Dundee Releases Timok Gold PEA, Plans for Optimization

Dundee Precious Metals (DPM) (TSX:DPM,OTC Pink:DPMLF) rose close to 4 percent on Monday (July 15) after releasing a preliminary economic assessment (PEA) for its Timok gold project in Serbia. 

The miner said that the PEA will provide a foundation for project optimization. 

“With further optimization, Timok has the potential to provide significant accretive organic growth for relatively low initial capital in a region where we have had a presence for many years,” said Rick Howes, president and CEO of DPM.

“DPM discovered Timok in 2008 and the team has advanced the project while developing strong relations with local communities and the government,” he added.

The PEA is based on Timok producing 132,000 ounces a year at its peak, with all-in sustaining costs set at US$717 per ounce over the span of a nine year mine life. Initial capital costs will be approximately US$136 million.

The study estimates an after-tax net present value of US$105 million and an after-tax internal rate of return of 18.6 percent for the project, with a payback period of 4.1 years.

Moving forward, DPM plans to explore potential optimization opportunities for Timok, with additional metallurgical test work to be done in order to find opportunities to improve processing methods, costs and recoveries for all gold-bearing material types.

Additionally, ongoing exploration will result in the targeting of additional shallow oxide material in the area — which could also generate further value for Timok. Finally, the miner noted that further flotation test work on what is now classified as sulfide material, excluding oxide and transitional materials, could also result in improved performance.

The asset itself is comprised of several sediment-hosted gold deposits, including Bigar Hill, Korkan and Korkan East. In 2014, mineral resource estimates were completed for all four deposits.

Last week, DPM released its Q2 production results, reporting that its Chelopech and Tsumeb assets are on track to achieve annual guidance, while at Ada Tepe (formerly referred to as Krumovgrad) guidance has been reduced due to a longer than expected construction time for subsequent cells for the integrated mine waste facility.

Despite the setback, the miner said that construction is progressing well and this initial constraint is expected to be eliminated sometime in August of this year.

“Chelopech and Tsumeb production are in line with 2019 guidance,” stated Howes. “Following our achievement of commercial production at Ada Tepe during the quarter, we are currently ramping-up to design capacity.”

Late last month, the miner announced that Ada Tepe, which is located in Bulgaria, had achieved commercial production and was fully operational.

“Commercial production at Ada Tepe marks the beginning of a new chapter for DPM, delivering significant growth in gold production and free cash flow,” Howes said. “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.”

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.

As of 11:02 p.m. EDT on Tuesday (July 16), DPM was trading at C$4.47.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.