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

Hello, and welcome to the Dundee Precious Metals Annual and Special Meeting of Shareholders. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of the same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the company that you first obtained all required consents for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure. It is now my pleasure to turn today's meeting over to Juanita Montalvo, Chair of the Board of Directors of the company who will be chairing today's meeting. Ms. Montalvo, the floor is yours.

Thank you very much. Good afternoon, everyone, and welcome to the 2025 Annual and Special Meeting of Shareholders of Dundee Precious Metals. My name is Juanita Montalvo, and I am the Chair of the Board. We come together today with heavy hearts. Just a few days ago, our Chair, Peter Gillin, passed away. His loss has been deeply felt by all of us at DPM. Peter served on our Board for 16 years and became chair 3 years ago. Through his tenure, he brought clarity, steadiness and quiet wisdom to our deliberations. He was always guided by principal integrity and by a deep respect for others, which is evident in the DPM values he helped shape and that continue to guide us today. Peter was a trusted adviser to many and for me personally, he was a mentor and a generous source of counsel. On behalf of all of us, I extend our heartfelt condolences to Peter's family and to all those who have the privilege of knowing him. Following our Board succession planning process I have now assumed the role of Chair. I do so with honor and with a deep sense of responsibility to the company and to those it serves. I look forward to working with my fellow directors and the management team as we carry forward DPM strategy with care and a strong commitment to our investors and with the people, communities and partners who make our work possible. I will continue to support the company's growth strategy and focus on disciplined capital allocation. So thank you again for being with us today. I will now turn to the formal business of today's meeting. This year, we are once again holding our meeting in a virtual format via live webcast. This approach allows for broader participation by our shareholders and proxy holders, regardless of geographic location while ensuring full opportunities for engagement. Participants can join from anywhere, ask questions and vote in real time. We also welcome guests who are joining us today to listen to our meeting. We would like to set out a few rules for the orderly conduct of the meeting. These are as follows. Questions can be submitted using the Q&A icon located on the right side of the screen. Please note that there are -- there may be a slight delay in questions being received by us after they have been submitted. Please follow the instructions in the virtual platform, which will ask you to indicate your name, which entity you represent, if any, and confirm whether you are a registered shareholder or a duly appointed proxy holder. Questions related to a motion can only be submitted by a registered shareholder or duly appointed proxy holder. When reading out a question on a motion, we will note the name of the shareholder or proxy holder submitting the question. Following the formal part of the meeting and management's presentation, there will be a Q&A session where all shareholders, proxy holders and guests are welcome to ask questions of a more general nature. And in order to deal with all questions in a timely fashion, questions of a similar nature will be answered once. If we are unable to address your question during the meeting due to time constraints, a representative of the company will reach out to you following the meeting with a response. Voting on all matters will be conducted by electronic ballot. To allow sufficient time for voting, the polls will be open at the beginning of the meeting. I remind you that only registered shareholders and duly appointed proxy holders who have properly logged in with their control numbers or user names will be asked to vote on each business item and be able to see motions being brought forth at this meeting on their screens. If you are a registered shareholder and you have already voted by proxy, you do not need to vote again unless you wish to change your vote. If you plan to vote at the meeting, you may choose to vote on each resolution immediately or wait until after an item is discussed or following the conclusion of discussions on all voting matters. To vote, simply click on your choice for or withhold or against as applicable. A confirmation message will appear to show your vote has been received. To change your vote, simply change your selection. The votes you have submitted on each polling item at the time the poll closes will be recorded. Totals in favor or against or withheld, as the case may be, for each resolution item will be tallied by the scrutineers once the voting is completed, and the Chair will report on the outcome of all motions at the end of the meeting. To expedite the formal part of the meeting, David Rae, DPM's President and CEO, will be moving all motions as the proxy appointee. Following the formal business, David Rae will provide an overview of our operating performance and growth outlook and respond to questions. We will now proceed with the formal portion of today's meeting. The 2025 Annual and Special Meeting of the shareholders of the company will now come to order. I declare