Ladies and gentlemen, thank you for standing by and welcome to the Dundee Precious Metals Third Quarter 2020 Earnings Results Conference Call. At this time questions. I would now like to hand the conference over to your first speaker today to Jennifer Cameron, Director, Investor Relations. Thank you. Please go ahead.
Thank you, and good morning. I'm Jennifer Cameron, Director of Investor Relations, and I'd like to welcome you to Dundee Precious Metals Third Quarter Conference Call. With me today are David Ray, President and CEO and Hume Kyle, Chief Financial Officer. After the close of business yesterday, we released our 3rd quarter results I hope you've had an opportunity to review our material. All forward looking information provided during this call is subject to the forward looking qualification which is detailed in our news release and incorporated in full for the purposes of today's call.
Certain financial measures referred to during this call are not measures recognized under IFRS and are referred to as non GAAP measures. These measures have no standardized meanings under IFRS and may not be comparable to similar measures presented by other companies. The definitions established and calculations performed by DPM are based on management's reasonable judgment and are consistently applied. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Please refer to the non GAAP financial measures section of our most recent MD and A for reconciliations of these non GAAP measures.
Please note that unless otherwise stated, operational and financial information communicated during this call have generally been rounded and any references to 2019 pertain to the comparable periods in 2020. I'll now turn the call over to David Ray.
Thanks, Geneta. Good morning and thank you all for joining us. As you would have seen from our earnings release last night, I'm pleased to report that DPM delivered another quarter with strong gold production and cost performance driving record financial results. Highlights of our 3rd quarter results include: strong operating performance at our Chelopech and Atatepe mines, which resulted in production of 80,000 ounces of gold and £9,200,000 of copper. We had solid smelter performance despite 15 days of scheduled maintenance and an excellent cost performance resulting in an all in sustaining cost for the quarter of $6.40 per gold ounce.
Our strong operational performance combined with higher gold prices generate record net earnings, adjusted EBITDA, and $59,000,000 of free cash flow for the quarter. It's important to highlight a few more also note that our record free cash flow was after delivery on our prepaid gold facility of approximately 7000 ounces in the quarter. We the strength of our results year to date, I'm pleased to say that we are tracking towards the upper end of our annual guidance for gold production and have reduced our all in sustaining cost guidance. Gose without saying that this has been a challenging year around the world as a result of the COVID-nineteen epidemic. To date, we've not experienced any material options to our operations and we continue to manage the situation by prioritizing the health and safety of our workforce force and host communities.
Our strong year to date performance amidst challenging circumstances is a credit to the outstanding efforts undertaken at each of our sites to effectively manage these challenges. Turning to the highlights from our operations for the third quarter, I'll start with Adatepe. Since ramping up to full production last year, operating team at Tata Tapi has continued to deliver impressive results beyond what was shown in the feasibility study and ahead of our expectations. And that's a rare accomplishment in our industry. In Q3, Atatepi produced approximately 30,000 gold ounces, which exceeded planned levels as a result primarily of strong gold grades, but also by a higher volume of ore treated.
With cash cost of $34 per tonne of ore processed during the quarter, cost performance is also better than anticipated for reasons which Hume will discuss shortly. Atatesta continues to be on track to meet its 2020 guidance with gold production tracking towards the higher end of the range. In October, we released an updated mineral reserve and resource for prototyping, which incorporated over 91,000 meters of close space, close space grade control drilling and detailed reconciliation studies that we've conducted since the start up of the operations. The results was a proven and probable mineral estimate of approximately 660,000 ounces of gold at an increased grade of 4.8 grams per ton, as well as an optimized life of mine plan for added testing. The optimized mine plan reflects a higher grade and recovered gold ounce profile relative to the original mine plan.
It supports our 3 year outlook for the operation and maintains production to 2026 and highlights Atatep's potential to drive strong operating results within our portfolio. We look forward to publishing an updated technical report for Atatep later this month. We're continuing with our exploration efforts around Atatepi with approximately 8000 meters planned at Surnak and 2 of the satellite deposits in the 4th quarter in addition to the 8000 meters already completed for this year. Additional exploration activities this year are focused on target delineation and resort's definition drilling about the affordable veins on the Chirite license, which is located approximately 25 Kilometers Northeast of Atatepec. Will be completed 6000 meters this year.
