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On Tuesday, Scotiabank reiterated its Sector Outperform rating and C$16.50 price target for Dundee Precious Metals (DPM:CN) (OTC: DPMLF), following the company's third-quarter results. The reported sales of 53.2 thousand ounces of gold were slightly below the firm's estimate of 59.1 thousand ounces. Similarly, copper production was just under expectations at 6.5 million pounds, compared to an estimated 6.6 million pounds.
The shortfall in production was attributed to the Ada Tepe mine, which experienced lower than anticipated grades and recoveries, coupled with reduced fleet availability and a lack of rainfall in the area. Despite these challenges, Dundee Precious Metals has confirmed its full-year 2024 guidance, with an anticipated increase in production at Ada Tepe in the fourth quarter of 2024.
Additionally, in the third quarter, Dundee Precious Metals repurchased 1.0725 million shares at C$12.57 each and declared a dividend of C$0.04 per share, which was payable on October 15, 2024. The company's share buyback and dividend payment are part of its ongoing efforts to return value to shareholders.
Scotiabank's analysis of Dundee Precious Metals' performance in the third quarter acknowledges mixed results for the company's shares. While the production was approximately 10% lower than expected, the forecast for higher production at Ada Tepe in the fourth quarter is seen as a positive development. This expectation is set against the backdrop of the company's maintained guidance for the full year 2024.
In conclusion, following updates to their model based on the third-quarter results, Scotiabank has maintained its Sector Outperform rating and a price target of C$16.50 for Dundee Precious Metals. The firm's stance reflects a continued optimistic outlook for the company's stock performance.
In other recent news, Dundee Precious Metals has reported strong financial outcomes for the second quarter of 2024, with production of approximately 68,000 ounces of gold and 8 million pounds of copper. The company also generated a record free cash flow of $82 million and maintained an all-in sustaining cost of $710 per ounce. Despite falling short of BMO Capital's third-quarter production estimates, the company's year-to-date production remains on track and 2024 guidance for all operations is upheld.
Dundee Precious Metals has also been actively repurchasing its shares through its Normal Course Issuer Bid (NCIB) share buyback program, buying back approximately 3.4 million shares, equivalent to around US$28.3 million. The company has also paid dividends totaling $14.5 million in the first half of 2024.
Furthermore, exploration programs are ongoing at Chelopech, and Dundee Precious Metals is progressing its Coka Rakita and Loma Larga projects. The sale of Tsumeb is also advancing, with all required Chinese regulatory approvals received. Despite a reduction in the purchase price and financing arrangements for Tierras Coloradas, Dundee Precious Metals maintains a strong operating track record and financial strength.
InvestingPro Insights
Dundee Precious Metals' recent performance and future outlook are further illuminated by data from InvestingPro. The company's financial health appears robust, with a Price-to-Earnings (P/E) ratio of 9.28, suggesting the stock may be undervalued relative to its earnings. This aligns with the Scotiabank's optimistic outlook and maintained price target.
InvestingPro Tips highlight that Dundee Precious Metals holds more cash than debt on its balance sheet, indicating strong financial stability. This is particularly relevant given the company's recent share repurchases and dividend payments, as mentioned in the article. Additionally, the stock is trading near its 52-week high, which corroborates the positive sentiment expressed in Scotiabank's analysis.
The company's revenue growth of 34.09% over the last twelve months as of Q2 2024 demonstrates strong performance, despite the recent production challenges at Ada Tepe. This growth, coupled with a healthy gross profit margin of 53.98%, suggests that Dundee Precious Metals is well-positioned to maintain its full-year guidance.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for Dundee Precious Metals, providing a deeper understanding of the company's financial position and market performance.
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