secondary material at Tsumeb; a weaker U.S. dollar relative to
local operating currencies; changes in contractual sales and/or toll terms and sulphuric acid prices; changes
to capital project parameters, schedule and/or costs; and the inability to draw down on DPM’s RCF due to
a breach or potential breach of one of its covenants.
General: assumes ability to carry on exploration and development activities; ability to operate in a safe,
efficient and effective manner; no significant unanticipated operational or technical difficulties; maintenance
of good relations with the communities surrounding Chelopech, Ada Tepe, Tsumeb and Loma Larga; no
significant events or changes relating to regulatory, environmental, health and safety matters, and no
significant negative effects as a result of , including that the Company does not experience any significant
negative effects as a result of the COVID-19 pandemic, the conflict in Ukraine and current economic
conditions, including inflationary impacts, beyond what has been factored into the Company’s Forward
Looking Statements.
The reader is 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.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 67
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 are 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 opinion should change. Accordingly, readers
are cautioned not to place undue reliance on Forward Looking Statements.
CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING DIFFERENCES IN REPORTING OF
MINERAL RESOURCE ESTIMATES
This MD&A has been prepared in accordance with the requirements of Canadian securities laws, which
differ from the requirements of United States securities laws. Canadian reporting requirements for
disclosure of mineral properties are governed by NI 43-101.
The United States Securities and Exchange Commission (“SEC”) adopted amendments to its disclosure
rules to modernize the mineral property disclosure requirements for issuers whose securities are registered
with the SEC under the Securities Exchange Act of 1934, as amended. These amendments became
effective February 25, 2019 (the “SEC Modernization Rules”) with compliance required for the first fiscal
year beginning on or after January 1, 2021. The SEC Modernization Rules replace the historical disclosure
requirements for mining issuers that were included in SEC Industry Guide 7. As a result of the adoption of
the SEC Modernization Rules, the SEC now recognizes estimates of “measured mineral resources”,
“indicated mineral resources” and “inferred mineral resources”. In addition, the SEC has amended its
definitions of “proven mineral reserves” and “probable mineral reserves” to be “substantially similar” to the
corresponding CIM Definition Standards incorporated by reference in NI 43-101.
Readers are cautioned that while the above terms are “substantially similar” to the corresponding CIM
Definition Standards, there are differences in the definitions under the SEC Modernization Rules and the
CIM Definition Standards. Accordingly, there is no assurance any Mineral Reserves or Mineral Resources
that the Company may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral
resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the
same had the Company prepared the reserve or resource estimates under the standards adopted under
the SEC Modernization Rules.
Readers are also cautioned that while the SEC will now recognize “measured mineral resources”, “indicated
mineral resources” and “inferred mineral resources”, it should not be assumed that any part or all of the
mineralization in these categories will ever be converted into a higher category of Mineral Resources or
into Mineral Reserves. Mineralization described using these terms has a greater amount of uncertainty as
to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly,
readers are cautioned not to assume that any “measured mineral resources”, “indicated mineral resources”
or “inferred mineral resources” that the Company reports are or will be economically or legally mineable.
Further, “inferred mineral resources” have a greater amount of uncertainty as to their existence and as to
whether they can be mined legally or economically. Therefore, readers are also cautioned not to assume
that all or any part of the “inferred mineral resources” exist. In accordance with Canadian securities laws,
estimates of “inferred mineral resources” cannot form the basis of feasibility or other economic studies,
except in limited circumstances where permitted under NI 43-101. For the above reasons, information
contained in this MD&A containing descriptions of the Company’s mineral deposits may not be comparable
to similar information made public by United States companies subject to the reporting and disclosure
requirements under the United States federal securities laws and the rules and regulations thereunder.
68 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
(cid:3)
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The accompanying consolidated financial statements of Dundee Precious Metals Inc. (the “Company”)
and all information in this financial report are the responsibility of management. The consolidated
financial statements have been prepared in accordance with International Financial Reporting
Standards and, where appropriate,
judgments.
Management has reviewed the financial information presented throughout this report and has ensured
it is consistent with the consolidated financial statements.
include management’s best estimates and
Management maintains a system of internal control designed to provide reasonable assurance that
assets are safeguarded from loss or unauthorized use, and that financial information is timely and
reliable. However, any system of internal control over financial reporting, no matter how well designed
and implemented, has inherent limitations and may not prevent or detect all misstatements.
The Board of Directors is responsible for ensuring that management fulfils its responsibilities for
financial reporting and is ultimately responsible for reviewing and approving the consolidated financial
statements. The Board carries out this responsibility principally through its Audit Committee.
The Board of Directors appoints the Audit Committee, and all of its members are independent
directors. The Audit Committee meets periodically with management and the auditors to review
internal controls, audit results, accounting principles and related matters. The Board of Directors
approves the consolidated financial statements on the recommendation from the Audit Committee.
PricewaterhouseCoopers LLP, an independent firm of Chartered Professional Accountants, was
appointed by the shareholders at the last annual meeting to examine the consolidated financial
statements and provide an independent professional opinion. PricewaterhouseCoopers LLP has full
and free access to the Audit Committee.
_(signed) ”David Rae”_________
David Rae
President and Chief Executive Officer
_(signed) “Navin Dyal”__
Navin Dyal
Executive Vice President and
Chief Financial Officer
(cid:3)
February 16, 2023
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 69
70 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 71
72 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 73
74 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 75
76 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31, 2022 and 2021
(in thousands of U.S. dollars)
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable
Inventories
Other current assets
Non-Current Assets
Investments at fair value
Exploration and evaluation assets
Mine properties
Property, plant & equipment
Intangible assets
Deferred income tax assets
Other long-term assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities
Income tax liabilities
Current portion of long-term liabilities
Non-Current Liabilities
Rehabilitation provisions
Share-based compensation plans
Other long-term liabilities
TOTAL LIABILITIES
EQUITY
Share capital
Contributed surplus
Retained earnings
Accumulated other comprehensive loss
TOTAL SHAREHOLDERS' EQUITY
TOTAL LIABILITIES AND EQUITY
Notes
2.2(e)
6
7
8(c)
8(a),8(b)
9
10
11
12
22
13
22
16
15
18
16
26(c)
December 31,
2022
December 31,
2021
433,176
126,437
45,813
5,495
610,921
40,773
126,231
113,520
237,103
15,501
6,590
6,615
546,333
1,157,254
86,529
83
10,273
96,885
45,823
8,122
13,330
67,275
164,160
334,377
128,338
49,626
1,452
513,793
47,983
98,925
138,037
335,305
17,359
8,685
8,323
654,617
1,168,410
77,170
2,395
6,234
85,799
50,401
13,933
13,864
78,198
163,997
583,027
6,436
411,786
(8,155)
993,094
1,157,254
585,050
8,629
412,394
(1,660)
1,004,413
1,168,410
The accompanying notes are an integral part of the consolidated financial statements
Signed on behalf of the Board of Directors
(Signed) "David Rae"
David Rae, Director
(Signed) "Anthony Walsh"
Anthony Walsh, Director
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 77
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, except per share amounts)
Notes
2022
2021
Continuing Operations
Revenue
Costs and expenses
Cost of sales
General and administrative expenses
Corporate social responsibility expenses
Exploration and evaluation expenses
Impairment charge
Finance costs
Other income and expense
Earnings before income taxes
Current income tax expense
Deferred income tax expense
Net earnings from continuing operations
Discontinued Operations
Net earnings from discontinued operations
Net earnings
Net earnings (loss) attributable to:
Common shareholders of the Company
From continuing operations
From discontinued operations
Non-controlling interests
Net earnings
Earnings per share attributable to
common shareholders of the Company
- Basic
From continuing operations
From discontinued operations
- Diluted
From continuing operations
From discontinued operations
29
19
19
19
3
20
21
22
22
4
23
23
23
23
569,795
641,443
357,447
28,800
6,240
24,230
85,000
6,325
3,011
511,053
58,742
21,199
1,620
35,923
-
35,923
35,923
-
-
35,923
0.19
-
0.19
-
357,136
18,161
4,838
18,006
-
5,549
8,335
412,025
229,418
33,625
5,064
190,729
19,095
209,824
190,750
19,351
(277)
209,824
1.02
0.10
1.02
0.10
The accompanying notes are an integral part of the consolidated financial statements
78 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars)
Net earnings
Other comprehensive income (loss) items that may be
reclassified subsequently to profit or loss:
Foreign exchange option contracts designated as
cash flow hedges
Unrealized gains (losses), net of income tax of $nil (2021 - $nil)
Deferred cost of hedging, net of income tax of $nil (2021 - $nil)
Realized (gains) losses transferred to cost of sales, net of
income tax of $nil (2021 - $nil)
Commodity swap contracts designated as
cash flow hedges
Unrealized losses, net of income tax recovery
of $nil (2021 - $1,525)
Deferred cost of hedging, net of income tax recovery
of $nil (2021 - $56)
Realized losses transferred to revenue, net of
income tax recovery of $nil (2021 - $1,516)
Cost of hedging transferred to revenue, net of
income tax recovery of $nil (2021 - $58)
Currency translation adjustments from discontinued operations
Other comprehensive income (loss) items that will not be
reclassified subsequently to profit or loss:
Unrealized losses on publicly traded securities, net of
income tax recovery of $nil (2021 - $5,019)
Remeasurement of pension obligations,
net of income tax recovery of $108 (2021 - $nil)
Comprehensive income
Comprehensive income (loss) attributable to:
Common shareholders of the Company
From continuing operations
From discontinued operations
Non-controlling interests
Comprehensive income
2022
35,923
2021
209,824
(1,544)
104
1,175
(2,504)
1,140
(6,525)
-
-
-
-
-
(13,723)
(504)
13,645
522
(908)
(5,292) (37,593)
(903)
-
(6,495) (46,415)
29,428
163,409
29,428
-
-
29,428
145,243
18,682
(516)
163,409
The accompanying notes are an integral part of the consolidated financial statements
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 79
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars)
OPERATING ACTIVITIES
Earnings before income taxes
Depreciation and amortization
Impairment charge
Changes in working capital
Other items not affecting cash
Proceeds from (payments for) settlement of derivative contracts
Interest received
Income taxes paid
Cash provided from operating activities of continuing operations
Cash used in operating activities of discontinued operations
INVESTING ACTIVITIES
Proceeds from MineRP Disposition
Acquisition of INV, net of cash acquired
Purchase of publicly traded securities
Proceeds from disposal of mine properties, property,
plant and equipment and intangible assets
Expenditures on exploration and evaluation assets
Expenditures on mine properties
Expenditures on property, plant and equipment
Expenditures on intangible assets
Increase in restricted cash
Cash used in investing activities of continuing operations
Notes
3
25(a)
25(b)
4
4
5
4
2022
2021
58,742
101,252
85,000
229,418
96,207
-
4,857 (55,469)
26,209
(3,875)
3,998 (14,082)
454
6,625
(24,547) (29,157)
253,580
232,052
-
(442)
-
-
(500)
45,188
(1,569)
(8,307)
5
263
(26,694) (10,100)
(9,549) (16,862)
(47,673) (33,648)
(1,398) (3,538)
(3,500)
(85,809) (32,073)
-
FINANCING ACTIVITIES
Proceeds from share issuance
Principal repayments related to leases
Dividends paid
Payments for share repurchases
Interest and finance fees paid
Cash used in financing activities of continuing operations
Cash used in financing activities of discontinued operations
Increase in cash and cash equivalents of continuing operations
Decrease in cash of discontinued operations
Cash at beginning of year, continuing operations
Cash at beginning of year, discontinued operations
Cash and cash equivalents at end of year,
continuing operations
Cash at end of year, discountinued operations
26(a)
26(b)
3,377
2,810
(4,620) (4,455)
(28,606) (22,143)
(10,207)
(13,619)
(3,976) (2,667)
(47,444) (36,662)
-
(140)
98,799
184,845
-
(582)
334,377
149,532
-
582
2.2(e)
433,176
-
334,377
-
The accompanying notes are an integral part of the consolidated financial statements
80 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, except for number of shares)
December 31, 2022
Amount
Number
December 31, 2021
Amount
Number
Notes
Share Capital
Authorized
Unlimited common and preference shares
with no par value
Issued
Fully paid common shares
with one vote per share
Balance at beginning of year
Shares issued on exercise of stock options
Shares issued on acquisition of INV
Share repurchases
Transferred from contributed surplus
18
5
26(b)
on exercise of stock options
Balance at end of year
Contributed surplus
Balance at beginning of year
Share-based compensation expense
Transferred to share capital on exercise of stock options
MineRP Disposition
Stock options issued on acquisition of INV
Share repurchases
Other changes in contributed surplus
4
5
26(b)
Balance at end of year
Retained earnings
Balance at beginning of year
Net earnings attributable to common shareholders
of the Company
Dividend distribution
Share repurchases
Balance at end of year
Accumulated other comprehensive loss
Balance at beginning of year
Other comprehensive loss
MineRP disposition
Balance at end of year
Total equity attributable to common shareholders
of the Company
Non-controlling interests
Balance at beginning of year
Net loss attributable to non-controlling interests
Other comprehensive loss attributable to
non-controlling interests
MineRP disposition
Other changes in non-controlling interests
Balance at end of year
Total equity at end of year
26(a)
26(b)
26(c)
4
4
191,441,200
1,060,102
525,219
585,050
2,810
3,377
60,844
-
(2,501,100) (7,551) (1,694,200) (5,269)
181,400,125
1,070,774
10,664,501
190,000,202
2,151
583,027
191,441,200
1,446
585,050
8,629
1,116
(2,151)
-
-
-
(1,158)
6,436
7,078
1,052
(1,446)
4,741
2,366
(5,141)
(21)
8,629
412,394
224,701
35,923
(30,463)
(6,068)
411,786
(1,660)
(6,495)
-
(8,155)
210,101
(22,408)
-
412,394
41,671
(46,176)
2,845
(1,660)
993,094
1,004,413
-
-
-
-
-
-
993,094
6,615
(277)
(239)
(6,010)
(89)
-
1,004,413
The accompanying notes are an integral part of the consolidated financial statements
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
1.
CORPORATE INFORMATION
Dundee Precious Metals Inc. (“DPM”) is a Canadian based, international gold mining company engaged in
the acquisition of mineral properties, exploration, development, mining and processing of precious metals.
DPM is a publicly listed company incorporated under the federal laws of Canada. DPM has common shares
traded on the Toronto Stock Exchange (“TSX”). The address of DPM’s registered office is 150 King Street
West, Suite 902, P.O. Box 30, Toronto, Ontario M5H 1J9.
As at December 31, 2022, DPM’s consolidated financial statements include DPM and its subsidiary
companies (collectively, the “Company”).
Continuing Operations:
DPM’s principal subsidiaries include:
(cid:120) 100% of Dundee Precious Metals Chelopech EAD (“Chelopech”), which owns and operates a gold,
copper and silver mine located east of Sofia, Bulgaria;
(cid:120) 100% of Dundee Precious Metals Krumovgrad EAD (“Ada Tepe”), which owns and operates a gold
mine located in south eastern Bulgaria, near the town of Krumovgrad; and
(cid:120) 92% of Dundee Precious Metals Tsumeb (Proprietary) Limited (“Tsumeb”), which owns and operates
a custom smelter located in Tsumeb, Namibia.
DPM holds interests, directly or indirectly, in a number of exploration and development properties located
in Ecuador, Serbia and Canada including:
(cid:120) 100% of DPM Ecuador S.A. (“DPM Ecuador”), which is focused on the exploration and development
of the Loma Larga gold project located in Ecuador;
(cid:120) 100% of DPM Avala d.o.o. and Crni Vrh Resources d.o.o, which are focused on the development of
the Timok gold project and the exploration of the (cid:253)oka Rakita project in Serbia, respectively; and
(cid:120) 6.5% of Sabina Gold and Silver Corp. (“Sabina”), which is focused on the development of the Back
River project in southwestern Nunavut, Canada.
Discontinued Operations (note 4):
On May 3, 2021, DPM sold its 73.7% ownership interest in MineRP Holdings Inc. (“MineRP”), which owns
MineRP Holdings (Proprietary) Limited, an independent mining software vendor with operations in Canada,
South Africa, Australia and Chile.
2.1 BASIS OF PREPARATION
The Company’s consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and
Interpretations of the IFRS Interpretations Committee. These consolidated financial statements were
approved by the Board of Directors on February 16, 2023.
2.2 SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements have been prepared on a historical cost basis except for publicly
traded securities and derivative assets and liabilities (note 8) that are measured at fair value.
The Company’s significant accounting policies are set out below. The Company has consistently applied
these accounting policies to all periods presented in these consolidated financial statements.
82 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of consolidation
Subsidiaries are all entities over which the Company has control. The Company controls an entity when the
Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The Company uses the acquisition method of accounting for business combinations. The fair value of the
acquisition of a subsidiary is based on the fair value of the assets acquired and liabilities assumed, and the
fair value of the consideration. The fair value of the assets acquired and liabilities assumed includes any
contingent consideration arrangement. Acquisition related costs are expensed as incurred. At the date of
acquisition, identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values. The Company also recognizes any non-controlling
interest in the acquiree at fair value.