As we look out to next year, we plan to drill approximately 32,000 meters at Atatepi with a focus on delineation of additional resources within the mine license and on advancing other prospective targets on regional licenses. Turning to Chelopech. Chalopech continued its track record of consistent performance, producing approximately 50,000 ounces of gold and £9,200,000 of copper. Gold production was higher than expected due to higher recoveries in Pyrite concentrate and copper production was as expected. Cash costs continues to be very steady and in line with our expectations with cash costs of $38 per ton of ore processed for the quarter.
Overall, given its strong performance year to date, Chelopech is expected to be at the upper end of its guidance guidance range on gold production for 2020, and is on track to meet guidance for all of the metrics. In terms of exploration, we continue to focus on extending the mine life through our in mine and brownfields exploration programs, and have 8000 meters of drilling planned for the fourth quarter. In the third quarter, we commenced an intensive diamond drilling program at the West Sheffcroft This is the new target located approximately 1 Kilometers Southwest of the Chelopech mine that was identified in June as part of a near mine drilling program. Additionally, deep directional drilling is continuing at the wedge prospect just north of our resource with a focus on testing more conceptual target in proximity to the Chelopech mine. Turning to Tsumeb.
Tsumeb delivered strong performance during the quarter processing approximately 56,000 tons of concentrate at a cash cost of $407 per ton. There were 15 days of scheduled maintenance during the quarter, which was primarily related to the replacement of certain equipment in the op gas system. This was effectively 2 1 week shutdowns, which we brought together in the third quarter. And we've done that for various reasons, one of which a sensible handling of COVID constraints in terms of resources that we can bring to the site. There's no additional significant maintenance planned prior to the Osnock furnace reline, which is currently scheduled to occur in the first quarter of 2021.
In 2020, CymaBiz recognizing its 10th anniversary as a DPM operation. And since we acquired the smelter in 2010, we've made substantial investment to significantly improve the health, safety and environmental performance and standards. And we are proudly seeing the benefit of that investment. In terms of enhanced operational and environmental performance as well as improved social and political license. Today I'm happy to say that we're starting to realize some of the long term targets for safety and operational performance that we had in mind for the smelter when we first acquired it.
And in fact, we expect 2020 to be a record year for Tsumeb, both operationally and financially, with a smelter on track to meet its guidance. In terms of future growth, our TMOP project in Serbia Servier continues to advance. Earlier this year, we initiated a prefeasibility study following encouraging results from optimization work completed last year to incorporate the sulfide portion of the mineral resource. As the PFS has progressed, we've determined that the sulfide portion will benefit from additional variability test work. And as a result, the PFS will continue to focus on the oxide portion of the project with the sulfide portion to be included as part of the potential feasibility study.
The PFS is progressing well and is on track for in Q4, and we anticipate sharing the results in the first quarter of 2021. We also continue to pursue our growth strategy by evaluating additional opportunities that have potential to generate strong returns and enhance value to the company. Closing, overall, DPM has never been in a better position to deliver value our shareholders and other stakeholders. With a strong 3rd quarter set of results, we've demonstrated our ability to deliver significant free cash flow and our commitment to deploying this share, a quarterly level we believe to be sustainable based on our free cash flow outlook. And yesterday announced the 4th quarter dividend payable on January 15, 2021, to shareholders of record as of December 31, 2020.
This is the demonstration of our commitment to delivering superior turns to shareholders and a disciplined approach to capital allocation, as well as our confidence that we will continue to deliver strong results in the coming Before I wrap up, I'd like to acknowledge all our dedicated employees across the company for their outstanding efforts to proactively respond to the challenges of the COVID-nineteen pandemic, while also maintaining the continuity of our operations. Our growing gold production profile and free cash flow generation, combined with our unique skills and innovation and building strong partnerships with local communities, position us well to continue delivering value for our shareholders. I'll now turn the call over to Hume for a review of our financial results and comments on our 2020 guidance following which we'll open the call to questions.
Thanks, Dave. Good morning, everybody. As Dave noted, continued strong operational performance from all of our operations and higher metal prices translated into strong financial results, including record net earnings and free cash flow. For the quarter, adjusted net earnings were $51,000,000 or $0.28 per share, representing an increase of $0.26 compared to 2019, and adjusted EBITDA was $85,000,000, up $52,000,000 compared to 2019. 2020 were $143,000,000 or $0.79 per share, representing a $0.69 increase compared to the prior year, and adjusted EBITDA was $241,000,000, up $158,000,000 compared to 2019.
