Good day, ladies and gentlemen, and welcome to the Dundee Precious Metals First Quarter 2019 Analyst Conference Call. At this time, As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Janet Reed, Ms. Reed.
You may begin.
Good morning, everyone. I'm Janet, the Manager of Investor Relations, and welcome to Dundee Precious Metals First Quarter Conference Call. With me today are Rick Howes, President and CEO and Hume Kyle, Chief Financial Officer, who will each comment on the quarter as well as David Ray's Chief Operating Officer. Nicholas Vistoff, SVP of Sustainable Development and John Lindsey, SVP Projects, who are here today to assist with answering questions following our formal remarks. After close of business yesterday, we released our first quarter results and hope you've had an opportunity to review our materials.
All forward looking information provided during this call is subject 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 under IFRS and are referred to as non GAAP measures. These measures have no standardized meanings under IFRS and may not be comparable similar measures presented by other companies. The definitions established and calculations performed by CPM 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 2018 pertain to the comparable period in 2018. On this morning's call, Rick will comment on our first quarter operating results, as well as the progress With that, I'll turn the call over to Rick.
Thanks, Janet, and hello, everyone, and thanks for joining us today for our first quarter conference call. I'm pleased to provide you with an update on 1st quarter results and progress on our key projects and initiatives. The underlying performance for the quarter was solid from both operations overall financial results for the first quarter were impacted by several items not reflective of the company's underlying operating performance. With the most significant being a $5,800,000 mark to market adjustment on share based compensation due to the increase in the share price. This resulted in reporting an earnings loss and earnings from both Chelopech and Tsumeb in line with expectations.
With the construction at Krumovgrad now completed and 1st gold concentrate reported in March, We expect to reach commercial production this quarter. This will result in a much stronger second half to the year. With most of the Krumovgrad capital spending now complete, our balance sheet remains strong. At the end of the quarter, we had debt of only $29,000,000, cash of $14,400,000 and an undrawn revolving credit facility of $234,000,000. We expect to start building a cash position in the second half of the year.
We saw a strong quarter on quarter move up in the gold price to an average realized price of $13.01 from 12.28 in Q4. Copper prices were relatively unchanged with an average realized copper price of 2.77. Chelopech produced 43,000 ounces of gold £8,000,000 of at an all in sustaining cost of $8.17 an ounce. The decreases in gold and copper production were primarily due primarily to lower gold and copper per grades, which were as expected and in line with the mine plan. Gold grades are expected to be in this range for the remaining quarters and copper grades are expected to be somewhat higher in the next two quarters.
We have a number of key improvement projects underway this year that will enhance revenues and decrease costs including drill and blast optimization and the transition from Anphol to emulsion explosives, our autonomous drone survey, further mill optimization, move to integrated dynamic planning and execution with MineRP and the introduction of the digital smart center for improved decision making. We continue with our investment in exploration in and around Chelopech to increase resources and reserves. In mine resort, relevant drilling totaled 14,000 meters in the quarter, concentrating on the upper levels of Block 8 and targets 148700. With the aim to expand the current ore body extents and allow conversion of mineral resources into mineral reserves. Further to this, the areas down plunge of Block 147 and Target North were also drilled during the first quarter.
In the regional exploration program around Chelopech a total of 2862 Meters, diamond drilling continued from the underground positions to Pipestone and from surface on the Crafts approach that located 2 Kilometers Northeast of the mine. Crafts now has 18 of 19 hole drilled drilled hitting a mineralization in a new zone of shallow copper gold mineralization over a strike length of three hundred meters between 1 thirty and five hundred meters from surface. This will be further tested with drilling this summer to determine the uptick extent toward surface as a potential open pit resource. At Tsumeb, complex 2822 tons. This is a record 1st quarter performance where seasonal grid power grid instability during the rainy season typically impacts operations, a concern that was successfully mitigated with a number of measures taken.
With continued improvements in temperature stability of the furnace operations, we anticipate achieving a record 18 month lining life between rebuilds. Which would mean the annual maintenance shutdown would occur in Q4 2019 and would not see a major maintenance shutdown again in 2020. Cash cost per ton of complex concentrate smelted net of byproduct credits during the first quarter of 2019 of $3.70 was 129 lower than the corresponding period in 2018 due primarily to higher volumes of complex concentrate smelted and the results of a number of cost savings initiatives sits. We continue to make progress reducing the secondary copper inventories that accumulated during the construction and commissioning of a new asset plan in copper converters. We've now reduced inventories by 2 thirds from the peak level in 2016.