The excess, if any, of the consideration paid and the amount of any non-controlling interest recognized over
the fair value of the identifiable net assets acquired is recorded as goodwill. In the case of a bargain
purchase, where the total consideration paid and the non-controlling interest recognized are less than the
fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the
consolidated statements of earnings (loss).
Subsidiaries are fully consolidated from the date on which control is acquired by the Company and they are
deconsolidated from the date that control ceases. The financial statements of the subsidiaries are prepared
for the same reporting period as the parent company using consistent accounting policies. All inter-company
balances, revenues and expenses and earnings and losses resulting from inter-company transactions are
eliminated on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are a separate component of the
Company’s equity. Non-controlling interests consist of the non-controlling interests on the date of the
original business combination plus the non-controlling interests’ share of changes in equity since the date
of acquisition.
(b) Critical accounting estimates and judgments
The preparation of the Company’s consolidated financial statements in accordance with IFRS requires
management to make judgments, estimates and assumptions that affect the amounts of assets, liabilities
and contingent liabilities on the date of the consolidated financial statements and the amounts of revenues
and expenses during the period reported. Estimates and assumptions are evaluated and are based on
management’s experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. However, actual outcomes can differ from these estimates.
The significant areas of estimation and/or judgment considered by management in preparing the
consolidated financial statements include, but are not limited to:
(cid:120) Mineral Resource and Mineral Reserve estimates (note 2.2(l));
(cid:120)
(cid:120)
(cid:120)
(cid:120)
impairment of non-financial assets (note 2.2(p));
rehabilitation provisions and contingencies (note 2.2(q));
revenue recognition related to toll smelting arrangements (note 2.2(t)); and
deferred income tax assets and liabilities (note 2.2(x)).
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Presentation and functional currency
The Company’s presentation currency(cid:3) is the U.S. dollar(cid:3) and the functional currency of(cid:3) DPM and(cid:3) its
consolidated subsidiaries(cid:3)from continuing operations is the(cid:3)U.S. dollar as it(cid:3)was(cid:3)assessed by management
as being the primary(cid:3)currency of the economic environment in which the(cid:3)Company(cid:3)operates.
(d)
Foreign currency
Foreign currency transactions
Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at
exchange rates on the reporting date. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated(cid:3)at the exchange rates on the dates that their fair
values are determined. Non-monetary assets and liabilities denominated in foreign currencies that are
measured at historical cost are translated at the exchange rates on the dates of the transactions. Income
and expense items are translated at the exchange rate on the dates of the transactions. Exchange gains
or losses resulting from the translation of these amounts are included in net earnings (loss), except those
arising on the translation of equity instruments that are fair valued through(cid:3)other comprehensive income
(loss).
Foreign operations
Foreign operations are comprised of subsidiaries of the Company that have a functional currency other
than the U.S. dollar. The assets and liabilities of foreign operations, including fair value adjustments arising
on acquisition, are translated into U.S. dollars at exchange rates on the reporting date. The income and
expenses of foreign operations are translated into U.S. dollars at exchange rates on the dates of the(cid:3)
transactions. Foreign currency differences are recognized as currency translation adjustments in other
comprehensive income(cid:3) (loss). Accumulated currency translation adjustments are reclassified to net
earnings (loss) upon the disposal of the associated(cid:3)foreign operation when the gain or loss on disposal is
recognized.(cid:3) Prior to the(cid:3) sale of MineRP in May 2021,(cid:3) MineRP(cid:3) was(cid:3) the only foreign operation of the
Company with(cid:3)a functional currency being South African Rand (“ZAR”) and its subsidiaries with functional
currencies(cid:3) denominated in the currencies of the primary economic environments in which each of the
subsidiaries(cid:3)operated.
(e)
Cash and cash equivalents
Cash and cash equivalents comprise cash deposits, guaranteed investment certificates(cid:3) (“GICs”)(cid:3) and/or
other highly rated and liquid securities with an original maturity of less than three months.(cid:3)As at December
31, 2022, cash and cash equivalents comprised of cash at banks of $383.4(cid:3)million (December 31, 2021 –
$334.4(cid:3)million)(cid:3)and GICs of $49.8 million (December 31, 2021 –(cid:3)$nil).
(f)
Inventories
Inventories of ore and concentrates(cid:3)are measured and valued at the lower of average production cost and
net realizable value. Net realizable value is the estimated selling price of the concentrates in the ordinary
course of business(cid:3) based on the prevailing metal prices on the reporting date, less estimated costs to
complete production and to bring the concentrates to sale. Production costs that are inventoried include the
costs directly related to bringing the inventory to its current condition and location, such as materials, labour,(cid:3)
other direct costs (including external services and depreciation, depletion and amortization),(cid:3) production
related(cid:3)overheads and(cid:3)royalties.
84 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inventories of sulphuric acid, arsenic calcines, spare parts, supplies and other materials are valued at the
lower of average cost and net realizable value. Obsolete, redundant and slow moving inventories are
identified at each reporting date and written down to their net realizable values. Arsenic calcines not
expected to be processed in the next 12 months are classified as long-term inventory and included in other
long-term assets.
(g)
Financial assets and liabilities excluding derivative instruments related to hedging activities
Financial assets
Initial recognition and measurement
Non-derivative financial assets are classified and measured as “financial assets at fair value”, as either
through profit or loss (“FVPL”) or through other comprehensive income (“FVOCI”), and “financial assets at
amortized cost”, as appropriate. The Company determines the classification of financial assets at the time
of initial recognition based on the Company’s business model and the contractual terms of the cash flows.
All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL,
directly attributable transaction costs on the trade date at which the Company becomes a party to the
contractual provisions of the instrument.
Financial assets with embedded derivatives are considered in their entirety when determining their
classification at FVPL or at amortized cost. The Company has classified accounts receivable on
provisionally priced sales as financial assets measured at FVPL. Other accounts receivable held for
collection of contractual cash flows are measured at amortized cost.
Subsequent measurement – Financial assets at FVPL
Financial assets measured at FVPL include financial assets management intends to sell in the short term
and any derivative financial instrument that is not designated as a hedging instrument in a hedge
relationship. Financial assets measured at FVPL are carried at fair value in the consolidated statements of
financial position with changes in fair value recognized in other income and expense in the consolidated
statements of earnings (loss). The Company’s investment in Sabina special warrants,
its accounts
receivable on provisionally priced sales and foreign exchange forward contracts not related to hedging
activities are classified as financial assets at FVPL.
Subsequent measurement – Financial assets at FVOCI
Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and
the Company has made an irrevocable election at the time of initial recognition to measure the assets at
FVOCI. The Company’s investments in publicly traded equity securities are classified as financial assets at
FVOCI.
After initial measurement, investments measured at FVOCI are subsequently measured at fair value with
unrealized gains or losses recognized in other comprehensive income (loss) in the consolidated statements
of comprehensive income (loss).
Subsequent measurement – Financial assets at amortized cost
Financial assets measured at amortized cost are non-derivative financial assets that are held for collection
of contractual cash flows, where those cash flows represent repayments of principal and interest. The
Company’s other accounts receivable is classified as financial assets at amortized cost.
Dividends from all financial assets are recognized in other income and expense in the consolidated
statements of earnings (loss) when the right to receive the dividend is established.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Derecognition
A financial asset is derecognized when the contractual rights to the cash flows from the asset expire or are
transferred, or the Company no longer retains substantially all the(cid:3)risks and rewards of ownership.
On derecognition of a financial asset, the difference between the carrying amount measured at the date of
derecognition and the consideration received(cid:3) is recognized in other income and(cid:3) expense(cid:3) in the
consolidated statements of earnings (loss) except for financial assets at FVOCI, for which the(cid:3)cumulative
gain or loss remains in accumulated other comprehensive income (loss)(cid:3)and is not reclassified to profit or
loss.
Impairment of financial assets
The Company’s only financial assets subject to impairment are other accounts receivable, which are
measured at amortized cost. The Company has elected to apply the simplified approach to impairment as
permitted by IFRS 9,(cid:3)Financial Instruments, which requires the expected lifetime loss to be recognized at
the time of initial recognition of the receivable.(cid:3)To measure estimated credit losses,(cid:3)accounts receivable have
been grouped based on shared credit risk characteristics, including the number of days past due. An
impairment loss(cid:3)is(cid:3)reversed in subsequent periods if the amount of the expected loss decreases and the
decrease can be objectively related to an event occurring after the initial impairment was recognized.
Financial liabilities
Recognition and measurement
Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is
the case for held for trading or derivative(cid:3)instruments,(cid:3)or the Company has opted to measure the(cid:3)financial
liability(cid:3)at FVPL.(cid:3)The Company’s financial liabilities include accounts payable(cid:3)and accrued liabilities(cid:3) and
long-term debt, which are initially recognized at fair value and subsequently measured at amortized cost.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires(cid:3)
with any associated gain or loss recognized(cid:3)in other income and(cid:3)expense(cid:3)in the consolidated statements
of earnings (loss).
(h) Derivative financial instruments(cid:3)and hedging activities
Derivatives are initially recognized at fair value on the dates(cid:3)they are(cid:3)entered into and are subsequently re-
measured at their fair value(cid:3)at the end of each reporting period.(cid:3)The method of recognizing the resulting
gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature
of the item being hedged.
For a derivative instrument to qualify for hedge accounting, the(cid:3)Company(cid:3)documents at the inception of the
transaction the relationship between(cid:3)a(cid:3)hedging instrument and(cid:3)hedged item, as well as its risk management
objectives(cid:3) and strategy for undertaking the hedging transaction. The Company also documents its
assessment, both at inception and on an ongoing basis, of whether the derivative used to(cid:3) hedge(cid:3) an
underlying exposure is highly effective in offsetting changes in the cash flows of the hedged item.
The full fair value of a hedging derivative is classified(cid:3)as a non-current asset or liability when the remaining
maturity is more than(cid:3)12 months.
86 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign exchange option contracts designated as cash flow hedges
The Company designates the intrinsic value of foreign exchange option contracts entered to hedge a portion
of its projected operating expenses and capital expenditures denominated in foreign currencies as cash
flow hedges.
The effective portion of changes in fair value of the intrinsic value of the options are initially recognized in
other comprehensive income (loss) in the consolidated statements of comprehensive income (loss). For
hedges of operating expenses, the accumulated fair value change initially recognized in other
comprehensive income (loss)
in the consolidated statements of comprehensive income (loss) is
subsequently recognized in cost of sales in the consolidated statements of earnings (loss) in the period
the
when the underlying hedged operating expenses occur. For hedges of capital expenditures,
accumulated fair value change initially recognized in other comprehensive income (loss) in the consolidated
statements of comprehensive income (loss) is subsequently included in the carrying value of the underlying
assets hedged in the period the underlying hedged capital expenditures occur.
The time value, which forms a component of these foreign exchange option contracts, is treated as a
separate cost of hedging. As a result, any unrealized fair value change in the time value component of the
outstanding foreign exchange option contracts is initially recognized as a deferred cost of hedging in other
comprehensive income (loss) in the consolidated statements of comprehensive income (loss). The
accumulated cost of hedging is subsequently recognized in cost of sales or included in the carrying value
of the underlying assets hedged in the period the underlying hedged operating expenses or capital
expenditures occur.
Commodity swap contracts designated as cash flow hedges
The Company also designates the spot component of commodity swap contracts to hedge future metal
price exposures (“Production Hedges”) as cash flow hedges.
The effective portion of changes in fair value of the spot component of the swaps are initially recognized in
other comprehensive income (loss) in the consolidated statements of comprehensive income (loss). The
accumulated fair value change is subsequently recognized in revenue in the consolidated statements of
earnings (loss) in the period the underlying hedged sales occur.
The forward points, or time value, which form a component of these commodity swap contracts, are treated
as a separate cost of hedging. As a result, any unrealized fair value change in the time value component
of the outstanding commodity swap contracts is initially recognized as a deferred cost of hedging in other
comprehensive income (loss) in the consolidated statements of comprehensive income (loss). The
accumulated cost of hedging is subsequently recognized in revenue in the period the underlying hedged
sales occur.
Commodity swap contracts designated as fair value hedges
The Company designates the spot component of commodity swap contracts to hedge the metal price
exposure associated with the time lag between the provisional and final determination of concentrate sales
(“QP Hedges”) as a fair value hedge.
The effective portion of changes in fair value of the spot component of these commodity swap contracts
are recognized in revenue in the consolidated statements of earnings (loss), together with any changes in
the fair value of the hedged accounts receivable on the provisionally priced sales.
The forward point component of these commodity swap contracts is accounted for separately as a cost of
hedging. As a result, any change in the fair value of the forward point component is recognized in revenue
in the consolidated statements of earnings (loss).
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria
for cash flow hedge accounting, the(cid:3)accumulated(cid:3)deferred gains(cid:3)or losses(cid:3)remain in other comprehensive
income (loss)(cid:3)until the period the underlying transaction that was hedged occurs at which point they are
reclassified and recognized in revenue in the consolidated statements of earnings (loss).(cid:3)If the(cid:3)underlying(cid:3)
hedged(cid:3) transaction is no longer expected to occur, the accumulated(cid:3) gains(cid:3) or losses(cid:3) that were initially
recognized in other comprehensive income (loss)(cid:3)are immediately reclassified to other income(cid:3)and(cid:3)expense(cid:3)
in the consolidated statements of earnings (loss).
The gains or losses relating to the ineffective portion of all cash flow or fair value hedges, if any, are
recognized immediately in other income and(cid:3)expense(cid:3)in the consolidated statements of earnings (loss).
(i)
Offsetting of financial instruments
Financial assets and financial liabilities are offset if there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on a net basis, or realize the assets and settle the
liabilities simultaneously.
(j)
Fair value of financial instruments
The fair value of financial instruments that are traded in active markets at each reporting date is determined
by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price
for short positions), without any deduction for transaction costs.
For instruments not traded in an active market, the fair value is determined using appropriate valuation
techniques. Such techniques may include using recent arm’s length transactions; reference to the current
fair value of another instrument that is substantially the same; discounted cash flow analysis or other
valuation models. These(cid:3) valuation models require the use of assumptions, including future stock price
volatility and probability of exercise.
Changes in the underlying assumptions could materially impact the Company’s investments at FVPL.(cid:3)
Further details on measurement of the fair values of financial instruments are provided in note 8.
(k) Mineral exploration(cid:3)and(cid:3)evaluation expenditures
Exploration and evaluation activities involve the search for Mineral Resources(cid:3)and Mineral Reserves, the
assessment of technical and operational feasibility and the determination of an identified Mineral Resource
or Mineral Reserve’s commercial viability. Once the legal right to explore has been acquired, exploration
and evaluation expenditures(cid:3)are expensed as incurred until economic production is probable. Exploration
expenditures in areas where there is a reasonable expectation to convert existing estimated Mineral
Resources to estimated Mineral Reserves or to(cid:3)add additional Mineral Resources with additional drilling
and evaluations in areas near existing Mineral Resources or Mineral Reserves and existing or planned
production facilities, are capitalized.
Exploration properties that contain Proven and Probable Mineral(cid:3)Reserves, but for which a development
decision has not yet been made, are subject to periodic review for impairment when events or changes in
circumstances indicate the project’s carrying value may not be recoverable.
Exploration and evaluation assets are reclassified to “Mine Properties –(cid:3)Mines under construction”(cid:3)when
the technical feasibility and commercial viability of extracting the(cid:3)Mineral Resources or Mineral Reserves(cid:3)
are(cid:3)demonstrable(cid:3)and construction has commenced or a decision to construct has been made. Exploration
and evaluation assets are assessed for impairment(cid:3)before reclassification to “Mines under construction”,(cid:3)
and(cid:3)the impairment charge, if any, is(cid:3)recognized(cid:3)through net earnings (loss).
88 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The application of the Company’s accounting policy for exploration and evaluation expenditures requires
judgment in determining whether it is probable that future economic benefits will be generated from the
exploitation of an exploration and evaluation asset when activities have not yet reached a stage where a
reasonable assessment of the existence of Mineral Reserves can be determined. The estimation of Mineral
Resources is a complex process and requires significant assumptions and estimates regarding economic
and geological data and these assumptions and estimates impact the decision to either expense or
capitalize exploration and evaluation expenditures. Management is required to make certain estimates and
assumptions about future events and circumstances in order to determine if an economically viable
extraction operation can be established. Any revision to any of these assumptions and estimates could
result in the impairment of the capitalized exploration and evaluation costs. If new information becomes
available after expenditures have been capitalized that the recovery of these expenditures is no longer
probable, the expenditures capitalized are written down to the recoverable amount and charged to net
earnings (loss) in the period the new information becomes available.
(l)
Mine properties
Mine Properties – Mines under construction
All expenditures undertaken in the development, construction, installation and/or completion of mine
production facilities are capitalized and initially classified as “Mines under construction”. All expenditures
related to the construction of mine declines and orebody access, including mine shafts and ventilation
raises, are considered to be capital development and are capitalized. Expenses incurred after reaching the
orebody are regarded as operating development costs and are included in the cost of ore hoisted.
