Good day, ladies and gentlemen, welcome to the Dundee Precious Metals first quarter 2019 analyst conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star then 0 on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Janet Reid. Ms. Reid, you may begin.
Good morning, everyone. I'm Janet, the Manager of Investor Relations, 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 Rae, Chief Operating Officer, Nikolay Hristov, SVP of Sustainable Development, and John Lindsay, SVP of 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 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 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 being made on our capital projects and exploration programs for the quarter.
Hume will provide an overview of our first quarter financial results. With that, I'll turn the call over to Rick.
Thanks, Janet. Hello everyone, and thanks for joining us today for our first quarter conference call. I'm pleased to provide you with an update on first 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 $5.8 million mark-to-market adjustment on share-based compensation due to the increase in the share price. This resulted in reporting an earnings loss per share of $0.01 and a cash flow per share of $0.09. We saw good Q1 performance and earnings from both Chelopech and Tsumeb in line with expectations. With the construction at Krumovgrad now completed and first 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 million, cash of $14.4 million, and an undrawn revolving credit facility of $234 million. 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 $1,301 from $1,228 in Q4. Copper prices were relatively unchanged, with an average realized copper price of $2.77. Chelopech produced 43,000 ounces of gold and 8 million pounds of copper at an all-in sustaining cost of $817 an ounce. The decreases in gold and copper production were due primarily to lower gold and copper 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 ANFO to emulsion explosives, our autonomous drone surveying, 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 resource development, drilling totaled 14,000 meters in the quarter, concentrating on the upper levels of Block 8 and targets 148 and 700, with the aim to expand the current ore body extents and allow conversion of mineral resources into mineral reserves.
Further to this, the area's 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 2,862 meters diamond drilling continued from the underground positions along the one and a half kilometer long southeast Precipice zone and from surface on the Krasta project, located 2 kilometers northeast of the mine. Krasta now has 18 of 19 holes drilled, hitting a mineralization in a new zone of shallow copper gold mineralization over a strike length of 300 meters between 130 and 500 meters from surface. At Tsumeb, complex concentrates melted during the quarter of 2019 was 62,822 tons.
This is a record first quarter performance, where seasonal 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 concentrates smelted net of byproduct credits during the first quarter of 2019, of $370, was $129 lower than the corresponding period in 2018, due primarily to higher volumes of complex concentrates smelted and the results of a number of cost savings initiatives. We continue to make progress reducing the secondary copper inventories that accumulated during the construction and commissioning of the new acid plant and copper converters.
We've now reduced inventories by two-thirds from the peak level in 2016. This reduction will continue through 2019 and will result in a reduction in stockpile interest and allow higher throughput capacity for fresh concentrates. We continue to advance the smelter expansion project to increase the throughput of complex concentrate to as much as 370,000 tons per annum. The feasibility study was completed in the fourth quarter of 2016 and confirmed the robust project economics, with an estimated implementation capital cost of approximately $52 million. 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 for potential new sources of complex concentrate feed to fill this expanding capacity. As of March 31st, 2019, construction of the Krumovgrad project was substantially completed. First concentrate production was achieved in March as planned. Mining of ore and waste continued through the first quarter of 2019, with 71,000 tons of waste and 16,000 tons of ore blasted and excavated. Ore was hauled to the ore stockpile, and 600 tons of low-grade ore was fed to the plant during the hot commissioning 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, and throughput is already achieving the design rate. We're now achieving 60%-70% of target recoveries, with several days actually hitting the target, which is actually faster than we expected.
We are confident that we will reach commercial production this quarter. Filling of the first rock cell with tailings in the IMWF, the Integrated Mine Waste Facility, is completed and will now be monitored to confirm the design consolidation rate. Demobilization of site construction crews is underway. Spending of $152 million has been incurred to the end of March, with an additional $12 million-$14 million forecast spending remaining to complete. The aggregate cost of the project is now expected to be between $164 million and $166 million, compared to the original estimate of $178 million. Exploration has identified a number of satellite deposits within a few kilometers of Krumovgrad. We completed phase two drilling program for the Sarnak satellite deposit located four kilometers to the west of Krumovgrad open pit in Q4.
A maiden mineral resource estimate, along with metallurgical test work, is underway, and we expect 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 Chiirite, Elhovo, and Lada exploration licenses. At the Chatokaya high-grade vein prospect on the Chiirite license, approximately 25 km northeast of Krumovgrad, a 3,000-meter drill campaign will commence in the second quarter. On September 24th, 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 46.9 million tons at 1.32 grams gold for 1.96 million ounces.
It includes oxide indicated mineral resource of 21.8 million tons at 1.06 grams of gold for 742,000 ounces of gold, and transitional indicated mineral resources of 9.2 million tons at 1.15 grams gold for 338,000 ounces. Net changes compared to the 2017 mineral resource estimate show a 35% increase in tons and a 16% increase in contained ounces. The increase in indicated mineral resources compared to the 2017 mineral resource estimate is attributable to the updated interpretations of the oxide and transitional weathering domains and better recoveries indicated from the vertical column leach 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 Timok. 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 oxide and transitional samples during the first quarter of 2018, further samples were 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 Bigar Hill and Korkan deposit, results from near-surface drilling during the second and third quarters of 2018 indicated good potential for additional resources outside the new resource model. Results of holes drilled to the west of Bigar Hill mineral resource intersected 28 meters at three grams gold from 85 meters down the hole. On the northeast side of the Bigar Hill deposit, we intersected 35 meters at two grams gold from 246 meters downhole in oxidized and strongly brecciated Cretaceous limestone.