Reported net earnings in all periods were slightly higher, reflecting mark to market gains related to Sabina special warrants that we hold. Relative to 2019, these results benefited from definitely higher volumes of gold sold, reflecting an impressive startup but at atepe that generated higher production in grades than we had originally envisioned. And continued strong performance from our flagship Chelopech mine, as well as an increase in, market gold prices of approximately 25% relative to 2019 levels and a weaker South African rand, which depreciated roughly 15% against the U. S. Dollar.
From a cash flow perspective, cash flow from operating activities in Q3 and year to date were $42,000,000 $127,000,000 respectively, compared with $23,000,000 $47,000,000 in 20.19 and reflected the same factors that drove increased earnings partially offset by an increase normal course timing issues with respect to a late, shipment in the quarter, which resulted in approximately $25,000,000 of cash proceeds being received just after the quarter as well as increased deliveries and higher gold prices. Funds from operation, which is before changes in working capital, $70,000,000 $194,000,000 in Q3 and year to date, respectively, compared to $32,000,000 $77,000,000 in 20 19. This solid performance translated into record free cash flow of $59,000,000 167,000,000 in Q3 and year to date compared to $21,000,000 $55,000,000 in 2019. This includes the delivery of 700027,000 ounces of gold in Q3 and year to date, respectively, in respect of our prepaid forward gold sales arrangement resulting in approximately $10,000,000 37,000,000 deferred revenue being recognized in earnings due under this arrangement. Our all in sustaining cost per ounce for the quarter year to date was 6.40 and $5.55, respectively, down 14% 13% from 2019, due primarily to lower cost production from Atatepe, and higher byproduct credits, partially offset by higher production or sorry, higher Chelopech treatment charges higher G and A expenses and higher cash outflows in respect of sustaining capital expenditures.
At Tsumeb, our Q3 and year to date cost per ton was $407 $3.69, respectively, down 21% 10% from 2019, due primarily to higher volumes of complex concentrate smelted as a result of steady operating performance, which more than offset the Q2 impact associated with regional measures undertaken by the Namibian government to reduce the risks related to COVID-nineteen as well as a weaker czar and higher asset deliveries partially offset by lower asset prices. From a capital expenditure standpoint, Total capital expenditures in the quarter and year to date were $13,000,000 $35,000,000, respectively, sustaining capital expenditures for the quarter and year to date $12,000,000 $30,000,000, up $1,011,000,000 from 2019 levels, reflecting the investments we are making to extend the life of chill as tailings management facility, as well as the higher CapEx associated with the startup of Atatepe. Growth capital expenditures for the quarter and year to date were $1,050,000,000, respectively, down $1,000,000 $30,000,000 from 2019, Here to date decrease, of course, is due to the fact that we completed construction, at the Atatepe mine. Following another quarter of strong free cash flow, we ended the quarter with available cash resources of approximately $252,000,000. This was comprised of a cash position of $102,000,000, together with $150,000,000 under our revolving credit facility.
We also have a liquid investment portfolio providing additional potential upside. This is comprised of a 9.4% interest in Sabina, and a 19.4% interest in IND, which together are valued at approximately 76,000,000 We also have a 70% fully diluted interest in MineRP, which puts an aggregate value on these investments at well over $100,000,000. From a risk management perspective, all of our key financial metrics and underlying financial exposures are well within established tolerance levels, During the quarter, we increased our 2021 hedge positions that were established to reduce Tsumeb's operating cost exposure to foreign currency movements, such as such that for the balance of 20.20 and for 2021, we are approximately 82% 84% hedged. And we've used zero cost colors
to do so.
Looking forward, we continue to focus on increasing the profitability of the business by optimizing our existing assets. And as Dave commented on earlier, we are on track to meet or outperform previously issued 2020 guidance. With strong operating performance for Matatepe and Chelopech in the 1st 9 months, Annual production and deliveries are expected to be at the upper end of our 2020 guidance. As a result, we have reduced our all in sustaining cost guidance to $6.50 to $7.20 per ounce of gold from the previously issued guidance of $700 to $780 reflecting excellent cost performance year to date. Mined costs at Chelopech are tracking our guidance and at Atatepe year to date costs were below the current guidance of $44 to $50 which was lowered from $50 to $60 in July.
We expect Atatepi cost to come in at the lower end of guidance with the potential to be slightly below this range as a result of strong operating performance and RC drilling costs, which are now being capitalized rather than expensed that's originally envisioned. Tsumeb remains on track to achieve its 2020 production guidance and is expected to achieve the lower end of its 2020 guidance due primarily to the weakening of the South African Rand relative to the U. S. Dollar. Year to date and forecast capital expenditures are in line with guidance.