This reduction will continue through 2019 and will result in a reduction in stockpile interest allow higher throughput capacity for fresh concentrates. We continue to advance the smelter expansion project to increase throughput of complex concentrate to as much as 370,000 tons per annum. The feasibility study was completed in the 4th quarter 2016 and confirmed the robust project economics with an estimated implementation capital cost of approximately $52,000,000. The scope of the project includes the rotary holding furnace, additional cooling and other upgrades to the Ausmelt furnace, as well as upgrades to the slag mill area. Work to secure the necessary permits to support this planned increase in production is progressing.
We will submit an updated ESIA for approval this quarter. Discussions are ongoing from potential new sources of complex concentrate fee to fill this expanded capacity. As of March 31, 2019, construction of the Krumovgrad project was substantially completed. 1st concentrate production was achieved in March as planned. Bining of ore and waste continued through the first quarter of 2019 with 71,000 tons of waste and 16,000 tons of ore blast and excavated.
Or was held to the ore stockpile on 600 tons of low grade ore was fed to the plant during the Oster Mission process. Currently, the ramp up to commercial production is going well. We are still feeding lower grade material through the plant. We are now running around the clock operations throughput is already achieving the design rate. We're now achieving 60% to 70% of target recoveries with several days actually hitting the target.
Which is actually faster than sale with tailings in the IMWF of the Integrated Mine Waste Facility is completed and will now be monitored to confirm the design consolidation rate. D mobilization of site construction crews is underway. Spending of $152,000,000 has been incurred to the end of March, with an additional $12,000,000 to $14,000,000 forecast spending remaining to complete. The aggregate cost of the project is now expected to be between 1 $64,000,000 $166,000,000 compared to the original estimate of $178,000,000. Exploration has identified a number of satellite deposits within a few kilometers of Krumovgrad.
We completed these 2 drilling program for the Cernac satellite deposit located 4 kilometer to the west of Grumor Grad open pit in Q4. A to complete this work and release the results in Q3. Drilling on the other nearby satellite deposits will continue in 2019 to look to extend the life of the Krumovgrad project. During the first quarter of 2019, geological mapping trenching and soil sampling were carried out to define additional gold targets on the tier right Heloval and Lada expiration licenses. At the Chateaukaya high grade vein prospect on the Qurate license, Approximately 25 Kilometers Northeast of Krumovgrad, a 3 1000 meter drill campaign will commence in the 2nd quarter.
On September 24, 2018, we announced the results of the updated mineral resource estimate for the Timok gold project in Serbia. This included total indicated mineral resources of 46,900,000 tons at 1.32 grams gold of 1,996,000 ounces. It includes oxide indicated mineral resource of 21,800,000 tons at one point 06 grams of gold for 742,000 ounces of gold and transitional indicated mineral resources of 9,200,000 tons at 1.15 grams gold, 338,000 ounces. Net changes compared to the 2017 Mineral Resource estimate showing a 35% increase in tons a 16% increase in contained ounces. The increase in indicated mineral resources compared to the 2017 mineral resource estimate.
Attributable to the updated interpretations of the oxide and transitional weathering domains and better recoveries indicated from the vertical column lease test processing oxide and transitional material. The inclusion of oxide and transitional mineralization within the conceptual pit optimization study has lowered cutoffs, which in turn has increased the constrained mineral resources. Based on this updated mineral resource estimate, We have initiated a scoping study for TMOC and depending on the results of the scoping study, we expect to release a preliminary economic assessment in this quarter. These studies will focus on the initial economics of the oxide and transitional material to be constrained in separate open pit shells as well as the potential for subsequent development of the sulfide resource. Development of a permitting approvals plan incorporating the ESIA process and approvals as well as all additional permits and approvals was initiated in the fourth quarter of 2018.
Following the positive results from a metallurgical test work program conducted on the Timok Oxite and traditional samples during the first quarter of 2018, further samples collected from the various domains and submitted for metallurgical test work during the fourth quarter. Results from this test work program will be included in the scoping study. Exploration plans for 2019 are being developed to identify additional high quality targets to expand the near surface oxide resources. At the bigger hail and corkin deposit, results from near service drilling during the second And Third quarters of 2018 indicated good potential for additional resource outside the new resource model. Results of holes drilled to the West of Bigar Hill mineral resource intersected twenty eight meters at three grams gold from eighty five meters down the hole.
