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, all participants are on a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you would need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker today, to Jennifer Cameron, Director of 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 Rae, President and CEO, and Hume Kyle, Chief Financial Officer. After the close of business yesterday, we released our third quarter results, and 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&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 Rae.
Thanks, Jennifer. Good morning, and thank you all for joining us. As you would've seen from our earnings release last night, I'm pleased to report that DPM delivered another exceptional quarter, with strong gold production and cost performance driving record financial results. Highlights of our third quarter results include strong operating performance at our Chelopech and Ada Tepe mines, which resulted in production of 80,000 ounces of gold and 9.2 million pounds 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 $640 per gold ounce. A strong operational performance, combined with higher gold prices, generated record net earnings, adjusted EBITDA, and $59 million of free cash flow for the quarter.
It's important to highlight, as Hume will also note, that our record free cash flow was after delivery on our prepaid gold facility of approximately 7,000 ounces in the quarter. With 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. It goes without saying that this has been a challenging year around the world as a result of the COVID-19 epidemic. To date, we've not experienced any material disruptions to our operations, and we continue to manage the situation by prioritizing the health and safety of our workforce 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 Ada Tepe. Since ramping up to full production last year, our operating team at Ada Tepe 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, Ada Tepe produced approximately 30,000 gold ounces, which exceeded planned levels as a result primarily of strong gold grades, but also a higher volume of ore treated. With cash costs of $34 per ton of ore processed during the quarter, cost performance was also better than anticipated for reasons which Hume will discuss shortly. Ada Tepe 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 Ada Tepe, which incorporated over 91,000 meters of close-spaced 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 Ada Tepe. The optimized mine plan reflects a higher grade in recovered gold ounce profile relative to the original mine plan. It supports our three-year outlook for the operation and maintains production to 2026 and highlights Ada Tepe's potential to drive strong operating results within our portfolio. We look forward to publishing an updated technical report for Ada Tepe later this month.
We're continuing with our exploration efforts around Ada Tepe with approximately 8,000 meters planned at Surnak and two other satellite deposits in the fourth quarter, in addition to the 8,000 meters already completed for this year. Additional exploration activities this year have focused on target delineation and resource definition drilling of epithermal veins on the Chirite license, which is located approximately 25 kilometers northeast of Ada Tepe, where we've completed 6,000 meters this year.
As we look out to next year, we plan to drill approximately 32,000 meters at Ada Tepe with a focus on delineation of additional resources within the mine license and on advancing other prospective targets on regional licenses. Turning to Chelopech. Chelopech continued its track record of consistent performance, producing approximately 50,000 ounces of gold and 9.2 million pounds of copper. Gold production was higher than expected due to higher recoveries in pyrite concentrate, and copper production was as expected.
Cash cost 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 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 8,000 meters of drilling planned for the fourth quarter. In the third quarter, we commenced an intensive diamond drilling program at the West Shaft Prospect. This is a new target located approximately one kilometer southwest of the Chelopech Mine. It 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 targets 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 off-gas system. This was effectively two one-week shutdowns, which we brought together in the third quarter. We'd done that for various reasons, one of which, the 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 Ausmelt furnace reline, which is currently scheduled to occur in the first quarter of 2021.
In 2020, Tsumeb is recognizing its 10th anniversary as a DPM operation. Since we acquired the smelter in 2010, we've made substantial investments to significantly improve the health, safety, and environmental performance and standards. We're 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. In fact, we expect 2020 to be a record year for Tsumeb, both operationally and financially, with the smelter on track to meet its guidance. In terms of future growth, our Timok project in Serbia continues to advance.
Earlier this year, we initiated a pre-feasibility 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 completion 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 for our shareholders and other stakeholders.
With a strong third quarter set of results, we've demonstrated our ability to deliver significant free cash flow and our commitment to deploying this capital in a disciplined manner. Earlier this year, we were pleased to announce an inaugural dividend of $0.02 per share, a quarterly level we believe to be sustainable based on our free cash flow outlook, and yesterday announced a fourth quarter dividend payable on January 15th, 2021 to shareholders of record as of December 31st, 2020. It's the demonstration of our commitment to delivering superior returns 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 years.
