Dundee Precious Metals (TSE:DPM) reported record quarterly revenue, earnings and free cash flow for the second quarter of 2026, supported by higher realized metal prices and contributions from the ramp-up of its Vareš mine in Bosnia and Herzegovina.
President and Chief Executive Officer David Rae said the company generated $227 million in free cash flow during the quarter and remained on track to meet its 2026 production guidance for the 12th consecutive year. The company also returned $58 million to shareholders during the quarter through share repurchases and dividend payments.
Financial results and costs
Chief Financial Officer Navin Dyal said quarterly revenue rose 94% from the prior-year period to $362 million. The increase primarily reflected higher realized metal prices and $110 million in pre-commercial production revenue from Vareš.
Adjusted net earnings totaled $211 million, or $0.95 per share, more than doubling from the comparable 2025 quarter. Dyal attributed the increase mainly to metal prices and Vareš’s addition to the operating portfolio, partly offset by higher income taxes and cost of sales.
Cash flow from operating activities was $271 million, up $172 million year over year, while free cash flow increased by $133 million from the prior-year quarter.
For the first half of 2026, the company reported all-in sustaining costs of $1,470 per gold equivalent ounce sold, compared with an average realized gold price of $4,635 per ounce. Dyal said the company remained on track to meet its annual all-in sustaining cost guidance, while noting that foreign exchange rates, labor costs, oil prices, royalties and metal prices can influence costs.
The company ended the quarter with $761 million in cash, no debt and a $400 million undrawn revolving credit facility, for total liquidity of approximately $1.2 billion.
Vareš ramp-up continues
Rae said Vareš continued to progress toward full production, with the company targeting an annualized processing rate of 850,000 tonnes by year-end. The mine processed 117,000 tonnes during the second quarter, up 48% from the first quarter, and produced approximately 35,000 gold equivalent ounces at an all-in sustaining cost of $563 per gold equivalent ounce sold.
A planned plant shutdown to complete tie-ins to an additional tailings filter was completed in seven days, ahead of schedule. The company said a second water treatment plant was being commissioned, while the paste backfill plant and second tailings filter were expected to be operational before year-end.
Dyal said Vareš’s reported costs benefited from the capitalization of pre-commercial production operating costs. During the first half, the company capitalized $48 million at Vareš, including $37 million of operating costs. Commercial production is expected by the end of the third quarter, based on a target of maintaining approximately 60% throughput capacity for 30 continuous days.
Once commercial production is achieved, costs are expected to begin flowing through the company’s reported operating metrics rather than being capitalized, Dyal said.
Chelopech exploration and growth pipeline
At the Chelopech mine in Bulgaria, DPM reported production of approximately 57,000 gold equivalent ounces in the second quarter, with all-in sustaining costs of $1,174 per gold equivalent ounce sold. Rae said the operation remained on track to achieve its annual guidance.
The company continued delineation drilling at the Wedge Zone target, where it has identified high-grade mineralization over roughly 170 meters of strike length, 130 meters of width and 300 meters of vertical extent. The zone remains open along strike and down dip, according to Rae.
DPM plans to complete an initial mineral resource estimate for Wedge Zone by year-end and expects to begin development of a decline toward the target from existing operations before year-end. Rae said the company is evaluating three potential access routes and would provide further details on capital spending and development timing later in the year.
Rae also highlighted the Brevene South Porphyry discovery, announced in June, including an initial drill result of 730 meters grading 2.5 grams per tonne gold equivalent. One drill hole extended beyond one kilometer and ended in mineralization, he said.
The company has five high-capacity rigs working at the target and plans up to 15,000 meters of drilling through the end of the third quarter. DPM expects to submit a final report supporting a Commercial Discovery Certificate after its current exploration phase concludes in September 2026. Rae said the process may temporarily restrict drilling on the Brevene license, though the company intends to test extensions of the target from within the nearby Chelopech mine concession.
Čoka Rakita permitting and shareholder returns
In Serbia, DPM continued permitting work for its Čoka Rakita project, where it is targeting a construction decision that would support construction beginning in early 2027. The company expects the special purpose spatial plan to be approved in the second half of 2026, followed by submission of an exploitation permit application. An environmental and social impact assessment is expected to be submitted by year-end.
DPM has also begun a 20,000-meter drilling program across the Čoka Rakita license, including work aimed at infilling and extending mineralization at Dumitru Potok. Rae said the company expects to provide additional exploration updates as drilling programs progress.
During the first half, DPM repurchased more than 2.1 million shares for $75 million and paid roughly $18 million in dividends. From July 1 through July 30, it repurchased an additional approximately 800,000 shares for $27 million, bringing year-to-date repurchases to about 3 million shares at an aggregate cost of $102 million.
Dyal said the company would continue balancing reinvestment in exploration and growth projects with shareholder returns. Rae added that DPM has discussed a $200 million buyback program and may have the capacity to increase that amount.
The company also confirmed that production at the Ada Tepe mine concluded as scheduled on July 15. Rae said DPM expects 95% of the mine area to be returned to the Natura 2000 European Union nature protection network as part of closure activities.
About Dundee Precious Metals (TSE:DPM)
DPM Metals engages in the acquisition, exploration, development, mining, and processing of precious metals, primarily focusing on gold, copper, and silver deposits. The company produces approximately 200,000 ounces of gold annually and is among the lowest-cost gold producers globally. DPM Metals maintains a strong financial position with $763 million in net cash as of March 2025 and has returned over $260 million to shareholders since 2020.
