Chinese firm buys Tsumeb smelter for N$930m

Dundee Precious Metals (DPM) Incorporated has agreed to sell its Tsumeb smelter to Chinese-owned Sinomine Resource Group Corporation Limited for N$930 million (approximately US$49 million).

This sale will include all associated assets and liabilities of the company.

It will be done through the disposition of all of the issued and outstanding shares held by the company in Dundee Precious Metals Tsumeb Holding.

“We are pleased to announce the sale of the Tsumeb smelter, which is consistent with our strategic objective of focusing on our gold-mining assets and simplifying our portfolio going forward.

“We are extremely proud of the investments we have made to transform Tsumeb’s operational and environmental performance into a specialised custom smelter with a highly skilled workforce,” David Rae, the president and chief executive, said in a statement.

“We would like to thank the government of Namibia, the community of Tsumeb and our employees for their support over the past 13 years. We will work closely with Sinomine to ensure a smooth transition to support a successful future for the operation and all of its stakeholders.”

DPM, which was recently beaten to the acquisition of Osino Resources gold assets in Namibia by Chinese company Yintai Gold, acquired the smelter in 2010 to secure a processing outlet for the complex concentrate produced by the company’s Chelopech mine in Bulgaria.

With developments in the global smelting market and changes in the quality of the Chelopech concentrate, DPM is able to place its Chelopech concentrate at several other third-party facilities, providing secure and reliable processing alternatives at favourable terms.

Under the terms of the sale, DPM will transfer, on a debt-free and cash-free basis, all assets and liabilities associated with the Tsumeb smelter to Sinomine for consideration of US$49 million in cash, subject to normal working capital adjustments.

The company has made limited representations and warranties and provided certain indemnities to Sinomine customary with transactions of this nature, subject to a liability cap equal to 50% of the purchase price.

The cash received by DPM on closing will be less a US$5 million holdback, to be held in security for a period of six months, to secure the company’s indemnity obligations under the agreement.

In addition, DPM is entitled to be paid all cash collected from IXM SA with respect to a positive balance in metals exposure outstanding at Tsumeb, currently estimated to be approximately US$17,2 million, which will constitute an increase in the purchase price.

The transaction is subject to customary closing conditions, including approval under the Namibian Competition Act and approvals required from Chinese regulatory authorities for overseas investments and is expected to close in the third quarter of 2024.

DPM expects to use the proceeds from the sale to further strengthen its balance sheet and to support its core mining business in line with its disciplined capital allocation framework.

DPM is a Canadian-based international gold-mining company with operations and projects in Bulgaria, Namibia, Serbia and Ecuador.

The company’s purpose is to unlock resources and generate value to thrive and grow together.

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