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-19 pandemic, while also maintaining the continuity of our operations. Our growing gold production profile and free cash flow generation, combined with our unique skills in 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 million, or $0.28 per share, representing an increase of $0.26 compared to 2019. Adjusted EBITDA was $85 million, up $52 million compared to 2019. Adjusted net earnings for the first nine months of 2020 were $143 million or $0.79 per share, representing a $0.69 increase compared to the prior year. Adjusted EBITDA was $241 million, up $158 million compared to 2019. Reported net earnings, in all periods were slightly higher, reflecting mark-to-market gains related to Sabina's special warrants that we hold.
Relative to 2019, these results benefited from significantly higher volumes of gold sold, reflecting an impressive startup at Ada Tepe that generated higher production in grades than we'd 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 US dollar. From a cash flow perspective, cash flow from operating activities in Q3 and year-to-date were $42 million and $127 million respectively, compared with $23 million and $47 million in 2019, and reflected the same factors that drove increased earnings, partially offset by an increase in working capital.
This increase reflected longer settlement terms for our Ada Tepe sales, normal course timing issues with respect to a late shipment in the quarter, which resulted in approximately $25 million 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, were $70 million and $194 million in Q3 and year-to-date respectively, compared to $32 million and $77 million in 2019. This solid performance translated into record free cash flow of $59 million and $167 million in Q3 and year-to-date, compared to $21 million and $55 million in 2019.
This includes the delivery of 7,000 and 27,000 ounces of gold in Q3 and year-to-date respectively, in respect of our prepaid forward gold sales arrangement, resulting in approximately $10 million and $37 million of deferred revenue being recognized in earnings with no corresponding contribution to cash flow. In the fourth quarter, we will deliver the remaining 7,000 ounces due under this arrangement. Our all-in sustaining cost per ounce for the quarter and year-to-date was $640 and $655 respectively, down 14% and 13% from 2019, due primarily to lower cost production from Ada Tepe and higher by-product credits, partially offset by higher Chelopech treatment charges, higher G&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 and $369 respectively, down 21% and 10% from 2019, due primarily to higher volumes of complex concentrates smelted as a result of steadier 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-19, as well as a weaker ZAR and higher acid deliveries, partially offset by lower acid prices. From a capital expenditure standpoint, total capital expenditures in the quarter and year-to-date were $13 million and $35 million respectively. Sustaining capital expenditures for the quarter and year-to-date were $12 million and $30 million, up $1 million and $11 million from 2019 levels, reflecting the investments we are making to extend the life of Chelopech's tailings management facility, as well as the higher CapEx associated with the start-up of Ada Tepe.
Growth capital expenditures for the quarter and year-to-date were $1 million and $5 million respectively, down $1 million and $30 million from 2019. Year-to-date decrease, of course, is due to the fact that we completed construction at the Ada Tepe mine. Following another quarter of strong free cash flow, we ended the quarter with available cash resources of approximately $252 million. This was comprised of a cash position of $102 million, together with $150 million 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 INV, which together are valued at approximately $76 million. We also have a 70% fully diluted interest in MineRP, which puts an aggregate value on these investments of well over $100 million.
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 that for the balance of 2020 and for 2021, we are approximately 82% and 84% hedged, and we've used zero cost collars to do so. Looking forward, we continue to focus on increasing the profitability of the business by optimizing our existing assets. As Dave commented on earlier, we are on track to meet or outperform previously issued 2020 guidance. With strong operating performance from Ada Tepe and Chelopech in the first nine 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 $650-$720 per ounce of gold from the previously issued guidance of $700-$780, reflecting excellent cost performance year-to-date. Mine costs at Chelopech are tracking our guidance, and at Ada Tepe, year-to-date costs were below the current guidance of $44-$50, which was lowered from $50-$60 in July. We expect Ada Tepe costs 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 expense 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 US dollar.
Year-to-date and forecast capital expenditures are in line with guidance. Our longer-term outlook covering 2021 and 2022, which can be found in the three-year outlook section of our MD&A, remains unchanged from what we issued in February, with the exception of Ada Tepe's 2021 outlook for sustaining capital expenditures, which are now expected to be between $15 million and $19 million, up from our previously issued guidance of $4 million to $5 million.
This increase is due primarily to accelerating grade control drilling, 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 Ada Tepe sustaining capital expenditures in 2022 remains unchanged at $4 million-$5 million. In closing, with continued significant free cash flow being generated from our business, a solid outlook for 2021 and 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 in 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 back to the operator.