that the polls are open on all resolutions and will remain open until the last item of business of the meeting has been completed. Kelly Stark-Anderson, Corporate Secretary of the company, will act as Secretary of the meeting. For the purposes of this meeting, I appoint Computershare Investor Services as scrutineers to compute the votes of any polls taken at this meeting and to report thereon to the secretary. The items of business for today's meeting are set out in the management information circular of the company dated March 20, 2025. Once again, we have provided meeting materials to shareholders using notice and access. Each shareholder has been sent a notice advising that the meeting materials are available on our website at www.dundeeprecious.com, Physical copies of the meeting materials were only provided to shareholders who previously requested paper copies. The meeting materials were mailed on April 7, 2025. Unless there is any objection, which may be voiced only by registered shareholders or duly appointed proxy holders by using the instant messaging service of the virtual interface, the Q&A feature icon, I will dispense with the reading of the notice of meeting. Copies of the management information circular and other meeting materials are available under the company's profile on SEDAR+ website. As no objections have been received, we will now continue. Our transfer agent, Computershare Investor Services, Inc., has attested to the proper mailing of the notice calling this meeting. The transfer agent has filed with me proof of service of such mailing, and I direct that a copy of such proof of service be retained with the records of the company. I have been advised that there are 2 or more people attending the meeting who hold or represent by proxy voting, shares representing more than 25% of all outstanding voting shares of the company. Therefore, a quorum of shareholders is present, and the meeting is properly called and duly constituted for the transaction of business. I have received the scrutineer's report and I direct that their formal report be retained with the records of the company. As the first item of business on the agenda for today's meeting, I present the audited consolidated financial statements of the company for the year ended December 31, 2024, together with the auditor's report to the shareholders thereon. Copies of such documents have been mailed to the shareholders who requested them. The next item of business is the election of directors. In accordance with the advanced notice bylaws of the company for nominating -- the nomination of directors by shareholders, we did not receive any notice of any director nominations for this year's meeting. Accordingly, the only persons eligible to be nominated for election as directors of the company are the persons recommended for nomination by management. Management does not propose to put forward any nominee in respect of the vacancy left by Mr. Gillin's passing. The remaining 7 management nominees will be put forward for election. The Board anticipates it will appoint a new director in due course in accordance with its board recruitment and selection processes. The directors to be elected by the shareholders of the company shall hold office until the close of business of the first Annual Meeting of Shareholders of the company following election or until their successors are elected or appointed. Nominated as directors for the ensuing year or until their successors are elected or appointed are the following: Nicole Adshead-Bell, Robert Bosshard, Jaimie Donovan, Kalidas Madhavpeddi, Juanita Montalvo, David Rae and Marie-Anne Tawil. Each of the persons nominated has confirmed that he or she is prepared to serve as a director. Since there are no other nominations, a motion to elect each of the individuals nominated as directors has been moved. And unless there are any questions, I will move to the next item of business. The next item of business is the appointment of the auditor of the company for the ensuing year and to authorize the directors of the company to fix the auditor's remuneration. The Board of Directors of the company has approved, subject to shareholder confirmation, the appointment of PricewaterhouseCoopers LLP, chartered professional accountants as the auditor of the company. It has been moved that PricewaterhouseCoopers LLP, chartered professional accountants, be appointed as the auditor of the company until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix the auditor's remuneration. And unless there are any questions, I will move to the next item of business. The next item of business is to consider and if deemed appropriate, pass with or without variation an ordinary resolution approving the company's shareholder rights plan as described in the circular. It has been moved that the ordinary resolution to approve the shareholder rights plan of the company be approved. Unless there are any questions, I will move to the next item of business. The next and final item of business is to pass the nonbinding advisory resolution accepting the company's approach to executive compensation as described in the circular. It has been moved that the nonbinding advisory resolution accepting the company's approach to executive compensation be approved and confirmed. As we mentioned, voting today is being conducted by electronic ballot. I will now take a moment for registered shareholders and appointed proxy holders to complete voting. [Voting]