At the Korkan deposit, located 25-50 meters northwest of the mineral resource, we intersected two intervals, including 60 meters at 1.7 grams gold in oxidized section from 65-81 meters downhole, followed by 21 meters at 0.7 grams from 93-114 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 pre-feasibility study. Our first testing of the use of AI for exploration targeting will be with the Timok data set. This work is underway with the first targets generated expected to be this quarter. On the Malartic joint venture, the diamond drill program, consisting of 5,800 meters and nine holes, started in early March 2019.
Drill targets occur along the Parfouru 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. Targets are being tested both laterally and at approximately 300-400 meters from the surface. A total of 3,774 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 anomalies identified last fall, will be planned. With MineRP, we see great potential with our investment as a unique new enterprise integration digital 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 MineRP is to introduce new planning enhancements and enable the intelligent use of data. Key benefits expected from this initiative are data unification to a 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. MineRP 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. Six 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 2019.
The strong results from Tsumeb and Chelopech, along with the ramp-up of production that is now underway at Krumovgrad, reflects the exceptional progress our team has made to improve the performance of our operations and advance our growth projects. Tsumeb continues to improve and contribute to the free cash flow of our business, with further upside possible by increasing throughput and reducing costs further, which is the focus for 2019 and beyond. With significant near-term growth in free cash flow coming from our Krumovgrad project beginning the 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 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 will now turn the call over to Hume, who will review the financial results and the 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 EBITDA of $17 million, down from $20 million in 2018. These decreases were driven in the first instance by the mark-to-market impact associated with DPM's strong performance, which accounted for substantially all the shortfall relative to consensus estimates, as well as higher treatment charges, primarily related to the unfavorable final settlements on provisionally priced concentrate sales, higher-cost gold copper concentrate produced and sold as a result of lower copper grades. These were partially offset by higher volumes from 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 million compared to $18 million in 2018, while free cash flow was $10 million compared to $11 million in 2018.
These changes were impacted by essentially the same factors that impacted adjusted EBITDA, with the exception of free cash flow, which was also impacted by lower cash outlays for sustaining capital. Our site cost measures were down both at Chelopech and Tsumeb with respect to per-ton metrics, reflecting continued solid performance and a stronger U.S. dollar in the case of Tsumeb, higher throughput, and an ongoing focus to reducing costs. Our all-in sustaining cost was $817 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 DPM during the quarter. 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 million and $18 million respectively for an aggregate spend of $20 million, down from $30 million in 2018, due primarily to the lower spend at Krumovgrad and the timing of each site's sustaining capital expenditure plans. At March 31st, our financial position was strong with $248 million in cash resources. With the Krumovgrad production now ramping up and DPM shifting towards a period of significant free cash flow generation, we are 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 reduce the aggregate size of the facility from $275 million to $175 million. These amendments are expected to be fully executed in May 2019.
From a risk perspective, we've also entered into a series of hedges in respect of the Namibian dollar to 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% of Tsumeb's Namibian dollar operating costs over the balance of the year, using a zero-cost option strategy that provided for, on average, a minimum and maximum exchange rate of NAD 14 and NAD 15.46. We also hedged approximately 25% of Tsumeb's 2020 Namibian operating exposure using a similar strategy that, on average, provided a minimum and maximum exchange rate of NAD 14.47 and NAD 16.09. This contrasts to a spot rate today of NAD 14.20.
During the quarter, we also amended our prepaid forward gold sales arrangement, which you will recall was entered into in 2016 as part of our de-risking strategy to support the construction of the Krumovgrad Project. This amendment essentially shifts the first six months of deliveries to realign them with when the project is expected to be fully ramped up and provides an ample cushion in the event we experience any unforeseen delays. As a result, deliveries that were scheduled originally from May to October, will now be delivered from November 2019 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, and 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. As such, our guidance remains unchanged from the guidance we issued in February 2019, with 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 full 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 further strengthen our financial position, as there's no doubt having a certain amount of cash in today's capital constrained market is a good thing.
It'll also provide the opportunity to re-invest in our business, not only to sustain, but to grow in a disciplined and accretive manner, to potentially introduce a sustainable dividend that returns a portion of cash to our shareholders without compromising our financial strength or our ability to sustain and grow the business. With that, I'll turn the call back over to the operator.
Thank you. Ladies and gentlemen, if you have a question at this time, please press the star then the number one key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, that's star then one to ask a question. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. Our first question comes from Jacob Willoughby of Beacon Securities. You may proceed with your question.
Good morning, guys. 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 $3.2 million 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, it's David Rae. 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 at Tsumeb. We do anticipate that will continue. It's largely the production rate that influences what happens financially at this mine.
Great. Okay. 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 because we have more secondaries. We've had better metal exposure experience, so we're actually experiencing recoveries as opposed to losses that we've had in the previous years. We're also benefiting from more favorable asset prices.
Right. My only other question was just on the G&A increasing from 9.6 to 13.36. You mentioned that the MineRP is included in there, the costs this year on MineRP are actually lower. Does that higher G&A include the stock-based compensation?
Yes. The stock-based compensation is essentially all of the increase. I think the actual impact in the quarter was a little over $5 million or $0.03 per share.
Right. Okay. That's great. Thanks very much.
Thanks, Jacob.
Thank you. As a reminder, ladies and gentlemen, that's star then one to ask a question. One moment for questions. I'm not showing any further questions at this time. I would now like to turn the call back over to Rick Howes for any further remarks.
Yes, thank you very much. I'll just wish everybody a great Mother's Day weekend. 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.