Dundee Precious Metals (DPM.TO) hasn’t released its financial results for Q4 and FY 2020 yet, but the production update provided by the company is very encouraging. The total gold production in Q4 was approximately 64,000 ounces of gold while an additional 7.6 million pounds of copper were produced. The total gold production in 2020 was just under 300,000 ounces of gold and exceeded the 35 million pounds of copper which means the gold production came in at the higher end of the guidance while the copper output came in at the lower end of the range.
The company hasn’t provided an updated guidance for 2021 yet but we expect another strong year thanks to the high gold and copper price resulting in low AISC as you can see in the image above. Dundee Precious Metals reported an adjusted free cash flow of approximately US$50M in Q3 and although the Q4 gold price may be a little bit lower than in Q3, the copper price will be slightly higher and the Q4 free cash flow should once again be very strong and this could boost the net cash position to around US$150M (C$200M) as of the end of last December which means that in excess of 10% of the market cap will be held in cash. Given the strong financial results and the strong balance sheet, we expect Dundee Precious Metals to be on the prowl for deals this year as it has the financial strength and flexibility to acquire other assets and – if needed- develop those using the internal cash flows.
Disclosure: The author has no position in Dundee Precious Metals but has sold put options on the company. Please read our disclaimer.