Upon the commencement of commercial production, all related assets included in “Mines under
construction” are reclassified to “Mine Properties – Producing mines” or “Property, plant and equipment”.
Determination of commencement of commercial production is a complex process and requires significant
assumptions and estimates. The commencement of commercial production is defined as the date when the
mine is capable of operating in the manner intended by management. The Company considers primarily
the following factors, among others, when determining the commencement of commercial production:
(cid:120) All major capital expenditures to achieve a consistent level of production and desired capacity have
been incurred;
(cid:120) A reasonable period of testing of the mine plant and equipment has been completed;
(cid:120) A predetermined percentage of design capacity of the mine and mill has been reached; and
(cid:120) Required production levels, grades and recoveries have been achieved.
Mine Properties – Producing mines
All assets reclassified from “Mines under construction” to “Producing mines” are stated at cost less
accumulated depletion and accumulated impairment charges. Costs incurred for the acquisition of land are
stated at cost.
The initial cost of a producing mine comprises its purchase price or construction cost, any costs directly
attributable to bringing it to a working condition for its intended use, the initial estimate of the rehabilitation
costs, and for qualifying assets, applicable borrowing costs during construction. The purchase price or
construction cost is the aggregate amount of cash consideration paid and the fair value of any other
consideration given to acquire the asset.
When a mine construction project moves into production, the capitalization of certain mine construction
costs ceases, and from that point on, costs are either regarded as inventory costs or expensed as cost of
sales, except for costs related to mine additions or improvements, open pit stripping activities that provide
a future benefit, and underground mine development or mineable reserve development, which qualify for
capitalization.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Depletion
The depletion of a producing mine asset is based on the unit-of-production method over the estimated
economic life of the related deposit.
Mineral Resource and Mineral Reserve estimates
The estimation of Mineral Resources and Mineral Reserves, as defined under National Instrument 43-101,
Standards of Disclosure for Mine Projects (“NI 43-101”), is a complex process and requires significant
assumptions and estimates. The Company prepares its Mineral Resource and Mineral Reserve estimates
based on information related to the geological data on the size, depth and shape of the orebody which is
compiled by appropriately qualified persons. Mineral Resource and Mineral Reserve estimates are based
upon factors such as metal prices, capital requirements, production costs, foreign exchange rates,
geotechnical and geological assumptions and judgments made in estimating the size and grade of the
orebody. Mineral Resource and Mineral Reserve estimates, together with forecast production, determine
the life of mine estimates and therefore changes in the Mineral Resource or Mineral Reserve estimates
may impact the carrying value of exploration and evaluation assets (note 2.2(k)), mine properties, property,
plant and equipment (note 2.2(m)), depletion and depreciation charges (note 2.2(m)), rehabilitation
provisions (note 2.2(q)), and deferred income tax assets (note 2.2(x)).
(m) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment charges.
The initial cost of property, plant and equipment comprises its purchase price or construction cost, any
costs directly attributable to bringing it to a working condition for its intended use, the initial estimate of the
rehabilitation costs, and for qualifying assets, applicable borrowing costs during construction. The purchase
price or construction cost is the aggregate amount of cash consideration paid and the fair value of any other
consideration given to acquire the asset. Where an item of property, plant and equipment is comprised of
significant components with different useful lives, the components are accounted for as separate items of
property, plant and equipment. Right-of-use assets relating to leases are also included in property, plant
and equipment (note 2.2(r)).
Depreciation
The depreciation of property, plant and equipment related to a mine is based on the unit-of-production
method over the estimated economic life of the related deposit, except in the case of an asset whose
estimated useful life is less than the life of the deposit, in which case the asset is depreciated over its
estimated useful life based on the straight-line method. For all other property, plant and equipment,
depreciation is based on the estimated useful life of the asset on a straight-line basis. Depreciation of
property, plant and equipment used in a capitalized exploration or development project is capitalized to the
project.
Depreciation of property, plant and equipment, which are depreciated on a straight-line basis over their
estimated useful lives, is as follows:
Asset Category
Buildings
Machinery and Equipment
Vehicles
Computer Hardware
Office Equipment
90 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
Estimated useful life
(Years)
10 - 20
3 - 20
5
2 - 4
3 - 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Construction work-in-progress includes property, plant and equipment in the course of construction and is
carried at cost less any recognized impairment charge. These assets are reclassified to the appropriate
category of property, plant and equipment and depreciation of these assets commences when they are
completed and ready for their intended use.
An item of property, plant and equipment, including any significant part initially recognized, is derecognized
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset, calculated as the difference between the net disposal proceeds and
the carrying amount of the asset, is recognized in profit or loss when the asset is derecognized.
The residual values, useful lives and methods of depreciation of all assets are reviewed at each financial
year end and are adjusted prospectively, if appropriate. Significant judgment is involved in the determination
of estimated residual values and useful lives. The actual residual values and useful lives may differ from
current estimates.
Depreciation of mine specific assets is based on the unit-of-production method. The life of these assets is
assessed annually with regard to both their anticipated useful life and the present assessments of the
economically recoverable reserves and resources of the mine property where these assets are located.
These calculations require the use of estimates and assumptions, including the amount of recoverable
reserves and resources. Any changes to these calculations based on new information are accounted for
prospectively.
Rates of depreciation and, in turn, the annual depreciation expense could therefore be materially affected
by changes in underlying estimates. Changes in estimates can be the result of differences in actual
production or changes in forecast future production, changes in Mineral Resources or Mineral Reserves
through exploration activities, differences between estimated and actual costs of mining and differences in
metal prices used in the estimation of Mineral Reserves.
Major maintenance and repairs
Expenditures on major maintenance include the cost of replacing part of an asset and overhaul costs. When
part of an asset is being replaced and it is probable that future economic benefits associated with the
replacement or overhauled item will flow to the Company through an extended life, the expenditure is
capitalized as a separate asset and the carrying amount of the replaced part is written off.
(n)
Intangible assets
Intangible assets include software, exploration and software licences and long-term customer contracts.
Intangible assets acquired are measured upon initial recognition at cost, which comprises the purchase
price plus any costs directly attributable to the preparation of the asset for its intended use. Identifiable
intangible assets acquired through business combinations are initially recognized at fair value as at the
date of acquisition.
Research expenditures are recognized as an expense as incurred. Development costs that are directly
attributable to the design and testing of an identifiable software product are capitalized and recognized as
an intangible asset.
Intangible assets are carried at cost less accumulated amortization and any accumulated impairment
charges and are amortized on a straight-line basis over their estimated useful lives.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The amortization periods applicable to intangible assets over their estimated useful lives are as follows:
Asset Category
Computer Software
Exploration and Software Licences
Estimated useful life
(Years)
3 - 5
3 - 5
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the intangible assets(cid:3)require the use of estimates and assumptions and are(cid:3)accounted for by
changing the amortization period or method, as appropriate, and are treated as changes in accounting
estimates. The amortization expense attributable to an(cid:3)intangible asset is recognized in the(cid:3)consolidated
statements of earnings (loss)(cid:3)in the applicable(cid:3)expense category(cid:3)to which(cid:3)the intangible asset(cid:3)relates.
The gain or loss arising from the(cid:3)derecognition of an intangible asset is(cid:3)measured as the difference between
the net disposal proceeds and the carrying amount of the asset and is(cid:3)recognized in profit or loss when the
asset is derecognized.
(o) Assets(cid:3)and liabilities(cid:3)held for sale and discontinued operations
Non-current assets or assets in a disposal group that are expected to be recovered primarily through sale
rather than through continuing use are classified as assets held for sale. A disposal group is a group of
assets which the Company intends to dispose of in a single transaction. These assets are measured at the
lower of their carrying amount and fair value less cost to sell. Impairment charges on initial classification as
held for sale and subsequent gains or losses on re-measurement are recognized in net earnings (loss) from
discontinued operations. The reversal of any previously recognized impairment charge cannot exceed the
carrying amount that would have been determined had no impairment charge been recognized for the asset
held for sale.
Assets and liabilities in a disposal group are classified as held for sale and are presented separately in the
consolidated statements of financial position.
The measurement of assets held for sale requires the use of estimates and assumptions related to the
carrying value and its recoverability through sale. Actual sale proceeds may differ materially from the
carrying value.
A discontinued operation is a component of the Company that has been disposed of or is classified as held
for sale and represents a separate line of business or geographical area of operations. The operating results(cid:3)
and cash flows(cid:3) of discontinued operations are presented separately in the consolidated statements of
earnings(cid:3)(loss) and cash flows.
(p)
Impairment of non-financial assets
At each reporting date,(cid:3)the carrying values of mine properties, intangible assets(cid:3)and property, plant and
equipment are assessed for impairment if(cid:3) indicators of potential impairment exist. If any indication of
potential impairment exists, an estimate of the asset’s recoverable amount is calculated. The recoverable
amount is determined as the higher of the fair value less costs of disposal(cid:3)(“FVLCD”) and its(cid:3)value in use
based on(cid:3)discounted(cid:3)cash flows.(cid:3)This is determined on(cid:3)an asset-by-asset basis, unless the asset does not
generate cash flows that are largely independent of those from other assets or groups of assets. If this is
the case, individual assets are grouped together into a Cash Generating Unit (“CGU”) for impairment
purposes. Such CGUs represent the lowest level for which there are separately identifiable cash inflows
that are largely independent of the cash flows from other assets or groups(cid:3) of assets. Management has
assessed the Company’s(cid:3)CGUs(cid:3)as being an individual operating site.
92 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the
asset or CGU is reduced to its recoverable amount with the corresponding impairment being charged to
earnings (loss) in the period of impairment. Impairment charge is recognized in the consolidated statements
of earnings (loss) in those expense categories consistent with the function of the impaired asset.
An assessment is also made at each reporting date as to whether there is any change in events or
circumstances relating to a previously recognized impairment. If a change has occurred, the Company
makes an estimate of the recoverable amount for the previously impaired asset or CGU. A previously
recognized impairment charge is reversed only if there has been a change in the estimates used to
determine the asset or CGU’s recoverable amount since the last impairment charge was recognized. If this
is the case, the carrying amount of the asset or CGU is increased to its newly determined recoverable
amount. The increased amount cannot exceed the carrying amount that would have been determined, net
of depreciation and amortization, had no impairment charge been recognized for the asset or CGU in prior
years.
The assessment of impairment is based on a number of external and internal factors, some of which are
outside of the Company’s control, and requires the use of estimates and assumptions related to these
factors for each CGU. External factors include market considerations ranging from overall economic activity
and the supply of and demand for the materials used in and products produced by the Company to changes
in commodity prices, toll rates, discount rates, foreign exchange rates and regulatory requirements. Internal
factors include considerations such as production volume, ability to convert resources into reserves, capital
and operating expenditures, and future development and expansion plans.
These significant estimates and assumptions, some of which may be subjective, require that management
make decisions based on the best available information at each reporting period. It is possible that the
actual recoverable amount could be significantly different than those estimates. A significant decline in the
asset’s market value, reductions in metal price forecasts, increases in estimated future costs of production,
increases in estimated future capital costs, reductions in the amount of recoverable reserves, resources
and exploration potential, and/or adverse market conditions can result in a write-down of the carrying
amounts of the Company’s assets. Judgment is also required when considering whether significant
changes in any of these items indicate a previous impairment may have reversed.
(q)
Provisions and contingencies
General
Provisions are recognized when: a) the Company has a present obligation (legal or constructive) as a result
of a past event; and b) it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made for the amount of the obligation. Where
some or all of the expenditure required to settle a provision is expected to be reimbursed by another party,
the reimbursement shall be recognized when it is virtually certain that reimbursement will be received if the
Company settles the obligation. The reimbursement shall be treated as a separate asset. If the effect of the
time value of money is material, provisions are discounted using a current pre-tax discount rate that reflects,
where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
as a result of the passage of time is recognized in finance cost in the consolidated statements of earnings
(loss).
A contingent liability is not recognized in the case where no reliable estimate can be made; however,
disclosure is required unless the possibility of an outflow of resources embodying economic benefits is
remote. By its nature, a contingent liability will only be resolved when one or more future events occur or
fail to occur. The assessment of a contingent liability inherently involves the exercise of significant judgment
and estimates of the outcome of future events.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Rehabilitation provisions
Mining, processing, development and exploration activities are subject to various laws and regulations
governing the protection of the environment. The Company recognizes a liability for its rehabilitation
obligations in the period when a legal and/or constructive obligation is identified. The liability is measured
at the present value of the estimated costs required to rehabilitate operating locations based on the risk
free nominal discount rates that are specific to the countries in which the operations are located. A
corresponding increase to the carrying amount of the related asset is recorded and depreciated in the same
manner as the related asset.
The nature of these restoration and rehabilitation activities includes: i) dismantling and removing structures;
ii) rehabilitating mines and tailing dams; iii) dismantling operating facilities; iv) closure of plant and waste
sites; and v) restoration, reclamation and re-vegetation of affected areas. Other environmental costs
incurred at the operating sites, such as environmental monitoring, water management and waste
management costs, are charged to profit or loss when incurred.
The liability is accreted over time to its expected future settlement value. The accretion expense is
recognized in finance costs in the consolidated statements of earnings (loss).
The Company assesses its rehabilitation provisions at each reporting date. The rehabilitation liability and
related assets are adjusted at each reporting date for changes in the discount rates and in the estimated
amount, timing and cost of the work to be carried out. Any reduction in the rehabilitation liability and
therefore any deduction in the related rehabilitation asset may not exceed the carrying amount of that asset.
If it does, any excess over the carrying value is immediately credited to profit or loss.
Significant estimates and assumptions are made by management in determining the nature and costs
associated with the rehabilitation liability. The estimates and assumptions required include estimates of the
timing, extent and costs of rehabilitation activities, technology changes, regulatory changes, and changes
in the discount and inflation rates. These uncertainties may result in future expenditures being different from
the amounts currently provided.
(r)
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
agreement on the inception date.
As a lessee, the Company recognizes a lease obligation and a right-of-use asset in the consolidated
statements of financial position on a present-value basis at the date when the leased asset is available for
use. Each lease payment is apportioned between a finance charge and a reduction of the lease obligation.
Finance charges are recognized in finance costs in the consolidated statements of earnings (loss). The
right-of-use asset is included in property, plant and equipment and is depreciated over the shorter of its
estimated useful life and the lease term on a straight-line basis.
Lease obligations are initially measured at the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(cid:120)
(cid:120) variable lease payments that are based on an index or a rate;
(cid:120) amounts expected to be payable under residual value guarantees;
(cid:120)
the exercise price of a purchase option if the Company is reasonably certain to exercise that option;
and
(cid:120) payments of penalties for terminating the lease, if the lease term reflects the Company exercising
that option.
Lease payments are discounted using the interest rate implicit in the lease, or if this rate cannot(cid:3) be
determined, the Company’s incremental borrowing rate.
94 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Right-of-use assets are initially measured at cost comprising the following:
the amount of the initial measurement of the lease obligation;
(cid:120)
(cid:120) any lease payments made at or before the commencement date less any lease incentives received;
(cid:120) any initial direct costs; and
(cid:120)
rehabilitation costs.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-
line basis as an expense in the consolidated statements of earnings (loss). Short-term leases are leases
with a lease term of 12 months or less. Low-value assets comprise primarily small equipment.
(s)
Share capital
Common shares issued by DPM are classified as equity. Costs directly attributable to the issuance of new
shares are recognized in equity as a deduction from the share proceeds. Costs to repurchase and cancel
the Company’s shares are recognized as a reduction in share capital to the extent of its book value. The
excess of the purchase price over the book value is recognized as a reduction in contributed surplus to the
extent of available surplus and any further excess is recognized as a reduction in retained earnings in the
consolidated statements of changes in shareholders’ equity.
(t)
Revenue recognition
Revenue from the sale of concentrates containing gold, copper and silver is recognized when control has
been transferred, which is considered to occur when products have been delivered and the significant risks
of loss have been transferred to the buyer. Revenue is measured based on the consideration specified in
the contract.
Revenue from the sale of concentrates is initially recorded based on a provisional value which is a function
of prevailing market prices, estimated weights and grades less smelter and other commercial deductions.
Under the terms of the concentrate sales contracts, the final metal price for the payable metal is based on
a predetermined quotational period of London Metal Exchange and London Bullion Market daily prices. The
price of the concentrate is the sum of the metal payments less the sum of specified deductions, including
treatment and refining charges, penalties for deleterious elements, and freight. The terms of these contracts
result in embedded derivatives because of the timing difference between the prevailing metal prices for
provisional payments and the actual contractual metal prices used for final settlement. These embedded
derivatives are adjusted to fair value at the end of each reporting period through to the date of final price
determination with any adjustments recognized in revenue.
Any adjustments to the amount receivable for each shipment on the settlement date, caused by final assay
results, are adjusted through revenue at the time of determination.
