WELCOME TO THE 2016 ANNUAL GENERAL MEETING MAY 5, Chelopech Mine, Bulgaria

Transcription

1 WELCOME TO THE 2016 ANNUAL GENERAL MEETING MAY 5, 2016 Chelopech Mine, Bulgaria

2 CHAIRMAN S AGENDA JONATHAN GOODMAN EXECUTIVE CHAIRMAN OF THE BOARD Opening Remarks and Introduction of the Board of Directors Jonathan Goodman, Executive Chairman Peter Gillin Rick Howes Murray John Jeremy Kinsman Garth MacRae Peter Nixon Marie-Anne Tawil Anthony Walsh Donald Young TSX:DPM 2

3 BUSINESS OF THE MEETING Appointment of Secretary and Scrutineer Constitution of the Meeting Presentation of Financial Statements and Auditor s Report Nomination and Election of Directors Jonathan Goodman Peter Gillin Rick Howes Murray John Jeremy Kinsman Garth MacRae Peter Nixon Marie-Anne Tawil Anthony Walsh Donald Young Appointment of the Auditor Advisory Resolution regarding Executive Compensation Termination of the Meeting TSX:DPM 3

4 PRESIDENT & CEO RICK HOWES Chelopech Mine, Bulgaria Chelopech Mine, Bulgaria

5 DPM SENIOR MANAGEMENT TEAM Rick Howes President & Chief Executive Officer Hume Kyle Executive Vice President & Chief Financial Officer David Rae Executive Vice President & Chief Operating Officer Lori Beak Senior Vice President, Governance, and Corporate Secretary Michael Dorfman Senior Vice President, Corporate Development Richard Gosse Senior Vice President, Exploration Nikolay Hristov Senior Vice President, Sustainable Business Development John Lindsay Senior Vice President, Projects Paul Proulx Senior Vice President, Corporate Services TSX:DPM 5

6 FORWARD LOOKING STATEMENTS This presentation contains forward looking information or "forward looking statements" that involve a number of risks and uncertainties. Forward looking information and forward looking statements include, but are not limited to, statements with respect to the future prices of gold and other metals, the estimation of mineral reserves and resources, the realization of mineral estimates, the timing and amount of estimated future production and output, costs of production, capital expenditures (including sustaining capex, non-discretionary capex and discretionary capex), costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation. Often, but not always, forward looking statements can be identified by the use of words such as plans, expects, or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates, or does not anticipate, or believes, or variations of such words and phrases or state that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Forward looking statements are based on the opinions and estimates of management as of the date such statements are made, and they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any other future results, performance or achievements expressed or implied by the forward looking statements. Such factors include, among others: the actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold; possible variations in ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, fluctuations in metal prices, as well as those risk factors discussed or referred to in this presentation under and in the Company s annual information form under the heading "Risk Factors" and other documents filed from time to time with the securities regulatory authorities in all provinces and territories of Canada and available at Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. TSX:DPM 6

7 DPM S GLOBAL PORTFOLIO OF ASSETS Unique Assets With Commodity & Geographic Diversity TSX:DPM 7

8 Au & Cu PRICE TREND: 2010 TO PRESENT Gold and Copper Price Trend, 2010 to Present Historical Relative Trading, Year-to-Date (1) 150% 100% 50% 109.8% 97.2% 94.5% 83.3% 74.6% 65.1% Tier I GDXJ GDX Tier III Tier II 0% 1 See footnotes contained in Appendix on slide 28 (50%) Jan-16 Feb-16 Mar-16 Apr-16 TSX:DPM 8

9 2015 KEY ACHIEVEMENTS 1. Achieved our best safety performance 2. Achieved Record Gold Production (2) F 3. Built and commissioned new acid plant in Namibia 4. Advanced Krumovgrad permitting 2 See footnotes contained in Appendix on slide 28 TSX:DPM 9

10 OUR STRATEGY TSX:DPM 10

11 2015 ACCOMPLISHMENTS MINE PRODUCTION AND COST REDUCTIONS Achieved record production of gold contained in all concentrates (000 s oz) (2) Remained a low AISC per ounce of gold producer (4,5) $626 $690 $ Reduced Cash Cost / tonne of ore processed (US$/t) (3) Reduction in G&A expenses of US$10.7M $28.5M $24.8M $17.8M ,3,4,5 See footnotes contained in Appendix on slide 28 TSX:DPM 11

12 2015 ACCOMPLISHMENTS - SMELTER Reduction in total smelter capital expenditures (US$M) Smelter Production (000 s tonnes) (6) F (6) F 6 See footnotes contained in Appendix on slide 28 TSX:DPM 12

