Dundee Precious Metals Inc

TSX:DPM

Earnings Call Analysis

Dundee Precious Metals' Strong Year and Robust Outlook

In 2023, Dundee Precious Metals (DPM) had an exceptional year marked by robust operating performance and free cash flow generation, producing approximately 296,000 ounces of gold and 31 million pounds of copper with all-in sustaining costs of $849 per ounce, aligning with guidance. Returning $96 million, which represents 42% of the $228 million free cash flow to shareholders through dividends and buybacks, the company solidified its financial position with $595 million cash on hand, a $150 million undrawn credit facility, and zero debt. With strong ESG standings, DPM looks to further growth with the acquisition of Ocino Resources and developments in Serbia's Coka Rakita project, projecting a promising future.

Revenue Increase and Cost Reduction Drive Financial Strength

Over the past quarter, the company generated $139 million in revenue, marking a 23% increase compared to the prior year. This boost was largely due to higher volumes and realized prices of gold sold. Moreover, there was a notable reduction in all-in sustaining costs, which fell to $876 per ounce of gold sold—a 13% decrease from 2022. These improved performance metrics are not just flukes but part of a year-long trend that saw annual revenue climb by 20% to $520 million. Driven by these strong results, the company is expecting solid gold production, approximately 240,000 ounces annually, over the next three years, and a forecasted dip in 2026 as the Ada Tepe mine approaches the end of its productive life.

Balanced Capital Allocation and Shareholder Returns

In tandem with growing its revenue and reducing costs, the company focused on building its financial reserves, ending the quarter with $595 million in cash. Demonstrating a commitment to shareholder returns, the company repurchased 9.7 million shares and paid out $30 million in dividends, amounting to 42% of its free cash flow. The company maintains a strategy of balancing reinvestment in the business with returning capital to shareholders, and it plans to renew its share repurchase program depending on various factors, including market conditions and capital requirements for future projects.

Exploration and Operational Updates

On the operational side, there were particular activities carried out in Q4 that weren't typical but necessary due to water management issues. This resulted in an adjustment to the mine plan exclusively for Q4. Investors can expect a return to the forecasted mine plan for 2024, with no notable deviation from the previous year's production grade expected. Moreover, the drilling teams continue to explore additional opportunities by applying the successful strategies from Coka Rakita to new areas. A significant milestone on the horizon is the completion of targeted drilling at the Tierras Coloradas site, which is expected by the second quarter of the current year.

Strategic Developments and Market Updates

Looking ahead, investors can anticipate updates on capital expenditure for projects like Coka Rakita and Twin Hills after market updates and deal closings. Regarding Ada Tepe, the outlook remains strong with expected high-grade gold production continuing until an anticipated mine closure in 2026. Additionally, the company is focusing on obtaining permits for a project with a projected construction start date in early 2026. Stability and strategic priorities within operating jurisdictions, such as Namibia, remain a high point, with the company reflecting positively on the swift and stable governmental transition after the recent passing of its President.

Conclusion of the Earnings Call

Wrapping up the earnings call, the executive team expressed gratitude to the participants and highlighted their availability for further inquiries. This proactive approach in engaging with investors and analysts sets a tone of transparency and openness for the company's communication efforts and investor relations.

Earnings Call Transcript 2023-Q4

[Operator]

Good day, and thank you for standing by. Welcome to Dundee Precious Metals Fourth Quarter 2023 Earnings Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference to Jennifer Cameron.

[Jennifer Cameron, executive]

Thank you, and good morning. I'm Jennifer Cameron, Director of Investor Relations, and I'd like to welcome you to Dundee Precious Metals Fourth Quarter and Year-End 2023 Conference Call. With me today are David Rae, President and CEO; Navin Dyal, Chief Financial Officer; as well as members of our senior management team, who will be available to take your questions.

Before we begin, I'd like to remind you that 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 or ratios. These measures have no standardized meaning 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 the call are related to continuing operations and have generally been rounded, references to 2022 pertain to the comparable periods in that year and references to averages are based on midpoint of our outlook or guidance.