Our longer term outlook covering 20212022 which can be found in the a one outlook for sustaining capital expenditures, which are now expected to be between $15,000,000 $19,000,000, up from our previously issued guidance of $4,000,000 to $5,000,000. This increase is due primarily to accelerating grade control billing, which was previously planned over several years in order to provide larger representative and high quality samples for better grade control and mine planning over the remaining life. The outlook for out of type a sustaining capital expenditures in 2022 remains unchanged at $4,000,000 to $5,000,000. In closing, with continued significant free cash flow being generated from our business solid outlook for 2021 2022, the potential to generate significant additional free cash flow, we are in a strong financial position to optimize and grow the business, which we intend to do in a disciplined manner, consistent with our capital allocation framework, and as such, expect to continue to grow our cash position to support prudent investments and high return growth opportunities and return a portion of our free cash flow generation to our shareholders by way of a regular quarterly dividend, the most recent of which was announced yesterday. With that, I'll turn the call
I show our first question comes from the line of Dalton Baretto from Canaccord. Please go ahead.
Thanks. Good morning, David and team and congratulations once again on a great quarter. Maybe I could start by asking about the cost at Atapet Why are they coming in so far below your guidance?
Jim, did you want to pick that up?
Yes. Well, I can start. I can get one factor that is impacting the adestepy cost per ton in the quarter is, the RC drilling. The RC drilling that was originally in our budget was considered to be an operating cost. And now as a result of the treatment, which is now capital, that probably in the quarter has an impact of something like $5 per ton, $4 to $5 per ton.
So it's effective quarter more, but on a year basis relative to the original guidance that we put out, it would have an impact of about $4 per ton. So that's one factor, both for the quarter and for the year. But beyond that, it's really good operating performance, higher production, better cost management, lower consumable costs, both in the case of lower diesel costs, and power costs, both from a rate and a consumption standpoint. Dave, did you want to add anything?
Yeah. Just to explain a little bit more on what we're talking about, the grade controlled drilling would typically be done for the year ahead of current production. And with the asset being fairly small and constrained, there was a significant risk of interference or alternatively the need when we're doing pushback to be reducing production. And what we recognized was that by getting the grade controlled done early, that would feed into life of mine planning and allow us to mitigate that. Now mitigations that we take today are going to put us in a better position.
Not just 1 year from now 2 3 years from now. So therefore, we felt it was sensible to accelerate the grade control drilling. So we've been talking about this for a year, but because Instead of it just seeing the year ahead, in which case we would expense it, now we're talking multiple years ahead. We felt it's sensible to move that into into capital. So that's why we did that.
So the impact actually in the quarter is even more than the $5 as much as $10 per ton. But as Hume was saying, the direct material costs, the reagents grinding material better it's actually all down to operating performance. The work that you do on the maintenance of the roads and the clarity in terms of direction of the fleet minimization of the holes and rework that has a benefit on the impact of consumption of tires and fuel and all of these types of things. So It's a combination of a number of things. We've done well in terms of our negotiation on some contracts.
We've benefited from lower power costs We've benefited from lower reagent and steel costs, but we've also benefited from really, really good work done by the team on focusing on how to get optimization of the recovery of this asset, including grade control and that's not in terms of the drilling, but how they actually manage that at the site in terms of dilution and in terms of losses. And that's also benefited us with the grades that are going to the mill. So it's a broad range of things The big impact in Q3 was around the RC drilling or the grade control drilling, but it's also a number of others which have been consistent through the year so far.
That's great color. And they really are doing a great job there. Can I switch gears and ask about TMOC for a second? So it sounds like the sulfides are going to like as you said benefit from additional work. Can you elaborate on what that additional variability work is?
And will you make a decision to go from PFS to feasibility study just on the merits of the oxides?
Michael, did you want to talk to them?
Sure. Hi, Dalton. Yeah, so that's correct. The sulfide is going to be subject of additional variability test work. After the pre feas.
And it's really just designed to optimize the flow sheet for the sulfides going forward and determine what the best processing methodology is going to be. And as you know, there's just a number of different zones within the ore body that require that additional variability test work to be done. To answer your second question, yes, the intention is that we would assuming a positive outcome on the pre feas we would move ahead on the basis of the oxides alone and continue to study the sulfides as part of the fees.