On the northeast side of the bigger hill deposit, we intersected thirty five meters at two grams gold from two forty meters downhole in oxidized and strongly brecciated cretaceous limestone. At the corkin deposit located 25 to 50 1 Meters North of the mineral resource. We intersected 2 intervals, including sixteen meters at one point 7 grams gold in oxidized section from 65 to 81 Meters Downhole, followed by 21 Meters of 0.7 grams from 93 to 114 meters in a transitional section. These drill results will be followed up in the summer of 2019 drill program, which will include holes for geotechnical hydrogeological data, to support the prefeasibility study. Our first testing of the use of AI for exploration targeting will be with the TMOP data set.
This work is underway with the first targets generated expected to be this quarter. On the Marptic joint venture, diamond drill program consisting of 5800 Meters and 9 holes started in early March 2019. Drilled targets occur along the Park Peru gold bearing deformation zone at the Revillard and Malrobic prospects. And near last year's intersections of 5.5 grams gold over two meters and 7.2 grams gold over 3.3 meters. The targets are being tested both laterally and at approximately 3 to 4 hundred meters from the surface.
Total of 3700 and 774 Meters in six holes was completed by the end of March. During the second quarter of 2019, the drill program will be completed. Results will be interpreted and the summer exploration program, including validation of soil anomaly, identified last fall will be planned. Platform designed for the mining industry. We ourselves are adopting MineRP as well as many other digital technologies to transform our business.
The intent we have with minor B is to introduce new planning enhancements and enable the intelligent use of data. Key benefits expected from this initiative are data unification to single platform, rapid parametric life of mine planning and sequencing, real time monitoring of performance plan versus actual to better respond to interruptions and better decision making. And MyRP is making good progress at introducing this unique platform that marries the science of mining to the business of mining to the mining industry with good interest and uptake. 6 major international companies have signed on to this new software platform and the company is in advanced discussions with 12 other companies. We expect growth in revenues and earnings to begin in the second half of twenty nineteen.
The strong results from Tsumeb and Chelopech along with the ramp up of production that is now underway at Grumberg reflects the exceptional progress our team has made to improve the the performance of our operations and advance our growth projects. Tsuma continued to improve and contribute a free cash flow of our business. Further upside possible by increasing throughput and reducing costs from our Krumovgrad project beginning in second half of this year, we represent a real growth and value investment opportunity for investors. We expect to build a cash position, which will start this year and grow rapidly over the next several years. In discussion with our board, we have adopted a disciplined allocation framework capital allocation framework that will balance reinvestment in the business while returning capital to shareholders once we are in a position to do so.
Thank you. I'll now turn the call over to Hume, who will review the financial results and our 2019 guidance following which we will open the floor to questions.
Thanks, Rick. From an earnings perspective, DPM reported adjusted net loss of $0.01 per share relative to Nil in 2018 and adjusted of EBITDA of $17,000,000, down from $20,000,000 in 20 18. These decreases were driven And the first instance, by the mark to market impact associated with EPM's strong performance, which accounted for substantially all the shortfall relative to consensus estimates. As well as higher treatment charges higher cost gold copper concentrate produced and sold as a result of lower copper grades. And these were partially offset by higher volumes, Tsumeb, higher volumes of payable gold sold from Chelopech and a stronger U.
S. Dollar. From a cash flow perspective funds from operations during the quarter, was $16,000,000 compared to $18,000,000 in 20.18, while free cash flow was $10,000,000 compared to $11,000,000 in 20.18. These changes were impacted by essentially the same factors that impacted adjusted EBITDA with the exception of free cash flow was also impacted by lower cash outlays for sustaining capital. Our site cost measures were down both at Chelopech and Sumeb with respect to per ton metrics, reflecting continued solid performance and in the and a stronger U.
S. Dollar in the case Tsumeb higher throughput and an ongoing focus, to reducing costs. Our all in sustaining cost was 8 $17 for the quarter, up $121, reflecting the higher cost gold copper concentrate produced and sold as a result of the lower copper grades and the mark to market impact associated with the strong share performance from GBM during the quarter, and these were partially offset by higher gold grades and a stronger U. S. Dollar.