I'll now turn the call over to David Rae.

[David Rae, executive]

Good morning, and thank you all for joining us. Overall, the leadership team at DPM is very proud of what our global team achieved in 2023, which was an exceptional year for the company. We delivered strong operating results and a robust free cash flow generation, significantly increased our return of capital to shareholders and further strengthened our balance sheet, providing an exceptional platform for our future growth, which we significantly transformed during the year.

Today, Navin and I will provide a brief update on our Q4 and year-end results and discuss why we believe that DPM continues to be well-positioned to deliver value to all of our stakeholders now and over the long term. I will also outline why we are excited about what lies ahead for DPM in 2024. Looking back at the past year, I'm pleased to report that in 2023, we continued our strong track record, consistent performance at our operations. We produced approximately 296,000 ounces of gold and 31 million pounds of copper. And despite industry-wide cost pressures and lower copper prices, our all-in sustaining cost was $849 per ounce, which was within our guidance.

We generated $228 million in free cash flow and significantly increased our return of capital to shareholders, returning $96 million or 42% of our free cash flow through share buybacks and dividends. We ended the year with a strong financial position with $595 million in cash and strong liquidity, including an undrawn $150 million revolving credit facility and no debt. Importantly, we continue to deliver on our ESG priorities and scored in the 91st percentile among metals and mining companies in the S&P Global Corporate Sustainability Assessment for the third consecutive year. During the year, we also significantly transformed our growth pipeline, which the Coka Rakita project in Serbia and the acquisition of Ocino Resources, which is targeted to close in the second half of the year, subject to certain approvals.

Looking at our operations in more detail and starting with Chelopech, our largest mine continued its track record of strong performance in 2023, producing approximately 162,000 ounces of gold and 31 million pounds of copper within our guidance for the year. In November, we announced an updated mineral reserve and resource estimate along with an updated life of mine plan with improved grades and recoveries, continuing our consistent track record of extending Chelopech's mine life. Today, Chelopech has a life of mine that extends to 2032 based on mineral reserves as a strong mineral resource base and significant opportunities to continue our track record of mine life extensions, including Chelopech North, which used to be known as Sveta Petka where we received our commercial discovery certificate in Q4.

In 2023, we continued our in-mine exploration program as well as aggressive brownfield exploration. We continued drilling at Sharlo Dere West and Sharlo Dere prospects, which demonstrated additional resource potential and these are within the concession and close to existing infrastructure.

Turning now to Ada Tepe. The mine achieved a new gold production record in 2023 at 134,200 ounces. All-in sustaining costs were particularly impressive at $500 per ounce of gold sold, and we're below the low end of guidance for the year. In the fourth quarter, we continued the target delineation campaign and scout drilling at the new Krumovitsa exploration license, scout drilling in several epithermal sediment-hosted targets was advanced during the quarter, and is planned to continue in the first quarter of 2024. In 2024, we plan to spend a total of $3 million to $4 million of brownfield exploration activities and approximately $2 million in greenfield exploration at Ada Tepe.

Last night, we announced that in 2023, we decided to undertake a strategic review of our Tsumeb asset, including a potential sale of the smelter. To provide some context around that announcement, we acquired Tsumeb in 2010 as a secure processing outlook for the complex -- outlet for the complex concentrate produced by Chelopech. With developments in the global smelting market we've been able to place Chelopech concentrate at several other third-party facilities, providing secure and reliable processing at favorable terms without the need to own and operate the smelter. Therefore, we do not expect to process any Chelopech concentrate at Tsumeb commencing in 2024. And the smelter therefore is no longer seen as a strategic asset within our portfolio.