Okay, great. And maybe just one last one for me. This one's for you, David. So on capital and capital allocation, the base dividend is much appreciated, but it barely puts a dent in my numbers going forward. How are you thinking of the next couple of years about growth versus incremental shareholder returns.
What is the process? Is that going to be reviewed quarterly? What's the preferred mechanism for any incremental shareholder returns? Do you prefer buybacks? Do you prefer supplementals.
Just any thoughts around that would be great.
Okay. I'll start with this and then I'll ask Kim to comment as well. It's, it's a discussion that every board meeting as we sort of have moved from a situation where we were a running debt to now generating significant free cash flow. I'd like to see this process as something that is more routine in the sense of how we actually get about assessing what is the appropriate level of return. So at this point, yes, we do have buyback up opportunities of this share price.
I don't think that's something that we would readily exercise. So then it's down to our investment in improvements within the operations to generate returns. It's down to exploration. And as you'll see, we've been more aggressive on exploration. It's down to dividends and it's down to what we might do in terms of growth.
So whether it's organic like T Mark or whether it's the potential for us to invest further and potential M and A activity in terms of supporting our future growth as we get 5 years and beyond as an organization. So it's we recognize that what's happened is from the time that we started with the $0.02 dividend, the situation with the gold price and our performance means that we are paying at a lower yield than we had originally anticipated. So that's understood. And it is a point of conversation It's happening on a regular basis. So I would say it's been discussed quarterly, but I think the intent is to come into some type of routine.
That there can be an expectation of when that's going to be. And I believe we're moving away from the concept of supplementary dividends to it being a more routine review of what that level is. So that would be my comment, Jim, did you want to add anything further to that?
Sure. It's obviously a relevant topic that comes up quite a bit in our conversations and in the marketplace. And And you can see in the marketplace that there's a mixture out there in terms of how people are approaching it. From our standpoint, we instituted the dividend, as Dave said, at a level that anticipated a lower pricing environment than the one that we're currently in. And certainly with current prices and should they prevail, it would provide the opportunity to increase that dividend further.
No doubt, but we instituted it at a level we knew we were comfortable with. It's not just based on from a board perspective, it's not just based on what the current market environment is. It's really looking at what the expectations are over a longer period of time and being satisfied that any dividend that we institute or any increases thereof is something that we feel we can sustained. We did not want to be changing our dividend on a quarter over quarter basis. So we're monitoring the market closely in terms of going on, but it's really something that, I wouldn't expect that we would look at and make quarterly decisions around.
I think that this is something that we would assess and take a longer term view and reassess, probably generally speaking, on an annual basis. So recognizing that we instituted the dividend earlier this year, thinking about whether there's an opportunity and what the timing would be around increasing that, we're probably looking at later this year early next year being something that that, that, that dividend level will be reassessed.
That's great. Thank you guys and congratulations again.
Thank you.
Thank you. Our next question comes from the line of Trevor Turnbull from Scotia Bank. Please go ahead.
Yes. Hi, Dave and Hume. Maybe a little bit of a follow on, on Dalton's questions about the Autatepec costs. I just wondered maybe going forward, if you had plans with guidance to break down say the all in sustaining costs between the different operations. It seems like now you give a consolidated figure for the company.
But perhaps it would be a little easier for us to track if it was broken out asset by asset.
Yes. I mean, it's something that we could do, for sure, Trevor. We haven't done it to date. But it's something that we could consider doing on a go forward basis.
And I guess just kind of a small question with respect to that. So you're all in sustaining cost guidance. You made a note that, it does incorporate some allocation for, say, corporate G and A and I think it was like a reclamation type of or maybe it was ESG expenses. Can you give us a sense of kind of what proportion does get allocated into that number?
The proportion would really follow revenue. That's the methodology. So looking at the revenue generation each of our businesses, so Tsumebatatepe and Chelopech that would dictate it. So roughly speaking, I don't have it right off the tip of my tongue, but let's say 2 thirds, 70% of the G and A costs would be allocated to between pitch.
Okay. So I misunderstood. I was thinking only a portion of the G and A was being allocated down, but it's what you're saying is just being allocated on a pro rata basis based on revenue contribution?
That's correct. Just looking at the scale of each business, we view revenue as being a representative tool or measure to use for that allocation and that's what we've been following years.
Yes. That makes sense. And then one very last small housekeeping item. Do you still pay a dividend to your partner in Namibia. I think it's called Greyhorse.