With respect to capital, sustaining growth capital expenditures for the quarter were $2,000,000 $18,000,000, respectively, for an aggregate spend of $20,000,000, down from $30,000,000 in 20 18, due primarily to the lower spend at Krumovgrad and the timing of each site sustaining capital expenditure plans. At March 31, our financial position was strong with $248,000,000 in cash resources, with the Krumovgrad production now ramping up and DPM shifting towards a period of significant free cash flow generation, we're currently in process of executing several amendments to the long term credit facility that among other things will extend the facility to 2022, reduce borrowing costs and reduced aggregate size of the facility from $275,000,000 to $175,000,000. These amendments are expected to fully executed in May 2019. From a risk perspective, we've also entered into a series of hedges in respect of the $1,000,000 reduce Tsumeb's exposure to foreign currency movements and to lock in a rate that supports free cash flow generation for the operation at March, we'd hedged approximately 80 percent of Tsumeb's, Namibian dollar operating costs over the balance of the year. Using a 0 cost option strategy that provided for, on average, a minimum of a maximum exchange rate of $14.46.
Also hedged approximately 25 percent of Tsumeb's 2020 Namibian operating exposure using a similar strategy that on average provided minimum and maximum exchange rate of 14.4716.09. This contrast to a spot rate today of 14.20. During the quarter, we also amended our prepaid support the construction of the Krumovgrad project. This amendment essentially shifts when the project is expected to be fully ramped up and provides an ample cushion in the event we experienced any unforeseen delays. As a result, deliveries are scheduled that were scheduled originally from May to October will now be delivered from November 19 to April 2020.
Such that in aggregate, 46,210 ounces will now be delivered over a 15 month period commencing in November 2019, representing approximately 14% of our expected gold deliveries during that period. Approximately 75% of the deliveries occurring in 2020. In terms of our outlook for 2019, we're on track to achieve all of the stated targets. And as our guidance remains unchanged from the guidance we issued in February 2019, but the only caveat being that we narrowed the range of the Krumovgrad forecast construction costs. In closing, the Krumovgrad operational, as Krumovgrad moves towards a pull operation, in the second quarter, we're entering a period of significantly higher gold production and free cash flow.
And we expect to see continued strong performance in our share price As Rick said, this is going to provide the opportunity to fully strengthen our financial or to further strengthen our financial position as there's no doubt having a certain amount of cash in today's cap constrained market is a good thing. It'll also provide the opportunity to reinvest in our business, not only to sustain, but to grow in a disciplined and accretive manner. And to potentially introduce a sustainable dividend that returns a portion of cash to our shareholders without compromising our financial strength. For our ability to sustain and grow the business. With that, I'll turn the call back over to the operator.
Thank you. You. Our first question comes from Jacob Willoughby of Beacon Securities.
Congrats on a great quarter, especially considering the lower copper and gold grades. I have two questions. My first one about Tsumeb from what I can see, it had a great quarter, did $3,200,000 in net earnings versus a loss of 4.7% in the year ago quarter. Is that something that you expect to sort of continue for the rest of the year?
Hi, Jake. This is David Ray. Yes, we anticipate that the current level of performance is going to continue. If you look back in the last few quarters, you've seen basically a reset in the level of production app to assume that we do anticipate that would continue. It's largely the production rate that influences what happens financially if it's not.
Great. Okay. And then of course, that's net of the Namibian dollar exchanges and your hedges and everything like that?
Yes. As Dave said, the real contributors year over year were really, volume followed by currency. As well as just lower deductions for stockpile interest, a bit more secondaries. We've had better metal exposure experience. So we're actually experiencing as opposed to losses that we've had in the previous years.
And we're also benefiting from, more favorable asset prices.
Right. And then my only other question was just on the G and A increasing from 9 point to 13.36. You mentioned that the, MineRP is included in there, but the cost this year on minor peer actually lower. So does that higher G and A include the stock based compensation?
Yes. I mean, the stock based compensation is essentially all of the increase. Like the I think the actual impact in the quarter was a little over $5,000,000 or $0.03 per share.
Thank And I'm not showing any further questions at this time. I would now like to turn the call back over to Rick House for any further remarks.
Yes. Thank you very much. So just wish everybody a great Mother's Day weekend. And thank you.
Thank you. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone, have a wonderful day.