For those of you who have not yet cast your votes, please do so now. We will provide registered shareholders and duly appointed proxy holders another moment to complete their electronic ballots. Once the electronic balloting closes, the voting page will disappear, and your votes will be automatically submitted. [Voting]

Voting is now closed. I would like to ask that the scrutineers compile the report regarding the results of the voting on all business matters. However, I've been advised that based on the proxies we have received to date, votes have been cast overwhelmingly in favor of all matters presented today. Each of the Director nominees received more than 98% of votes in favor of his or her election as a Director of the company to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. 91.82% have voted in favor of the appointment PricewaterhouseCoopers LLP as the auditor of the company and to authorize the Board of Directors of the company to fix their remuneration. 96.51% have voted in favor of passing an ordinary resolution approving the shareholder rights plan of the company. 99.04% have voted in favor of passing a nonbinding advisory resolution accepting the company's approach to executive compensation. I declare that each of the 7 nominees have been duly elected as directors, PricewaterhouseCoopers LLP has been duly appointed as the auditor of the company. The resolution approving the adoption of the company's shareholder rights plan has duly passed, and the nonbinding advisory resolution accepting the company's approach to executive compensation has been duly passed. I confirm that the results will be published on SEDAR+ and by press release following the meeting. The formal items of business as set out in the notice of meeting have now been dealt with. It has been moved that this meeting now terminate. And as there are no further business to come before the meeting, I declare the formal part of the meeting to be concluded. I will now turn the meeting over to our President and CEO, David Rae. David's remarks will be followed by a question-and-answer period.

Thank you, Juanita. Before I begin with my prepared remarks, I'd like to take a moment to echo Juanita's comments and share my condolences on the recent passing of Peter Gillin. His steady leadership of oversight helped guide our transformation into the responsible growing precious metals producer that we are today, and he will be missed by us all. We are pleased to have Juanita assume the role of Chair given her leadership and governance expertise. Juanita has served on the board since 2017 and with more than 25 years of international experience in mining, she has a strong track record in the development of large-scale projects, operational and strategic decision-making. She assumes the role at an exciting time for the company's growth outlook and this continuity and leadership underpins our operating track record, exploration success and financial position as we focus on executing our strategy to become a mid-tier precious metals producer. I would now like to turn to our 2024 performance and our continuing efforts to deliver superior value to our stakeholders. I will also be outlining the strong future ahead for the company as we advance our high-quality growth pipeline and exciting exploration prospects. First, let me draw your attention to the cautionary statements on Slide 6 as I will be discussing forward-looking information during my remarks as well as the non-GAAP disclosures outlined in Slide 7. Our excellent 2024 results and solid Q1 performance reinforced the DPM strengths that underpin our focus on developing a robust platform for growth to deliver above-average returns to our shareholders. First, we are a responsible and efficient operator. In 2024, we once again achieved our gold production and all-in sustaining cost guidance, continuing our exceptional 10-year track record of delivery. And as we announced with our Q1 results today, we are on track to deliver our 2025 guidance targets. Importantly, we achieved this track record while maintaining our high standard for responsible mining with strong performance in safety and environmental stewardship. Second, we're focused on developing quality assets. We rapidly advanced Coka Rakita from discovery to initiating a feasibility study within 24 months, a testament to the quality of the team and the project. And we have established our exploration credentials with multiple high-grade discoveries in Serbia and our long track record of adding mine life at Chelopech. Third, we maintain a strong financial position to support growth. We have consistently delivered free cash flow generation, including a record $305 million in 2024 and have grown our cash position to over $760 million at the end of Q1, further strengthening our financial capacity to fund growth. At the same time, our investors are benefiting from our low-cost high-margin gold production as we harvest free cash flow by returning excess capital to shareholders. In 2025, we are highly focused on growth, including advancing the Coka Rakita project with a target of achieving first concentrate production in 2028. The pre-feasibility study, which we completed at the end of last year, outlined a very robust, highly accretive project that adds high-margin gold production growth to our portfolio. We proceeded immediately to a feasibility study, and we continue to advance permitting activities in parallel with a goal of commencing construction in mid-2026. We have a proven track record in project development, having delivered the $180 million Ada Tepe project on time and on budget as well as the Chelopech expansion, which doubled production and other investments to improve operations and enhance value. Overall, we are very excited by Coka Rakita's potential in a region where we have had a presence for many years that has a long history of exploration and mining development and where we have developed strong relationships with local stakeholders. What makes Coka Rakita particularly exciting is the significant exploration potential within the footprints of the project, where we've made several additional discoveries including the Dumitru Potok, Frasen and Valja Saka prospects. Recent results from these targets clearly demonstrate the existence of significant copper gold mineralization and which has the potential to provide additional high-grade mineral resources adjacent to the plant infrastructure of Coka Rakita. Our drilling program continues to expand in the Dumitru Potok discovery and we've yet to define its limits as it remains open in multiple directions and at depth. We are making good progress on our 55-kilometer drilling program with 14 drill rigs currently in operation. At the Loma Larga gold project, we achieved progress on the permitting front in 2024, a testament to the constructive relationships we've built with stakeholders. As a result of this progress, we are planning to complete an updated feasibility study for the project in the second quarter. This will update the project economics to reflect the current gold price and capital and operating cost environment. Loma Larga remains an attractive growth option in our portfolio and is a great fit with our technical and operating expertise. At Chelopech, our flagship operation, we continue to prioritize in-mine and brownfields exploration work to further extend mine life in 2025, targeting an increase to over 10 years. Reflecting this priority, we've increased our budget for brownfields exploration in 2025, and we focus on testing near-mine targets on the Chelopech concession. Chelopech today has a mine life that extends 2032 based on mineral reserves and has a substantial 1.2 million ounce mineral resource base and a 4,100 hectare land package with significant opportunities to continue our track record of mine life extension at Chelopech. Our financial strength and cash balance are our competitive advantages uniquely positioning us to be able to fund growth internally while also returning a portion of excess capital to shareholders. Since 2020, we have returned over $350 million to shareholders through share buybacks and dividends. This year, we have significantly ramped up the share buyback program with approval for up to $200 million in 2025. In the first quarter, we made significant progress against that target as we repurchased 7.5 million shares for a total cost of $85 million. Our values and commitment to high standards for sustainability continue to guide our conduct at every level. This commitment is the foundation for our long track record as a trusted community partner. Over the past 4 years, DPM has ranked in the top decile among metals and mining companies in the S&P Global Corporate Sustainability Assessment, a well-regarded third-party illustrating our strong track record in this key area of our business. We look forward to sharing our 2024 sustainability report in the coming weeks, which will provide a full and transparent view of our sustainability performance. I would like to share a few highlights though. We completed 2.8 million hours without a lost time injury in 2024 and continue to focus on delivering best-in-class safety performance. We made significant progress towards our 2035 climate reduction target, reducing Scope 1 and 2 greenhouse gas emissions by over 25% since our 2020 baseline. Once again, we achieved 0 industrial wastewater discharges across our mine sites. And as we look ahead, we are focused on setting new standards, the responsible mine closure in line with our values as we prefer to the end of life of Ada Tepe's mine life expected in mid-2026. And we are continuing our investments in small and medium enterprises in Krumovgrad to foster the development of businesses not connected to the mining industry and to help the local community thrive long after our mining operations have completed. As we look ahead, we are focused on advancing our organic pipeline and continuing to build value in momentum. Our portfolio is generating solid and consistent results, and we are very well positioned as one of the lowest cost producers. We are harvesting free cash flow and delivering peer-leading returns to shareholders through our enhanced share buyback program. We are progressing the Coka Rakita feasibility study to an accelerated construction decision and are making progress on our Loma Larga project. And we have substantial financial strength to fund these growth opportunities and exploration. On behalf of our employees and our Board of Directors, I would like to thank you for your continued support and your time today. I would now like to open the call for questions.

