Dundee Precious Metals Inc. Acquires Adriatic Metals to Enhance Production and Growth
- Dundee Precious Metals Inc. acquires Adriatic Metals for about $1.3 billion, enhancing its asset portfolio and production capabilities.
- The VareS operation is expected to yield up to 425,000 gold equivalent ounces by 2027 with low production costs.
- DPM aims for sustainable growth and increased cash flow through the strategic acquisition, reinforcing its competitive position in mining.
Dundee Precious Metals Expands Portfolio with Strategic Acquisition of Adriatic Metals
Dundee Precious Metals Inc. (TSX: DPM) solidifies its position in the mining sector through its recent agreement to acquire Adriatic Metals plc for an implied equity valuation of approximately $1.3 billion. This acquisition centers around the VareS operation located in Bosnia and Herzegovina, a significant underground mine that produces silver, lead, zinc, and gold. The VareS mine is anticipated to enhance DPM's production capabilities, with expectations of generating up to 425,000 gold equivalent ounces by 2027. This strategic move not only diversifies DPM's asset portfolio but also aligns with its long-term growth objectives, positioning it for sustainable production increases over the coming years.
The VareS operation boasts an initial operational lifespan of 15 years and is supported by an extensive 4,400-hectare land package, which is crucial for extending the company's mineral reserve life. The technical report on VareS reveals that it is set to yield an average annual payable production of approximately 168,000 ounces of gold equivalent at an all-in sustaining cost of $893 per ounce. This production efficiency, coupled with a post-tax net present value (NPV5%) estimated at $1.6 billion based on anticipated long-term metal prices, underscores the mine's potential as a low-cost producer in a competitive market.
David Rae, CEO of DPM, emphasizes that the VareS mine fits strategically within DPM's asset portfolio, asserting that this acquisition is essential for enhancing cash flow generation and supporting the company’s organic growth pipeline. Laura Tyler, CEO of Adriatic Metals, supports this vision, noting the significant growth potential of the VareS operation. DPM projects sustainable mill throughput of 850,000 tonnes per annum by late 2026, indicating a robust operational forecast that could further strengthen the company’s market position and financial results.
In addition to the acquisition, DPM's focus on capital returns programs reflects its commitment to providing value to shareholders while investing in growth opportunities. The integration of VareS is expected to not only boost immediate production figures but also foster long-term financial resilience. As DPM continues to develop its portfolio, the strategic acquisition of Adriatic Metals stands out as a pivotal step in enhancing its competitive edge in the mining industry.
Overall, the acquisition demonstrates DPM's proactive approach to expanding its resource base and optimizing cash flow, critical components for thriving in the ever-evolving mining landscape. The anticipated production growth from VareS aligns with DPM's vision for sustainable and profitable operations, marking a significant milestone in the company's growth journey.