In 2023, Tsumeb processed approximately 188,000 tonnes of complex concentrate, which was below 2023 guidance. This was a result of unplanned downtime in the off-gas furnace system in the first 3 quarters of the year. And we extended our shutdown in order to complete refers to that off-gas system. However, in the fourth quarter, we got the benefit of that work with Tsumeb processing approximately 68,000 tonnes of complex concentrate, which was a near record level of performance, a very large improvement over the prior 3 quarters, due to the repair of those off-gas systems.

Over the course of 2023, we significantly transformed our growth prospects. In December, we announced that we had entered into an agreement to acquire Ocino Resources and the advanced stage Twin Hills project in Namibia, which is the potential to add near-term growth to our portfolio. The transaction is subject to a senior shareholder approval and Namibian competition approval. Also in December, we announced the initial mineral resource estimate for Coka Rakita, which marked a significant milestone for DPM's future growth and confirm Coka Rakita's potential as a high-quality gold project.

Since we announced the initial discovery in January of 2023, Coka Rakita has rapidly grown into a 1.8 million ounce deposit at 5.6 grams a tonne, a remarkable achievement over such a short period of time. We're continuing to accelerate the project to our development pipeline, including advancing a preliminary economic assessment, which we expect to complete in the second quarter of 2024. We'll be targeting throughput rate of 850,000 tonnes per annum.

The project is located approximately 35 kilometers from the City of Borin, Serbia. It's proximal to existing roads and power lines and is approximately 320 kilometers northwest of DPM's Chelopech mine in Bulgaria, which will allow easy access to existing technical support capabilities. Coka Rakita is a strong fit with our underground mining and processing expertise with metallurgical test work demonstrating gold recoveries of approximately 90% by gravity concentration and conventional flotation.

We're excited by Coka Rakita's potential in a region where we've had a presence for many years and where we've developed strong relationships with local stakeholders. We're also planning to continue with aggressive exploration at Coka Rakita and the surrounding licenses to generate new discoveries. Scout drilling near Coka Rakita continued in the fourth quarter, intercepting favorable geological indicators in the North and Northwest plank of the system, where additional marble-hosted scout mineralization was encountered.

In the fourth quarter of 2023, we were granted 2 new exploration licenses covering the area hosting the Timok Gold Project. We are currently preparing an aggressive exploration program and plan to start testing scout targets on the new potash Coka exploration license located to the North of Coka Rakita as well as the new passage exploration license switches to the west of Coka Rakita. This program is expected to commence in early 2024, pending approval of work programs and permitting procedures with approximately 25,000 meters of drilling planned for the first year of exploration on these targets. 2024, we're planning to spend a total of around $20 million for exploration activities in Serbia.

Turning to Loma Larga in Ecuador. We continue to progress activities related to permitting and stakeholder relationships. In October, a new President was elected and we are working with the newly formed government to fulfill the requirements of the August 2023 ruling, which found the pre, prior and informed consultation of certain local indigenous populations must be carried out by the state. That ruling also required environmental consultation with communities in the project area of influence and additional reports on the impact on water resources and the nearby National Recreation Area and these will be delivered by the Ministry to the Court to advance the project to the exploitation phase.

In line with this ruling, the government commenced the environmental consultation process in January, and DPM will continue to support the Government of Ecuador and proactively engage with stakeholders to fulfill the conditions established by the court. As previously reported, DPM will continue with the optimization phase of the feasibility study beyond the previously stated time line ending in 2023. This in order to evaluate additional opportunities and potentially incorporate the results of drilling once these activities are able to recommence. We will continue to take a disciplined approach with respect to future investments in the Loma Larga project, which will be based on the receipt of key milestones, the overall operating environment in Ecuador and our other capital allocation priorities.

At the Tierras Coloradas concession, which is located 200 kilometers south of Loma Larga in Ecuador's local province. We continued the 10,000-meter drilling program which commenced in August. This program is designed to follow up the positive results we reported at the end of February, which confirmed the presence of 2 high-grade vein systems that remain open in multiple directions.