[Operator Instructions] And while we wait for the audience to submit any questions and for the Q&A to populate, Dave, we often receive questions from investors about the potential that we see from new discovery of Coka Rakita and how they will factor into the development of that project. Could you please provide some comments?

Sure. Thanks, Jen. One of the things to keep in mind is that as we are progressing Coka Rakita at an accelerated time line, that does require a lot of our drill capacity to be consumed in infill drilling and geotechnical, hydrogeological and other activities such as condemnation such that we are confident in terms of the placement of future facilities. That being said, the recent reporting and progress with Dumitru Potok, I think, has been an example of how with limited resources initially, we've been able to delineate and further define what opportunities we have in proximity of Coka Rakita. So if you look at Dumitru Potok and Frasen they are roughly 1 kilometers to be north of Coka Rakita. And in February, we reported that we've identified 190 meters of 3% copper equivalent at a point at approximately 1 kilometer underground. Further than that, 2 kilometers away, we identified some signature findings, including visible gold and other characteristics that are very similar to what we found with Coka Rakita. So this is extremely exciting. And what I talked about earlier in the presentation of now moving to 14 rigs and actually developing beyond that, this now is moving beyond the infill drilling and project requirements of Coka Rakita, and we'll be able to provide much more information on these exciting opportunities that we have in proximity and on our land package around Coka Rakita.

Thank you. At this time, there are no questions from the audience, which concludes the question-and-answer session. Thank you for joining us.