Ada Tepe Gold Mine Entering a New Phase of Growth in Free Cash Flow Investor Presentation August 2020 TSX:DPM
Forward Looking Statements TSX:DPM Certain statements and other information included in this presentation 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”, “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 presentation relate to, among other things: certain statements with respect to the estimated capital costs, operating costs, key project operating costs and financial metrics and other project economics, including the three-year outlook provided by the Company; re-rating to an intermediate / mid-tier producer; the commencement of a preliminary feasibility study for Timok; timing of further optimization work at Tsumeb and potential benefits of the planned rotary furnace installation; the processing of Chelopech concentrate; the impact of any impairment charges; price of gold, copper, silver and acid; toll rates; smelter metal recoveries and stockpile interest deductions; the estimation of Mineral Reserves and Mineral Resources and the realization of such mineral estimates; the timing and amount of estimated future production and output, life of mine, costs of production, cash costs and other cost measures, capital expenditures, rates of return at certain of the Company’s deposits and timing of the development of new deposits; results of economic studies; success of exploration activities; success of permitting activities; permitting time lines; currency fluctuations; requirements for additional capital; 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 payment of dividends; and timing and possible outcome of pending litigation. Forward Looking Statements are based on certain key assumptions and the opinions and estimates of management and Qualified Persons (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 presentation, such factors include, among others: the uncertainties with respect to actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations and economic studies; changes in project parameters as plans continue to be refined; possible variations in ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; uncertainties and risks inherent to developing and commissioning new mines into production, which may be subject to unforeseen delays; 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; 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; social and non-government organizations opposition to mining projects and smelting operations; fluctuations in metal and acid prices, toll rates and foreign exchange rates; unanticipated title disputes; claims or litigation; limitation on insurance coverage; cyber attacks; risks related to the implementation, cost and realization of benefits from digital initiatives; failure to realize projected financial results from MineRP Holdings Inc.; risks related to operating a technology business reliant on the ownership, protection and ongoing development of key intellectual properties; as well as those risk factors discussed or referred to in any other documents (including without limitation the Company’s most recent Annual Information Form) 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. The reader has been 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. 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 speak 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 opinions should change. Accordingly, readers are cautioned not to place undue reliance on Forward Looking Statements. This presentation is accurate as of the date specified on the title page but may be superseded by subsequent disclosures including press releases and quarterly reports. 2
Transitioning to a Mid Tier Producer TSX:DPM Growing average annual production to ~275,000 oz. Au from high grade assets (1) Targeting lowest quartile costs with AISC of US$680-US$760/oz. (1,2) Free cash flow expected to average ~US$140 to $180 MM/yr over next 3 years generating attractive cash yield (1, 3) Strong balance sheet with growing cash balance and liquid investment portfolio Returning cash to shareholders with introduction of a sustainable quarterly dividend Highly skilled and diverse management team with track record of driving optimisation and innovation Proven capability of delivering industry leading ESG solutions, building social acceptance and securing permits 3 1, 2, 3. See footnotes contained in Appendix on slide 44
Strong Company Fundamentals TSX:DPM Production & Financial Metrics Transitioning 3-Year Avg. (2020-2022) (1,2) to Mid Tier Production 252-296 koz Au Three-Year Average Free Cash Producer AISC/oz Au $680-$760 Flow per Year at $1,500 - $1,700/oz Au (1,3) Share Capital (@ August 14, 2020) ~$US140 to C$ Share Price/52 week low-high $9.26 / $3.88 - $10.36 US$180 MM Market Capitalization (US$) $1.3 B Attractive valuation P/NAV (consensus) (4) 0.9x per year Dividend Yield 1.2% Based on the midpoint of the three-year outlook. Free cash flow in 2020 is expected to be lower than the average due to the prepaid forward gold sale. Financial Position (@ June 30, 2020) Cash $76 M Strong Investment portfolio (5) $65 M financial position Debt – Prepaid Forward Gold Sale 13,984 oz (i) 4 1, 2, 3, 4, 5. See footnotes contained in Appendix on slide 44. (i) Ounces remaining to be delivered under the prepaid forward gold sales arrangement.
An Industry Leader in ESG ➢ DPM received a rating of “A” by MSCI ESG Research, a well -respected independent ESG rating agency (February 2020) Environmental Social Governance Social benefit and development, human Climate change, energy, water, Enterprise risk management, Diversity, DPM Areas of Focus rights (including for indigenous peoples), biodiversity & waste management Supply chain management health and safety • • Energy Intensity – 13% improvement • Social Development – completed ERM – Strong Enterprise Risk for Chelopech, 50% for Tsumeb. empowerment deal in Namibia and Management framework. • Emission Intensities – GHG • SME Fund for Ada Tepe. Balanced Score Card – Utilize • TRIF – Total Reportable Injury improvement of 27% for Chelopech Balanced Score Card to link strategy and 41% for Tsumeb. Frequency reduced by 85%. to objectives setting and Selected Results to Date • Water Intensity – 42% improvement comparable to the best in industry. performance measurement. • LTIF – Long Term Injury Free • at Tsumeb. Gender Equality – 21 of 45 senior • Biodiversity Best Practices – Ada achievement of 3 million hours in managers are women. Tepe named Best Practice by the EU Bulgaria Commission for its approach to Biodiversity management. 5 The use by the Company of any MSCI or its affiliates data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of Dundee Precious Metals Inc. by MSCI. MSCI services and data are the property of MSCI or its information providers and are provided ‘as - is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI.
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