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Miner Is 'Set Up for a Strong 2020'
Research Report

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The numbers from the company's three operations are reviewed in a CIBC report.

In a Jan. 12 research note, CIBC analyst Cosmos Chiu reported that Dundee Precious Metals Inc. (DPM:TSX) posted a solid Q4/19 and its production for 2019 fell well within the guidance range. "Overall, the results confirm that the company is set up for a strong 2020 as Chelopech's high-margin production is complemented by Ada Tepe's first full year of operation."

Chiu reviewed Dundee's Q4/19 and 2019 numbers, which were in line with CIBC's estimates, and performance of each asset.

During the quarter, Dundee produced 69,500 ounces (69.5 Koz) of gold and 10 million pounds (10 Mlb) of copper, which took the year's total for each to 231 Koz and 37 Mlb, respectively. These quantities fell in the higher end of full-year 2019 guidance, which was 200–247 Koz for gold and 33–39 Mlb for copper.

As for Dundee's Chelopech operation in Bulgaria, it "continued its solid year," Chiu noted. Total production was 173 Koz of gold, versus guidance of 155–187 Koz. Copper production fell within the top end of guidance. During Q4/19, gold production was 43 Koz compared to CIBC's estimate of 42 Koz, and production was 10 Mlb, the same as CIBC's estimate. Dundee attributed Chelopech's production levels, Chiu relayed, to having mined in higher-grade gold areas of the deposit and having recovered more gold in the pyrite concentrate.

This year, Dundee will continue to drill at Chelopech "as it looks to extend the current eight-year reserve life at its flagship operation," noted Chiu.

Regarding Ada Tepe, also in Bulgaria, "it has progressed well since Dundee announced that the mine had completed its ramp-up on Sept. 27, 2019," Chiu indicated. Total production there in 2019 was 57 Koz of gold, in the high end of revised (lowered) guidance of 45–60 Koz. Q4/19 production came in at 26.5 Koz, under CIBC's forecast of 27.3 Koz. "The positive impact of higher-grade material was offset by milling downtime as the SAG mill was relined within the quarter," explained Chiu.

Gold sales of 38.9 Koz from Ada Tepe exceeded production due to there being extra gold concentrate in inventory from Q3/19. This was expected and should benefit Dundee's Q4/19 financials.

With respect to Dundee's Tsumeb operation in Namibia, it smelted 48,600 tons (48.6 Kt) of concentrate in Q4/19, more than CIBC's projection of 45.5 Kt. Dundee revised full-year guidance downward to 210–230 Kt due to scheduled maintenance of the smelter, and full-year production met that guidance. The company curtailed operations at Tsumeb from Sept. 3 through Oct. 25, during which annual maintenance was carried out. "No significant maintenance shutdown is now expected until 2021," Chiu pointed out.

CIBC has an Outperformer rating and a CA$7 per share price target on Dundee, whose current share price is about CA$5.94.


1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from CIBC, Dundee Precious Metals Inc., Earnings Update, January 12, 2020

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Dundee Precious MEtals INc. (DPM.TO)
• 2g CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from these companies in the next 3 months: Dundee Precious Metals Incorporated

For important disclosure footnotes for companies mentioned in this report that are covered by CIBC World Markets Inc., click here: Disclaimers & Disclosures.

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