13 2015 ACCOMPLISHMENTS GROWTH PROGRESS SMELTER EXPANSION Potential expansion of smelter throughput up to 370,000 tpy (6) (6) (6) (6) (6) F 2017F 2018F 2019F 2020F Holding Furnace 6 See footnotes contained in Appendix on slide 28 TSX:DPM 13

14 2015 ACCOMPLISHMENTS GROWTH PROGRESS - KRUMOVGRAD Main Detailed Development Plan (DDP) & Land Use Final DDP approved and in force - November Land redesignation approved and in force (2) Next step is land purchase in progress Other DDPs / Approvals New Access Road Draft DDP announced, KMC approved routing Water Well DDP approved and in force, construction permit issued (3),(4) Off site offices and admin complex DDP approved and in force Discharge water pipeline municipal and Federal land use approvals received Powerline (Power distribution company) in progress Existing Road Upgrade Scope defined, KMC to tender and award Social Benefit Negotiation Executed 2015 donation contract Main road upgrade; Medical centre study; Water supply study Archaeological Work All field work completed in December Final archaeology report approved by the expert committee Final archaeological protocols signed by the Ministry of Culture in December Construction Permit TSX:DPM 14

15 2015 ACCOMPLISHMENTS GROWTH PROGRESS - EXPLORATION In-mine exploration programs continue to replace the reserves mined each year at Chelopech Regional brownfields exploration programs around existing mines and our planned Krumovgrad mine have identified promising new targets that will be further tested in 2016 Ore Mined / Reserves (mt) Total ore mined to date Ore Reserve TSX:DPM 15

16 2016 YTD ACCOMPLISHMENTS SALE OF KAPAN MINE Transaction Highlights Announced March 1, 2016 Proceeds: US$25 million - US$10 million in cash + US$15 million in Polymetal common shares - Subject to normal course working capital adjustments; 2% net smelter return royalty on future production Completed on April 28, 2016 Exclusions - Certain joint venture arrangements and related exploration assets and licenses in the central part of the country Implications - Strengthens balance sheet and reduces future capital requirements; Increases focus on core portfolio of assets TSX:DPM 16

17 EXPLORATION AVALA PROPERTIES IN SERBIA HIGHLIGHTS (2) Closing occurred April 8, 2016 Timok Gold Project 2.5 million oz in resource category: 920,000 mineable oz 2014 PEA (using $1300 gold price and 5% discount rate) DPM plans to explore for additional mineable ounces Kiseljak Copper Gold Porphyry Project 547 million tonne resource at 0.22 g/t gold and 0.23% copper Assess potential for higher grades close to surface (3),(4) Timok Gold Project Kiseljak Cu Au Porphry Lenovac Lenovac option agreement with Rio Tinto 132km 2 licence south of the Freeport-Reservoir discovery at Cekaru Peki If Rio Tinto incurs expenditures of US$3 million by December 31, 2017, it will earn a 51% interest project (C$1 million first year commitment) Rio Tinto can incur additional expenditures of US$5 million by end of 2019, for 65% interest in the project and US$32 million by end of 2023 for 75% interest in the project TSX:DPM 17

18 MARKET OUTLOOK Gold Price and GDXJ Index January April 29, 2016 (7) TSX Gold Equities/Gold Bullion The ratio is two SD from trend (8) $3.50 Copper Price January 2015 April 29, 2016 (7) Total Global Copper Inventories (9) $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 January ,8,9 See footnotes contained in Appendix on slide 28 January 2016 April 2016 TSX:DPM 18

19 BUSINESS OUTLOOK EXISTING MINES Increased production tonnage at Chelopech Chelopech Ore Mined (mt) Increased gold production in 2018 (000 s ounces) (6) (6) (6) (6) F 2016F 2017F 2018F 2019F (6) (6) 2020F 6 See footnotes contained in Appendix on slide 28 TSX:DPM 19

20 BUSINESS OUTLOOK - KRUMOVGRAD Annual gold production 85,700 oz Capital cost to complete US$164M Production start date Q Total cash cost per oz AuEq $389 LOM 8 years High Return Project (10) Average annual EBITDA $64.9M 10 See footnotes contained in Appendix on slide 28 TSX:DPM 20

21 BUSINESS OUTLOOK KRUMOVGRAD Process Plant Integrated Mine Waste Facility TSX:DPM 21

22 BUSINESS OUTLOOK TSUMEB SMELTER Chelopech concentrat e supplied to smelter (000s) Third Party con supplied to smelter (000s) 479 Cash cost per tonne of concentrate smelted (net of by product (3) credits) Anticipated future capacity F 2017F 2018F 2019F 2020F (6) (6) (6) (6) (6) 3,6 See footnotes contained in Appendix on slide 28 TSX:DPM 22