Is that an annual dividend that tends to get paid out in Q4. Is that something we need to think about?
We do pay them a dividend. A portion of it is is, is annual. So it's, the minimum dividend, as you may recall, for the 1st 5 years, is $500. So it's not that much. 200 is paid out sort of at the beginning of each year.
That's to sort of cover operating costs. The balance is paid out, subject to them, having investments to make. So all of the between those two things, all of the dividend for 2020 has already been paid out. There won't be anything paid out in Q4.
Thank you. Our next question comes from the line of Kosmos Chiu from CIBC. Please go ahead.
Hi, thanks, David and Hume and happy Friday, 13th, I guess. And great to see that you've improved on your cost guidance. Maybe my first question is on, Adatep pay here. Going back to the technical report that you have put out earlier on in October, good to see that it confirms a 3 year guidance. But with that said, the number of ounces stayed about the same, the mine life stayed about the same.
And so I guess my question is, what's the potential here in terms of increasing the mine life adding more years to it? David, as you mentioned, you've planned about 32,000 meters in terms of drilling. It sounds like that's part of it. But what's the potential here? Is it from the satellite deposits or is it an extension of the current added Tepay deposit itself?
And if I look at my field notes from 2019, when I went to site, I guess, at the tepi, it looks like a lot of mineralization was in the sedimentary package. A lot of it was also in the contact between the metamorphic package and the sedimentary package. Is that still the interpretation at this point in time?
I don't think anything's changed in the interpretation, Cosmos. In terms of where we see the opportunities coming, we do see that as satellite primarily to the current asset, which is well understood and well drilled. So, we are putting more and more energy, into those areas around Atatene. What I would say is that if you look at exploration generally, we had a rethink and a reprioritization that started in May, June this year. And as a consequence of that, you would have noticed that we've actually flipped some of the prioritization of the targets at Chelopech.
And we've increased the intensity of some of the drilling that's been going on in and around Chelopech. At Atatepe, we've done some of that, but we still have to do the in-depth view. However, we've got some interesting things that are going on at Atatepe at the moment. As you'll notice, in some of the recent disclosure of results. And I do anticipate that as we find opportunities, we'll be aggressively drilling in order to do what we can to make sure that there is no drop in production from the end of life of mine at Atapix.
So you'll know I've been cautious on this when I've been asked in some of the analyst meetings, right? I think with what I see, I'm getting more confidence now that we're going be able to do some things. It may be internally and there's some potential for external opportunities as well. So I think it's a watch to face to your point, it's going to be probably largely looking at that 25 to 40 kilometers away from the current asset. Where that source is going to be, but we'll do everything that we can to unearth any other opportunities in proximity to Atatepec.
For sure. Maybe as you talked about, a lot of exploration results coming out of Chelopech And as you mentioned, there's quite a few zones that you're targeting at this point in time. David, could you remind us if some of these or these new zones here, are they can they be accessed using the current infrastructure? How far is it once again? I'm trying to picture the long section here, but I tend to forget.
Furthest one away at the moment is, just on a kilometer. So 8 hundred meters to a kilometer away, and that's West Shaft. The flip that we made in prioritization. Typically, we've been working, in the sort of northeast area and southeast area relative to the mine in that where typically things are a little shallower. And we tended to ignore things that are more Southwest.
And West Shasta was noted in the MD and A that that had been something that we'd identified an opportunity, in the last couple of years. But actually, this dates back quite a while where we had a magnetic anomaly we found there all the way back in about 2003 to 2005. So what we did is we when we reprioritized, we took into account a lot of different information that we had and decided that we should be looking a little deeper and relative to Southwest. So at the moment, where we're looking is Southwest that's West Shaft. And we're looking at Wedge, which has been ongoing for a little while now and that continues to be interesting and that's just north of the Chelopech mine, maybe a little northwest And we're also anticipating that we'll be doing some work in Bosdorf, which is just north of which.
So those are the primary areas where we're focusing at the moment. And there continues to be some ongoing work around Crestor as well. But effectively, what we're doing at the moment is we're in the spatter pet care exploration license which is immediately around the Chelopech concession session. I don't know if that's helpful that you wanted to get some clarification on that, Kusmas.
Yes, I think that's good. And then in terms of, David, you just put out your updated reserves for addedtepe. What can you remind us in terms of timing of the reserve update for the other operations, say Chelopech And have you made a determination in terms of what commodity price assumption you're going to use or you're going to about use about the same as you had the template?