In closing, we're entering 2024 in the unique position. We have strong and consistent production from our operations and an all-in sustaining cost that ranks among the lowest in the gold industry. We have significant free cash flow generation a record of disciplined capital allocation and returning capital to shareholders, we have attractive development projects, proven exploration success and the financial strength to internally fund our growth pipeline and exploration prospects as well as continuing to return capital to shareholders through our quarterly dividend. We've got continuing ESG performance and an impressive track record of securing our social license and a very strong technical team with a history of adding real value through innovation.

I'll now turn the call over to Navin for a review of the financial results and outlook following which we'll open the call to questions.

[Navindra Dyal, executive]

Thanks, Dave. I'll be touching briefly on the financial highlights for the quarter and year. I'll also provide an overview of our 2024 guidance -- sorry, 2025 -- 2024 guidance and updated 3-year outlook. And I will conclude with some commentary on our balance sheet and return of capital program. A few considerations include the announced agreement to acquire Ocino Resources Corp and its advanced stage Twin Hills full development project which offers near-term production growth to supplement the decrease in production at Ada Tepe as the mine comes to the end of its life and a significant exploration package in Namibia. And the company's decision to undertake a strategic review of its Tsumeb operation including a potential sale, given that the smelter is no longer seen as strategic to DPM's asset portfolio.

As a result of this decision, the assets and liabilities of Tsumeb have been presented as held for sale in the company's balance sheet as of December 31, 2023, and the operating results and cash flows at Tsumeb have been presented as discontinued operations and the consolidated statements of earnings and loans and cash flows for both of the years ended December 31, 2023 and 2022.

My remarks will focus on highlights from continuing operations only. Looking at our financial highlights from the quarter and year, we achieved consolidated production and costs in line with our guidance and delivered strong financial results. We generated $139 million of revenue in the fourth quarter a 23% increase compared to the prior year due primarily to higher volumes and realized prices of gold sold. For the year, revenue was $520 million, 20% higher than 2022 due primarily to higher volumes and realized prices of gold sold and lower treatment and freight charges at Chelopech, partially offset by lower volumes and realized prices of copper sold.

Adjusted net earnings were $50 million for the quarter, a $28 million increase compared to the prior year due primarily to higher revenues from gold sales. This was partially offset by higher planned exploration and evaluation expenses. In 2023, adjusted net earnings were $180 million, $61 million higher than the prior year due primarily to higher revenues from gold sales, lower treatment and freight charges at Chelopech and higher interest income. This was partially offset by higher plant exploration and valuation expenses where we increased spending following positive results from our exploration programs in Serbia and Bulgaria.

Cash flows from operations of $71 million for the fourth quarter and $262 million for the year were higher than the prior year due primarily to higher adjusted EBITDA. During the fourth quarter, free cash flow was $49 million, $19 million higher than the prior year due primarily to the same factors impacting cash flow from operations and lower cash outlays for sustaining capital. For 2023, we generated $228 million of free cash flow, a 51% increase compared to 2022.

In terms of cost metrics, we achieved our all-in sustaining cost guidance for the year. In the fourth quarter, all-in sustaining cost was $876 per ounce of gold sold, 13% lower relative to 2022 with higher volumes of gold sold, lower cash outlays for sustaining capital, higher by-product credits and lower prices for power, partially offset by a stronger euro relative to the U.S. dollar. In terms of our capital spend, we were in line with our guidance for both sustaining capital and growth capital expenditures.

Looking at the fourth quarter, sustaining capital expenditures were $8 million, 38% lower than the prior year of $13 million, due primarily to the planned upgrade of the tailings management facility at Chelopech, which occurs throughout 2022 and was completed in the second quarter of 2023. Growth capital expenditures of $10 million for the quarter, primarily related to the Loma Larga Gold project, which were comparable to the prior year. Last night, we provided an updated 3-year outlook, which has been outlined in detail on Slide 16 of the webcast. We are forecasting strong gold production, averaging approximately 240,000 ounces annually over the next 3 years. Our 3-year outlook forecast a reduction in 2026 as Ada Tepe reaches the end of its mine life.

