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Research Note - Dundee Precious Metals Inc. (DPM:TSX,$6.00|BUY $15.50 TARGET) Q2 Production Beat - Production to Ramp in H2/22

This morning, DPM released preliminary production results for Q2/22. Consolidated gold production came in at 72.9 Koz, beating our estimate of 68.5 Koz (Table 1), on the upper end of Company guidance. Copper production also beat our expectations, with DPM producing 8.8 Mlbs for the quarter vs. our estimate of 8.7 Mlbs. We anticipate production to continue to ramp as the Company previously iterated that the grade and production profile is expected to be stronger during the back half of the year.

At Chelopech, production during the quarter came in at 49.2 Koz compared to our estimate of 41.9 Koz and up ~19% from Q1, which came in at 41.5 Koz. Copper production came in at 8.8 Mlbs compared to our estimate of 8.7 Mlbs. Mill throughput for the quarter was 529.0 Kt, below our estimate of 540.0 Kt. The operation benefitted from higher gold grades and recoveries and the operation is on track to meet the upper end of annual guidance.

The Ada Tepe operation produced 23.7 Koz of Au, up ~11% from Q1 and slightly below our estimate of 26.5 Koz. Mill throughput for Q1 was 217.1 Kt, above our estimate of 188.0 Kt.

The Tsumeb smelter processed 21.1 Kt of complex concentrate during Q2, well below the 47.0 Kt processed in Q1 and below our estimate. The significant drop in processed concentrate for the quarter is due to unplanned downtime due to water leaks that were resolved during the planned Ausmelt maintenance shutdown completed during the quarter. This 45-day shutdown included additional maintenance to the off-gas and baghouse systems, which is expected to improve operational performance going forward. DPM is reviewing its 2022 guidance for Tsumeb as concentrate is expected to be lower than guidance and cash cost is expected to increase because of the lower production.

20220711 - M Partners - DPM - Q2 Production
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