Dundee’s share price rose modestly on the news that it has achieved commercial production at the Bulgaria-based mine.
Dundee Precious Metals (DPM) (TSX:DPM,OTC Pink:DPLMF) rose over 6 percent when the miner announced on Monday (June 17) that it has achieved commercial production at its Krumovgrad gold project.
Now that the mine is fully operational, DPM will begin referring to the mine as Ada Tepe, since it is known locally in Bulgaria under that name.
“Commercial production at Ada Tepe marks the beginning of a new chapter for DPM, delivering significant growth in gold production and free cash flow,” said Rick Howes, president and CEO.
“I would like to congratulate all of our employees for achieving this key milestone safely and under budget as well as our local stakeholders for their many years of cooperation and support for this project,” he added.
DPM first announced concentrate production at the asset in mid-March of this year, with commercial production starting on June 8.
Since that time, recoveries have continued to ramp up beyond the commercial production threshold. Ramp up to full design capacity continues, with that level expected to be reached next quarter.
Forecast capital costs still sit at US$164 million to US$166 million, down from the original estimate of US$178 million. Construction was nearly complete as of the end of May, and aggregate cash outlays for the project were set at US$152 million, with the remaining outlays related largely to holdbacks.
In its Q1 results release, DPM reported that at Ada Tepe is expected to produce between 55,000 and 75,000 ounces of gold in concentrate in 2019.
Aside from Ada Tepe, DPM operates the Chelopech mine in Bulgaria, which is expected to produce between 155,000 and 187,000 ounces of gold in concentrate this year as grades return to life of mine levels. The mine will also produce 33 to 39 million pounds of copper in concentrate.
DPM has invested a significant amount of its profits to transform the mine from an undercapitalized operation into one that is viable.
The company’s other asset currently in production is Tsumeb, which produces copper and is located in Namibia. Complex concentrate smelted this year is seen coming in at between 225,000 and 250,000 tonnes, up over 8 percent from the previous year.
DPM’s total guidance for 2019 is 210,000 to 262,000 ounces of gold in concentrate and 33 to 39 million pounds of copper in concentrate, plus 225,000 to 250,000 tonnes of complex concentrate smelted.
Exploration spending this year from DPM is projected at between US$12 million and US$14 million, with money being spent mainly on drilling at Chelopech. Some funds will be dedicated to exploration at the Timok gold project in Serbia, and on metallurgical test work at the Surnak prospect near Ada Tepe.
As of 12:28 p.m. EDT on Monday, DPM was up 6.08 percent, trading at C$4.36.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.