Copper production over the next 3 years is expected to average approximately 33 million pounds per year with higher production expected in 2025, in line with the Chelopech updated life of mine plan. We are forecasting slightly higher all-in sustaining cost per ounce of gold sold for 2024 relative to our previous 3-year outlook. This is partially due to a change in our copper price assumption, which we lowered to $3.75 per pound or $4 per pound in our previous outlook. Our revised outlook also reflects lower volumes of copper sold in 2024 and higher local currency operating expenses. Our sustaining capital is trending lower over the next 3 years, largely reflecting the fact that Ada Tepe is nearing the end of its mine life.

Our 2024 guidance that 3-year outlook does not yet reflect the acquisition of Ocino Resources. We continue to build our financial strength, ending the quarter with $595 million of cash on the balance sheet. During the year, we bought back 9.7 million shares through our NCIB program and paid $30 million of dividends returning a total of 42% of our free cash flow to shareholders. We also intend to renew the NCIB providing us with the flexibility to pursue additional share repurchases depending on our financial position, the outlook of our business and ongoing capital requirements as we advance our growth pipeline as well as our share price and overall market conditions.

We are currently reviewing our capital allocation strategy with a view to balancing between the capital required to fund our growth and returning capital to shareholders through dividend distribution and future share buyback. Today, with our strong cash position, no debt, and a $150 million undrawn credit facility, we are in a unique position among growing gold producers. We have the ability to fund our development pipeline internally, while continuing to pay a quarterly dividend.

With that, I will now turn the call back to the operator for Q&A.

[Operator]

[Operator Instructions] Our first question is from Wayne Lam with RBC.

[Wayne Lam, analyst]

Just curious at Twin Hills. Can you kind of walk us through what we might be able to expect with the results of the optimization study. And then is the majority of the work being done to normalize the CapEx and costs versus the Ocino study? Or are there additional upside scenarios kind of being evaluated here in terms of higher grade or additional material outside the main bulge and central deposits.

[David Rae, executive]

Wayne, sorry, my voice is breaking up a little bit. There's not really much to update at this point on Twin Hills. Obviously, we are cognizant of opportunities in terms of grade mine plans and sequence capital, but all of these are for future communication. I think at this point, we're still in a position where we're waiting for the shareholder meeting. And while we have some contact, we're not really in a position to talk about updating anything to market.

[Wayne Lam, analyst]

Yes. Understood. Looking forward to the closing of that transaction. Maybe moving to Tsumeb. Can you give us a bit of insight around the strategic review and what the timing could look like there? And then just on the Chelopech or you guys have done a lot of work to divert the concentrate to third parties over the past year. Can you give us kind of an idea of what those agreements might look like in terms of tenure for the place in that ore and what kind of gives you the confidence that you can kind of do without Tsumeb now?

[David Rae, executive]

Okay. A few different things. In terms of the process, we've been at this for a little while. We've looked broadly at the type of groups that might be interested in the smelter. And there are a broad range of different groups, including those directly focused on smelters, perhaps those who are concentrate traders, perhaps those who might be interested in some of the historical work around the site, which has left copper inventories and old tailings and things like that. So that process has been a fairly broad range, and we've obviously got to the point where we feel, there is something that we have confidence and that we can conclude.

In terms of the timing, not appropriate really to give you anything on that at the moment, but just to say that, that was a deliberate step that we took to place this in an asset held for sale. And I think just watch this space. In terms of confidence on our placement of concentrate, we've been all the way back to 2013, 2014, we've been placing concentrates in different smelters globally. And to this point, we have more than 5 different facilities where we can place that concentrate and that gives us the confidence that we have the ability to do that without requiring the fallback of our own smelter. In terms of the tenure, the bottom line there is that it makes sense for us to, if you compare relative to the smelter, we would consider a percentage of gross metal value payable. And the bottom line is that these smelters are all quite different in terms of the treatment terms that they give us between payable, TCs and this type of thing.