Revenue from processing concentrates is recognized when the concentrate has been smelted and is based
on the toll rate specified in the toll agreement, which can vary based on the composition of the concentrate
processed and prevailing market conditions at the time the agreement was entered. Under each toll
agreement, Tsumeb incurs a carrying charge in respect of the concentrate it processes until blister copper
is delivered. This carrying charge is recorded as a reduction of revenue.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue from processing concentrates(cid:3)is also adjusted for any(cid:3)over or under recoveries of metals delivered
relative to contracted rates(cid:3) under the tolling agreement between Tsumeb and IXM S.A. (“IXM”). These
adjustments represent metal exposure and are calculated by comparing (i) the copper, gold and silver
content in the concentrate received and processed by Tsumeb multiplied by the percentage accountable(cid:3)in
the IXM contract to (ii) the(cid:3)accountable(cid:3)copper, gold and silver in the blister delivered to IXM and in the in-
circuit material still being processed by Tsumeb. Many aspects(cid:3) of the metal exposure are subject to
estimation, including the amount of metal contained in concentrate received, in-circuit material and blister
delivered where final assays have not been completed. These significant estimates are based on the
Company’s process knowledge, joint surveys with IXM and multiple assay results, the final results of which
could differ from initial estimates.
Revenue from the sale of sulphuric acid, a by-product from processing concentrate at the Tsumeb smelter,
is measured at the price specified in the sales contract and is recognized when the control has been
transferred, which is considered to occur when(cid:3)the products have been delivered to the location specified
in the sales contract and the risk of loss has been transferred to the buyer.
Prior to the sale of MineRP in May 2021,(cid:3)revenue from MineRP’s software services was recognized over
time when the services were rendered. This was measured based on the actual service provided to the end
of the reporting period as a proportion of the total services to be provided. The estimated revenue or extent
of progress toward percentage of completion was revised if changes occurred(cid:3)or circumstances arose that
indicated(cid:3)a revision was(cid:3)warranted. Any resulting increase or decrease in estimated revenue was reflected
in the consolidated statements of earnings (loss) in the period in which such determination was made.
Prior to the sale of MineRP in May 2021, revenue from licences entered into by MineRP containing software
and ongoing services elements was(cid:3)recognized based on the estimated fair value of each element. The fair
value of each element was(cid:3)determined based on the market price of each element when sold separately.
Revenue relating to the software element was(cid:3) recognized when the control had(cid:3)been transferred to the
customer, which occurred(cid:3)on delivery. Revenue relating to the service element was recognized over time(cid:3)
when the services were rendered.
(u) Deferred revenue
Deferred revenue(cid:3) is recognized in the consolidated statements of financial position when a cash(cid:3)
prepayment is received from one or more customers prior to the sale of product or delivery of service.
Revenue is subsequently recognized in the consolidated statements of earnings (loss) when the sale occurs,
which generally occurs when control has been transferred or in the case of services, when the services
have been rendered.
The Company recognizes(cid:3)the time value of money,(cid:3)where there is a significant financing component and(cid:3)
the period between the payment by the customer and the transfer of the contracted(cid:3) goods or services
exceeds one year.
(v)
Borrowing costs
Borrowing costs directly related(cid:3) to the acquisition(cid:3) and the construction of a qualifying capital asset(cid:3) are(cid:3)
capitalized and added to the cost of the asset(cid:3)until such time as the asset is(cid:3)considered substantially ready
for its(cid:3) intended use. Where funds are borrowed specifically to finance a project, the amount capitalized
represents the actual borrowing costs incurred. Where funds used to finance a project form part of general
borrowings, the amount capitalized is calculated using the weighted average cost(cid:3)applicable to relevant
general borrowings of the Company(cid:3)during the period. All other borrowing costs are recognized in profit or
loss in the period in which they are incurred.
96 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(w) Share-based compensation transactions
Equity-settled transactions
Stock options are granted to directors and selected employees to buy common shares of the Company.
Stock options vest equally over a three-year period and expire five years from the date of grant. Grants of
stock options are based on the five-day volume weighted average price (“Market Price”) of DPM’s common
shares on the TSX the day before the effective grant date and reflect the Company’s estimate of the number
of awards that will ultimately vest. Stock options are measured on the date of grant by reference to the fair
value determined using a Black-Scholes valuation model, further details of which are given in note 18. The
value is recognized as a general and administrative expense in the consolidated statements of earnings
(loss) and an increase to contributed surplus in the consolidated statements of changes in shareholders’
equity over the period in which the performance and/or service conditions are fulfilled.
The dilutive effect of outstanding stock options is reflected as additional share dilution in the computation
of diluted earnings per share.
Cash-settled transactions
A Director Deferred Share Unit (“Director DSU”) Plan and an Employee Deferred Share Unit (“Employee
DSU”) Plan were established for directors and certain employees in lieu of cash compensation. The Director
DSUs are paid in cash following separation of a director from the Company based on the closing price of
DPM’s common shares on the applicable redemption date as elected by the director. The Employee DSUs
are paid in cash based on (i) the Market Price of DPM’s common shares on the date the employee ceases
to be employed by DPM or a subsidiary thereof (“Separation Date”); or (ii) if a deferred redemption date
has been elected by the employee (“Deferred Redemption Date”), a cash payment by the Company to the
employee based on the Market Price or the closing price of DPM’s common shares on the day preceding
the Deferred Redemption Date; or (iii) the Market Price of DPM’s common shares if the Deferred
Redemption Date is December 15 of the calendar year commencing after the Separation Date. The cost of
the DSUs is measured initially at fair value based on the closing price of DPM’s common shares preceding
the day the DSUs are granted. The cost of the DSUs is recognized as a liability under share based
compensation plans in the consolidated statements of financial position and as a general and administrative
expense in the consolidated statements of earnings (loss). The liability is remeasured to fair value based
on the Market Price of DPM’s common shares at each reporting date up to and including the settlement
date, with changes in fair value recognized in general and administrative expenses in the consolidated
statements of earnings (loss).
A Share Unit (“SU”) Plan was established for directors, certain employees and eligible contractors
(“Participant”) of DPM and its wholly-owned subsidiaries in consideration of past services to the Company.
Under this plan, the Board of Directors may, at its sole discretion, (i) grant non-performance based SUs,
referred to as restricted share units (“RSUs”) and SUs with a performance-based component, referred to as
performance share units (“PSUs”), subject to performance conditions to be achieved by the Company; and
(ii) determine the entitlement date or dates of such RSUs and PSUs. Non-performance based RSUs vest
equally over a three-year period and are paid in cash based on the Market Price of DPM’s publicly traded
common shares on the entitlement date or dates. PSUs vest after three years from the grant date and are
paid in cash based on the Market Price of DPM’s common shares, subject to performance criteria established
by the Board of Directors on the entitlement date or dates.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The cost of the RSUs and PSUs is measured initially at fair value on the grant date based on the Market
Price of DPM’s common shares preceding the effective grant date. The cost of RSUs and PSUs is
recognized as a liability under share based compensation plans, with the current portion recognized in
accounts payable and accrued liabilities, in the consolidated statements of financial position and as an
expense in the consolidated statements of earnings (loss) over the vesting period. The liability is
remeasured to fair value based on the Market Price of DPM’s common shares and, in the case of PSUs,
subject to performance criteria, at each reporting date up to and including the settlement date, with changes
in fair value recognized in the consolidated statements of earnings (loss).
(x)
Income taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities on the taxable loss or income for the period. The tax rates and tax laws used
to compute the amount are those enacted or substantively enacted by the end of the reporting period.
Current income tax assets and current income tax liabilities are only offset if a legally enforceable right
exists to offset the amounts and the Company intends to settle on a net basis or to realize the asset and
settle the liability simultaneously.
Deferred income tax
Deferred income tax is provided using the balance sheet method on temporary differences on the reporting
date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes. Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred
income tax assets are recognized for all deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses, to the extent that it is probable that taxable income will be generated in
future periods to utilize these deductible temporary differences.
The following temporary differences do not result in deferred income tax assets or liabilities:
(cid:120) The initial recognition of assets or liabilities, not arising from a business combination, that does not
affect accounting or taxable profit;
(cid:120) Initial recognition of goodwill, if any; and
(cid:120) Investments in subsidiaries, associates and jointly controlled entities where the timing of the reversal
of temporary differences can be controlled and reversal in the foreseeable future is not probable.
The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient future taxable income will be generated to
allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets
are reassessed at the end of each reporting period and are recognized to the extent that it has become
probable that future taxable income will be generated to allow the deferred income tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to be in effect in(cid:3)
the(cid:3)period(cid:3)when the asset is expected to be realized or the liability is expected to be settled, based on tax
rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred income tax assets and liabilities are offset if a legally enforceable right exists to offset(cid:3) current
income tax assets against current income tax liabilities and the deferred income taxes relate to the same
taxable entity and the same taxation authority.
98 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
2.2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Current and deferred income taxes related to items recognized directly in equity are recognized in equity
and not in profit or loss. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Judgment is required in determining whether deferred income tax assets are recognized on the
consolidated statements of financial position. Deferred income tax assets, including those arising from
unutilized tax losses, require management to assess the likelihood that the Company will generate future
taxable income in order to utilize the deferred income tax assets. Estimates of future taxable income are
based on forecasted cash flows from operations or other activities and the application of existing tax laws
in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the net deferred income tax assets recorded on the reporting
date could be impacted.
Additionally, future changes in tax laws in the jurisdictions in which the Company operates could impact tax
deductions in future periods and the value of its deferred income tax assets and liabilities.
(y)
Earnings per share
Basic earnings per share is computed by dividing the net earnings available to common shareholders by
the weighted average number of shares outstanding during the reporting period.
Diluted earnings per share reflects the potential dilution that could occur if additional common shares are
assumed to be issued under securities that entitle their holders to obtain common shares in the future. The
number of additional shares for inclusion in diluted earnings per share is determined using the treasury
stock method, whereby stock options and warrants, whose exercise price is less than the average market
price of the Company’s common shares, are assumed to be exercised at the beginning of the period with
proceeds based on the average market price for the period. The incremental number of common shares
issued under stock options and warrants is included in the calculation of diluted earnings per share.
2.3 NEW IFRS AMENDMENT ADOPTED
The Company adopted amendment to IAS 16, Property, Plant and Equipment, effective for financial
reporting periods commencing on or after January 1, 2022. This amendment prohibits deducting from the
cost of an item of property, plant and equipment any proceeds from selling items produced while bringing
that asset to the location and condition necessary for it to be capable of operating in the manner intended
by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of
producing those items, in profit or loss, and must disclose separately the amounts of proceeds and costs
relating to items produced that are not an output of the entity’s ordinary activities. This amendment had no
impact on the Company’s consolidated financial statements for the year ended December 31, 2022.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
3.
TSUMEB IMPAIRMENT CHARGE
During the year ended December 31, 2022, the Company assessed the recoverable amount of each of its
CGUs(cid:3)as a result of (i) the market capitalization of DPM’s shares being less than their carrying value; and
(ii) a decrease in the expected supply of suitable higher arsenic bearing concentrate for processing at the
smelter over the longer term. Based on this assessment, the carrying values of all CGUs were considered
recoverable, with the exception of Tsumeb.
As a result of the impairment assessment, the carrying value of Tsumeb exceeded its estimated recoverable
amount resulting in an impairment charge of $85.0 million being recognized in the consolidated statements
of earnings (loss)(cid:3)for the year(cid:3)ended December 31, 2022, of which $84.3(cid:3)million related to property, plant,
and equipment and(cid:3)$0.7(cid:3)million related to intangible assets. This charge was primarily attributable to lower
forecast toll revenue as a result of an(cid:3)expected reduction in higher arsenic bearing third party concentrate(cid:3)
feed being received by the smelter commencing in 2024,(cid:3)concurrent with when the smelter is not expected
to be(cid:3)processing any of(cid:3)Chelopech concentrate.(cid:3)While the processing of Chelopech concentrate at other
third party smelters(cid:3) is expected to generate additional overall value for the Company, it will be realized(cid:3)
through lower treatment charges and higher margins at Chelopech rather than higher tolling rates(cid:3) and
higher margins at Tsumeb.
Tsumeb’s recoverable amount of $40.0(cid:3)million was determined using FVLCD, which was calculated based
on projected future cash flows utilizing the latest information available and management’s estimates
including throughput ranging from 230,000 tonnes to 350,000 tonnes, toll rates and volumes based on
historical terms received and the Company’s knowledge of the complex concentrate market, lower
operating costs, sustaining capital expenditures in line with current levels, and the foreign exchange rate
between the U.S. dollar and the ZAR(cid:3)of 17.05. These projected cash flows were prepared in current dollars
and discounted using a real discount rate of 10.79%, representing the estimated weighted average real
cost of capital. This rate was estimated based on the Capital Asset Pricing Model where the costs of equity
and debt were based on, among other things, estimated interest rates, market returns on equity, share
volatility, leverage and risks specific to the mining sector and Tsumeb. Management’s estimate of Tsumeb’s
FVLCD is classified as level 3 in the fair value hierarchy.
Sensitivities
The projected cash flows and FVLCD(cid:3)for Tsumeb can be affected by any one or more changes in the
estimates used.(cid:3)Changes in third party toll rates,(cid:3)operating costs,(cid:3)foreign exchange rates and volumes of
concentrate smelted(cid:3) have(cid:3) the greatest impact on value, where(cid:3) a 5% change in any one(cid:3) of above
assumptions would each change the FVLCD by approximately $30(cid:3)million to $35(cid:3)million(cid:3)as at December
31, 2022.(cid:3)In addition, if Tsumeb does(cid:3)not achieve forecasted(cid:3)operating levels and future cost savings in
respect of(cid:3)its(cid:3)initiative to optimize the cost structure of the smelter, there could be a further impairment
charge.
100 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
4.
DISCONTINUED OPERATIONS
On December 22, 2020, the Company and other shareholders of MineRP entered into a definitive
agreement with Epiroc Canada Holding Inc., a subsidiary of Epiroc Rock Drills AB (“Epiroc”) for the sale of
MineRP (the “MineRP Disposition”). The MineRP Disposition closed on May 3, 2021.
Net cash consideration received for DPM's equity interest in MineRP:
Total purchase price
Cash received for settlement of DPM loan to MineRP
Working capital adjustment
Closing indebtedness
Closing cash
Cash consideration
Less: transaction costs
Net cash consideration
Cash paid to non-controlling interests
Net cash consideration received for DPM's equity interest in MineRP (a)
59,000
(20,571)
(1,485)
(534)
276
36,686
(3,048)
33,638
(9,021)
24,617
Net assets disposed:
Cash
Accounts receivable
Property, plant & equipment
Intangible assets
Other long-term assets
Total assets disposed
Accounts payable and accrued liabilities
Loan payable to Epiroc
Current portion of long-term liabilities
Deferred income tax liabilities
Other long-term liabilities
Total liabilities disposed
Non-controlling interests
Net assets disposed
Reclassification of currency translation adjustments from
accumulated other comprehensive income
Gain on MineRP Disposition included in net earnings
from discontinued operations
276
2,231
1,137
26,760
230
30,634
5,835
20,571
311
950
630
28,297
607
1,730
(2,845)
20,042
(a) Net cash consideration received included $5.1 million held in escrow on closing to secure against any
post closing adjustments related to working capital and certain representations and warranties, of
which $1.6 million related to working capital items. The working capital adjustment was finalized in
December 2021, resulting in an unfavourable final adjustment of $0.6 million to the Company which
was recognized as a reduction in the gain on MineRP Disposition included in net earnings from
discontinued operations for the year ended December 31, 2021. As at December 31, 2022, the
remaining cash held in escrow of $3.5 million related to other indemnities was recognized as restricted
cash included in other current assets in the consolidated financial statements of financial position.
As a result of the MineRP Disposition, the operating results and cash flows of MineRP have been presented
as discontinued operations in the consolidated statements of earnings (loss) and cash flows for the year
ended December 31, 2021.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The following table summarizes the operating results of MineRP which have been aggregated and
presented as discontinued operations for the year ended December 31, 2021:
Revenue
Costs and expenses
Cost of sales
General and administrative expenses
Other income
Loss before income taxes
Deferred income tax recovery
Net loss from discontinued operations
before gain on MineRP Disposition
Gain on MineRP Disposition
Net earnings from discontinued operations
5.
ACQUISITION OF INV METALS INC. (“INV”)
2021
4,521
3,726
2,384
(631)
5,479
(958)
(11)
(947)
20,042
19,095
On July 26, 2021, the Company acquired all of the issued and outstanding shares it did not already own of
INV, now renamed DPM Ecuador Holdings Inc., which owns DPM Ecuador, the principal assets of which
are comprised of the Loma Larga gold project and certain other exploration licences. As consideration for
the acquisition, DPM issued 10,664,501 common shares representing 0.0910 of a DPM common share for
each INV common share acquired at a market price of $5.72 (Cdn$7.19) per share with an aggregate value
of $61.0 million.
This transaction was accounted for as an asset acquisition with the consideration paid allocated primarily
to the exploration and evaluation assets related to the Loma Larga gold project. The following table
summarizes the consideration paid and the allocation of this consideration to the assets acquired and
liabilities assumed as at the date of acquisition.