Actually, that's a very hot topic. So we basically the Chelopech, as you know, we have process whereby September each year, we cut off exploration information at that point. At this time of the year, what we do is we define those assumptions and finalize those assumptions for purposes of the resource to reserve conversion. That work really takes place with the reserves in January. And what it does is put into a position to report in March, usually just towards the time where we're putting out the AIF.
So it's in the last week of March. With our assets, what we typically do is we only report every 2nd year, even though we do a full MRR update each year. And the reason why we would do it more frequently would be if see a variation of the order of or just above 10%. So we're because we reported in earlier this year for Chelopech, we're not anticipating that we're going to be reporting next year. If we did, that would likely be because there's positive news and we're trending towards being above 10% variance.
So, basically, at a Tepichowethach, what we've done is step them out of sequence. They were both originally planned for an update at that time of year. And we've actually separated them for purposes of smoothing out resources who were applied to this. So we can actually put them into other things like more broad advice into our exploration activities. So I don't know if that's helpful.
Yes. Thanks, David. And then maybe one last question, you're taking a step back, more broader based I'm not as close to it, but I just want some kind of understanding in terms of the COVID-nineteen response in Bulgaria. It looks like it's done fairly well so far. And that's shown in your production guidance that's unaffected But, how is it impacting Bulgaria as a country?
And more on a macro micro basis, how's how is it impacting Dundee Precious Metals, if at all?
Yes. So 2 primary operating jurisdictions are in quite different cycles So Namibia, if you go back 2 months ago, was facing a lot of pressure, primarily from the coastal area and the area around the camp and we were seeing influence of COVID in and around Tsumeb. So now that was not your primary question. You were thinking towards Bulgaria, but what's happened now in Namibia is that it is now the middle of summer or it's getting into summer. It's hot everybody's outside and what they're seeing is a dramatic decrease in the incidence of COVID.
So the pressure is coming off now quite the opposite in Europe, as you've seen from France and Germany and England to have been continuing to have significant struggles. A like to that in Bulgaria, there's been a big increase in incidents. So while we were at the low point perhaps 100 per day, you're now talking about 3,400,000 determinations per day. So it's very significantly different. Now the ultimate consequences of this in terms of those who are most effective, that hasn't risen to the same degree, but regardless there's been a significant increase in pressure, in terms of COVID cases around our assets.
What we've done is we've maintained and actually strengthened our stance on COVID all the way through this. So where other people slide that off and opened up a little bit, we didn't. So, and I think that's really closing with steps. So we have had a number of cases largely where people are related to medical workers or they've been in contact with people and communities they've been identified as contact traced outside of the workplace. And what we do immediately when that is we have people sort of stay at home.
They've got to have at least 2 negative tests and a period of time before we allow them to come back to work. So there has been increasing pressure. It is a concern at the moment, broadly through Europe, Bulgaria, is as affected as anywhere But in terms of our operation, Eylea and team have just been doing an absolutely fantastic job of controlling this by being proactive making sure that we support our people. So they're making the right decision because there's a lot of pressure in the communities to relax standards. Go out and don't wear masks, forget about the hand washing what's that all about.
So maintaining that level of diligence among the workforce. I think has been one of the real things that our team's done extremely well on.
Thanks, David. Congrats again on a very strong Q3 and stay safe.
Thank you. Our next question comes from the line of Don DeMarco from National Bank Financial. Please go ahead.
Hi, David and team. Thanks for taking my question. First off, I wanted to just go back to exploration at Atatepe. The Shasta Al Qaeda it's some pretty good drill results last night from your phase 2 program. She showed some decent grade.
I know it's still early. Can you tell us a little bit more about this? Is it an open pitiable prospect? Is it near road infrastructure? Maybe a little bit about the strike if you have any information on that.
And what do you need from next year's program to confirm this as a potential satellite supplement?
Yeah, all good questions. It's part of the thing that I think would better benefit from having a detailed conversation with our exploration people. What I would say is that we continue to be excited by a number of things that are going on around, atatepe or our Krumovgrad prospect. I think that's increased recently. We were a little concerned about our ability to continue the mine, but I think that's starting to change with some of the opportunities that we're finding.
With Chapel Kaya itself, obviously that's encouraging, but we've seen these types of things before, like with 153, when we first looked at it, it looked exceptionally became a great asset, but not the type of thing that it did first look like. So, we're a little cautious until we get more holes into these things. In terms of road infrastructure, it does look like there's I'm not actually been there actually, but I do believe there's a close proximity to production. I believe it's about 25 kilometers away from our site. So We have been looking at these things to make sure that if we do find them and I'm assuming it's an open pit, that's certainly the assumption so far.
