FY20 we model FCF of US$136 mln for an impressive 19% FCF yield
January 9, 2020
Dundee Precious Metals Inc.
DPM (TSX): C$5.18
Stock Rating: Outperform
Target: C$8.50
Risk Rating: Above Average
Ada Tepe Supports Solid Operational Q4/19
Ada Tepe FY19 Production at Top End of Guidance Range
Production beat. Q4/19 consolidated gold production of 69.5k oz (NBF 65.2k oz), up 3.9k oz q/q and 7% above our
estimates. Gold sales of 82.1k oz (NBF 80.6k oz) were up 42.5k oz q/q as the Q3/19 sales deficit was resolved, as expected.
Copper production of 10.0 mln lbs (NBF 9.1 mln lbs) was flat q/q. Mine-by-mine highlights include:
● Q4/19 Chelopech production of 43.0k oz (NBF 40.9k oz), up 2.7k oz q/q and modestly above our estimates. FY19 production
of 173.4k oz was in line with the guidance range (155-187k oz).
● Q4/19 Ada Tepe production of 26.5k oz (NBF 24.3k oz), up 1.7k oz q/q, delivering continued solid performance in its second
quarter of commercial production. Positively, FY19 production of 57.2k oz lands near the top end of the guidance range
(45-60k oz).
Measurable FCF on deck. After preliminary updates, our estimates have improved slightly, and we model Q4/19 FCF of
~US$27 mln (vs. Q3/19 of US$10.2 mln), benefiting from higher gold sales and metal prices (~US$1,483/oz in Q4/19 vs.
US$1,461/oz in Q3/19), with offset from commencement of prepaid gold sales (~46.2k oz over 6 qtrs). Our Q4/19 FCF
estimates factor DPM's ~US$7.7 mln investment in INV Metals Inc. (INV: TSX) which closed Oct. 28, 2019. Looking ahead, for
FY20 we model FCF of US$136 mln for an impressive 19% FCF yield.
Maintaining Outperform rating and $8.50 target. Trading at P/NAV 0.68x (peers 0.80x), P/CF20 4.0x (peers 4.5x) and P/
CF21 3.0x (peers 4.0x). Our target is based on 5.0x EV/EBITDA NTM (100%). DPM reports financials after market close on
Feb. 13 with the conference call scheduled for Feb. 14 that 9 AM EST (dial-in: 1-844-264-2104).
Don DeMarco, (416) 869-7572, don.demarco@nbc.ca
Associate: Rabi Nizami, (416) 869-7925, rabi.nizami@nbc.ca
Associate: Harmen Puri, (416) 869-8045, harmen.puri@nbc.ca