Thank you, sir. As a reminder, to ask a question, you would need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. 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 Ada Tepe. Why are they coming in so far below your guidance?
Hume, did you want to pick that up?
Yeah, well, I can start. One factor that is impacting the Ada Tepe 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. 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-$5 per ton. It's affected the 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. That's one factor, both for the quarter and for the year. 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 control drilling would typically be done for the year ahead of current production. With the asset being fairly small and constrained, there was a significant risk of interference or alternatively, the need when we're doing push backs to be reducing production. What we recognized was that by getting the grade control done early, that would feed into our 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 one year from now, two and three years from now. Therefore we felt it was sensible to accelerate the grade control drilling.
We've been talking about this for a year, but because instead of it just being the year ahead, in which case we would expense it, now we're talking multiple years ahead. We felt it sensible to move that into capital. That's why we did that. The impact actually in the quarter is even more than the $5, is as much as $10 a ton. As Hume was saying, the direct material costs, the reagents, grinding material, 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 and 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. 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 this team on focusing on how to get optimization of the recovery of this asset, including grade control, and not in terms of the drilling, but how they actually manage that at the site in terms of dilution and in terms of losses. That's also benefited us with the grades that are going to the mill. 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. They really are doing a great job there. Can I switch gears and ask about Timok for a second? It sounds like the sulfides are going to, as you said, benefit from additional work. Can you elaborate on what that additional variability work is? 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 that?
Sure. Hi, Dalton. That's correct. The sulfide is going to be subject of additional variability test work after the pre-feas. 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. 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, 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 feas.
Okay, great. Maybe just one last one for me. This one's for you, David. 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. I'll ask Hume to comment as well. It's a discussion at 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 go about assessing what is the appropriate level of return. At this point, yes, we do have buyback opportunities. At this share price, I don't think that's something that we would readily exercise. It's down to investment in improvements within the operations to generate returns. It's down to exploration. As you'll see, we're being more aggressive on exploration. It's down to dividends. It's down to what we might do in terms of growth.
Whether it's organic like Timok or whether it's the potential for us to invest further and potential M&A activity in terms of supporting our future growth as we get five years and beyond as an organization. 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. That's understood, and it is a point of conversation. It's happening on a regular basis, so I would say it's being discussed quarterly, but I think the intent is to come into some type of routine so that there can be an expectation of when that's going to be.
I believe we're moving away from the concept of supplementary dividends to it being a more routine review of what that level is. That would be my comment. Hume, 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. 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. Certainly with current prices, and should they prevail, it would provide the opportunity to increase that dividend further, no doubt. We instituted it at a level we knew we were comfortable with. 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 sustain.
We do not want to be changing our dividend on a quarter-over-quarter basis. We're monitoring the market closely in terms of what's 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. 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 or early next year as being something 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 Scotiabank. Please go ahead.
Hi, Dave and Hume. I had maybe a little bit of a follow-on on Dalton's questions about the Ada Tepe 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.
Yeah. 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.
I guess just kind of a small question with respect to that. Your all-in sustaining cost guidance, you made a note that it does incorporate some allocation for, say, corporate G&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. Looking at the revenue generation of each of our businesses, assume Ada Tepe and Chelopech, that would dictate it. Roughly speaking, I don't have it right off the tip of my tongue, but let's say two-thirds, 70% of the G&A costs would be allocated between Ada Tepe and Chelopech.
I misunderstood. I was thinking only a portion of the G&A was being allocated down. What you're saying is it's 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 for years.
Yeah. No, that makes sense. One very last small housekeeping item. Do you still pay a dividend to your partner in Namibia, I think it's called Greyhorse Mining? 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 annual. The minimum dividend, as you may recall, for the first five years, is $500,000, so it's not that much. $200,000 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. Between those two things, all of the dividend for 2020 has already been paid out. There won't be anything paid out in Q4.
Okay. That's all I had. Thanks, guys.
Thank you.
Thank you. Our next question comes from the line of Cosmos Chiu from CIBC. Please go ahead.
Hi. Thanks, David and Hume. Happy Friday the 13th, I guess. Great to see that you've improved on your cost guidance. Maybe my first question is on Ada Tepe here. Going back to the technical report that you put out earlier on in October, good to see that it confirms the three-year guidance. With that said, the number of ounces stayed about the same. The mine life stayed about the same. 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. What's the potential here? Is it from the satellite deposits, or is it an extension of the current Ada Tepe deposit itself?