Consideration paid
DPM common shares issued, net of share issuance costs
Fair value of previously held equity interest (a)
DPM stock options(b)
Transaction costs
Total consideration paid
Assets acquired and liabilities assumed
Cash
Accounts receivable
Investments at fair value
Exploration and evaluation assets
Property, plant and equipment
Other long-term assets
Accounts payable and accrued liabilities
Current portion of long-term liabilities
Other long-term liabilities
Net assets acquired
102 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
60,844
17,988
2,366
2,463
83,661
1,029
556
151
86,372
589
897
(4,677)
(220)
(1,036)
83,661
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
(a) The fair value of the 35,344,424 INV shares previously held by DPM was based on the market price
of $0.51 (Cdn$0.64) per INV share as at the date of acquisition.
(b) As at the date of acquisition, 12,304,700 outstanding INV stock options vested immediately and were
exchanged for 1,119,728 DPM stock options, the fair value of which was estimated using the Black-
Scholes option pricing model.
The Company recognized a post-acquisition net loss of $0.6 million from DPM Ecuador in the consolidated
statements of earnings (loss) for the year ended December 31, 2021. Had DPM Ecuador been consolidated
from January 1, 2021, the Company would have reported a net loss of $8.6 million, including change of
control payments as a result of the acquisition, in its consolidated statements of earnings (loss) for the year
ended December 31, 2021.
6.
ACCOUNTS RECEIVABLE
Accounts receivable (a)
Supplier advances and other prepaids
Value added tax receivable
December 31,
2022
December 31,
2021
113,951
9,599
2,887
126,437
116,699
9,618
2,021
128,338
(a) As at December 31, 2022, the Company’s accounts receivable included a metal recovery of $15.5
million (December 31, 2021 – $2.2 million) related to estimated metal exposure at Tsumeb.
7.
INVENTORIES
Ore and concentrates
Spare parts, supplies and other
December 31,
2022
12,787
33,026
45,813
December 31,
2021
18,012
31,614
49,626
For the year ended December 31, 2022, the cost of inventories recognized as an expense and included in
cost of sales was $220.3 million (2021 – $209.5 million), including a provision for slow moving inventories
of $1.2 million (2021 – $0.7 million).
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
8.
FINANCIAL INSTRUMENTS
Set out below is a comparison, by category, of the carrying amounts of the Company’s financial instruments
that are recognized in the consolidated statements of financial position:
Financial instrument
December 31, December 31,
2021
2022
Amortized cost
433,176
334,377
Financial assets
Cash and cash equivalents
Accounts receivable
on provisionally priced sales
Other accounts receivable
Restricted cash
Sabina special warrants (a)
Other warrants
Publicly traded securities (b)
Commodity swap contracts (c)
Foreign exchange forward contracts FVPL
FVPL
Amortized cost
Amortized cost
FVPL
FVPL
FVOCI
Derivatives for fair value hedges
75,707
50,730
5,641
-
219
40,554
149
531
85,083
43,255
5,730
5,795
21
42,167
21
-
Financial liabilities
Accounts payable
and accrued liabilities
Commodity swap contracts (c)
Foreign exchange option
Amortized cost
Derivatives for fair value hedges
81,165
3,259
73,735
1,946
contracts (d)
Derivatives for cash flow hedges
Foreign exchange forward contracts FVPL
1,787
318
1,489
-
The carrying(cid:3)values of all the financial assets and liabilities approximate their fair(cid:3)values as at December
31, 2022(cid:3)and 2021.
(a) Sabina special warrants
In September 2022, 5,000,000 Series B special warrants were exercised in return for 5,000,000 common
shares by DPM following a positive production decision with respect to the Back River project.(cid:3) As at
December 31, 2022, DPM held 36,050,566(cid:3)common shares of Sabina.
The fair value of the(cid:3)Sabina(cid:3)special warrants was included in investments at fair value in the consolidated
statements of financial position as at December 31, 2021 and was based on the fair value of the Sabina
common shares, which was determined based on the closing bid prices as at the valuation date.
For the year ended December 31, 2022, the Company recognized net(cid:3) losses(cid:3) on the Sabina special
warrants of $2.4(cid:3)million(cid:3)(2021 –(cid:3)$6.3(cid:3)million) in other income and expense(cid:3)(note 21)(cid:3)in the consolidated
statements of earnings (loss).
(b) Publicly traded securities
Publicly traded securities include a portfolio of equity investments in publicly traded mining and exploration
companies, comprised primarily of Sabina.
For the year ended December 31, 2022, the Company recognized unrealized losses(cid:3) on these publicly
traded securities of $5.3(cid:3)million (2021(cid:3)–(cid:3)$42.6(cid:3)million) in other comprehensive income (loss) that will not be
reclassified subsequently to profit or loss.
104 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
(c) Commodity swap contracts
The Company enters into QP Hedges, being cash settled commodity swap contracts from time to time to
swap future contracted monthly average metal prices for fixed metal prices to eliminate or substantially
reduce the metal price exposure associated with the time lag between the provisional and final
determination of concentrate sales.
As at December 31, 2022, the Company’s outstanding QP Hedges, all of which mature within four months
from the reporting date, are summarized in the table below:
Commodity hedged
Payable gold
Payable copper
Volume hedged
27,510 ounces
11,695,509 pounds
Weighted average fixed price
of QP Hedges
1,795.80/ounce
3.59/pound
The Company also enters into Production Hedges, being cash settled commodity swap contracts from time
to time to swap future contracted monthly average prices for fixed metal prices to reduce its future metal
price exposure in respect of its projected production. As at December 31, 2022, the Company had no
outstanding Production Hedges.
The Company designates the spot component of commodity swap contracts in respect of Production
Hedges as cash flow hedges and the spot component of commodity swap contracts in respect of QP
Hedges as fair value hedges.
The fair value gain or loss on commodity swap contracts is calculated based on the corresponding London
Metal Exchange forward copper prices and New York Commodity Exchange forward gold prices, as
applicable. As at December 31, 2022, the net fair value loss on all outstanding QP hedges was $3.2 million
(December 31, 2021 – $1.9 million), of which $0.1 million (December 31, 2021 – $0.02 million) was included
in other current assets and $3.3 million (December 31, 2021 – $1.9 million) in accounts payable and accrued
liabilities.
All QP hedges are subject to master netting agreements. As at December 31, 2022 and 2021, there was
no set-off of assets and liabilities in the consolidated statements of financial position.
For the year ended December 31, 2022, the Company recognized, in revenue, net gains of $6.8 million
(2021 – net losses of $3.5 million) on QP Hedges and realized losses of $nil (2021 – $15.7 million) on
Production Hedges.
(d) Foreign exchange option contracts
The Company enters into foreign exchange option contracts from time to time to reduce the foreign
exchange exposure associated with projected operating expenses and capital expenditures denominated
in foreign currencies. Foreign exchange option contracts are entered to provide price protection below a
specified “floor” rate and participation up to a specified “ceiling” rate. The option contracts entered are
comprised of a series of call options and put options (which when combined create a price “collar”) that are
structured so as to provide for a zero upfront cash cost.
As at December 31, 2022, the Company had outstanding foreign exchange option contracts in respect of a
portion of its projected Namibian dollar denominated operating expenses which are linked to the ZAR as
summarized in the table below:
Year of projected
operating expenses
2023
Amount hedged
in ZAR (i)
1,378,176,000
Call options sold
Weighted average
ceiling rate US$/ZAR
17.69
Put options purchased
Weighted average
floor rate US$/ZAR
15.69
(i) The Namibian dollar is pegged to the ZAR on a 1:1 basis.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 105
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The Company designates the intrinsic value of foreign exchange option contracts as cash flow hedges. The
time value component of foreign exchange option contracts is treated as a separate cost of hedging.
The fair value gain or loss on these outstanding contracts was calculated based on foreign exchange
forward rates quoted in the market. As at December 31, 2022, the net fair value loss on all outstanding
foreign exchange option contracts was $1.8 million (December 31, 2021 – $1.5 million), which was included
in accounts payable and accrued liabilities. All foreign exchange option contracts are subject to master
netting agreements. As at December 31, 2022 and 2021, there was no set-off of assets and liabilities in the
consolidated statements of financial position.
The Company recognized realized losses of $1.1 million (2021 – realized gains of $6.5 million) for the year
ended December 31, 2022 in cost of sales on the spot component of settled contracts.
For the year ended December 31, 2022, the Company recognized unrealized losses of $0.4 million (2021
– $5.4 million) in other comprehensive income (loss) on the spot component of the outstanding foreign
exchange option contracts. For the year ended December 31, 2022, the Company also recognized
unrealized gains of $0.1 million (2021 – unrealized losses of $2.5 million) on the time value component of
the outstanding foreign exchange option contracts in other comprehensive income (loss) as a deferred cost
of hedging.
Effects of hedge accounting
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic
prospective effectiveness assessments to ensure that an economic relationship exists between the hedged
items (the Company’s accounts receivable on provisionally priced sales, projected payable metal
production, and projected operating expenses and capital expenditures denominated in foreign currencies)
and the hedging instruments (commodity swap contracts and foreign exchange forward and option
contracts). The hedges are effective when the critical terms of the hedging instrument match with the critical
terms of the hedged item.
Hedge ineffectiveness can arise from:
(cid:120) Differences in the timing and/or amount of the cash flows of the hedged item and the hedging
instrument; and
(cid:120) Fair value movements related to counterparty credit risk, which impact the hedging instrument and
the hedged item differently.
The Company’s hedging relationships are such that the ratio between the underlying hedged item and the
hedging instrument is 1:1. To measure for potential hedge ineffectiveness, the Company compares change
in the fair value of the hedging instrument to change in the fair value of the underlying hedged item.
106 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
Set out below is a summary of effects of hedge accounting on the Company’s consolidated statements of
financial position by risk category for its fair value and cash flow hedges:
Commodity swap contracts
designated as fair value hedges (a)
Carrying amount
Assets included in other current assets
Liabilities included in accounts payable and accrued liabilities
Notional amount
Changes in fair value used for measuring ineffectiveness
Hedging instruments
Hedged items
Foreign exchange option contracts
designated as cash flow hedges
Carrying amount
2022
2021
149
(3,259)
(3,110)
91,380
(3,224)
3,369
21
(1,946)
(1,925)
58,281
(1,892)
1,914
Liability included in accounts payable and accrued liabilities
Notional amount ZAR (in 000's)
Changes in fair value used for measuring ineffectiveness
Hedging instruments
Hedged items
(1,787)
1,378,176
(1,489)
1,464,090
(403)
403
-
-
(a) As at December 31, 2022, the carrying value of the hedged item, comprised of accounts receivable on
provisionally priced sales, was $75.7 million (December 31, 2021 – $85.1 million).
See note 26(c) for the effects of hedge accounting on the consolidated statements of earnings (loss) and
the consolidated statements of comprehensive income (loss).
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:
(cid:120) Level 1: based on quoted (unadjusted) prices in active markets for identical assets or liabilities;
(cid:120) Level 2: based on inputs which have a significant effect on fair value that are observable, either
directly or indirectly from market data; and
(cid:120) Level 3: based on inputs which have a significant effect on fair value that are not observable from
market data.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 107
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The following table illustrates the classification of the Company’s financial instruments within the fair value
hierarchy as at December 31, 2022 and 2021:
Financial assets
Accounts receivable on provisionally
priced sales
Other warrants
Publicly traded securities
Commodity swap contracts
Foreign exchange forward contracts
Financial liabilities
Commodity swap contracts
Foreign exchange option contracts
Foreign exchange forward contracts
Financial assets
Accounts receivable on provisionally
priced sales
Sabina special warrants
Other warrants
Publicly traded securities
Commodity swap contracts
Foreign exchange option contracts
Financial liabilities
Commodity swap contracts
Foreign exchange option contracts
Level 1
Level 2
As at December 31, 2022
Total
Level 3
-
-
40,554
-
-
-
-
-
75,707
-
-
149
531
3,259
1,787
318
-
219
-
-
-
-
-
-
75,707
219
40,554
149
531
3,259
1,787
318
Level 1
Level 2
As at December 31, 2021
Total
Level 3
-
-
42,167
-
-
-
-
85,083
-
-
-
21
-
1,946
1,489
-
5,795
21
-
-
-
-
-
85,083
5,795
21
42,167
21
-
1,946
1,489
During the years ended December 31, 2022 and 2021, there were no transfers between Level 1 and Level
2 fair value measurements, and no transfers into or out of Level 3 fair value measurements.
The following table reconciles Level 3 fair value measurements from January 1, 2021 to December 31,
2022:
Balance at beginning of year
Purchase of other warrants
Unrealized losses included in net earnings (note 21)
Exercise of Sabina special warrants into common shares
Balance at end of year
December 31,
2022
5,816
245
(2,415)
(3,427)
219
December 31,
2021
12,128
-
(6,312)
-
5,816
108 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
9.
EXPLORATION AND EVALUATION ASSETS
Balance at beginning of year
Additions
Acquisition of INV (note 5)
Capitalized depreciation
Balance at end of year
December 31,
2022
December 31,
2021
98,925
26,649
-
657
126,231
-
12,444
86,372
109
98,925
Exploration and evaluation expenditures expensed directly to net earnings from continuing operations
amounted to $24.2 million (2021 – $18.0 million) for the year ended December 31, 2022.
10. MINE PROPERTIES
Cost:
Balance at beginning of year
Additions
Capitalized depreciation
Change in rehabilitation provisions (note 15)
Disposals
Balance at end of year
Accumulated depletion:
Balance at beginning of year
Depletion
Disposals
Balance at end of year
Net book value:
At beginning of year
At end of year
December 31,
2022
December 31,
2021
330,262
8,567
620
(2,268)
(222)
336,959
192,225
31,436
(222)
223,439
138,037
113,520
314,003
16,837
537
(1,115)
-
330,262
158,565
33,660
-
192,225
155,438
138,037
The costs comprising mine properties related to producing mines. Of the total depletion expense, $33.1
million (2021 – $31.0 million) was charged to cost of sales for the year ended December 31, 2022.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
11. PROPERTY, PLANT AND EQUIPMENT
Machinery Construction
Work-in-
Progress
and
Equipment
Buildings
Cost:
Balance as at January 1, 2021
Additions
Acquisition of INV (note 5)
Capitalized depreciation
Disposals
Impairment charge
Change in rehabilitation provisions (note 15)
Transfers
Balance as at December 31, 2021
Additions
Capitalized depreciation
Disposals
Impairment charge (note 3)
Change in rehabilitation provisions (note 15) (1,074)
(359)
Transfers
72,304
Balance as at December 31, 2022
Accumulated depreciation and impairment:
Balance as at January 1, 2021
79,513
3,106
263
-
19,240
576,290
15,971
16,406
-
326
802
-
(305)
(1,506) (3,274)
-
(5,506)
(1,262)
-
12,058 (12,225)
23,483
595,038
26,984
19,238
744
-
(1,419) (15,960)
(104)
(12,406) (111,468) (12,158)
-
17,865 (17,506)
21,443
(6)
(609)
167
80,928
6,634
-
504,940
227
30,386
7,635
48
280,320
53,958
1,382
(1,116) (3,175)
(5,291)
327,194
58,282
1,419
(1,407) (15,874)
(4,384) (47,318)
323,703
(3)
36,950
6,151
571
37,881
-
-
-
-
-
-
-
-
-
-
-
Depreciation expense
Capitalized depreciation
Depreciation relating to disposals
Impairment charge
Balance as at December 31, 2021
Depreciation expense
Capitalized depreciation
Depreciation relating to disposals
Impairment charge (note 3)
Balance as at December 31, 2022
Net book value:
As at December 31, 2021
As at December 31, 2022
Total
675,043
35,483
589
802
(5,085)
(5,512)
(1,871)
-
699,449
52,856
744
(17,483)
(136,032)
(847)
-
598,687
310,706
61,593
1,430
(4,291)
(5,294)
364,144
64,433
1,990
(17,281)
(51,702)
361,584
43,978
34,423
267,844
181,237
23,483
21,443
335,305
237,103
Of the total depreciation expense from continuing operations, $63.5 million (2021 – $61.3 million) was
charged to cost of sales and $0.9 million (2021 – $0.6 million) was charged to general and administrative
expenses for the year ended December 31, 2022.
See note 17 for the carrying value of right-of-use assets under leases recognized in property, plant and
equipment as at December 31, 2022 and 2021 and other lease related information for the years ended
December 31, 2022 and 2021.
110 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
12.
INTANGIBLE ASSETS
Cost:
Balance at beginning of year
Additions
Disposals
Impairment charge (note 3)
Balance at end of year
Accumulated amortization and impairment:
Balance at beginning of year
Amortization
Capitalized amortization
Amortization relating to disposals
Impairment charge (note 3)
Balance at end of year
Net book value:
At beginning of year
At end of year
December 31,
2022
December 31,
2021
36,026
2,554
(406)
(2,138)
36,036
18,667
3,733
10
(406)
(1,469)
20,535
17,359
15,501
32,114
4,609
-
(697)
36,026
15,975
3,370
17
-
(695)
18,667
16,139
17,359
Of the total intangible asset amortization expense from continuing operations, $2.5 million (2021 – $2.4
million) was charged to cost of sales and $1.2 million (2021 – $1.0 million) was charged to general and
administrative expenses for the year ended December 31, 2022.
