DPM Metals Inc. (DPM.TO) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to DPM Metals Investor Virtual and Q&A Session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Cameron, Director of Investor Relations. Please go ahead.

Thank you, and thank you all for joining us. As mentioned, I'm Jennifer Cameron, Director of Investor Relations, and I'd like to welcome you all to our virtual Q&A session. A few hours ago we held an Investor Day event and the recording, along with the presentation materials are available on our website. We're holding this call to provide analysts and investors who are located in other time zones, the opportunity to ask questions of our leadership and technical teams. Before we get started, I'd like to remind you that all forward-looking information provided during this call is subject to the forward-looking qualification, which is detailed in the presentation on the Slide #2, and incorporated in full for the purposes of today's call. I will now turn the call over to David Rae, our President and CEO, to start things off with some brief opening remarks, following which we will open the lines for questions.

Welcome to our Investor Day. On behalf of DPM's entire team, I'd like to thank you for joining us. Our Investor Day comes at a particularly exciting time for DPM. Over the past few weeks, we've announced several key updates that mark important milestones in our growth story and that underline our growth profile and value we are realizing from operation -- from the exploration. This has included the discovery of a new high-grade mineralization at Chelopech, our flagship operation. The feasibility study at Coka Rakita, which confirmed a high-margin, low-cost operation that will generate significant returns for shareholders and the initial resource estimates for Dumitru Potok, Rakita North and Frasen, which demonstrate that the Rakita camp district scale has potential, and the progress we've made at Vares since we became the owner and operator 3 months ago. Importantly, we're entering this next phase of growth from the position of financial strength. With over $400 million in cash on the balance sheet, no debt and undrawn credit facility and the significant free cash flow we are generating from our high-margin operations, we are fully funded to advance our growth priorities and exploration activities. This strong financial foundation gives us the flexibility and confidence to execute on our strategy and deliver value for shareholders. Another important area that provides us with confidence as we enter our next phase of growth is the strength of our team. Today, you have the opportunity to hear directly from the technical leaders and subject matter experts who are driving our growth projects, exploration activities and operational priorities. I'm pleased to introduce our team, starting with Iliya Garkov, our Chief Operating Officer; Mirco Nolte, Vice President of Projects; Tsvetomir Velkov, Vice President of Technical Services; Stefan Metodiev, Director Exploration; and Ross Overall, Director of Corporate Technical Services. This team will be able to provide you with deeper insights into our assets, our recent achievements, and our excitement for the future. We'd now be happy to take any questions.

[Operator Instructions] First question comes from Adam Baker from Macquarie.

David and team, sorry, I had a bit of issue getting connected, but I'm here now. So I completely miss the start, apologies if this is a bit of a recap of something that you may have already said. But just focused on the Rakita camp, particularly around the resource for Dumitru Potok, I know it is very early days, but you've got 84 million tonne resource there now is pretty sizable. If we'd assume a 60% resource to mining inventory calculations, you could get to, say, a 50 million tonne mining inventory there. I'm just wondering if you have had any initial thoughts around what the upside potential could be from a mill capacity standpoint? Noting that your copper equivalent grade is similar to that 2.2% level. And have you assumed pretty conservative recoveries, certainly by my numbers, you could get to 50,000 to 60,000 tonnes of copper equivalent over a 14 to 15-year mine life. So just keen to hear your thoughts around that project moving forward?

So we're pretty excited with this new discovery, and it's only a kilometer or so away from Coka Rakita. We do see these 2 assets is quite different, though. So it's possible to put the material from Dumitru Potok and the other assets in that area through the Coka Rakita mill, but I wouldn't consider it to be a good use of that capacity. So if you were to look at this and you were to look at the profile that we talked about earlier today, that's going to come out of Coka Rakita. What we're going to have is we're going to have a little over 200,000 ounces for the first few years and averaging 190 or so thousand ounces over the first 5 years. So what I would expect is really with Coka Rakita, we're looking to find other very similar ore bodies, which are amenable to both gravity and flotation as that circuit is set and basically extend that life of mine and increase that early profile in terms of production. So that would be first prize for us in terms of that look. So coming back to Dumitru Potok, we would agree with you that there's some real potential for scale. Ross and Stefan can talk a little bit more about this, but I feel -- we feel there's more as opposed to just conversion on what we already have in that area and particularly as we look further north. And what we would see is a dedicated facility going in for that, probably somewhere in the early 2030s, 2033, something like that, and it's going to be dedicated to that type of material. So basically, you could have 2 lines of production in and around that stage. Maybe what I'll do at this point is just ask Ross if you had any thoughts that he wanted to add in terms of what we're trying to do with discovery, and perhaps with Stefan some comments as well about our exploration activity.

Yes. Thanks, Dave. So I'd add there is some scale here. There is some size and looking for instance, of metrics like timing for vertical needs on those areas with in excess of 150,000 tonnes per vertical meter at Dumitru Potok itself. So these are metrics lend themselves to very high production rate. We've initially sort of looking at 2 million to 5 million tonnes per annum production rate. We really haven't got a number in mind yet, but these are the sort of ballpark we're thinking about. And we tend to agree with some of your comments that the sort of feeling we would have in terms of metal production [ upside here ]. In terms of upside, I'll turn it over to Stefan.

