Strong Cash Flows and Growth Potential for Precious Metals Producer Dundee

• Dundee Precious Metals generated $135 million in free cash flow in H1 2022, on track for over $200 million for the full year. Strong production and low costs driving cash flow generation.
• Looking to increase efficiencies and productivity at core Chelopech mine in Bulgaria; investing in electric fleet transition to reduce costs. Evaluating growth opportunities.
• Advanced EPA and environmental permits for Ecuador project; targeting production in 2026-2027 timeframe. Excited about high-potential Chokerakita project in Ecuador as well.
• Disciplined on M&A front, looking for high-margin, cash-flow generating assets. Balance sheet strength provides flexibility.
• Returning cash to shareholders via dividends and buybacks. On track for ~$100 million in buybacks in 2022. Focus on creating value on per share basis.

About Dundee Precious Metals

Dundee Precious Metals is a Canadian-based international mining company engaged in the acquisition, exploration, development, mining and processing of precious metal properties. With over 30 years of operating history, Dundee currently operates two mines located in Bulgaria, including the Chelopech underground gold-copper mine and the Ada Tepe open-pit gold mine.

Interview with David Rae, CEO of Dundee Precious Metals

Consistent Free Cash Flow Generation Fuels Growth

In the company's recent Q2 investor update, CEO David Rae highlighted Dundee's strong free cash flow generation, with $135 million generated year-to-date. With cash costs in the mid $400s per ounce, Dundee's assets are delivering exceptional margins even in an inflationary environment. This consistent free cash flow generation provides financial flexibility to fund continued exploration, development of growth projects, and return of capital to shareholders.

During the first half of 2022, Dundee spent $30-35 million on exploration to extend mine life at Chelopech and advance exploration at earlier stage targets. An additional $20-25 million was directed towards project development, including advancing a feasibility study and scoping studies at the Chokerita gold project in Serbia. The company also doubled its share buyback program to $100 million for 2022.

Evaluating Organic and M&A Growth

With its strong balance sheet, Dundee continues to evaluate both organic and M&A growth opportunities. On the organic side, the company sees exploration opportunities to extend Chelopech's mine life by 5-10 years through near-mine targets. Exploration results at the Chokerita gold project in Serbia are also expected in Q4 2022, with significant potential to develop another low-cost asset similar to Ada Tepe.

On the M&A side, Dundee is evaluating later stage or producing assets that can deliver additional high-margin production and cash flow. The company remains disciplined in this approach, looking for assets that complement its portfolio rather than pursuing growth for growth's sake. Proximity to existing assets is also a consideration, given the potential synergies.

Managing Ecuador Project Risks

Dundee's Llurimagua copper-gold project in Ecuador has faced delays, with first production potentially pushed out to 2027. While a setback, Llurimagua is just one component of a diversified portfolio. The company continues to work through required permitting and social processes, and will be ready to advance the project once clarity on requirements is achieved.

In the meantime, Dundee is focused on advancing its Serbian and Bulgarian assets which face lower jurisdictional uncertainties. The company's strong balance sheet reduces risks associated with the delayed Ecuador project.

Conclusion: Cash Flows to Support Growth Across Portfolio

With its producing assets generating robust margins and cash flow even in an inflationary environment, Dundee Precious Metals is strongly positioned to continue funding value-enhancing growth. The company has several avenues to extend mine life organically, advance new projects like Chokerita, and pursue strategic M&A opportunities. While delays in Ecuador are a near-term headwind, Dundee's balance sheet strength provides flexibility to weather these risks. For investors looking at precious metals producers, Dundee offers exposure to high-margin assets generating significant cash flows, a solid pipeline of growth opportunities, and management committed to maximizing per share value creation.