13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable
Accrued liabilities
Commodity swap contracts (note 8(c))
Foreign exchange option contracts (note 8(d))
Foreign exchange forward contracts
Share based compensation plans - current portion (note 18)
Dividend payable (note 26(a))
Value added tax payable
December 31,
2022
December 31,
2021
22,025
40,824
3,259
1,787
318
7,943
7,600
2,773
86,529
17,643
40,201
1,946
1,489
-
6,518
5,743
3,630
77,170
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 111
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
14. DEBT
(a) DPM Revolving Credit Facility
Up to July 2022, DPM had a committed revolving credit facility of $150.0 million with a consortium of banks
that was to mature in February 2024. In July 2022, DPM replaced this facility(cid:3)with a new committed revolving
credit facility (the “RCF”) with a consortium of four banks that matures in July 2026. Generally speaking,
this facility contains more favourable terms and conditions than the old RCF, providing added flexibility, an
extended term, and lower pricing, and is secured by pledges of DPM’s investments in Ada Tepe, Chelopech
and Loma Larga and by guarantees from each of the subsidiaries that hold these assets and by certain
holding companies. Initially, DPM is permitted to borrow up to an aggregate principal amount of $150.0
million, which can be increased pursuant to an accordion feature that permits, subject to certain conditions,
the facility to be increased to $250.0 million. The cost of borrowing is based on the Secured Overnight
Financing Rate (“SOFR”), the general replacement rate for LIBOR, plus a spread, which is currently 2.25%,
and can range between 2.25% and 3.50% depending upon DPM’s leverage. The RCF contains financial
covenants that require DPM to maintain: (i) a Debt Leverage Ratio below 3.75:1, and (ii) a minimum net
worth equal to $600(cid:3)million(cid:3)plus (minus) 50% of ongoing net earnings (loss) plus 50% of all equity raised
by DPM, in each case, after March 31, 2022, and(cid:3)as defined under the RCF.
As at December 31, 2022(cid:3) and 2021, DPM was in compliance with all financial covenants and $nil was
drawn under the RCF.
(b) Tsumeb overdraft facility
Tsumeb has a Namibian $100.0 million ($5.9(cid:3)million)(cid:3)demand overdraft facility. This facility(cid:3)is guaranteed
by DPM and bears interest at a rate equal to the Namibian Prime Lending Rate minus 0.5%. As at
December 31, 2022(cid:3)and 2021, $nil(cid:3)was drawn from this facility.
(c) Other credit agreements and guarantees
Chelopech and Ada Tepe have a $21.0 million multi-purpose credit facility that matures on November 30,
2023(cid:3)and is guaranteed by DPM. As at December 31, 2022, $17.3(cid:3)million (December 31, 2021 –(cid:3)$13.9
million) had been utilized in the form of letters of credit and letters of guarantee, primarily in respect of
concession contracts with the Bulgarian Ministry of Energy.
Chelopech and Ada Tepe also have a Euro 21.0(cid:3)million ($22.5(cid:3)million) credit facility to support mine closure
and rehabilitation obligations(cid:3)in respect of concession contracts with the Bulgarian Ministry of Energy.(cid:3)This
credit facility matures on November 30, 2023(cid:3)and is guaranteed by DPM.(cid:3)As at December 31, 2022,(cid:3)$22.5(cid:3)
million (December 31, 2021 –(cid:3)$23.8 million) had been utilized in the form of letters of guarantee.
Ada Tepe also has a $10.3 million multi-purpose credit facility that matures on November 30, 2023(cid:3)and is
guaranteed by DPM.(cid:3)As at December 31, 2022, $0.2(cid:3)million (December 31, 2021 –(cid:3)$0.2 million) had been
utilized in the form of letters of credit and letters of guarantee, primarily in respect of exploration contracts
with the Bulgarian Ministry of Energy.
Advances under these facilities bear interest at a rate equal to the one month SOFR(cid:3)plus 2.5%. The letters
of credit and guarantee bear a fee of 0.6% based on the amounts issued.
112 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
15. REHABILITATION PROVISIONS
The rehabilitation provisions represent the present value of rehabilitation costs relating to the Chelopech,
Tsumeb and Ada Tepe sites, which are expected to be incurred between 2023 and 2049.
Key assumptions used in determining the rehabilitation provisions were as follows:
Discount period
Chelopech
Tsumeb
Ada Tepe
Local discount rate
Chelopech/Ada Tepe
Tsumeb
Local long-term inflation rate
Chelopech/Ada Tepe
Tsumeb
Changes to rehabilitation provisions were as follows:
December 31,
2022
December 31,
2021
2023 - 2043
2023 - 2049
2023 - 2038
2022 - 2043
2022 - 2049
2022 - 2038
4.2%
12.1%
2.6%
4.5%
1.3%
11.1%
2.5%
4.5%
Total
52,526
834
(4,114)
2,380
51,626
6,157
(9,692)
2,859
50,950
Balance as at January 1, 2021
Change in cost estimate
Remeasurement of provisions (b)
Accretion expense (note 20)
Balance as at December 31, 2021
Change in cost estimate (a)
Remeasurement of provisions (b)
Accretion expense (note 20)
Balance as at December 31, 2022
Chelopech
23,270
834
(1,702)
256
22,658
675
Ada Tepe
11,463
-
(1,432)
125
10,156
-
(4,134) (3,049) (2,509)
214
Tsumeb
17,793
-
(980)
1,999
18,812
5,482
2,232
413
19,612
23,477
7,861
The current portion of rehabilitation provisions of $5.1 million (December 31, 2021 – $1.2 million) is
presented as current portion of long-term liabilities on the consolidated statements of financial position (note
16).
(a) During the year ended December 31, 2022, Tsumeb has increased its estimated rehabilitation costs
based on its current activities, updated closure plan and existing closure obligations.
(b) Remeasurement of provisions resulted from changes in discount rates, inflation rates and foreign
exchange rates at each site.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 113
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
16. OTHER LONG-TERM LIABILITIES
Leases (note 17)
Pension obligations
Other liabilities
Less: Current portion
17. LEASES
December 31,
2022
December 31,
2021
14,584
2,731
6,288
23,603
(10,273)
13,330
15,188
2,513
2,397
20,098
(6,234)
13,864
The Company leases various property, equipment and vehicles with lease terms ranging between one to 15
years. Extension and termination options are included in a number of property and equipment leases across
the Company. These terms are used to maximize operational flexibility in terms of managing contracts, the
majority of which are exercisable jointly by both the Company and the respective lessor. Lease terms are
negotiated on an individual basis and contain a wide range of terms and conditions. Some of the Company’s
leased assets are pledged as security for the related lease obligations.
Tsumeb has a long-term lease agreement for the supply of oxygen. The original term of the lease was 15
years extending to 2025, payable on a monthly basis. The lease payments were discounted at a rate of
12.5%.
Right-of-use assets recognized in property, plant and equipment (note 11) as at December 31, 2022 and
2021 were as follows:
Buildings
Machinery and Equipment
December 31,
2022
6,077
3,502
9,579
December 31,
2021
3,741
7,024
10,765
Additions to the right-of-use assets during the year ended December 31, 2022 were $3.9 million (2021 –
$2.9 million).
Lease obligations related to right-of-use assets recognized in the current portion of long-term liabilities and
other long-term liabilities (note 16) as at December 31, 2022 and 2021 were as follows:
Current portion of long-term liabilities
Other long-term liabilities
December 31,
2022
4,543
10,041
14,584
December 31,
2021
4,405
10,783
15,188
114 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
Expenses related to leases recognized in the consolidated statements of earnings (loss) for the year ended
December 31, 2022 and 2021 were as follows:
Depreciation charge of right-of-use assets
Buildings
Machinery and Equipment
Finance charges (note 20)
Expense relating to short-term leases
Expense relating to leases of low-value assets
that are not short-term leases
Expense relating to variable lease payments
not included in lease obligations
2022
1,112
3,691
4,803
1,025
795
30
2021
870
3,954
4,824
1,163
494
59
1,530
1,194
Total cash outflows for leases for the year ended December 31, 2022 were $5.7 million (2021 – $5.5 million).
18. SHARE-BASED COMPENSATION PLANS
SU plan
DPM has a SU Plan for directors, certain employees and eligible contractors of DPM and its wholly-owned
subsidiaries in consideration of past services to the Company. The Board of Directors administers this plan
and determines the grants.
(a) RSUs
These RSUs vest equally over a three-year period and are paid in cash based on the Market Price of DPM’s
publicly traded common shares on the entitlement date or dates, which should not be later than December
31 of the year that is three years after the year of service for which the RSUs are granted, as determined by
the Board of Directors in its sole discretion.
The following is a summary of the RSUs granted for the years indicated:
Balance as at January 1, 2021
RSUs granted
RSUs redeemed
RSUs forfeited
Mark-to-market adjustments
Balance as at December 31, 2021
RSUs granted
RSUs redeemed
RSUs forfeited
Mark-to-market adjustments
Balance as at December 31, 2022
Number of RSUs
Amount
2,280,594
726,258
(1,199,532)
(82,749)
1,724,571
840,499
(903,171)
(146,739)
1,515,160
9,773
3,869
(7,700)
(89)
433
6,286
4,262
(5,411)
(366)
(328)
4,443
The current portion of RSUs of $3.1 million (December 31, 2021 – $4.5 million) was included in accounts
payable and accrued liabilities on the consolidated statements of financial position (note 13).
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 115
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
As at December 31, 2022, there was $3.4 million (December 31, 2021 – $3.1 million) of expenses relating to
unvested RSUs remaining to be charged to net earnings in future periods relating to the RSU plan.
(b) PSUs
Under the SU Plan, the Board of Directors may, at its sole discretion, (i) grant SUs with a performance-based
component, referred to as PSUs, subject to performance conditions to be achieved by the Company, and (ii)
determine the entitlement date or dates of such PSUs. These PSUs vest after three years and are paid in
cash based on the Market Price of DPM’s publicly traded common shares, subject to established
performance criteria, on the entitlement date or dates, which shall not be later than December 31 of the year
that is three years after the year of service for which the PSUs were granted, as determined by the Board of
Directors in its sole discretion.
The following is a summary of the PSUs granted for the years indicated:
Balance as at January 1, 2021
PSUs granted
PSUs redeemed
Mark-to-market adjustments
Balance as at December 31, 2021
PSUs granted
PSUs redeemed
PSUs forfeited
Mark-to-market adjustments
Balance as at December 31, 2022
Number of PSUs
Amount
1,252,090
240,928
(511,316)
981,702
278,829
(411,850)
(17,948)
830,733
7,212
1,403
(5,599)
471
3,487
1,438
(2,956)
(33)
488
2,424
The(cid:3)current portion of PSUs(cid:3)of $1.5 million (December 31, 2021 –(cid:3)$2.0(cid:3)million) was included in(cid:3)accounts
payable and accrued liabilities(cid:3)on the consolidated statements of financial position (note 13).
As at December 31, 2022,(cid:3)there was $1.8(cid:3)million (December 31, 2021(cid:3)–(cid:3)$1.7(cid:3)million) of expenses(cid:3)remaining
to be charged to net earnings(cid:3)in future periods relating to unvested PSUs.
DSU(cid:3)plans
DPM(cid:3)has a DSU Plan for directors and certain employees.
Under the Director DSU Plan, directors receive a portion of their annual compensation in the form of DSUs.
The DSUs are redeemable in cash equal to the closing price of DPM’s common shares on the applicable
redemption date as elected by(cid:3)the director.
Under the Employee DSU Plan,(cid:3) grants to employees of the Company are determined by the Board of
Directors, or the Human Capital & Compensation(cid:3) Committee, in lieu of a cash bonus. The DSUs are
redeemable in cash based on(cid:3)(i) the Market Price of DPM’s common shares on the Separation Date; or (ii)
the Market Price(cid:3) or the closing price of DPM’s(cid:3) common share on the day preceding(cid:3) the Deferred
Redemption Date; or (iii) the Market Price of DPM’s common shares(cid:3)if the Deferred Redemption Date is
December 15 of the calendar year commencing after the Separation Date.
116 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The following is a continuity of the DSUs for the years indicated:
Balance as at January 1, 2021
DSUs granted
DSUs redeemed
Mark-to-market adjustments
Balance as at December 31, 2021
DSUs granted
DSUs redeemed
Mark-to-market adjustments
Balance as at December 31, 2022
Number of DSUs
Amount
1,869,258
179,883
(297,007)
1,752,134
235,372
(145,802)
1,841,704
13,478
1,093
(2,078)
(1,876)
10,617
1,189
(949)
(1,706)
9,151
The current portion of DSUs of $3.3 million (December 31, 2021 – $0.02 million) was included in accounts
payable and accrued liabilities on the consolidated statements of financial position (note 13).
DPM stock option plan
The Company has established an incentive stock option plan for the directors, selected employees and
consultants. Pursuant to the plan, the exercise price of the stock option cannot be less than the Market
Price of DPM’s common shares on the trading date preceding the effective date of the stock option grant.
The aggregate number of shares that can be issued from treasury under this plan is 12,500,000. Stock
options granted vest equally over a three-year period and expire five years from the date of grant.
During the year ended December 31, 2022, the Company granted 649,468 (2021 – 464,443) stock options
with a fair value of $1.1 million (2021 – $1.1 million). The estimated value of the stock options granted will
be recognized as an expense in the consolidated statements of earnings (loss) and an addition to
contributed surplus in the consolidated statements of changes in shareholders’ equity over the vesting
period. The Company recorded stock option expenses of $1.1 million (2021 – $1.1 million) for the year
ended December 31, 2022 under this stock option plan.
As at December 31, 2022, there was $0.8 million (December 31, 2021 – $0.7 million) of expenses remaining
to be charged to net earnings in future periods relating to unvested stock options.
The fair value of options granted was estimated using the Black-Scholes option pricing model. The expected
volatility is estimated based on the historic average share price volatility. The inputs used in the
measurement of the fair values at the time the options were granted were as follows:
Five year risk free interest rate
Expected life in years
Expected volatility
Dividends per share
2022
2.4% - 3.3%
4.75
45.7% - 46.78%
$0.16
2021
0.8% - 0.9%
4.75
52.6% - 54.6%
$0.12
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 117
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The following is a stock option continuity for the years indicated:
Number of
options
Weighted average
exercise price per share
(Cdn$)
Balance as at January 1, 2021
Options granted
INV options (note 5)
Options exercised
Options expired
Balance as at December 31, 2021
Options granted
Options exercised
Options expired
Options forfeited
Balance as at December 31, 2022
2,916,087
464,443
1,119,728
(1,070,774)
(34,139)
3,395,345
649,468
(1,060,102)
(301,028)
(18,900)
2,664,783
3.52
7.67
6.74
3.27
10.11
5.17
7.37
4.04
10.66
6.80
5.53
The following lists the options outstanding and exercisable as at December 31, 2022:
Options outstanding
Options exercisable
Range of
exercise prices
per share
(Cdn$)
3.28 - 4.45
4.46 - 8.50
3.28 - 8.50
Number of
options
outstanding
1,526,147
1,138,636
2,664,783
Weighted
average
remaining
years
1.21
3.66
2.26
Weighted
average
exercise
price
per share
(Cdn$)
4.08
7.47
5.53
Weighted
average
exercise
price
per share
(Cdn$)
4.02
7.43
4.44
Number of
options
exercisable
1,321,734
187,251
1,508,985
19. EXPENSES BY NATURE
Cost of sales, general and administrative expenses, and exploration and evaluation expenses, as reported
in the consolidated statements of earnings (loss), have been regrouped by the nature of the expenses as
follows:
Raw materials, consumables and spare parts
Staff costs
Service costs
Share-based compensation expense
Royalties (a)
Drilling, assaying and other exploration and evaluation expenses
Insurance
Net (gains) losses on foreign exchange option contracts (note 8(d))
Depletion of mine properties (note 10)
Depreciation of property, plant and equipment (note 11)
Amortization of intangible assets (note 12)
Other costs
118 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
2022
2021
112,545
101,844
77,135
85,467
68,423
69,494
6,742
4,156
15,648
21,468
16,413
11,095
4,855
4,794
1,140 (6,525)
30,960
61,877
3,370
5,242
33,119
64,400
3,733
6,385
410,477
393,303
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
(a) Chelopech pays royalties at a fixed rate of 1.5% annually based on the gross value of the gold, silver
and copper contained in the ore mined. Ada Tepe pays royalties at a variable royalty rate on a sliding
scale between 1.44% and 4% applied to the gross value of the gold and silver contained in the ore
mined based on a range of pre-tax profit to sales ratios. For the year ended December 31, 2022, the
royalty rate was 1.5% (2021 – 1.5%) for Chelopech and 4% (2021 – 3.9%) for Ada Tepe.