23 SUMMARY DIVERSIFIED LOW COST PRODUCER 2016 Asset Diversification (11) 2016 Adjusted EBITDA Generation (3,12) 2016 Revenue Diversification (13) 2019 Revenue Diversification Bulgaria 52% Canada 3% Namibia 45% Tsumeb 33% Chelopech 67% Smelter 37% Ag 1% Copper 20% Gold 42% Smelter 37% Ag 1% Copper 14% Gold 48% Capital Expenditures (US$M) (3,6) All-in Sustaining Cost (US$/oz) (3,6,13) Smelter Cash cost (US$/t) (3,6) Discretionary Growth CAPEX Forecast Discretionary Growth CAPEX Non-discretionary Growth CAPEX Sustaining CAPEX Forecast sustaining CAPEX F 2017F 2018F 2019F 2020F F 2017F 2018F 2019F 2020F F 2017F 2018F 2019F 2020F 3,6,11,12,13 See footnotes contained in Appendix on slide 28 TSX:DPM 23

24 COMMITTED TO MAINTAINING A STRONG BALANCE SHEET Net Debt / EBITDA (x) (14) Net Debt (US$M) (14) Net Debt / Capitalization (% at end of period) Total Available Liquidity (US$M at end of period) (15) ,15 See footnotes contained in Appendix on slide 28 TSX:DPM 24

25 PRUDENT FINANCING STRATEGY TO SUPPORT GROWTH Maintain top down financing strategy Utilize equity markets for core funding requirements Maintain LT credit facilities with a core lending group Opportunistically access HYB market or Supplement with project debt financing & local bank arrangements, where appropriate Bring in strategic or financial partners, where appropriate Preserve solid financial position Limit debt component of capital Targeted Max. 20% Adhere to targeted credit metrics Targeted Max 2.0 x Maintain sufficient liquidity Min. $75 million Selectively hedge exposures to manage risk Provisional metal sales pricing 100% hedged Future production 74% of 2016 BOY Payable Cu $2.32 Foreign denominated operating costs ~ 60% of 2016 & 2017 Nam$ costs ~ 22% of 2016 & 2017 Euro costs Foreign denominated capital project costs $176M in Available Liquidity Net Debt / Capitalization (16) (% at end of period) Debt / EBITDA (16,17) (x) 16,17 See footnotes contained in Appendix on slide 28 TSX:DPM 25

26 KEY MILESTONES Smelter Q2 Ramp-up of new copper converters Q3 Ausmelt Cooling Upgrade Expansion Implementation Q4 Expansion study to 370,000 tpy concentrate smelted Q2 Expansion study Detailed Engineering Krumovgrad Q2 Updated economics Q2 Construction permit Construction Q3 First production Q2 Financing plan Q3 BOD approval Q3 Project start Chelopech Production Ramp to 2.2Mt/a Evaluation of Mining and Milling intensity constraints Expansion study to 2.5 mtpy ore production Expansion Implementation Resource Development above 390 level targeted at increasing reserves TSX:DPM 26

27 DPM COMMITTED TO PEOPLE, COMMUNITY, MINING A progressive gold mining company that unlocks and delivers superior value through innovation and strong partnerships with stakeholders TSX:DPM 27

