Dundee Precious Metals sells smelter for US$49 million
Dundee Precious Metals Inc. [DPM-TSX] has announced a share purchase agreement with a subsidiary of Sinomine Resource Group Co. of China for the sale of its stake in the Tsumeb smelter in Namibia for US$49 million in cash.
Under the agreement, Dundee will transfer all assets and liabilities associated with the Tsumeb smelter to Sinomine via the sale of all issued and outstanding shares indirectly held in Dundee Precious Metals Tsumeb Holding.
Dundee Precious Metals has made limited representations and warranties and provided certain indemnities to Sinomine, subject to a liability cap equal to 50% of the purchase price. The cash received by Dundee Precious Metals at closing will be less a US$5.0 million holdback to be held in escrow for a period of six months to secure indemnity obligations under the sale agreement.
The company is also entitled to be paid all cash collected from IXM SA with respect to a positive balance in metals exposure outstanding at Tsumeb, estimated to be about US$17.2 million.
Dundee Precious Metals is a Toronto-based international gold mining company with operations in Bulgaria, Namibia, Serbia and Ecuador.
Dundee Precious Metals was recently involved in an unsuccessful attempt to acquire Osino Resoruces Corp. [OSI-TSXV, OSIIF-OTCQX, RSR1-FSE], after Osino disclosed that it had received a superior proposal from a foreign-based mining company that would value Osino at about $368 million.
Osino’s key asset is a 100% interest in the advanced state, multi-million-ounce Twin Hills gold project locate in Namibia, a mining-friendly jurisdiction, where Dundee has been operating the Tsumeb smelter since 2010. A June 2023 feasibility study completed by Osino outlined an open-pit project with a 13-year mine life and average annual production of 175,000 ounces of gold in the first five years.
With first production expected by the second half of 2026, Twin Hills has the potential to become Namibia’s third largest gold mine.
Dundee acquired the smelter in 2010 to secure a processing outlet for the complex concentrate produced by the company’s Chelopech mine in Bulgaria. However, with developments in the global smelting market and changes in the quality of Chelopech concentrate, Dundee says it is able to place its Chelopech concentrate in several other third-party facilities, providing secure and reliable processing alternatives at favourable terms.
“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,’’ said Dundee President and CEO David Rae. “We are extremely proud of the investments that we have made to transform Tsumeb’s operational and environmental performance into a specialized custom smelter with a highly skilled workforce,’’ he said.
Dundee shares were virtually unchanged on the news, rising almost 0.6% or $0.06 to $10.24. The shares trade in a 52-week range of $10.78 and $7.79.