And I can't really give you a number, this is a direct comparable. It's safe to say that it makes a difference. If you look back at the updated life of mine plan, not the last one, but the one prior to that with Chelopech. You can see the difference that it made in terms of the outlook for Chelopech. So it's material, and that has sort of led us to the point where last year, we only had one quarter of production from Chelopech going to the smelter and this year, planned nothing planting. So Navin, do you want to add anything to it.

[Navindra Dyal, executive]

Sure. Yes. Wayne, it's Navin. The tenure for the contracts are typically 3 years, and they continue thereafter with 1 year cancellation notices.

[Wayne Lam, analyst]

Okay. Great. And then maybe just last one. Just curious at Tierras Coloradas, you guys had some really interesting exploration results early last year, but it seems has been gone -- it seems to have been relatively quiet since then. Have the issues at Loma Larga impacted your willingness to spend more aggressively on drilling there? Or is that just a function of focus being diverted a bit now given the emphasis that Coka Rakita and now Twin Hills?

[David Rae, executive]

So I think the drilling was the prior year. And what happened from that drilling, we've decided to do some additional work. Initially, the scope of that was less than what we ultimately wanted to do. So we're talking a couple of million -- a couple of thousand meters, I think 2,000, 3,000 meters, and we ended up with 10,000 meters that we targeted. It took a little while to get that in place, but that's got nothing to do with what's going on at Loma Larga you just have practicalities to go through in terms of making sure that everything is okay with permitting, making sure that the local communities are on site. And then you've got to go and get contracts in place and it's in a different jurisdiction in some different groups and you've got to hire people in order to make it work. So it was just a strength practicality.

Now this is in local province. So it is different from us why. And there's nothing preventing us from drilling. So what we did at the end of last year is we had some of our key people that have been the drivers at Coka Rakita out to this area to have a look at what are we targeting? And are there other opportunities that we didn't consider when we came to that initial 10,000 meters. So the bottom line is that, the work is actually progressing at the rate that we can in an area, which is actually quite difficult to access. It's also not a flat to rain.

You have to be very good in terms of thinking to what you have to do. We've included some of the thinking that's generated success at Coka Rakita in what we're looking at this year. But largely, it's been down to just the pace at which we can deliver that work. There were some very interesting numbers early on. We're continuing to drill. We have about 6,000 meters of the 10,000 meters done, and we would anticipate completing that within the second quarter of this year.

[Operator]

And it comes from the line of Don DeMarco with National Bank Financial.

[Don DeMarco, analyst]

First question for David and Navin. So with Tsumeb now held -- now classified as an asset held for sale, I see in the reporting last night, said net assets of $45 million. Do you think that this magnitude is indicative of a price that the asset could garner in the event of M&A?

[Navindra Dyal, executive]

Don, it's Navin. Yes, we're -- at this point, we're not going to comment on potential price that we might receive for this. This is something that obviously is -- would be coming at a slightly later time.

[Don DeMarco, analyst]

Okay. Fair enough. Well, thanks for the information last night anyway. Looking to Ada Tepe Q4 grade, 7.5 grams per tonne. Now this is -- Ada Tepe has really been running hard on grades for a while now. We saw from the technical report mine plan had a grade of 6.28 grams per tonne in '23, which is above the reserve of 5.19. And the mine plan has it coming down to 5.52. But given that it's been running above mine plan, would we expect -- are you just getting a good reconciliation here? Or do you expect the grades to maybe soften a little more than expected in 2024.

[David Rae, executive]

Congratulations, Don, on a level of detail here that I don't think is necessarily the norm. Actually, we had something specific that we decided to do in Q4 that had nothing to do with the overall plans or any changes. So don't assume that's the norm, don't assume that's a reconciliation. There were some practicalities in Q4. And it was largely around what was happening with water, and we made a decision with slightly alter our mine plan for purposes of Q4 and be back to where we used to be.