28 FOOTNOTES AND DISCLAIMERS 1. Source: RBC; Capital IQ as at April 29, Comprised of all metals contained in concentrate, including pyrite concentrate 3. A non-gaap measure. Refer to the non-gaap Financial Measures section of the Full Year 2015 MD&A for reconciliations to IFRS 4. AISC per ounce of gold represents cost of sales at Chelopech less depreciation, amortization and other non-cash items plus treatment charges, penalties, transportation and other selling costs, sustaining capital expenditures, rehabilitation related to accretion expenses and an allocated portion of the Company s G&A expenses less by-product revenues in respect of copper and silver including realized gains on copper derivative contracts divided by the payable gold in copper concentrate sold 5. Excludes metals in pyrite concentrate and where applicable, the treatment charges, transportation and other selling costs related to the sale of pyrite concentrate which is reported separately 6. Forecast/guidance information is subject to a number of risks. 2016F is based on guidance issued February 9, 2016 and 2017 to 2020 forecast data is based on the completion of several growth projects within currently contemplated time frames. See Forward Looking Statements on slide 6 7. Source: KITCO, The World Bank 8. Source: Standard and Poors London Bullion Market Association, Dundee Economics. February Source: Bloomberg with commentary from Scotia Mining Sales 10. Based on 2015 Krumovgrad Technical Report. To be updated Q Estimated to end of Adjusted EBITDA represents earnings before income tax plus depreciation and amortization, finance costs, losses/gains on impairment provisions and reversals, unrealized losses/gains on derivative contracts and investments at fair value, realized and unrealized losses/gains on equity settled warrants, minus interest income 13. From continuing operations 14. Net Debt, represents term debt and drawn amount under revolving credit facility, less cash 15. Undrawn portion of RCF and cash and 2020 information is indicative, and reflects the completion of several growth projects within currently contemplated time frames, at current market prices without additional financing and is subject to a number of risks. See Forward Looking Statements on slide 6 and footnotes on slide Calculated in accordance with bank covenants Without limitation to the foregoing, the following outlines certain specific forward looking statements contained in this presentation and provides certain material assumptions used to develop such forward looking statements and material risk factors that could cause actual results to differ materially from the forward looking statements (which are provided without limitation to the additional general risk factors discussed herein and in the Full Year 2015 MD&A). Sustaining CAPEX, Non-Discretionary CAPEX and Discretionary CAPEX: assumes foreign exchange rates remain at or around current levels, and all capital projects proceed as planned and at a cost that is consistent with the budget established for each project. Subject to a number of risks, the more significant of which are: technical challenges; delays related to securing necessary approvals, equipment deliveries, equipment performance, and the speed with which work is performed; availability of qualified labour; and changes in project parameters, timing and decision to proceed with projects and/or any components there of and estimated costs, including foreign exchange impacts. Gold and Copper Production: projected levels of metal production assumes grades and recoveries are consistent with current estimates of Mineral Resources and Mineral Reserves and DPM s current expectations and timing of potential expansion at Kapan and construction start-up of Krumovgrad project and decision to proceed with projects and/or any components there of; and ore mined/milled is consistent with planned levels. Subject to a number of risks, the more significant of which are: lower than anticipated ore grades, recovery rates and ore mined/milled. Smelted Concentrate: assumes no significant disruption in equipment availability or concentrate supply. Subject to a number of risks, the more significant of which are: unanticipated operational issues; timing and decision to proceed with expansion projects, including the holding furnace, and/or any components there of; unanticipated issues related to the commissioning and operation of the acid plant and converters and any further expansion components including a holding furnace; lower than anticipated equipment availability; and disruptions to or changes in the supply of concentrate. Technical Information related to slide 20 Updated Krumovgrad Project Economics The Mineral Resource and Mineral Reserve estimates and other scientific and technical information which supports this presentation was prepared by CSA Global (UK) Ltd. ( CSA ), in accordance with Canadian regulatory requirements set out in National Instrument Standards of Disclosure for Mineral Projects, and were reviewed and approved by, as relates to Mineral Resources, Galen White, BSc (Hons) FAusIMM FGS, Director and Principal Consultant of CSA, and Julian Bennett, BSc ARSM FIMMM CEng, as relates to Mineral Reserves. Both Galen White and Julian Bennett are independent Qualified Persons ( QP ), as defined under NI The NI technical report (the Krumovgrad Technical Report ) entitled NI Technical Report, Ada Tepe Deposit, Krumovgrad Project, Bulgaria dated March 21, 2014, in respect of the study for the construction and operation of its Krumovgrad gold project disclosed herein, was filed March 31, 2014 on SEDAR at Simon Meik, Processing, and Edgar Urbaez, formerly Corporate Director, Technical Services, both of DPM, who are QPs and not independent of the Company, have reviewed and approved the contents of this presentation. The Mineral Resource and Mineral Reserve estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential development of such Mineral Resources. See the Krumovgrad Technical Report for more information with respect to the key assumptions, parameters, methods and risks of determination associated with the foregoing Mineral Resource estimates. Cautionary note to U.S. Investors concerning estimates of Mineral Resources. These estimates have been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. The terms mineral resource, measured mineral resource, indicated mineral resource and inferred mineral resource are defined in NI and recognized by Canadian securities laws but are not defined terms under the U.S. Securities and Exchange Commission ( SEC ) Guide 7 ( SEC Guide 7 ) or recognized under U.S. securities laws. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be upgraded to mineral reserves. Inferred mineral resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever by upgraded to a higher category. Under Canadian securities laws, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies. U.S. investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Accordingly, these mineral resource estimates and related information may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder, including SEC Guide 7. 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29 Thank You Corporate Head Office: One Adelaide Street East, Suite 500 Toronto, Ontario M5C 2V9 T: Investor Relations T: TSX: DPM Common Shares Chelopech Mine, Bulgaria