If I look at my field notes from 2019 when I went to site, I guess, Ada Tepe, it looks like a lot of mineralization was in the sedimentary package. A lot of it was also in the contact between a metamorphic package and a sedimentary package. Is that still the interpretation at this point in time?
I don't think anything's changed in the interpretation, Cosmos Chiu. 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. We are putting more and more energy into those areas around Ada Tepe. 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. 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. Ada Tepe, 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 Ada Tepe at the moment, as you'll notice in some of the recent disclosure of results. 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 the life of mine at Ada Tepe. 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 to be able to do some things. It may be internally, and there's some potential for external opportunities as well. I think it's a watch this space.
To your point, it's gonna be probably largely looking about 25 to 40 km away from the current asset where that source is gonna be. We'll do everything that we can to unearth any other opportunities in proximity to Ada Tepe.
Mm-hmm. 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 new zones here, 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. 800 m 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, and that's where typically things are a little shallower. We've tended to ignore things that are more southwest. West Shaft was noted in the MD&A that that had been something that we'd identified an opportunity in the last couple of years. Actually, this dates back quite a while where we had a magnetic anomaly that we found there all the way back in about 2003 to 2005. What we did is 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 southwest.
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. We're also anticipating that we'll be doing some work in Vozdol, which is just north of Wedge. Those are the primary areas where we're focusing at the moment, and there continues to be some ongoing work around Krassen as well. Effectively, what we're doing at the moment is we're in the Sveta Petka exploration license, which is immediately around the Chelopech concession. I don't know if that's helpful, if you wanted to get some clarification on that, Cosmos.
Yep. I think that's good. In terms of, David, you just put out your updated reserves for Ada Tepe. Can you remind us in terms of timing of the reserve update for the other operations, say, Chelopech? Have you made a determination in terms of what commodity price assumption you're going to use? Are you going to use about the same as you had for Ada Tepe?
Actually, that's a very hot topic. Basically, with Chelopech, as you know, we have a 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 pace with the reserves in January. What it does, it puts us 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 second year, even though we do a full MRR update each year. The reason why we would do it more frequently would be if we see a variation of the order of or just above 10%.
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.
Basically, Ada Tepe, Chelopech, what we've done is we've stepped them out of sequence. They were both originally planned for an update at that time of year. We've actually separated them for purposes of smoothing out our resources that were applied to this so we can actually put them into other things, like more broad advice into our exploration activities. I don't know if that's helpful.
Yep. Thanks, David. Then maybe one last question here, taking a step back, more broader based. I am not as close to it, but I just want some kind of understanding in terms of the COVID-19 response in Bulgaria. It looks like it has done fairly well so far, and that is shown in your production guidance that is unaffected. How is it impacting Bulgaria as a country and, more on a micro basis, how is it impacting Dundee Precious Metals, if at all?
Yeah. Two primary operating jurisdictions are in quite different cycles. Namibia, if you go back two months ago, was facing a lot of pressure, primarily from the coastal area and the area around the capital. We were seeing influence of COVID in and around Tsumeb. I know that was not your primary question. You were thinking towards Bulgaria. 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. What they're seeing is a dramatic decrease in the incidence of COVID. The pressure's coming off. Now, quite the opposite in Europe, as you've seen from France and Germany and England, who've been continuing to have significant struggles. Alike to that, in Bulgaria, there's been a big increase in incidents.
While we were at the low point, perhaps 100 per day, you're now talking about 3,000, 4,000 determinations per day. It's very significantly different. The ultimate consequences of this in terms of those who are most affected, that hasn't risen to the same degree. 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. Where other people slacked that off and opened up a little bit, we didn't. I think that's really put us in good stead. We have had a number of cases, largely where people are related to medical workers, or they've been in contact with people in communities. They've been identified as contact traced outside of the workplace.
What we do immediately when that happens is we have people sort of stay at home. They've got to have at least two negative tests and a period of time before we allow them to come back to work. There has been increasing pressure. It is a concern at the moment broadly through Europe. Bulgaria is as affected as anywhere else. In terms of our operation, Iliya 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 decisions, because there's a lot of pressure in the communities to relax standards. Go out, don't wear masks, forget about the hand washing. What's that all about? Maintaining that level of diligence among the workforce, I think, has been one of the real things that our team's done extremely well at.