So what will happen is that the outlook now is as per what we had in the forecast for this year. But we had something that was driving the grade in Q4. It wasn't to achieve a record production. If you look more closely, you'll see that what we did is we balance the tonnage with the grade for the quarter. So we've not robbed anything, but there was a specific need for us to do something in Q4. Congratulations on smoothing that one.

[Don DeMarco, analyst]

Okay. Well, that's great. And great to hear that the outlook, the mine plan for 2024 is intact. And congratulations on converting that higher grade to free cash flow in the quarter. And then final question. Okay. So balance sheet, $600 million in cash, $150 million on your facility. Can you just remind us when we're going to get CapEx updates for the potential development of Coka Rakita and Twin Hills subject to closing of the deal and so on?

[Michael Dorfman, executive]

Yes. Don, it's Mike here. With respect to Twin Hills, what we indicated is we would be updating the market following closing on that. And with respect to Coka Rakita, we've undertaken a PEA, which is on target for release in Q2 after getting a CapEx update for Coka Rakita then.

[Operator]

And is from the line of Eric Winmill with Scotiabank.

[Eric Winmill, analyst]

Great. A number of my questions already been answered, but maybe just following up on Ada Tepe. I mean I know you said the asset was sort of nearing end of its life. 2026, it does look like maybe the stronger profile. Any comments here specifically in terms of the mine planning and what you're seeing in '26.

[David Rae, executive]

The forecast for the 3 years that we have just provided the update is representative of what we expect, I think as we said before, but we anticipate there may be a couple of months of difference in the outlook for Ada Tepe as we get closer to the sort of residual amounts in 2026, but we're not anticipating it being more than a couple of months. So we do anticipate closure in 2026. And as I said, that sort of the outlook for the next 3 years, that's up to date.

[Eric Winmill, analyst]

Yes. Fantastic. And maybe just one more for me. In terms of the other jurisdictions, I know you touched on Ecuador a little bit. Any other comments here in terms of Serbia or maybe Namibia, some of what's happening there in country and how that might shape your capital allocation in the coming years?

[David Rae, executive]

Yes. So in Serbia, we continue to develop that project at a pace, very, very good support from local and federal authorities. So very happy with what's going on and great support from the local community. So not really seeing any changes there or expecting anything. We're just driving as hard as we can to get that project permitted so that we're looking for construction date early in 2026. If you have a look at what's happening in Namibia, I presume what you're talking about there is the change after their President, Geingob passed away.

[Eric Winmill, analyst]

That's correct. And I know I've talked a little bit about strategic priorities and yes, just wondering if it might have any impact.

[David Rae, executive]

Well, I think the interesting thing about it is it really demonstrates just how good a jurisdiction Namibia is within, I think, 16 hours of the announcement of the President's passing, there's been a formation of the government and a new leader appointed with a Vice President and there was no noise or concerns or expressions of frustration. So population just accepted this. It was a logical transition of government, well managed. It was the first time anybody has passed away in that position in Namibia. So it's sort of an interesting test of the transition. And obviously, I think it did extremely well.

In terms of the current leadership well-known, well-respected, very much in line with previous thinking. And the current Vice President is the person that was previously nominated as the Head of SWAPO, who would then expect to become the next President. So again, level of continuity. So we like Namibia for a reason it's demonstrated good governance, consistency and openness in terms of many of its activities. I don't know if that covers the question, Eric.

[Eric Winmill, analyst]

Yes. Perfect. I appreciate the added color. That's really helpful. So great to see the cash balance continue to grow, and yes, I look forward to the update. So I'll hop back in the queue.

[David Rae, executive]

Thank you.

[Operator]

And with that, we conclude our Q&A session for today. I will turn it back to Jennifer Cameron for final comments.

[Jennifer Cameron, executive]

Well, thank you, everyone, for joining us. We look forward to talking to you next quarter. Should you have any additional questions, any member of our team is happy to help you out. So feel free to give us a call. Thanks.

[Operator]

And thank you all for joining our call today. You may now disconnect.