Dundee Precious Metals has said that complex concentrate smelted at its Tsumeb smelter in the third quarter of 2023 of 21,782 tonnes was 42,208 tonnes lower than the corresponding period in 2022 due primarily to the timing of the Ausmelt furnace maintenance shutdown, which was completed during the third quarter of 2023 compared to the second quarter of 2022.
In its operating and financial results for the third quarter and first nine months ended September 30, 2023, the miner also noted that complex concentrate smelted in the first nine months of 2023 of 120,912 tonnes was 11,375 tonnes lower than the corresponding period in 2022 due primarily to unplanned downtime earlier in 2023, which was related to water leaks in the off-gas system.
“Following the completion of the maintenance work in the third quarter of 2023, Tsumeb resumed operations and ramped up to full production towards the end of September. While complex concentrate smelted is expected to increase in the fourth quarter, reflecting improved operating performance as a result of the maintenance work, it is forecast to be below the guidance range for the year,” said David Rae, President and Chief Executive Officer.
Holistically however, in the third quarter of 2023, the Company’s mining operations continued to perform well and delivered another quarter of strong production. Ada Tepe achieved record quarterly gold production, reflecting higher grades in-line with the mine plan, and production from Chelopech was in-line with expectations.
At Tsumeb, the planned Ausmelt furnace maintenance was completed during the quarter and the smelter resumed operations and ramped up to full production towards the end of September. Both mining operations are on track to achieve their 2023 production and cost guidance, while Tsumeb is forecast to be below its 2023 production guidance range and towards the high end of its cash cost per tonne guidance range.
“With strong gold production, including record quarterly performance from Ada Tepe, we generated over US$180 million of free cash flow year-to-date, demonstrating the quality of our assets and strength of our operating teams,” said Rae. “Our mining operations are on track to achieve their 2023 guidance for production and all-in sustaining cost, and we continue to be well-positioned as one of the lowest-cost gold producers.
“During the quarter, we continued to return a significant portion of our free cash flow to our shareholders, approximately 42% year-to-date, through our enhanced share buyback program and our sustainable quarterly dividend.
“Our infill and extensional drilling programs at the Čoka Rakita project are advancing well, and we are on track to deliver the maiden Mineral Resource estimate for the project before the end of 2023. We continue to be excited by Čoka Rakita’s potential and we are progressing activities to accelerate the development of this high-quality organic growth prospect.”
Cost measures
Cost of sales in the third quarter of 2023 of US$84.0 million decreased compared to US$89.8 million in the corresponding period in 2022 due primarily to lower depreciation expense as a result of the impairment charge in respect of Tsumeb taken in the third quarter of 2022 and lower operating costs at the smelter as a result of the maintenance shutdown in the third quarter of 2023. Cost of sales in first nine months of 2023 of US$254.4 million decreased compared to US$266.3 million in the corresponding period in 2022 due primarily to lower depreciation expense and lower operating costs at the smelter as a result of unplanned downtime at Tsumeb, partially offset by higher local currency mine operating costs reflecting higher costs for labour and direct materials.
All-in sustaining cost per ounce of gold sold in the third quarter of 2023 of US$911 was 8% lower than the corresponding period in 2022 due primarily to higher volumes of gold sold, partially offset by a stronger Euro relative to the U.S. dollar.
All-in sustaining cost per ounce of gold sold in the third quarter of 2023 was US$178 higher compared to the second quarter of 2023 due primarily to higher treatment charges as all of the gold-copper concentrate was delivered to Tsumeb this quarter, while all deliveries were to third-party smelters in the second quarter. Going forward, DPM expects all gold-copper concentrate to be delivered to third-party smelters.
All-in sustaining cost per ounce of gold sold in the first nine months of 2023 of US$840 was comparable to the corresponding period of 2022 due primarily to higher local currency mine operating costs reflecting higher costs for labour and direct materials, lower by-product credits as a result of lower volumes and realized prices of copper sold, and higher share-based compensation reflecting DPM’s strong share price performance, largely offset by higher volumes of gold sold and lower treatment and freight charges at Chelopech.
Cash cost per tonne of complex concentrate smelted in the third quarter of 2023 of US$921 was US$624 higher than the corresponding period in 2022 due primarily to lower volumes of complex concentrate smelted as a result of the timing of the Ausmelt furnace maintenance shutdown. Cash cost per tonne of complex concentrate smelted in the first nine months of 2023 of US$467 was comparable to the corresponding period in 2022 due primarily to lower volumes of complex concentrate smelted, largely offset by a weaker South African Rand (“ZAR”) relative to the U.S. dollar. Tsumeb is tracking towards the high end of its 2023 cash cost guidance range.
On November 7, 2023, the Company declared a dividend of US$0.04 per common share payable on January 15, 2024 to shareholders of record on December 31, 2023.