That we would be able to extract that economically, including the road transportation and the treatment at out of Tempe. I think the encouraging thing here was some of the encouraging thing was the grades as opposed necessarily finding something. That was a little different. I would agree. Anyway, I think what we might need to do, Dan, is if you have any particular questions, what we'll do is we'll make sure we take those up with our next meetings.
And have a little bit more content on exploration and the detail around that area.
And my second question is, do you have any guidance for the remaining sustaining CapEx at Tsumeb for Q4. I think year to date, maybe $3,000,000 hasn't been. I think the guidance is somewhere closer to $12,000,000 to $15,000,000 if I have my numbers right.
Jim, did you have a comment for that?
Yes, I mean, the, the balance of sustaining CapEx for Tsumeb will be higher than it was during the first three quarters. But it's not expected to be probably as high as you might expect based on the full year guidance. So I anticipate we'll probably come in a little bit lower lower in the range for the guidance for Tsumeb, but still within the range.
It's fair to say that with, with COVID, what that's affected is the ability to get people to sites. So some of the things that are maybe installed, but not fully commissioned yet are affected by the ability to get people decide. Also, if you have a look at the timing of the shutdowns, that's important because you need to bring materials in and have those at site ready for the shutdown. So of course, We've had a short shutdown, so that spend has already incurred. Now we've got the big shutdown coming up and the preparation is happening now.
So refractory linings in place any ducting that we need to do any of the equipment modifications. So there's reason to believe that the loading will be more towards the back end of the year. However, I think it's also I assume that tends to underspend relative to its guidance on capital.
Okay. Thanks so much for that. That's all for me. Congratulations again.
Thank you. Thank you. And I show our last question comes from the line of Daniel Mackenzie from Rustport Investments. Please go ahead.
Good morning, David, Hume, and another congratulations for a great quarter. With that at TEPI, on Kosmos and Don's question. Very interesting area. The difficulty of course was a long time getting it permitted. So the areas looking down, the areas that you're drilling now, how would you describe as the confidence level you have, if you finding that a deposit, a good chance you will, that you can confirm with that in a lot more reasonable time than in, at a tipping.
So the permitting of Allotepi, of course, was complicated by, being what we had to do to get the social license in that area. And so a large number of years of that time between the inception to actually starting the construction and operation was down to that. In this particular case, we've got an excellent relationship with the area now recognizing that there's different municipalities around Chalote, sorry, chromograft. So having a good relationship in chromograft, it's not necessarily directly translate to others. However, we've got a demonstration of what we can do.
So there's a, a expectation in terms of how long it will take to move things the regulatory process. And then there's a, stakeholder part, which can help either accelerate or at least prevents any drag on that process. So timing is tight. No doubt about it. However, we feel we're well positioned.
And on top of that, there have been some recent changes in the regulations or some clarification shall I put it? I mean, in terms of how you can actually take assets fall with that will primarily benefit Chelopech, but also does benefit in some instances, at atypic. So I would hope that would also translate into any new assets. Around the addedtepe and Chelopech sites.
Okay. And then just
in terms of the resistance for lack of a better word that you had an initial permitting. The I guess the fact you've been mining there for a while and done a good job
the
resistance for anything new being developed, you would expect to be less Is that fair?
I mean initially people are not sure what it is that the perpetual that you do. So somewhat being the having a relationship with a community and then being able to see what it means when we come into the area that we're not just and don't care about the environment or don't care about the water or don't care about the people we're looking at this thing holistically and how do we create a net positive value. And it's very easy now for us to take, people in Bulgaria to individuals who speak their own language who largely data, they have the very same style of living and they can sort of see for themselves the impact that it's had in the relationship that they have with the company and they can do that without the company involved. And I think that's very far when you have, leaders in individual communities and thought leaders able to talk without our influence they can truly get a sense of what happens if they work with us in order to realize these assets, but it does have a broader benefit.
Good to hear. Thanks, David, and congratulations again.
Thank you. This concludes our Q And A session. At this time, I'd like to turn the call back over to Mr. David Grace, CEO, for closing remarks.
Okay, I'd like to thank you all for participating in this call. And we look forward to keeping you updated on our journey at DPM. And with that, have a great weekend. Thank you very much. Bye bye.
Thank you sir. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Good day.