20. FINANCE COSTS
Borrowing costs
Accretion expense related to rehabilitation provisions (note 15)
Finance charges under leases (note 17)
21. OTHER INCOME AND EXPENSE
Net losses on Sabina special warrants (note 8(a))
Net losses on other warrants
Tsumeb restructuring costs (a)
Net foreign exchange losses
Interest income
Other, net
2022
2,441
2,859
1,025
6,325
2021
2,006
2,380
1,163
5,549
2022
2,369
46
5,735
681
(6,554)
734
3,011
2021
6,289
23
-
1,628
(632)
1,027
8,335
(a) Tsumeb restructuring costs were related to severance payment and other employee benefits related to
a comprehensive cost saving initiative at Tsumeb.
22.
INCOME TAXES
The major components of income tax expense recognized in net earnings (loss) from continuing operations
are as follows:
Current income tax expense on earnings
Deferred income tax expense related to
origination and reversal of temporary differences
Income tax expense
2022
21,199
1,620
22,819
2021
33,625
5,064
38,689
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 119
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The reconciliation of the combined Canadian federal and provincial government statutory income tax rates
to the effective tax rate is as follows:
Earnings before income taxes from continuing operations
Combined Canadian federal and provincial
statutory income tax rates
Expected income tax expense
Lower rates on foreign earnings
Changes in unrecognized tax benefits
Non-deductible portion of capital losses
Non-deductible share-based compensation expense
Other, net
Income tax expense
2022
58,742
26.5%
15,567
(26,593)
30,867
2,223
296
459
22,819
2021
229,418
26.5%
60,796
(41,163)
14,842
3,346
279
589
38,689
A deferred income tax recovery of $8.2 million relating to publicly traded securities and cash flow hedges
was also recognized in other comprehensive income (loss) for the year ended December 31, 2021.
The significant components of the Company’s deferred income taxes as at December 31, 2022 and 2021
are as follows:
December 31,
2022
December 31,
2021
Deferred income tax assets
Non-capital losses
Capital losses
Cumulative Canadian exploration and evaluation expenses
Depreciable property, plant and equipment
Financing costs
Share-based compensation expense
Rehabilitation provisions
Investments
Other
Gross deferred income tax assets
Unrecognized tax benefits
Total deferred income tax assets
Deferred income tax liabilities
Depreciable property, plant and equipment
Other
Total deferred income tax liabilities
Net deferred income tax assets
79,453
7,110
2,220
8,497
5,477
2,042
2,251
2,258
373
109,681
(101,882)
7,799
0
1,035
174
1,209
6,590
72,565
3,354
2,308
8,897
2,345
3,541
2,754
1,360
1,055
98,179
(88,724)
9,455
649
121
770
8,685
As at December 31, 2022, the Company had(cid:3)$6.6(cid:3)million (December 31, 2021 –(cid:3)$8.7(cid:3)million) of(cid:3)net deferred
income tax assets after offsetting deferred income tax assets and liabilities incurred by the same legal
entities in the same jurisdictions in its consolidated statements of financial position.
Of the total deferred income tax assets recognized in 2022, $7.7(cid:3)million (2021(cid:3)–(cid:3)$8.6(cid:3)million) is expected
to be recovered after more than 12 months. Of the total deferred income tax liabilities recognized in 2022,
$1.0(cid:3)million (2021 –(cid:3)$0.6(cid:3)million) is expected to be payable after more than 12 months.
As at December 31, 2022, the Company had Canadian non-capital losses of $280.4(cid:3)million (December 31,
2021(cid:3)–(cid:3)$255.3(cid:3)million) expiring between 2025(cid:3)and 2042(cid:3)and Serbian non-capital losses of $34.4(cid:3)million
(December 31, 2021(cid:3)–(cid:3)$31.8(cid:3)million) expiring between 2023 and 2027(cid:3)for which no deferred income tax
assets had been recognized.
120 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The Company is subject to assessments by various taxation authorities which may interpret tax legislation
and tax filing positions differently than the Company. Such differences are provided for when it is probable
that the Company’s filing position will not be upheld and the amount of the tax exposure can be reasonably
estimated. As at December 31, 2022 and 2021, no provisions have been made in the consolidated financial
statements for potential tax liabilities relating to such assessments and interpretations.
23. EARNINGS PER SHARE
Net earnings attributable to common shareholders
Net earnings from continuing operations
Net earnings from discontinued operations
Basic weighted average number of common shares
Effect of stock options
2022
2021
35,923
-
190,750
19,351
190,518,584
639,008
186,135,033
1,342,045
Diluted weighted average number of common shares
191,157,592
187,477,078
Basic earnings per share
From continuing operations
From discontinued operations
Diluted earnings per share
From continuing operations
From discontinued operations
24. RELATED PARTY TRANSACTIONS
Key management remuneration
0.19
-
0.19
-
1.02
0.10
1.02
0.10
The Company’s related parties include its key management. Key management includes directors (executive
and non-executive), the Chief Executive Officer (“CEO”), the Executive Vice Presidents and the Senior Vice
Presidents reporting directly to the CEO.
The remuneration of the key management of the Company recognized in the consolidated statements of
earnings (loss) for the years ended December 31, 2022 and 2021 was as follows:
Salaries, management bonuses and director fees
Other benefits
Share-based compensation
Total remuneration
2022
5,040
274
2,559
7,873
2021
3,290
210
1,897
5,397
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 121
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
25. SUPPLEMENTARY CASH FLOW INFORMATION
(a) Changes in working capital
(Increase) decrease in accounts receivable and other assets
(Increase) decrease in inventories
Increase (decrease) in accounts payable and accrued liabilities
Decrease in other liabilities
(b) Other items not affecting cash
Net finance costs
Share-based compensation expense
Net losses on Sabina special warrants
Net losses on other warrants
Realized (gains) losses on commodity swap contracts
Realized (gains) losses on foreign exchange option contracts
Other, net
26. SUPPLEMENTARY SHAREHOLDERS’ EQUITY INFORMATION
(a) Dividend
2022
1,836
2,163
3,081
(2,223)
4,857
2022
(229)
1,116
2,369
46
(7,917)
1,140
(400)
(3,875)
2021
(42,190)
(5,103)
(1,714)
(6,462)
(55,469)
2021
4,917
1,052
6,289
23
19,289
(6,525)
1,164
26,209
During(cid:3)the year(cid:3)ended December 31, 2022,(cid:3)the Company declared a quarterly dividend of $0.04 (2021(cid:3)–
$0.03)(cid:3) per common share to its shareholders of record resulting in total dividend distributions of $30.5(cid:3)
million (2021(cid:3) –(cid:3)$22.4(cid:3)million) recognized against its retained earnings in the consolidated statements of
changes in shareholders’ equity.(cid:3)The Company paid(cid:3)an aggregate of $28.6(cid:3)million (2021(cid:3)–(cid:3)$22.1(cid:3)million)
of dividends which were included in cash used in financing activities in the consolidated statements of cash
flows for the year(cid:3)ended December 31, 2022(cid:3)and(cid:3)recognized a dividend payable of(cid:3)$7.6(cid:3)million (December
31, 2021 –(cid:3) $5.7(cid:3) million)(cid:3) in accounts payable and accrued liabilities in the consolidated statements of
financial position as at December 31, 2022.
On February 16,(cid:3)2023, the Company(cid:3)declared a dividend of $0.04(cid:3)per common share payable on April 17,(cid:3)
2023(cid:3)to shareholders of record on March(cid:3)31, 2023.
(b) Share repurchases under the Normal Course Issuer Bid (“NCIB”)
The Company established a NCIB on March 1, 2022 extending to February 28, 2023. The maximum
number of shares that can be repurchased during this period is 9,000,000 shares.
During the year ended December 31, 2022, the Company purchased a total of 2,471,500(cid:3) (2021(cid:3) –
1,723,800)(cid:3)shares, all of which were cancelled as at December 31, 2022.(cid:3)The Company also cancelled an
additional 29,600 shares(cid:3) in 2022(cid:3)that were purchased in 2021, resulting in a total of 2,501,100(cid:3)(2021(cid:3) –
1,694,200)(cid:3) shares being cancelled during the year ended December 31,(cid:3) 2022. The total cost of these
purchases was $13.6(cid:3)million (2021(cid:3)–(cid:3)$10.4 million)(cid:3)at an average price of $5.51 (Cdn$7.14)(cid:3)(2021(cid:3)–(cid:3)$6.02
(Cdn$7.64))(cid:3)per share, of which $7.5(cid:3)million(cid:3)(2021 –(cid:3)$5.3(cid:3)million)(cid:3)was recognized as a reduction in share
capital, $nil (2021(cid:3)–(cid:3)$5.1 million) as a reduction in contributed surplus and $6.1(cid:3)million (2021(cid:3)–(cid:3)$nil)(cid:3)as a
reduction in retained earnings in the consolidated statements of changes in shareholders’ equity for the
year(cid:3)ended December 31, 2022 and the payment for which was included in cash used in financing activities
in the consolidated statements of cash flows for the years(cid:3)ended December 31,(cid:3)2022(cid:3)and 2021.
122 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
(c) Changes in accumulated other comprehensive loss
Cash flow hedge reserves
Foreign exchange option contracts
Balance at beginning of year
Unrealized gains (losses), net of income taxes
Realized (gains) losses transferred to cost of sales,
net of income taxes
Balance at end of year
Commodity swap contracts
Balance at beginning of year
Unrealized losses, net of income taxes
Realized losses transferred to revenue, net of income taxes
Balance at end of year
Deferred cost of hedging reserves
Foreign exchange option contracts
Balance at beginning of year
Deferred cost of hedging, net of income taxes
Balance at end of year
Commodity swap contracts
Balance at beginning of year
Deferred cost of hedging, net of income taxes
Cost of hedging transferred to revenue, net of income taxes
Balance at end of year
Unrealized gains on publicly traded securities
Balance at beginning of year
Unrealized losses, net of income taxes
Balance at end of year
Pension obligations
Balance at beginning of period
Remeasurements of pension obligations, net of income taxes
Balance at end of year
Accumulated currency translation adjustments
Balance at beginning and end of year
Accumulated currency translation adjustments
related to assets and liabilities held for sale
Balance at beginning of year
Classified as held for sale
MineRP Disposition (note 4)
Balance at end of year
Accumulated other comprehensive loss
2022
2021
(6)
(1,544)
1,140
(410)
-
-
-
-
5,344
1,175
(6,525)
(6)
78
(13,723)
13,645
-
(1,444)
1,060
104 (2,504)
(1,340) (1,444)
-
-
-
-
(18)
(504)
522
-
2,236
39,829
(5,292) (37,593)
2,236
(3,056)
-
(903)
(903)
-
-
-
(2,446) (2,446)
-
-
-
(2,176)
(669)
2,845
-
(8,155) (1,660)
-
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 123
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
27. COMMITMENTS AND OTHER CONTINGENCIES
(a) Commitments
The Company had the following minimum contractual commitments as at December 31, 2022:
Capital commitments
Purchase commitments
Total commitments
Tsumeb secondary materials
up to 1 year
1 - 5 years
17,348
21,077
38,425
-
95
95
Total
17,348
21,172
38,520
As at December 31, 2022, Tsumeb had approximately $36.8 million (December 31, 2021 – $73.8 million)
of recoverable third party in-process secondary materials, which it is obligated to process and return,
generally in the form of blister, to IXM pursuant to a tolling agreement.
In April 2021, the Company and IXM agreed to amend the existing tolling agreement to provide for, among
other things: i) targeted declining excess secondary material balances, above which excess secondary
material would be required to be purchased by the Company; ii) the elimination of all excess secondary
material by March 31, 2023; iii) an increase in the defined level of normal secondary material; and iv) an
extension of the tolling agreement by three years to December 31, 2026.
As at December 31, 2022, the value of excess secondary materials, as defined in the tolling agreement,
was approximately $3.3 million, which was below the targeted excess secondary material balance under
the tolling agreement as at December 31, 2022.
(b) Contingencies
The Company is involved in legal proceedings, from time to time, arising in the ordinary course of its
business. It is not expected that any material liability will arise from current legal proceedings or have a
material adverse effect on the Company’s future business, operations or financial condition.
28. FINANCIAL RISK MANAGEMENT
The Company’s principal financial liabilities(cid:3) comprise accounts payable(cid:3) and accrued liabilities(cid:3) and long-
term debt. The main purpose of these financial instruments is to assist with the management of the
Company’s short term and long term cash flow requirements. The Company(cid:3)has various financial assets,(cid:3)
such as cash(cid:3)and(cid:3)accounts receivable,(cid:3)which arise directly from its operations.
The main risks that could adversely affect the Company’s financial assets, liabilities or future cash flows
are(cid:3)market risk (which includes commodity price risk, interest rate risk(cid:3)and(cid:3)foreign currency risk), liquidity
risk and credit risk.(cid:3)Management reviews each of these risks and establishes(cid:3)policies for managing them
as(cid:3)summarized below.
The following discussion also includes a sensitivity analysis that is intended to illustrate the sensitivity to
changes in market variables on the Company’s financial instruments and the impact on net earnings (loss)
and shareholders’ equity, where applicable. Financial instruments affected by market risk include cash,
accounts receivable, investments at fair value, commodity swap contracts, foreign exchange option
contracts, long-term debt, accounts payable and accrued liabilities. The sensitivity has been prepared using
financial assets and liabilities held as at the reporting dates.
124 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The Company has established financial risk management policies to identify and analyze the risks of the
Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Financial
risk management policies and systems are reviewed regularly to reflect changes in market conditions and
the Company’s activities. The Company, through its training and management standards and procedures,
aims to develop a disciplined and constructive control environment in which all employees involved in
financial risk management activities understand their roles and obligations.
Market risk
Market risk is the risk that the future cash flows or the fair value of a financial instrument will fluctuate
because of changes in market prices. Market risk is comprised of three types of risks: commodity price risk,
interest rate risk and foreign currency risk. The impact of each of these components is discussed below.
Commodity price risk
The Company is subject to price risk associated with fluctuations in the market prices for metals. The
Company sells its products at prices that are effectively determined by reference to the traded prices on
the London Metal Exchange and London Bullion Market. The prices of gold and copper are major factors
influencing the Company’s business, results of operations and financial condition. The Company regularly
enters into commodity swap contracts to reduce the price exposure associated with the time lag between
the provisional and final determination of its concentrate sales. In addition, the Company periodically enters
into commodity swap contracts to reduce the price exposure associated with projected payable copper
production.
The Company’s risk management policy, which was approved by the Board of Directors, requires
provisional concentrate sales to be fully hedged and permits hedging up to 90%, 85% and 80% of its
projected payable copper production in the subsequent 1, 2, and 3 year reporting periods, respectively.
As at December 31, 2022, the impact of a 5% increase or decrease in metal prices impacting the Company’s
accounts receivable and outstanding commodity swap contracts, with all other variables held constant,
would decrease or increase earnings before income taxes by $0.6 million (2021 – $2.0 million) and would
decrease or increase equity by $0.6 million (2021 – $2.0 million).
The following table demonstrates the effect on 2022 and 2021 earnings before income taxes of a 5%
increase in commodity prices on its sales, excluding the impact of any hedges and with all other variables
held constant. The impact on equity is the same as the impact on net earnings.
Effect of a 5% increase in metal prices on earnings before income taxes
Gold
Copper
Total increase on earnings before income taxes
2022
21,911
5,487
27,398
2021
25,129
6,883
32,012
The effect of a 5% decrease in metal prices, excluding the impact of any hedges and with all other variables
held constant, would decrease earnings before income taxes by an equivalent amount.
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
Interest rate risk
Interest rate risk is the risk that the future cash flows or fair value of a financial instrument will fluctuate
because of changes in market interest rates. The Company’s exposure to the risk of changes in market
interest rates relates primarily to the Company’s cash and floating rate denominated debt and other financial
liabilities. As at December 31, 2022, the Company had no debt or floating rate denominated financial
liabilities. For the year ended December 31, 2022, a 100 basis point increase or decrease in interest rates
across the yield curve, with all other variables held constant, would increase or decrease earnings before
income taxes by $4.3 million (2021 – $3.4 million). The impact on equity is the same as the impact on net
earnings.
Foreign currency risk
The Company’s foreign currency exposures arise primarily from a significant portion of its operating and
capital costs being denominated in currencies other than the U.S. dollar, the Company’s functional
currency. The Company periodically undertakes to purchase, in advance, a portion of its foreign
denominated cash flow requirements on a spot or forward basis to reduce this exposure. The Company
also enters into foreign exchange option contracts in order to reduce the foreign exchange exposure
associated with projected operating expenses and capital expenditures denominated in foreign currencies.
The Company’s risk management policy, which was approved by the Board of Directors, permits up to 85%,
80% and 75% of its projected operating expenses denominated in foreign currency to be hedged in the
subsequent 1, 2, and 3 year reporting periods, respectively. The policy also permits projected capital
expenditures denominated in foreign currency to be fully hedged.