Hi there. Stefan Metodiev here. With the growth mentioned here, [indiscernible]. Thinking about the broader picture to the stock, we know that Coka Rakita is there. So our further infrastructure will be developed there. And the condition on lower level of the same marble unit is down so far from the product Dumitru Potok, Rakita North target. So going further between the Rakita North and Dumitru Potok would have the volume presumably, but we're quite confident on the geology. The upside potential to the North remains open. Again, we believe that next year the first item will be aiming more of the contact terms with the high grade that we are mentioning, and extrapolating further on the same state we are already having some to discuss about the [ acquisition ]. So yes, the upside is near. And also on gross, not everything that we have drilled is improved, it's in the published resource. We believe that we can put more tonnage there by including the existing on target and also [ that addition ].

Yes. Sorry. It's a little bit hard to hear you guys -- you considered me fairly. I seem to be able to hear you better David. Just a further question to this. Clearly, quite a good project. You've got a lot of corporates globally facing compelling of a project. I'm just wondering, have you given any thought to -- I know it's early days and it's exciting as your main growth lever in the portfolio outside of Vares. Have you given any consideration to divesting this if the right offer came forward?

We should think about divesting?

Yes. Just a question on divesting. I know it's a very exciting project at Coka Rakita and the Rakita camp. And if the right price came forward, would that be something you'd consider?

No. It's never say never, but clearly, the prospectivity and the opportunity here is significant, and I don't see that we would be amenable to an early consideration on that. We'd want to know more about what is there. So hopefully, I understood you correctly that we're referring to our Serbian assets. But at this point, we see them as really core to our future together with Chelopech and Vares.

Okay. I couldn't be clearer. Yes, I might jump back in the queue to see if there's any other questions.

[Operator Instructions] So a follow-up question from Adam Baker from Macquarie.

Looks like it's just me, so it does. Just maybe let's go to Chelopech now. The Wedge Zone, some pretty interesting drilling results that you've had out recently there. When do you envisage that this could potentially be incorporated into the mine plan there?

I think we were talking today about, obviously, we've got further work to do in terms of understanding the scale. It's very early days yet. But one of the things that we're very good at, at Chelopech is looking at how we can bring things in early on, particularly where the grade is higher than the resource grade in order to basically give us a better sort of near-term profile. Iliya, I think you mentioned that you were looking at the possibility of having access to this in 2029. Did you want to comment more?

Yes, we're looking how we can bring this on the stage to be able to do the test blastings on the first stope there are about 2029. That's what at the moment we are analyzing how we can bring this stope, not later.

Okay. That's great. And what about the metallurgical characteristics of the ore? How does this compare to the preexisting material that you're mining at Chelopech?

Well, we were right now working on the -- roughly 2 mains, this is more tougher and with less or more growth based on this initial range that we just reported. Eventually speaking, the ore doesn't make a very big difference from what we see in Chelopech mine. We're talking about semi-massive to massive sulfides and sulfide salts. And this really looks like they have more upper parts of the -- some of the main ore bodies in the mine itself. So I don't expect any variables, but maybe with the next release that we do with the additional billing, we already have some initial testing results.

Maybe stepping across the Vares, you've indicated things are going very well there. Grades above expectations, particularly for 2026. What is it that is making you so optimistic based on the original technical report really a couple of months ago?

So maybe I'll start, and Iliya, if you want to chip in. So based on the progress that we've made so far on focusing our efforts on decline development and then following that up with optimization work around drill and blast and support for the cycles, we're quite confident that we're going to be able to get to the area of the mine that we need along the sort of the idea being that by Q4 next year, we're at full production of 850,000 tonnes per year for that last quarter and basically ramping up from January through until September. So I'll let Iliya comment, but the high level is that we're seeing good alignment with our expectations, and we're dealing with any opportunities and anything that we need to improve along the way. Go ahead, Iliya, do you want to add some comments?

A little bit more details what make us not optimistic. We already achieved -- start achieving the development rates, which we plan to achieve from January next year. We already achieved those rates on November and that makes us much more comfortable. We will be there where we plan to be. Also, we've been able to pull one of the testing stopes where we will optimize blasting parameters. That has already moved to December. And in this perspective, we also -- or from this angle, we are also ahead of the schedule.

So decline development and readiness for blasting and the sort of work on sort of cycle around development, decline development, but also on production. All of that is absolutely looking at or slightly ahead of what we wanted it to be. So far, so good.

Thank you for the questions. That concludes our Q&A session. I will now hand back to Jennifer.

Thank you all for joining us. Hopefully, if you have any further questions, please feel free to contact any of us at any time. We're happy to connect you with members of our technical team at any point to help clarify any of these pieces. And particularly for those in Australia, we hope to see you all in person sometime soon. So thank you for your time today, and we look forward to connecting in the future.

This concludes today's conference call. Thank you for participating. You may now disconnect.