Thanks, David. Congrats again on a very strong Q3. Stay safe.
Thank you.
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 Ada Tepe. The Çatalkaya prospect, it's some pretty good drill results last night from your Phase Two program, shows some decent grade. I know it's still early. Can you tell us a little bit more about this? Is it an open-pittable prospect? Is it near road infrastructure? Maybe a little bit about the strike, if you have any information on that. What do you need from next year's program to confirm this as a potential satellite supplement?
Yeah, all good questions. The type of 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 Ada Tepe or our Krumovgrad prospect. I think that's increased recently. We were a little concerned about our ability to continue the mine. I think that's starting to change with some of the opportunities that we're finding. With Çatalkaya itself, obviously that's encouraging. We've seen these types of things before, like with Block 153, when we first looked at it looked exceptional. It became a great asset, not the type of thing that it first looked like. We're a little cautious until we get more holes into these things.
In terms of road infrastructure, it does look like I've not actually been there, actually, but I do believe there's a close proximity to construction. I believe it's about 25 km away from our site. 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 Ada Tepe. I think the encouraging thing here was the grades, as opposed necessarily finding something. That was a little different, I would agree.
I think what we might need to do then 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.
Okay. Thank you for that. 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 million has been spent. I think the guidance is somewhere closer to $12 million-$15 million, if I have my numbers right.
Hume, did you have a comment for that?
Yeah, the balance of sustaining CapEx for Tsumeb will be higher than it was during the first three quarters. It's not expected to be probably as high as you might expect based on the full year guidance.
Okay.
I anticipate we'll probably come in a little bit lower in the range for the guidance for Tsumeb, but still within the range.
Okay, perfect.
It's fair to say that with COVID-19, what that's affected is the ability to get people to site. Some of the things that are maybe installed but not fully commissioned yet are affected by the ability to get the right people to site. 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. Of course, we've had a short shutdown, so that spend is already incurred. Now we've got the big shutdown coming up and the preparation is happening now. Refractory lining's in place, any ducting that we need to do, any of the equipment modifications. There's reason to believe that the loading will be more towards the back end of the year.
I think it's also recognized Tsumeb 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. I show our last question comes from the line of Daniel McConvey from Rossport Investments. Please go ahead.
Good morning, David, Hume, and another congratulations for a great quarter. With Ada Tepe on Cosmos and Don's question, very prolific, very interesting area. The difficulty, of course, was the long time getting it permitted. The areas you're looking now and the areas that you're drilling now, how would you describe is the confidence level you have if you find another deposit? Good chance you will, that you can permit that in a lot more reasonable time than Ada Tepe.
The permitting of Ada Tepe, of course, was complicated by what we had to do to get the social license in that area. 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 Çatalkaya, sorry, Krumovgrad. Having a good relationship in Krumovgrad does not necessarily directly translate to others. However, we've got a demonstration of what we can do. There's an expectation in terms of how long it will take to move things through the regulatory process. There's a stakeholder part which can help either accelerate or at least prevent any drag on that process. Timing is tight, no doubt about it. However, we feel we're well positioned.
On top of that, there have been some recent changes in the regulations or rather some clarification, should I put it, in terms of how you can actually take assets forward that will primarily benefit Çatalkaya, but also does benefit in some instances Ada Tepe. I would hope that would also translate into any new assets around the Ada Tepe and Çatalkaya sites.
Okay, just in terms of the resistance, for lack of a better word, that you had in initial permitting. I guess the fact you've been mining there for a while and have done a good job, the resistance for anything new being developed, you would expect to be less. Is that fair?
Initially people are not sure what it is that they're prepared to let you do. Somewhat, being there and 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 there 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. It's very easy now for us to take people in Bulgaria to individuals who speak their own language, who largely day-to-day have the very same style of living, and they can sort of see for themselves the impact that it's had and the relationship that they have with the company. They can do that without the company involved.
I think that's very powerful 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, that it does have a broader benefit.
Okay. Good to hear. Thanks, David, and congratulations again.
Thank you.
Thank you. This concludes our Q&A session. At this time, I'd like to turn the call back over to Mr. David Rae, 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. 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.