As at December 31, 2022, a 5% appreciation of the U.S. dollar relative to the ZAR on the Company’s
outstanding foreign exchange option contracts, with all other variables held constant, would decrease equity
by $0.8 million (2021 – $1.9 million). The effect of a 5% depreciation of the U.S. dollar relative to the ZAR
on the Company’s outstanding foreign exchange option contracts, with all other variables held constant,
would have no impact on equity.
The following table demonstrates the effect on 2022 and 2021 earnings before income taxes and equity of
a 5% appreciation of the U.S. dollar relative to the Company’s key foreign currencies on the Company’s
outstanding financial assets and liabilities denominated in foreign currencies, excluding the impact of any
hedges and with all other variables held constant.
Euro
Namibian Dollar
Canadian Dollar
Total increase
Effect of a 5% appreciation of the U.S. dollar on
Earnings before income taxes
Equity
2022
2,091
(381)
(1,082)
628
2021
1,731
(353)
(773)
605
2022
1,822
(381)
946
2,388
2021
1,521
(353)
1,335
2,504
The effect of a 5% depreciation of the U.S. dollar relative to these foreign currencies on the Company’s
outstanding foreign denominated financial assets and liabilities, excluding the impact of any hedges and
with all other variables held constant, would be to decrease earnings before income taxes and equity by
equivalent amounts.
126 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
Credit risk
The exposure to credit risk arises through the potential failure of a customer or another third party to meet
its contractual obligations to the Company. During 2022, the Company had contracts with 19 customers in
connection with its mining and smelting operations, one of whom accounted for approximately 40% (2021
– 40%) of the Company’s revenue. Under the terms of the Company’s concentrate sales contracts, the
purchasers make an initial advance payment equal to 70% to 100% of the provisional value of each lot at
the time title transfers. This serves to mitigate a portion of the Company’s credit risk.
With respect to credit risk arising from the other financial assets of the Company, which comprise cash,
equity investments and derivative financial assets, the Company’s maximum exposure is equal to the
carrying amount of these instruments. The Company limits its counterparty credit risk on these assets by
dealing with highly rated counterparties, issuers that are subject to minimum credit ratings, and/or maximum
prescribed exposures.
Liquidity risk
The Company relies on the cash flows generated from its operations, including provisional payments
received from its customers, retained cash balances, available lines of credit under its RCF and its ability to
raise debt and equity from the capital markets to fund its operating, investment and liquidity needs. The
cyclical nature of the Company’s businesses and the volatility of capital markets are such that conditions
could change dramatically, affecting the Company’s cash flow generating capability, its ability to maintain, or
draw upon, its RCF or the existing terms under its concentrate sales and/or smelting agreements, as well as
its liquidity, cost of capital and its ability to access new capital, which could adversely affect the Company’s
earnings and cash flows and, in turn, could affect total shareholder returns. To reduce these risks, the
Company: (i) prepares regular cash flow forecasts to monitor its capital requirements, available liquidity and
compliance to debt covenants; (ii) strives to maintain a prudent capital structure that is comprised primarily
of equity financing and long-term debt, currently in the form of a committed RCF; and (iii) targets a minimum
level of liquidity comprised of surplus cash balances and/or undrawn committed lines of credit to avoid having
to raise additional capital at times when the costs or terms would be regarded as unfavourable.
The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual
undiscounted payments.
Accounts payable and accrued liabilities
Commodity swap contracts
Foreign exchange option contracts
Foreign exchange forward contracts
Lease obligations
Other obligations
Accounts payable and accrued liabilities
Commodity swap contracts
Foreign exchange option contracts
Lease obligations
Other obligations
As at December 31, 2022
up to 1 year 1 - 5 years over 5 years
81,165
3,259
1,787
318
5,416
127
92,072
-
-
-
-
9,854
1,567
11,421
-
-
-
-
1,403
486
1,889
Total
81,165
3,259
1,787
318
16,673
2,180
105,382
As at December 31, 2021
up to 1 year
1 - 5 years
over 5 years
73,735
1,946
1,489
5,407
700
83,277
-
-
-
10,305
840
11,145
-
-
-
1,791
125
1,916
Total
73,735
1,946
1,489
17,503
1,665
96,338
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
Capital management
The Company’s objective for capital management is to: (i) maintain sufficient levels of liquidity to fund and
support its exploration, evaluation, development and operating activities; (ii) maintain a strong financial
position to ensure it has ready access to debt and equity markets to supplement its existing cash balance
and free cash flow being used to fund its growth activities; and (iii) comply with all financial covenants set
out in its credit agreements and guarantees. See note 14 for discussion on the Company’s compliance with
these requirements. The Company monitors its financial position and the potential impact of adverse market
conditions on an ongoing basis. The Company manages its capital structure and makes adjustments to it
based on prevailing market conditions and according to its business strategy. The Company's long term
funding strategy is to maintain a capital structure comprised primarily of equity sourced from equity offerings
and net earnings generated from its businesses and, as a result, the targeted level of debt making up the
Company’s capital base is relatively low. Given the long term nature of the assets being funded and the
U.S. dollar denominated revenue stream generated therefrom, the Company’s general strategy around any
debt financing is to raise long-term U.S. dollar denominated debt to supplement these equity financings.
Overall financial leverage is monitored based upon a number of non-financial and financial factors, including
a number of credit related ratios contained in DPM’s loan agreements and net debt (defined as total debt
less cash and cash equivalents) as a percentage of total capital (defined as total equity plus net debt). As
of December 31, 2022, the Company was in compliance with all loan covenants and its net debt as a
percentage of total capital was negative 77% (December 31, 2021 – negative 50%).
29. OPERATING SEGMENT INFORMATION
Operating segments are components of an entity whose operating results are regularly reviewed by the
chief operating decision maker in deciding how to allocate resources and in assessing performance and for
which separate financial information is available.
The Company has three reportable operating segments –(cid:3) Chelopech and Ada Tepe in Bulgaria and
Tsumeb in Namibia. The nature of their operations, products and services are described in note 1,(cid:3)
Corporate Information. These segments are organized predominantly(cid:3) by the products and services
provided to customers and geography of the businesses. The Corporate and Other segment includes
corporate, exploration and evaluation and other income and cost items that do not pertain directly to an
operating segment. There are no significant inter-segment transactions that have not been eliminated on
consolidation.
The operating results of MineRP have been presented as a discontinued operation for the year ended
December 31, 2021 as a result of the MineRP Disposition (note(cid:3)4).
The accounting policies of the segments are the same as those described in note 2.2, Significant
Accounting Policies. Segment performance is evaluated based on several operating and financial
measures, including net earnings (loss), which is measured(cid:3) consistently with net earnings (loss) in the
consolidated financial statements.
128 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The following table summarizes the net earnings (loss) and other relevant information by segment for the
years ended December 31, 2022 and 2021:
Continuing operations
Revenue (a)
Costs and expenses
Cost of sales
General and administrative expenses
Corporate social responsibility expenses
Exploration and evaluation expenses
Impairment charge (note 3)
Finance costs
Other income and expense
Earnings (loss) before income taxes
Income tax expense
Net earnings (loss) from
continuing operatons
Other disclosures
Depreciation and amortization
Capital expenditures (b)
Continuing operations
Revenue (a)
Costs and expenses
Cost of sales
General and administrative expenses
Corporate social responsibility expenses
Exploration and evaluation expenses
Finance costs
Other income and expense
Earnings (loss) before income taxes
Income tax expense
Net earnings (loss) from
continuing operatons
Other disclosures
Year ended December 31, 2022
Chelopech Ada Tepe
Tsumeb
Corporate
& Other
Total
271,648
161,842
136,305
-
569,795
133,929
-
-
12,876
-
833
(216)
147,422
124,226
13,223
102,739
-
-
2,769
-
502
(648)
105,362
120,779
-
-
-
85,000
2,985
7,625
216,389
-
28,800
6,240
8,585
-
2,005
(3,750)
41,880
56,480 (80,084) (41,880)
237
9,359
-
357,447
28,800
6,240
24,230
85,000
6,325
3,011
511,053
58,742
22,819
111,003
47,121 (80,084) (42,117)
35,923
26,132
26,927
55,984
9,830
17,023
19,760
2,113
34,109
101,252
90,626
Year ended December 31, 2021
Chelopech
Ada Tepe
Tsumeb
Corporate
& Other
Total
292,779
229,314
119,350
-
641,443
128,726
-
-
6,089
722
440
135,977
156,802
16,046
99,748
-
-
2,204
430
(443)
101,939
128,662
-
-
-
2,967
884
132,513
-
18,161
4,838
9,713
1,430
7,454
41,596
127,375 (13,163) (41,596)
5,224
17,419
-
357,136
18,161
4,838
18,006
5,549
8,335
412,025
229,418
38,689
140,756
109,956 (13,163) (46,820)
190,729
Depreciation and amortization
Capital expenditures (b)
22,063
22,567
54,405
18,378
18,202
13,604
1,537
15,064
96,207
69,613
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 129
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
(a) Revenues from Chelopech and Ada Tepe were generated from the sale of concentrates and Tsumeb’s
revenues were generated from processing concentrates and acid sales. For the year ended December
31, 2022, $169.3 million or 39% (2021 – $237.7 million or 46%) of revenues from the sale of
concentrates and $113.0 million or 83% (2021 – $100.5 million or 84%) of revenues from processing
concentrates were derived from a single external customer. Revenues of $112.2 million or 26% (2021
– $157.5 million or 30%) from the sale of concentrates were also derived from another single external
customer.
(b) Capital expenditures represent cash outlays and non-cash accruals in respect of exploration and
evaluation assets (note 9), mine properties (note 10), property, plant and equipment (note 11) and
intangible assets (note 12).
The following table summarizes the Company’s revenue recognized for the years ended December 31,
2022 and 2021:
Revenue recognized at a point in time from:
Sale of concentrates (a)
Processing concentrates (b)
Acid sales
Revenue from contracts with customers
Mark-to-market price adjustments
on provisionally priced sales
Net mark-to-market gains (losses) on commodity swap contracts
Total revenue
2022
2021
434,859
113,252
23,053
571,164
(8,101)
6,732
569,795
537,896
100,509
18,841
657,246
3,486
(19,289)
641,443
(a) For the year ended December 31, 2022, the Company’s revenue from the sale of concentrates
included an adjustment of $5.8 million (2021 – $1.8 million) in connection with the final determination
and settlement of prior year provisional sales.
(b) For the year ended December 31, 2022, the Company’s revenue from processing concentrates
included a metal recovery of $13.2 million (2021 – $2.6 million) related to the estimated metal exposure
at Tsumeb.
130 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
The following table summarizes the total assets and total liabilities by segment as at December 31, 2022
and 2021:
Chelopech
Ada Tepe
Tsumeb
Total current assets
Total non-current assets
Total assets
103,463
169,655
273,118
97,589
169,244
266,833
45,356
26,564
71,920
As at December 31, 2022
Corporate
& Other
364,513
180,870
545,383
Total
610,921
546,333
1,157,254
Total liabilities
57,196
24,379
42,038
40,547
164,160
Chelopech
Ada Tepe
Tsumeb
As at December 31, 2021
Corporate
& Other
Total
Total current assets
Total non-current assets
Total assets
117,806
173,894
291,700
110,689
216,702
327,391
33,440
106,392
139,832
251,858
157,629
409,487
513,793
654,617
1,168,410
Total liabilities
54,388
31,660
41,865
36,084
163,997
DPM is domiciled in Canada. Revenues by geographic location are based on the location in which the
revenues originate. Revenues by geographic location for the years ended December 31, 2022 and 2021
are summarized below:
Revenue
Revenue
Year ended December 31, 2022
Europe
433,490
Africa
Total
136,305
569,795
Year ended December 31, 2021
Europe
Africa
Total
522,093
119,350
641,443
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 131
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(in thousands of U.S. dollars, unless otherwise indicated)
Assets by geographic location as at December 31, 2022 and 2021 are summarized below:
As at December 31, 2022
Canada
Europe
Africa
Ecuador
Total
Total current assets
Financial assets
Deferred income tax assets
Other non-current assets
Total assets
359,108
40,773
-
9,175
409,056
205,356
-
6,590
349,490
561,436
45,381
1,301
-
25,262
71,944
1,076
-
-
113,742
114,818
610,921
42,074
6,590
497,669
1,157,254
As at December 31, 2021
Canada
Europe
Africa
Ecuador
Total
242,595
51,520
-
4,587
298,702
234,924
-
8,685
391,603
635,212
33,596
1,388
-
105,004
139,988
2,678
-
-
91,830
94,508
513,793
52,908
8,685
593,024
1,168,410
Total current assets
Financial assets
Deferred income tax assets
Other non-current assets
Total assets
30. SUBSEQUENT EVENT
On February 13, 2023, B2Gold Corp (“B2Gold”) and Sabina announced that the parties have entered into
a definitive agreement pursuant to which B2Gold has agreed to acquire all of the issued and outstanding
shares of Sabrina through issuing 0.3867 of a common share of B2Gold for each Sabina common share,
representing a consideration of Cdn$1.87 per Sabina share on a fully-diluted basis based on the closing
price of B2Gold on the TSX as at February 10, 2023. As a result, DPM’s ownership interest in Sabina would
be valued at $49.8 million (Cdn$67.4 million) based on Cdn$1.87 per Sabina share under this transaction.
As at December 31, 2022, DPM held 36,050,566 common shares of Sabina with a fair value of $35.4 million
(Cdn$47.9 million) (note 8(a)).
This transaction is subject to Sabina shareholders’ approval, as well as normal course regulatory approvals
and the satisfaction of customary closing conditions.
132 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
CORPORATE
INFORMATION
Directors
Officers
Nicole Adshead-Bell1,2
Vancouver, British Columbia,
Canada
David Rae
President and Chief Executive Officer
Iliya Garkov
Senior Vice President, European
Operations
Jaimie Donovan3,4
Toronto, Ontario, Canada
R. Peter Gillin5
Toronto, Ontario, Canada
Kalidas Madhavpeddi1,2,4
Phoenix, Arizona, USA
Juanita Montalvo3,4
Toronto, Ontario, Canada
David Rae
Toronto, Ontario, Canada
Marie-Anne Tawil1,2,3
Westmount, Québec, Canada
Anthony P. Walsh1,2
Vancouver, British Columbia,
Canada
Shareholder Contact
Jennifer Cameron
Director, Investor Relations
jcameron@dundeeprecious.com
Tel: 416-365-2549
Fax: 416-365-9080
1 Audit Committee
2 Human Capital and Compensation
Committee
3 Corporate Governance and
Nominating Committee
4 Sustainability Committee
5 Board Chair
Navin Dyal
Executive Vice President and
Chief Financial Officer
Michael Dorfman
Executive Vice President,
Corporate Development
Kelly Stark-Anderson
Executive Vice President, Corporate
Affairs, General Counsel and Corporate
Secretary
Nikolay Hristov
Senior Vice President,
Sustainable Business Development
Sylvia Chen
Vice President, Finance
Mark Crawley
Vice President, Commercial
Anna Ivanova
Vice President, Business Optimization
Zebra Kasete
Vice President and Managing Director,
Tsumeb
Mirco Nolte
Vice President, Operational Excellence
Matthieu Risgallah
Vice President, Innovation & Technology
Alex Wilson
Vice President, Human Resources
ANNUAL REPORT 2022 DUNDEE PRECIOUS METALS 133
Corporate Office
Stock Listing
and Symbol
Dundee Precious Metals Inc.
150 King Street West
Suite 902, P.O. Box 30
Toronto, Ontario, Canada, M5H 1J9
Tel: 416-365-5191
Fax: 416-365-9080
The Toronto Stock Exchange
DPM – Common Shares
Copies of the Company’s Quarterly and
Annual Reports are available on
written request from our registrar.
Regional Offices
Registrar
Ecuador
Cuenca office:
Dundee Precious Metals
Padre Julio Matovelle 755 y Migue Díaz
Tel: +593 7 2815 161
Computershare
Investor Services Inc.
100 University Avenue, 8th Floor
Toronto, Ontario, Canada M5J 2Y1
Tel:
Quito office:
Dundee Precious Metals
El Tiempo N37-67 y El Comercio
Tel: +593 2 2468 674
Tel:
Fax:
Fax:
514-982-7555
(International direct dial)
(toll-free): 800-564-6253
(North America)
416-263-9394 (International)
(toll free): 888-453-0330
(North America)
Website: www.computershare.com
Email: service@computershare.com
Sofia
Dundee Precious Metals
26 Bacho Kiro Street, 3rd Floor
Sofia 1000, Bulgaria
Tel: +359-2-9301500
Fax: +359-2-9301595
Windhoek
Dundee Precious Metals
35 Schanzen Road
Klein Windhoek
Windhoek, Namibia
Tel: +264-0-61-385000
Fax: +264-0-61-385001
134 DUNDEE PRECIOUS METALS ANNUAL REPORT 2022
150 King Street West
Suite 902
Toronto, ON
M5H 3T9
Canada
www.dundeeprecious.com
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